Document:

Exhibit
10.2

SECURITY AGREEMENT

This SECURITY
AGREEMENT (this “Agreement”)
is dated as of July 28, 2006, and entered into by and among FTD, INC., a Delaware corporation (“Company”),
FTD GROUP, INC., a Delaware corporation
(“Holdings”), each of THE UNDERSIGNED DIRECT AND INDIRECT SUBSIDIARIES
of Company (each of such undersigned Subsidiaries being a “Subsidiary Grantor” and collectively “Subsidiary Grantors”) and each ADDITIONAL GRANTOR that may become a party
hereto after the date hereof in accordance with Section 21 hereof (each of
Company, Holdings, each Subsidiary Grantor, and each Additional Grantor being a
“Grantor” and collectively the “Grantors”) and WELLS FARGO BANK, N.A.,
as Administrative Agent for and representative of (in such capacity herein called
“Secured Party”) the Beneficiaries
(as hereinafter defined).

PRELIMINARY STATEMENTS

A.                                   Pursuant
to the Credit Agreement dated as of July 28, 2006 (said Credit Agreement, as it
may hereafter be amended, restated, supplemented or otherwise modified from time
to time, being the “Credit Agreement”;
the terms defined therein and not otherwise defined in Section 32 or elsewhere
herein being used herein as therein defined), by and among Company, the lenders
listed therein as Lenders, Wells Fargo Bank, N.A., as Administrative Agent (in
such capacity, “Administrative Agent”),
and the other agents listed therein, Lenders have made certain commitments,
subject to the terms and conditions set forth in the Credit Agreement, to
extend certain credit facilities to Company.

B.                                     Company
may from time to time enter, or may from time to time have entered, into one or
more Lender Swap Agreements with one or more Swap Counterparties in accordance
with the terms of the Credit Agreement, and it is desired that the obligations
of Company under the Lender Swap Agreements, including, without limitation, the
obligation of Company to make payments thereunder in the event of early
termination thereof, together with all obligations of Company under the Credit
Agreement and the other Loan Documents, be secured hereunder.

C.                                     Holdings
has executed and delivered the Holdings Guaranty, and Subsidiary Grantors have
executed and delivered the Subsidiary Guaranty, in each case in favor of
Secured Party for the benefit of Lenders and any Swap Counterparties, pursuant
to which Holdings and each Subsidiary Grantor have guarantied the prompt
payment and performance when due of all obligations of Company under the Credit
Agreement and all obligations of Company under the Lender Swap Agreements.

D.                                    It
is a condition precedent to the initial extensions of credit by Lenders under
the Credit Agreement that Grantors listed on the signature pages hereof shall
have granted the security interests and undertaken the obligations contemplated
by this Agreement.

NOW, THEREFORE, in
consideration of the agreements set forth herein and in the Credit Agreement
and in order to induce Lenders to make Loans and other extensions of credit
under the Credit Agreement and to induce Swap Counterparties to enter into the
Lender Swap Agreements, each Grantor hereby agrees with Secured Party as
follows:

 1
 

 

SECTION 1.                                               Grant
of Security.

Each Grantor hereby assigns to Secured Party, and
hereby grants to Secured Party a security interest in, all of such Grantor’s
right, title and interest in and to all of the personal property of such
Grantor, in each case whether now or hereafter existing, whether tangible or
intangible, whether now owned or hereafter acquired, wherever the same may be
located and whether or not subject to the Uniform Commercial Code as it exists
on the date of this Agreement, or as it may hereafter be amended in the State
of New York (the “UCC”), including
all Assigned Agreements and the following (the “Collateral”):

(a)                                  all
Accounts;

(b)                                 all
Chattel Paper;

(c)                                  all
Money and all Deposit Accounts, together with all amounts on deposit from time
to time in such Deposit Accounts;

(d)                                 all
Documents;

(e)                                  all
General Intangibles, including all intellectual property, Payment Intangibles
and Software;

(f)                                    all
Goods, including Inventory, Equipment and Fixtures;

(g)                                 all
Instruments;

(h)                                 all
Investment Property;

(i)                                     all
Letter-of-Credit Rights and other Supporting Obligations;

(j)                                     all
Records;

(k)                                  all
Commercial Tort Claims, including those set forth on Schedule 1 annexed
hereto; and

(l)                                     all
Proceeds and Accessions with respect to any of the foregoing Collateral.

Each category of Collateral set forth above shall have
the meaning set forth in the UCC (to the extent such term is defined in the
UCC), it being the intention of Grantors that the description of the Collateral
set forth above be construed to include the broadest possible range of assets.

Notwithstanding anything herein to the contrary, in no
event shall the Collateral include, and no Grantor shall be deemed to have
granted a security interest in, any of such Grantor’s rights or interests in or
under, (a) any license, contract, permit, Instrument, Security or
franchise to which such Grantor is a party or any of its rights or interests
thereunder to the extent, but only to the extent, that such a grant would,
under the terms of such license, contract, permit,

 2
 

 

Instrument, Security or
franchise, result in a breach of the terms of, or constitute a default under,
such license, contract, permit, Instrument, Security or franchise (other than
to the extent that any such term would be rendered ineffective pursuant to the
UCC or any other applicable law (including the Bankruptcy Code) or principles
of equity); provided, that immediately upon the ineffectiveness, lapse
or termination of any such provision the Collateral shall include, and such
Grantor shall be deemed to have granted a security interest in, all such rights
and interests as if such provision had never been in effect, or (b)  any
property or asset hereafter acquired by any Grantor that is subject to a Lien
permitted to be incurred pursuant to the Credit Agreement solely to the extent
that the documents evidencing such Lien prohibit the grant of a security
interest in or Lien on such property or asset; provided that, upon such property
or asset no longer being subject to such Lien or prohibition, such property or
asset shall (without any act or delivery by any Person) constitute Collateral
hereunder.

Notwithstanding anything herein to the contrary, the
Collateral shall not include any equity interests issued by a Person if such
Person is a controlled foreign corporation (used hereinafter as such term is
defined in Section 957(a) or any successor provision of the Internal Revenue
Code), in excess of the amount of such equity interests possessing up to but
not exceeding 66% of the voting power of all classes of such equity interests
entitled to vote of such Person.

SECTION 2.                                               Security
for Obligations.

This Agreement secures, and the Collateral is
collateral security for, the prompt payment or performance in full when due,
whether at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise, of all Secured Obligations of each Grantor.  “Secured
Obligations” means:

(a)                                  with
respect to Company, all obligations and liabilities of every nature of Company
now or hereafter existing under or arising out of or in connection with the
Credit Agreement and the other Loan Documents and any Lender Swap Agreement;

(b)                                 with
respect to each Subsidiary Grantor and Additional Grantor, all obligations and
liabilities of every nature of such Subsidiary Grantor now or hereafter
existing under or arising out of or in connection with the Subsidiary Guaranty;
and

(c)                                  with
respect to Holdings, all obligations and liabilities of every nature of
Holdings now or hereafter existing under or arising out of or in connection
with the Holdings Guaranty;

in each case together with all extensions or renewals
thereof, whether for principal, interest, reimbursement of amounts drawn under
Letters of Credit, payments for early termination of Lender Swap Agreements,
fees, expenses, indemnities or otherwise, whether voluntary or involuntary,
direct or indirect, absolute or contingent, liquidated or unliquidated, whether
or not jointly owed with others, and whether or not from time to time decreased
or extinguished and later increased, created or incurred, and all or any
portion of such obligations or liabilities that are paid, to the extent all or
any part of such payment is avoided or recovered directly or indirectly from
Secured Party or any Lender or Swap Counterparty as a preference, fraudulent

 3
 

 

transfer or otherwise, and all obligations of every
nature of Grantors now or hereafter existing under this Agreement (including,
without limitation, interest and other amounts that, but for the filing of a
petition in bankruptcy with respect to Company or any other Grantor, would
accrue on such obligations, whether or not a claim is allowed against Company
or such Grantor for such amounts in the related bankruptcy proceeding).

SECTION 3.                                               Grantors
Remain Liable.

Anything contained herein to the contrary
notwithstanding, (a) each Grantor shall remain liable under any contracts and
agreements included in the Collateral, to the extent set forth therein, to perform
all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by Secured Party of any of
its rights hereunder shall not release any Grantor from any of its duties or
obligations under the contracts and agreements included in the Collateral, and
(c) Secured Party shall not have any obligation or liability under any
contracts, licenses, and agreements included in the Collateral by reason of
this Agreement, nor shall Secured Party be obligated to perform any of the
obligations or duties of any Grantor thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.

SECTION 4.                                               Representations
and Warranties.

Each Grantor represents
and warrants as follows:

(a)                                  Ownership of Collateral.  Except as expressly permitted by the Credit
Agreement, such Grantor owns its interests in the Collateral free and clear of
any Lien and no effective financing statement or other instrument similar in
effect covering all or any part of the Collateral is on file in any filing or
recording office, in the PTO (to such Grantor’s knowledge) or in the Copyright
Office, except for which proper terminations have been delivered to Secured
Party for filing.

(b)                                 Perfection. 
The security interests in the Collateral granted to Secured Party for
the ratable benefit of Lenders and Swap Counterparties hereunder constitute
valid security interests in the Collateral, securing the payment of the Secured
Obligations.  Upon (i) the filing of
UCC financing statements naming each Grantor as “debtor”, naming Secured Party
as “secured party” and describing the Collateral in the filing offices with
respect to such Grantor set forth on Schedule 2 annexed hereto,
(ii) in the case of the Securities Collateral consisting of certificated
Securities or evidenced by Instruments, in addition to filing of such UCC
financing statements, delivery of the certificates representing such
certificated Securities and delivery of such Instruments to Secured Party, in
each case duly endorsed or accompanied by duly executed instruments of
assignment or transfer in blank, (iii) in the case of the Intellectual
Property Collateral, in addition to the filing of such UCC financing
statements, the recordation of a Grant with the PTO or with the Copyright
Office, as applicable, (iv) in the case of Equipment that is covered by a
certificate of title, to the extent requested by Secured Party, the filing with
the registrar of motor vehicles or other appropriate authority in the
applicable jurisdiction of an application requesting the notation of the
security interest created hereunder on such certificate of title, and (v), in
the case of any Deposit Account and any Investment Property constituting a
Security Entitlement, Securities Account, Commodity Contract or Commodity

 4
 

 

Account, to the extent
requested by Secured Party, the execution and delivery to Secured Party of an
agreement providing for control by Secured Party thereof, the security
interests in the Collateral granted to Secured Party for the ratable benefit of
Lenders and Swap Counterparties will constitute perfected security interests
therein prior to all other Liens (except for Permitted Encumbrances and Liens
permitted by subsection 7.2(A) of the Credit Agreement), and all filings and other
actions necessary or desirable to perfect and protect such security interests
have been, or promptly after the Closing Date will be, duly made or taken.

(c)                                  Office Locations; Type and Jurisdiction of
Organization; Locations of Equipment and Inventory.  As of the Closing Date or, in the case of an
Additional Grantor, the date of the applicable Counterpart, the office where
such Grantor keeps its Records regarding the Accounts and all Intellectual
Property and all originals of all Chattel Paper that evidence Accounts are
located at the locations set forth on Schedule 3 annexed hereto; such
Grantor’s name as it appears in official filings in the jurisdiction of its
organization, type of organization (i.e. corporation, limited partnership,
etc.), jurisdiction of organization and organization number provided by the
applicable Government Authority of the jurisdiction of organization are set
forth on Schedule 3 annexed hereto. 
All of the Equipment and Inventory is, as of the date hereof, or in the
case of an Additional Grantor, the date of the applicable Counterpart, located
at the places set forth on Schedule 4 annexed hereto, except for
Inventory which, in the ordinary course of business, is in transit either
(i) from a supplier to a Grantor, (ii) between the locations set
forth on Schedule 4 annexed hereto, or (iii) to customers of a
Grantor.

(d)                                 Reserved.

(e)                                  Delivery of Certain Collateral.  As of the Closing Date, all certificates or
Instruments (excluding checks) evidencing, comprising or representing the
Collateral have been delivered to Secured Party duly endorsed or accompanied by
duly executed instruments of transfer or assignment in blank.

(f)                                    Securities Collateral.  All of the Pledged Subsidiary Equity set
forth on Schedule 6 annexed hereto has been duly authorized and validly
issued and is fully paid and non-assessable; all of the Pledged Subsidiary Debt
set forth on Schedule 7 annexed hereto has been duly authorized and is
the legally valid and binding obligation of the issuers thereof and is not in
default; there are no outstanding warrants, options or other rights to
purchase, or other agreements outstanding with respect to, or property that is
now or hereafter convertible into, or that requires the issuance or sale of,
any Pledged Subsidiary Equity, other than the Put/Call Agreements; Schedule
6 annexed hereto sets forth all of the Equity Interests and the Pledged
Equity owned by each Grantor, and the percentage ownership in each issuer
thereof, on the date hereof; and Schedule 7 annexed hereto sets forth
all of the Pledged Debt in existence on the date hereof.

(g)                                 Intellectual Property Collateral.  As of the Closing Date, a true and complete
list of all material Trademark Registrations and applications for any material
Trademark owned, held (whether pursuant to a license or otherwise) or used by
such Grantor, in whole or in part, is set forth on Schedule 8 annexed
hereto; as of the Closing Date, a true and complete list of all material
Patents owned, held (whether pursuant to a license or otherwise) or used by
such Grantor, in whole or in part, is set forth on Schedule 9 annexed
hereto; as of the

 5
 

 

Closing Date, a true and
complete list of all material Copyright Registrations and applications for
Copyright Registrations held (whether pursuant to a license or otherwise) by
such Grantor, in whole or in part, is set forth on Schedule 10 annexed
hereto; and after reasonable inquiry, such Grantor is not aware of any pending
or threatened claim by any third party that any of the Intellectual Property
Collateral owned, held or used by such Grantor is invalid or unenforceable
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect.

(h)                                 Deposit Accounts, Security Accounts, Commodity
Accounts.  Schedule 11
annexed hereto lists all Deposit Accounts, Security Accounts and Commodity
Accounts owned by each Grantor as of the Closing Date and indicates the
institution or intermediary at which the account is held and the account
number.

(i)                                     Chattel Paper.  As of the date hereof, such Grantor has no
interest in any Chattel Paper, except as set forth in Schedule 12
annexed hereto.

(j)                                     Letter-of-Credit Rights.  As of the date hereof, such Grantor has no
interest in any Letter-of-Credit Rights, except as set forth on Schedule 13
annexed hereto.

(k)                                  Documents. 
As of the date hereof, no negotiable Documents are outstanding with
respect to any of the Inventory, except as set forth on Schedule 14
annexed hereto.

(l)                                     Assigned Agreements.  As of the date hereof, to the applicable Grantor’s
knowledge, each Assigned Agreement is in full force and effect and is
enforceable against the parties thereto in accordance with its terms.

(m)                               Motor Vehicles. As of the date hereof, such
Grantor owns no motor vehicles.

SECTION 5.                                               Further
Assurances.

(a)                                  Generally. 
Each Grantor agrees that from time to time, at the expense of Grantors,
such Grantor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that Secured Party may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable
Secured Party to exercise and enforce its rights and remedies hereunder with
respect to any Collateral.  Without limiting
the generality of the foregoing, each Grantor will:  (i) (A) notify Secured Party in writing
of receipt by such Grantor of any interest in Chattel Paper (other than Chattel
Paper received by such Grantor in connection with the making of loans (financing
equipment sold) or equipment leases to customers permitted by subsection
7.3(xiv) of the Credit Agreement), (B) at the reasonable request of Secured
Party, notify Secured Party in writing of receipt by such Grantor of any
interest in Chattel Paper received in connection with the making of loans
(financing equipment sold) or equipment leases to customers permitted by
subsection 7.3(xiv) of the Credit Agreement and (C) at the reasonable request
of Secured Party, mark conspicuously each item of Chattel Paper, with a legend,
in form and substance reasonably satisfactory to Secured Party, indicating that
such Chattel Paper is subject to the security interest granted hereby,
(ii) deliver to Secured Party all promissory notes and other

 6
 

 

Instruments with a principal
amount in excess of $100,000 and, at the reasonable request of Secured Party,
all original counterparts of Chattel Paper, duly endorsed and accompanied by
duly executed instruments of transfer or assignment, all in form and substance
satisfactory to Secured Party, (iii) (A) execute (if necessary) and
file such financing or continuation statements, or amendments thereto,
(B) at the reasonable request of Secured Party, execute and deliver, and
cause to be executed and delivered, agreements establishing that Secured Party
has control of electronic Chattel Paper, Deposit Accounts, Investment Property
and Letter-of-Credit Rights of such Grantor and (C) deliver such other
instruments or notices, in each case, as may be necessary or desirable, or as Secured
Party may reasonably request, in order to perfect and preserve the security
interests granted or purported to be granted hereby, (iv) furnish to
Secured Party from time to time statements and schedules further identifying
and describing the Collateral and such other reports in connection with the
Collateral as Secured Party may reasonably request, all in reasonable detail,
(v) promptly after the acquisition by such Grantor of any item of
Equipment with a value in excess of $100,000 that is covered by a certificate
of title under a statute of any jurisdiction under the law of which indication
of a security interest on such certificate is required as a condition of
perfection thereof, execute and file with the registrar of motor vehicles or
other appropriate authority in such jurisdiction an application or other
document requesting the notation or other indication of the security interest
created hereunder on such certificate of title, (vi) within 30 days after
the end of each calendar quarter, deliver to Secured Party copies of all such
applications or other documents filed during such calendar quarter and copies
of all such certificates of title issued during such calendar quarter
indicating the security interest created hereunder in the items of Equipment covered
thereby, (vii) at any reasonable time, upon request and reasonable prior
notice by Secured Party, exhibit the Collateral to and allow inspection of the
Collateral by Secured Party, or persons designated by Secured Party, (viii) at
Secured Party’s reasonable request, appear in and defend any action or
proceeding that may affect such Grantor’s title to or Secured Party’s security
interest in all or any material part of the Collateral, and (ix) at Secured
Party’s reasonable request, use commercially reasonable efforts to obtain any
necessary consents of third parties to the creation and perfection of a
security interest in favor of Secured Party with respect to any
Collateral.  Each Grantor hereby
authorizes Secured Party to file one or more financing or continuation
statements, and amendments thereto, relative to all or any part of the
Collateral (including any financing statement indicating that it covers “all
assets” or “all personal property” of such Grantor) without the signature of
any Grantor.

(b)                                 Securities Collateral.  Without limiting the generality of the
foregoing Section 5(a), each Grantor agrees that (i) all certificates or
Instruments with a principal amount in excess of $100,000 representing or
evidencing the Securities Collateral shall be delivered to and held by or on
behalf of Secured Party pursuant hereto and shall be in suitable form for
transfer by delivery or, as applicable, shall be accompanied by such Grantor’s
endorsement, where necessary, or duly executed instruments of transfer or
assignment in blank, all in form and substance reasonably satisfactory to
Secured Party and (ii) it will, upon obtaining any additional Equity
Interests or Indebtedness, promptly (and in any event within ten Business Days)
deliver to Secured Party a Pledge Supplement, duly executed by such Grantor, in
respect of such additional Pledged Equity or Pledged Debt; provided,
that the failure of any Grantor to execute a Pledge Supplement with respect to
any additional Pledged Equity or Pledged Debt shall not impair the security
interest of Secured Party therein or otherwise adversely affect the rights and
remedies of Secured Party hereunder with respect thereto.  Upon each such acquisition, the
representations and warranties contained in Section 4(f) hereof shall be deemed
to have been made by such

 7
 

 

Grantor as to such
Pledged Equity or Pledged Debt, whether or not such Pledge Supplement is
delivered.

(c)                                  Intellectual Property Collateral.  Without limiting the generality of the
foregoing Section 5(a), if any Grantor shall hereafter obtain rights to any new
Intellectual Property Collateral or become entitled to the benefit of
(i) any Patent or any reissue, division, continuation, renewal, extension
or continuation-in-part of any Patent or any improvement of any Patent or
(ii) any Copyright Registration, application for Copyright Registration or
renewals or extension of any Copyright, then in any such case, the provisions
of this Agreement shall automatically apply thereto.  At least quarterly, within 20 Business Days after
the end of each calendar quarter, each Grantor shall notify Secured Party in
writing of any of the foregoing rights acquired by such Grantor after the date
hereof and of any Trademark Registrations issued or application for a Trademark
Registration made, any Patent issued or application for a Patent made, and any
Copyright Registrations issued or application for Copyright Registration made,
in any such case, after the date hereof. 
At least quarterly, within 20 Business Days after the end of each calendar
quarter, each Grantor shall execute and deliver to Secured Party an IP
Supplement, and submit a Grant for recordation with respect thereto in the PTO
or Copyright Office, as applicable; provided, the failure of any Grantor
to execute an IP Supplement or submit a Grant for recordation with respect to
any additional Intellectual Property Collateral shall not impair the security
interest of Secured Party therein or otherwise adversely affect the rights and
remedies of Secured Party hereunder with respect thereto.  Upon delivery to Secured Party of an IP
Supplement, Schedules 8, 9 and 10 annexed hereto and Schedule A
to each Grant, as applicable, shall be deemed modified to include reference to
any right, title or interest in any existing Intellectual Property Collateral
or any Intellectual Property Collateral set forth on Schedule A to such
IP Supplement.  Upon each such
acquisition, the representations and warranties contained in Section 4(g)
hereof shall be deemed to have been made by such Grantor as to such
Intellectual Property Collateral, whether or not such IP Supplement is
delivered.

(d)                                 Commercial Tort Claims.  Grantors have no Commercial Tort Claims as of
the date hereof, except as set forth on Schedule 1 annexed hereto.  In the event that a Grantor shall at any time
after the date hereof have any Commercial Tort Claims, such Grantor shall
promptly notify Secured Party thereof in writing, which notice shall
(i) set forth in reasonable detail the basis for and nature of such
Commercial Tort Claim and (ii) constitute an amendment to this Agreement
by which such Commercial Tort Claim shall constitute part of the Collateral.

SECTION 6.                                               Certain
Covenants of Grantors.

Each Grantor shall:

(a)                                  not
use or knowingly permit any Collateral to be used unlawfully or in violation of
any provision of this Agreement or any applicable statute, regulation or
ordinance or any policy of insurance covering the Collateral;

(b)                                 give
Secured Party at least 10 days’ prior written notice of (i) any change in
such Grantor’s name, identity or corporate structure and (ii) any
reincorporation, reorganization or other action that results in a change of the
jurisdiction of organization of such Grantor;

 8
 

 

(c)                                  if
Secured Party gives value to enable such Grantor to acquire rights in or the use
of any Collateral, use such value for such purposes;

(d)                                 keep
correct and accurate (in all material respects) Records of Collateral at the
locations described in Schedule 3 annexed hereto;

(e)                                  permit
representatives of Secured Party at any time upon reasonable prior notice
during normal business hours to inspect and make abstracts from such Records,
and each Grantor agrees to render to Secured Party, at Grantor’s cost and
expense, such clerical and other assistance as may be reasonably requested with
regard thereto;

(f)                                    not
permit any Person other than Secured Party or such Grantor to have possession
or control of any Chattel Paper; and

(g)                                 not
enter into any Control Agreement covering any Collateral with any Person unless
such Control Agreement is in favor of Secured Party.

SECTION 7.                                               Special
Covenants With Respect to Equipment and Inventory.

Each Grantor shall:

(a)                                  if
any Inventory is in possession or control of any of such Grantor’s agents or
processors, if the aggregate book value of all such Inventory exceeds $250,000,
and in any event upon the occurrence of an Event of Default and at the written
request of Secured Party, instruct such agent or processor to hold all such
Inventory for the account of Secured Party and subject to the instructions of Secured
Party;

(b)                                 if
any Inventory is located on premises leased by such Grantor, at the written
request of Secured Party, use commercially reasonable efforts to deliver to
Secured Party a fully executed Collateral Access Agreement; and

(c)                                  promptly
upon the issuance and delivery to such Grantor of any negotiable Document with
a value in excess of $100,000, deliver such Document to Secured Party.

SECTION 8.                                               Special
Covenants with respect to Accounts and Assigned Agreements.

(a)                                  Each
Grantor shall, for not less than two years from the date on which each Account
of such Grantor arose, maintain (i) complete Records of such Account,
including records of all payments received, credits granted and merchandise
returned, and (ii) all documentation relating thereto.

(b)                                 Except
as otherwise provided in this subsection (b), each Grantor shall continue to
collect, at its own expense, all amounts due or to become due to such Grantor
under the Accounts.  In connection with
such collections, each Grantor may take (and, at Secured Party’s direction,
shall take) such action as such Grantor or Secured Party may deem necessary or
advisable to enforce collection of amounts due or to become due under the
Accounts; provided, however, that Secured Party shall have the right at
any time, upon the occurrence and during the continuation of an Event of
Default and upon written notice to such Grantor of its

 9
 

 

intention to do so, to
(i) notify the account debtors or obligors under any Accounts of the
assignment of such Accounts to Secured Party and to direct such account debtors
or obligors to make payment of all amounts due or to become due to such Grantor
thereunder directly to Secured Party, (ii) notify each Person maintaining
a lockbox or similar arrangement to which account debtors or obligors under any
Accounts have been directed to make payment to remit all amounts representing
collections on checks and other payment items from time to time sent to or
deposited in such lockbox or other arrangement directly to Secured Party,
(iii) enforce collection of any such Accounts at the expense of Grantors,
and (iv) adjust, settle or compromise the amount or payment thereof, in
the same manner and to the same extent as such Grantor might have done.  After receipt by such Grantor of the notice
from Secured Party referred to in the proviso to the preceding sentence, (A)
all amounts and proceeds (including checks and other Instruments) received by
such Grantor in respect of the Accounts shall be received for the benefit of
Secured Party hereunder, shall be segregated from other funds of such Grantor
and shall be forthwith paid over or delivered to Secured Party in the same form
as so received (with any necessary endorsement) to be held as cash Collateral
and applied as provided by Section 17 hereof, and (B) such Grantor shall not,
without the written consent of Secured Party, adjust, settle or compromise the
amount or payment of any Account, or release wholly or partly any account
debtor or obligor thereof, or allow any credit or discount thereon except to
the extent not prohibited by the terms of the Credit Agreement.

(c)                                  Each
Grantor shall at its expense:

(i)                                     if
consistent with sound business practices, perform and observe all terms and
provisions of the Assigned Agreements to be performed or observed by it,
maintain the Assigned Agreements in full force and effect, enforce the Assigned
Agreements in accordance with their terms, and take all such action to such end
as may be from time to time requested by Secured Party; and

(ii)                                  upon
request of Secured Party, (A) furnish to Secured Party, promptly upon
receipt thereof, copies of all notices, requests and other documents received
by such Grantor under or pursuant to the Assigned Agreements and from time to
time such information and reports regarding the Assigned Agreements as Secured
Party may reasonably request and (B) make to the parties to such Assigned
Agreements such demands and requests for information and reports or for action
as such Grantor is entitled to make under the Assigned Agreements.

(d)                                 Upon
the occurrence and during the continuance of an Event of Default, no Grantor
shall (i) cancel or terminate any of the Assigned Agreements or consent to
or accept any cancellation or termination thereof; (ii) amend or otherwise
modify the Assigned Agreements or give any consent, waiver or approval
thereunder that could reasonably be expected to materially impair the interest
or rights of Secured Party; (iii) waive any default under or breach of the
Assigned Agreements; (iv) consent to or permit or accept any prepayment of
amounts to become due under or in connection with the Assigned Agreements,
except as expressly provided therein; or (v) take any other action in
connection with the Assigned Agreements that could reasonably be expected to
materially impair the value of the interest or rights of such Grantor
thereunder or that could reasonably be expected to materially impair the
interest or rights of Secured Party.

 10

 

SECTION 9.                                               Special
Covenants With Respect to the Securities Collateral.

(a)                                  Form of Securities Collateral.  Secured Party shall have the right at any
time to exchange certificates or instruments representing or evidencing
Securities Collateral for certificates or instruments of smaller or larger
denominations.  If any Securities
Collateral is not a security pursuant to Section 8-103 of the UCC, no Grantor
shall take any action that, under such Section, converts such Securities
Collateral into a security without causing the issuer thereof to issue to it
certificates or instruments evidencing such Securities Collateral, which it
shall promptly deliver to Secured Party as provided in this Section 9(a).

(b)                                 Covenants. 
Each Grantor shall (i) not, except as expressly permitted by the
Credit Agreement, permit any issuer of Pledged Subsidiary Equity to merge or
consolidate unless all the outstanding Equity Interests of the surviving or
resulting Person are, upon such merger or consolidation, pledged hereunder and no
cash, securities or other property is distributed in respect of the outstanding
Equity Interests of any other constituent corporation; provided that, if
the surviving or resulting Person upon any such merger or consolidation is a
controlled foreign corporation, then such Grantor shall only be required to
pledge outstanding Equity Interests of such surviving or resulting Person
possessing up to but not exceeding 66% of the voting power of all classes of
Equity Interests of such issuer entitled to vote; (ii) cause each issuer
of Pledged Subsidiary Equity not to issue Equity Interests in addition to or in
substitution for the Pledged Subsidiary Equity issued by such issuer, except to
such Grantor; (iii) immediately upon its acquisition (directly or
indirectly) of any Equity Interests, including additional Equity Interests in
each issuer of Pledged Equity, comply with Section 5(b); provided that,
notwithstanding anything contained in this clause (iii) to the contrary, such
Grantor shall only be required to pledge the outstanding Equity Interests of a
controlled foreign corporation possessing up to but not exceeding 66% of the
voting power of all classes of capital stock of such controlled foreign
corporation entitled to vote; (iv) immediately upon issuance of any and
all Instruments or other evidences of additional Indebtedness from time to time
owed to such Grantor by any obligor on the Pledged Debt, comply with Sections
5(a) and (b); (v) promptly deliver to Secured Party all written notices
received by it with respect to the Securities Collateral; (vi) at its
expense (A) perform and comply in all material respects with all terms and
provisions of any agreement related to the Securities Collateral required to be
performed or complied with by it, (B) maintain all such agreements in full
force and effect and (C) enforce all such agreements in accordance with their
terms; and (vii), at the request of Secured Party, promptly execute and deliver
to Secured Party an agreement providing for control by Secured Party of all
Securities Entitlements, Securities Accounts, Commodity Contracts and Commodity
Accounts of such Grantor.

(c)                                  Voting and Distributions.  So long as no Event of Default shall have
occurred and be continuing, (i) each Grantor shall be entitled to exercise
any and all voting and other consensual rights pertaining to the Securities
Collateral or any part thereof for any purpose not prohibited by the terms of
this Agreement or the Credit Agreement; provided, no Grantor shall
exercise or refrain from exercising any such right if Secured Party shall have
notified such Grantor that, in Secured Party’s reasonable judgment, such action
would have a material adverse effect on the value of the Securities Collateral
or any part thereof; and (ii) each Grantor shall be entitled to receive
and retain any and all dividends, other distributions and interest paid in
respect of the Securities Collateral.

 11
 

 

Upon the occurrence and during the continuation of an
Event of Default, (x) upon written notice from Secured Party to any Grantor,
all rights of such Grantor to exercise the voting and other consensual rights
which it would otherwise be entitled to exercise pursuant hereto shall cease,
and all such rights shall thereupon become vested in Secured Party who shall
thereupon have the sole right to exercise such voting and other consensual
rights; (y) except as otherwise specified in the Credit Agreement, all rights
of such Grantor to receive the dividends, other distributions, principal and
interest payments which it would otherwise be authorized to receive and retain
pursuant hereto shall cease, and all such rights shall thereupon become vested
in Secured Party who shall thereupon have the sole right to receive and hold as
Collateral such dividends, other distributions and interest payments; and (z)
all dividends, principal, interest payments and other distributions which are
received by such Grantor contrary to the provisions of clause (y) above shall
be received for the benefit of Secured Party, shall be segregated from other
funds of such Grantor and shall forthwith be paid over to Secured Party as
Collateral in the same form as so received (with any necessary endorsements).

In order to permit Secured Party to exercise the
voting and other consensual rights which it may be entitled to exercise
pursuant hereto and to receive all dividends and other distributions which it
may be entitled to receive hereunder, (I) each Grantor shall promptly execute
and deliver (or cause to be executed and delivered) to Secured Party all such
proxies, dividend payment orders and other instruments as Secured Party may
from time to time reasonably request, and (II) without limiting the effect of
clause (I) above, each Grantor hereby grants to Secured Party an irrevocable
proxy to vote the Pledged Equity and to exercise all other rights, powers,
privileges and remedies to which a holder of the Pledged Equity would be
entitled (including giving or withholding written consents of holders of Equity
Interests, calling special meetings of holders of Equity Interests and voting
at such meetings), which proxy shall be effective, automatically and without
the necessity of any action (including any transfer of any Pledged Equity on
the record books of the issuer thereof) by any other Person (including the
issuer of the Pledged Equity or any officer or agent thereof), upon the
occurrence of an Event of Default and which proxy shall only terminate upon the
payment in full of the Secured Obligations, the cure of such Event of Default
or waiver thereof as evidenced by a writing executed by Secured Party.

SECTION
10.                                             Special
Covenants With Respect to the Intellectual Property Collateral.

(a)                                  Each
Grantor shall:

(i)                                     use
commercially reasonable efforts so as not to permit the inclusion in any
contract to which it hereafter becomes a party of any provision that could
reasonably be expected to impair or prevent the creation of a security interest
in, or the assignment of, such Grantor’s rights and interests in any property
included within the definitions of any Intellectual Property Collateral
acquired under such contracts;

(ii)                                  use
commercially reasonable efforts to protect the secrecy of all trade secrets
that constitute Intellectual Property Collateral, including, without
limitation, where appropriate entering into confidentiality agreements with
employees and labeling and restricting access to secret information and
documents;

 12
 

 

(iii)                               use
proper statutory notice in connection with its use of any of the Intellectual
Property Collateral and products and services covered by the Intellectual
Property Collateral; and

(iv)                              use
a commercially appropriate standard of quality (which may be consistent with
such Grantor’s past practices) in the manufacture, sale and delivery of
products and services sold or delivered under or in connection with the
Trademarks.

(b)                                 Except
as otherwise provided in this Section 10, each Grantor shall continue to
collect, at its own expense, all amounts due or to become due to such Grantor
in respect of the Intellectual Property Collateral or any portion thereof.  In connection with such collections, each
Grantor may take such action as such Grantor may reasonably deem necessary or
advisable to enforce collection of such amounts; provided, Secured Party shall
have the right at any time, upon the occurrence and during the continuation of
an Event of Default and upon written notice to such Grantor of its intention to
do so, to notify the obligors with respect to any such amounts of the existence
of the security interest created hereby and to direct such obligors to make
payment of all such amounts directly to Secured Party, and, upon such
notification and at the expense of such Grantor, to enforce collection of any
such amounts and to adjust, settle or compromise the amount or payment thereof,
in the same manner and to the same extent as such Grantor might have done.  After receipt by any Grantor of the notice
from Secured Party referred to in the proviso to the preceding sentence and
upon the occurrence and during the continuance of any Event of Default,
(i) all amounts and proceeds (including checks and Instruments) received
by each Grantor in respect of amounts due to such Grantor in respect of the
Intellectual Property Collateral or any portion thereof shall be received for
the benefit of Secured Party hereunder, shall be segregated from other funds of
such Grantor and shall be forthwith paid over or delivered to Secured Party in
the same form as so received (with any necessary endorsement) to be held as
cash Collateral and applied as provided by Section 17 hereof, and
(ii) such Grantor shall not adjust, settle or compromise the amount or
payment of any such amount or release wholly or partly any obligor with respect
thereto or allow any credit or discount thereon.

(c)                                  Each
Grantor shall have the duty diligently, through counsel reasonably acceptable
to such Grantor and Secured Party, to prosecute, file and/or make, unless and
until such Grantor, in its commercially reasonable judgment, decides otherwise,
(i) any application for registration relating to any of the Intellectual
Property Collateral owned, held or used by such Grantor and set forth on Schedules
8, 9 or 10 annexed hereto, as applicable, that is pending as
of the date of this Agreement, (ii) any Copyright Registration on any
existing or future unregistered but copyrightable works (except for works of
nominal commercial value or with respect to which such Grantor has determined
in the exercise of its commercially reasonable judgment that it shall not seek
registration), (iii) any application on any future patentable but
unpatented innovation or invention comprising Intellectual Property Collateral,
and (iv) any Trademark opposition and cancellation proceedings, renew
Trademark Registrations and Copyright Registrations and do any and all acts
which are necessary or desirable to preserve and maintain all rights in all
Intellectual Property Collateral.  Any
expenses incurred in connection therewith shall be borne solely by Grantors.

(d)                                 Except
as provided herein, each Grantor shall have the right to commence and prosecute
in its own name, as real party in interest, for its own benefit and at its own

 13
 

 

expense, such suits,
proceedings or other actions for infringement, unfair competition, dilution,
misappropriation or other damage, or reexamination or reissue proceedings as
are necessary to protect the Intellectual Property Collateral.  Each Grantor shall promptly, following its
becoming aware thereof, notify Secured Party of the institution of, or of any
adverse determination in, any proceeding (whether in the PTO, the Copyright
Office or any federal, state, local or foreign court) or regarding such Grantor’s
ownership, right to use, or interest in any Intellectual Property Collateral
material to such Grantor’s business. 
Each Grantor shall provide to Secured Party any information with respect
thereto reasonably requested by Secured Party and of which such Grantor has
knowledge.

(e)                                  In
addition to, and not by way of limitation of, the granting of a security
interest in the Collateral pursuant hereto, each Grantor, effective upon the
occurrence and during the continuance of an Event of Default, hereby grants to
Secured Party the nonexclusive right and license to use all Trademarks,
tradenames, Copyrights, Patents or technical processes included within the
Intellectual Property Collateral owned or used by such Grantor that relate to
the Collateral, together with any goodwill associated therewith, all to the
extent necessary to enable Secured Party to realize on the Collateral in
accordance with this Agreement and to enable any transferee or assignee of the
Collateral to enjoy the benefits of the Collateral.  This right shall inure to the benefit of all
successors, assigns and transferees of Secured Party and its successors,
assigns and transferees, whether by voluntary conveyance, operation of law,
assignment, transfer, foreclosure, deed in lieu of foreclosure or
otherwise.  Such right and license shall
be granted free of charge, without requirement that any monetary payment
whatsoever be made to such Grantor.  If
and to the extent that any Grantor is permitted to license the Intellectual
Property Collateral, Secured Party shall promptly enter into a non-disturbance
agreement or other similar arrangement, at such Grantor’s request and expense,
with such Grantor and any licensee of any Intellectual Property Collateral
permitted hereunder in form and substance reasonably satisfactory to such
licensee, such Grantor and Secured Party pursuant to which (i) Secured
Party shall agree not to disturb or interfere with such licensee’s rights under
its license agreement with such Grantor so long as such licensee is not in
default thereunder, and (ii) such licensee shall acknowledge and agree
that the Intellectual Property Collateral licensed to it is subject to the
security interest created in favor of Secured Party and the other terms of this
Agreement.

(f)                                    The
parties hereto acknowledge and agree that, subject to the other terms and
provisions of this Agreement and of the Credit Agreement, including Secured
Party’s rights upon the occurrence and during the continuance of an Event of
Default, the grant of a security interest in each Grantor’s Intellectual
Property contained herein shall not diminish such Grantor’s exclusive right and
license to use, or grant to other Persons licenses or sublicenses in, such
Intellectual Property, except to the extent such actions by any Grantor would
inhibit or prevent Secured Party from enforcing its rights hereunder or under
the Credit Agreement.

SECTION 11.                                        Collateral
Account.

Secured Party is hereby authorized to establish and
maintain as a blocked account under the sole dominion and control of Secured
Party, a restricted Deposit Account designated as “FTD, Inc. Collateral Account”
(the “Collateral Account”).  All amounts
at any time held in the Collateral Account shall be beneficially owned by
Grantors but shall be held in the name of

 14
 

 

Secured Party hereunder,
for the benefit of Beneficiaries, as collateral security for the Secured
Obligations upon the terms and conditions set forth herein.  Grantors shall have no right to withdraw,
transfer or, except as expressly set forth herein, otherwise receive any funds
deposited into the Collateral Account. 
Notwithstanding the foregoing, amounts deposited by Company into the
Collateral Account pursuant to subsection 3.3E of the Credit Agreement shall be
released to Company upon satisfaction of the conditions specified in such
subsection.  Anything contained herein to
the contrary notwithstanding, the Collateral Account shall be subject to such
applicable laws, and such applicable regulations of the Board of Governors of
the Federal Reserve System and of any other appropriate banking or Government
Authority, as may now or hereafter be in effect.  All deposits of funds in the Collateral
Account shall be made by wire transfer (or, if applicable, by intra-bank
transfer from another account of a Grantor) of immediately available funds, in
each case addressed in accordance with instructions of Secured Party.  Each Grantor shall, promptly after initiating
a transfer of funds to the Collateral Account, give notice to Secured Party by
telefacsimile of the date, amount and method of delivery of such deposit.  Cash held by Secured Party in the Collateral
Account shall not be invested by Secured Party but instead shall be maintained
as a cash deposit in the Collateral Account pending application thereof as
elsewhere provided in this Agreement.  To
the extent permitted under Regulation Q of the Board of Governors of the
Federal Reserve System, any cash held in the Collateral Account shall bear
interest at the standard rate paid by Secured Party to its customers for
deposits of like amounts and terms. 
Subject to Secured Party’s rights hereunder, any interest earned on
deposits of cash in the Collateral Account shall be deposited directly in, and
held in the Collateral Account.

SECTION 12.                                        Secured
Party Appointed Attorney-in-Fact.

Each Grantor hereby irrevocably appoints Secured Party
as such Grantor’s attorney-in-fact, with full authority in the place and stead
of such Grantor and in the name of such Grantor, Secured Party or otherwise,
from time to time in Secured Party’s discretion to take any action and to
execute any instrument that Secured Party may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation:

(a)                                  upon
the occurrence and during the continuance of an Event of Default, to obtain and
adjust insurance required to be maintained by such Grantor or paid to Secured
Party pursuant to the Credit Agreement;

(b)                                 upon
the occurrence and during the continuance of an Event of Default, to ask for,
demand, collect, sue for, recover, compound, receive and give acquittance and
receipts for moneys due and to become due under or in respect of any of the
Collateral;

(c)                                  upon
the occurrence and during the continuance of an Event of Default, to receive,
endorse and collect any drafts or other Instruments, Documents, Chattel Paper
and other documents in connection with clauses (a) and (b) above;

(d)                                 upon
the occurrence and during the continuance of an Event of Default, to file any
claims or take any action or institute any proceedings that Secured Party may
deem necessary or desirable for the collection of any of the Collateral or
otherwise to enforce or protect the rights of Secured Party with respect to any
of the Collateral;

 15
 

 

(e)                                  to
pay or discharge taxes or Liens (other than taxes not required to be discharged
pursuant to the Credit Agreement and Liens permitted under this Agreement or
the Credit Agreement) levied or placed upon or threatened against the
Collateral, the legality or validity thereof and the amounts necessary to
discharge the same to be determined by Secured Party in its sole discretion,
any such payments made by Secured Party to become obligations of such Grantor
to Secured Party, due and payable immediately without demand;

(f)                                    upon
the occurrence and during the continuance of an Event of Default, to sign and
endorse any invoices, freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments, verifications and
notices in connection with Accounts and other documents relating to the
Collateral; and

(g)                                 upon
the occurrence and during the continuance of an Event of Default, generally to
sell, transfer, pledge, make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though Secured Party were
the absolute owner thereof for all purposes, and to do, at Secured Party’s
option and Grantors’ expense, at any time or from time to time, all acts and
things that Secured Party deems necessary to protect, preserve or realize upon
the Collateral and Secured Party’s security interest therein in order to effect
the intent of this Agreement, all as fully and effectively as such Grantor
might do.

SECTION 13.                                        Secured
Party May Perform.

If any Grantor fails to perform any agreement
contained herein, Secured Party may itself perform, or cause performance of,
such agreement, and the expenses of Secured Party incurred in connection
therewith shall be payable by Grantors under Section 18(b) hereof.

SECTION 14.                                        Standard
of Care.

The powers conferred on Secured Party hereunder are
solely to protect its interest in the Collateral and shall not impose any duty
upon it to exercise any such powers. 
Except for the exercise of reasonable care in the custody of any
Collateral in its possession and the accounting for moneys actually received by
it hereunder, Secured Party shall have no duty as to any Collateral or as to
the taking of any necessary steps to preserve rights against prior parties or
any other rights pertaining to any Collateral. 
Secured Party shall be deemed to have exercised reasonable care in the
custody and preservation of Collateral in its possession if such Collateral is
accorded treatment substantially equal to that which Secured Party accords its
own property.

SECTION 15.                                        Remedies.

(a)                                  Generally. 
If any Event of Default shall have occurred and be continuing, Secured
Party may, subject to Section 20 hereof, 
exercise in respect of the Collateral, in addition to all other rights
and remedies provided for herein or otherwise available to it, all the rights
and remedies of a secured party on default under the UCC (whether or not the
UCC applies to the affected Collateral), and also may (i) require each Grantor
to, and each Grantor hereby agrees that it will at its expense and upon request
of Secured Party forthwith, assemble all or part of the Collateral as directed
by Secured Party and make it available to Secured Party at a place to be
designated by Secured Party that is reasonably convenient to both parties,
(ii) enter onto the property where any Collateral is located and take
possession thereof with or without judicial

 16
 

 

process, (iii) prior
to the disposition of the Collateral, store, process, repair or recondition the
Collateral or otherwise prepare the Collateral for disposition in any manner to
the extent Secured Party deems appropriate, (iv) take possession of any
Grantor’s premises or place custodians in exclusive control thereof, remain on
such premises and use the same and any of such Grantor’s equipment for the
purpose of completing any work in process, taking any actions described in the
preceding clause (iii) and collecting any Secured Obligation, (v) without
notice except as specified below, sell the Collateral or any part thereof in
one or more parcels at public or private sale, at any of Secured Party’s
offices or elsewhere, for cash, on credit or for future delivery, at such time
or times and at such price or prices and upon such other terms as Secured Party
may deem commercially reasonable, (vi) exercise dominion and control over
and refuse to permit further withdrawals from any Deposit Account maintained
with Secured Party or any Lender and provide instructions directing the
disposition of funds in Deposit Accounts not maintained with Secured Party or
any Lender and (vii) provide entitlement orders with respect to Security
Entitlements and other Investment Property constituting a part of the
Collateral and, without notice to any Grantor, transfer to or register in the
name of Secured Party or any of its nominees any or all of the Securities
Collateral.  To the extent permitted by
law, Secured Party or any Lender or Swap Counterparty may be the purchaser of
any or all of the Collateral at any such sale and Secured Party, as agent for
and representative of Lenders and Swap Counterparties (but not any Lender or
Swap Counterparty in its individual capacity unless Requisite Obligees shall
otherwise agree in writing), shall be entitled, for the purpose of bidding and
making settlement or payment of the purchase price for all or any portion of
the Collateral sold at any such public sale, to use and apply any of the
Secured Obligations as a credit on account of the purchase price for any
Collateral payable by Secured Party at such sale.  Each purchaser at any such sale shall hold
the property sold absolutely free from any claim or right on the part of any
Grantor, and each Grantor hereby waives (to the extent permitted by applicable
law) all rights of redemption, stay and/or appraisal which it now has or may at
any time in the future have under any rule of law or statute now existing or
hereafter enacted.  Each Grantor agrees
that, to the extent notice of sale shall be required by law, at least ten days’
notice to such Grantor of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification.  Secured Party shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given.  Secured Party may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned. 
Each Grantor hereby waives any claims against Secured Party arising by
reason of the fact that the price at which any Collateral may have been sold at
such a private sale was less than the price which might have been obtained at a
public sale, even if Secured Party accepts the first offer received and does
not offer such Collateral to more than one offeree.  If the proceeds of any sale or other
disposition of the Collateral are insufficient to pay all the Secured
Obligations, Grantors shall be jointly and severally liable for the deficiency
and the fees of any attorneys employed by Secured Party to collect such
deficiency.  Each Grantor further agrees
that a breach of any of the covenants contained in this Section 15 will cause
irreparable injury to Secured Party, that Secured Party has no adequate remedy
at law in respect of such breach and, as a consequence, that each and every
covenant contained in this Section shall be specifically enforceable against
such Grantor, and each Grantor hereby waives and agrees not to assert any
defenses against an action for specific performance of such covenants except
for a defense that no default has occurred giving rise to the Secured
Obligations becoming due and payable prior to their stated maturities.

 17

 

(b)                                 Securities Collateral.  Each Grantor recognizes that, by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws, Secured Party may be compelled, with respect to any sale of
all or any part of the Securities Collateral conducted without prior
registration or qualification of such Securities Collateral under the
Securities Act and/or such state securities laws, to limit purchasers to those
who will agree, among other things, to acquire the Securities Collateral for
their own account, for investment and not with a view to the distribution or
resale thereof.  Each Grantor
acknowledges that any such private placement may be at prices and on terms less
favorable than those obtainable through a sale without such restrictions
(including an offering made pursuant to a registration statement under the
Securities Act) and, notwithstanding such circumstances, each Grantor agrees
that any such private placement shall not be deemed, in and of itself, to be
commercially unreasonable and that Secured Party shall have no obligation to
delay the sale of any Securities Collateral for the period of time necessary to
permit the issuer thereof to register it for a form of sale requiring
registration under the Securities Act or under applicable state securities
laws, even if such issuer would, or should, agree to so register it.  If Secured Party determines to exercise its
right to sell any or all of the Securities Collateral, upon written request,
each Grantor shall and shall cause each issuer of any Securities Collateral to
be sold hereunder from time to time to furnish to Secured Party all such
information as Secured Party may request in order to determine the amount of
Securities Collateral which may be sold by Secured Party in exempt transactions
under the Securities Act and the rules and regulations of the Securities and
Exchange Commission thereunder, as the same are from time to time in effect.

(c)                                  Collateral Account.  If an Event of Default has occurred and is
continuing and, in accordance with Section 8 of the Credit Agreement, Company
is required to pay to Secured Party an amount (the “Aggregate Available Amount”) equal to the maximum amount that
may at any time be drawn under all Letters of Credit then outstanding under the
Credit Agreement, Company shall deliver funds in such an amount for deposit in
the Collateral Account.  In the event a
Letter of Credit is denominated in a currency other than Dollars, the portion
of the Aggregate Available Amount related to such Letter of Credit shall be
calculated based upon the applicable Exchange Rate for such currency as of the
applicable date of determination.  If for
any reason the aggregate amount delivered by Company for deposit in the
Collateral Account as aforesaid is less than the Aggregate Available Amount,
the aggregate amount so delivered by Company shall be apportioned among all
outstanding Letters of Credit for purposes of this Section in accordance with
the ratio of the maximum amount available for drawing under each such Letter of
Credit (as to such Letter of Credit, the “Maximum
Available Amount”) to the Aggregate Available Amount.  Upon any drawing under any outstanding Letter
of Credit in respect of which Company has deposited in the Collateral Account
an amount described above, Secured Party shall apply the amount apportioned to
such Letter of Credit to reimburse the Issuing Lender for the amount of such
drawing.  In the event of cancellation or
expiration of any Letter of Credit in respect of which Company has deposited in
the Collateral Account any amounts described above, or in the event of any
reduction in the Maximum Available Amount under such Letter of Credit, Secured
Party shall apply the amount then on deposit in the Collateral Account in
respect of such Letter of Credit (less, in the case of such a reduction, the
Maximum Available Amount under such Letter of Credit immediately after such
reduction) first, to the payment of any amounts payable to Secured Party
pursuant to Section 17 hereof, second, to the extent of any excess, to the cash
collateralization pursuant to the terms of this Agreement of any outstanding
Letters of Credit in respect of which Company has failed to

 18
 

 

pay all or a portion of
the amounts described above (such cash collateralization to be apportioned
among all such Letters of Credit in the manner described above), third, to the
extent of any further excess, to the payment of any other outstanding Secured
Obligations in such order as Secured Party shall elect, and fourth, to the
extent of any further excess, to the payment to whomsoever shall be lawfully
entitled to receive such funds.

SECTION 16.                                        Additional
Remedies for Intellectual Property Collateral.

(a)                                  Anything
contained herein to the contrary notwithstanding, upon the occurrence and
during the continuation of an Event of Default, (i) Secured Party shall
have the right (but not the obligation) to bring suit, in the name of any
Grantor, Secured Party or otherwise, to enforce any Intellectual Property
Collateral, in which event each Grantor shall, at the reasonable request of
Secured Party, do any and all lawful acts and execute any and all documents
required by Secured Party in aid of such enforcement and each Grantor shall
promptly, upon demand, reimburse and indemnify Secured Party as provided in
subsections 10.2 and 10.3 of the Credit Agreement and Section 18 hereof, as
applicable, in connection with the exercise of its rights under this Section
16, and, to the extent that Secured Party shall elect not to bring suit to
enforce any such Intellectual Property Collateral as provided in this Section,
each Grantor agrees to use all reasonable measures, whether by action, suit,
proceeding or otherwise, which, in such Grantor’s reasonable judgment are
necessary to prevent the infringement of any of the Intellectual Property
Collateral material to such Grantor’s business by others and for that purpose
agrees to use its commercially reasonable judgment in maintaining any action,
suit or proceeding against any Person so infringing reasonably necessary to prevent
such infringement; (ii) upon written demand from Secured Party, each
Grantor shall execute and deliver to Secured Party an assignment or assignments
of the Intellectual Property Collateral and such other documents as are
necessary or appropriate to carry out the intent and purposes of this
Agreement; (iii) each Grantor agrees that such an assignment and/or
recording shall be applied to reduce the Secured Obligations outstanding only
to the extent that Secured Party (or any Lender) receives cash proceeds in
respect of the sale of, or other realization upon, the Intellectual Property
Collateral; and (iv) within five Business Days after written notice from
Secured Party, each Grantor shall make available to Secured Party, to the
extent within such Grantor’s power and authority, such personnel in such
Grantor’s employ as Secured Party may reasonably designate, by name, title or
job responsibility, to permit such Grantor to continue, directly or indirectly,
to produce, advertise and sell the products and services sold or delivered by
such Grantor under or in connection with the Trademarks, Trademark
Registrations and Trademark Rights, such persons to be available to perform
their prior functions on Secured Party’s behalf and to be compensated by
Secured Party at such Grantor’s expense on a per diem, pro-rata basis
consistent with the salary and benefit structure applicable to each as of the
date of such Event of Default.

(b)                                 If
(i) an Event of Default shall have occurred and, by reason of cure,
waiver, modification, amendment or otherwise, no longer be continuing,
(ii) no other Event of Default shall have occurred and be continuing,
(iii) an assignment to Secured Party of any rights, title and interests in
and to the Intellectual Property Collateral shall have been previously made,
and (iv) the Secured Obligations shall not have become immediately due and
payable, upon the written request of any Grantor, Secured Party shall promptly
execute and deliver to such Grantor such assignments as may be necessary to reassign
to such Grantor any such rights, title and

 19
 

 

interests as may have
been assigned to Secured Party as aforesaid, subject to any disposition thereof
that may have been made by Secured Party; provided, after giving effect to such
reassignment, Secured Party’s security interest granted pursuant hereto, as
well as all other rights and remedies of Secured Party granted hereunder, shall
continue to be in full force and effect; and provided further, the rights,
title and interests so reassigned shall be free and clear of all Liens other
than Liens (if any) encumbering such rights, title and interest at the time of
their assignment to Secured Party and Permitted Encumbrances.

SECTION 17.                                        Application
of Proceeds.

Except as expressly provided elsewhere in this Agreement,
all proceeds received by Secured Party in respect of any sale of, collection
from, or other realization upon all or any part of the Collateral shall be
applied as provided in the Credit Agreement.

SECTION 18.                                        Indemnity
and Expenses.

(a)                                  Grantors
jointly and severally agree to indemnify Secured Party, each Lender and each
Swap Counterparty from and against any and all claims, losses and liabilities
in any way relating to, growing out of or resulting from this Agreement and the
transactions contemplated hereby (including, without limitation, enforcement of
this Agreement), except to the extent such claims, losses or liabilities result
solely from Secured Party’s or such Lender’s or Swap Counterparty’s gross
negligence or willful misconduct as finally determined by a court of competent
jurisdiction.

(b)                                 Grantors
jointly and severally agree to pay to Secured Party upon demand the amount of
any and all costs and expenses in accordance with subsection 10.2 of the Credit
Agreement.

(c)                                  The
obligations of Grantors in this Section 18 shall (i) survive the termination of
this Agreement and the discharge of Grantors’ other obligations under this
Agreement, the Lender Swap Agreements, the Credit Agreement and the other Loan
Documents and (ii), as to any Grantor that is a party to a Guaranty, be subject
to the provisions of Section 1(b) thereof.

SECTION 19.                                        Continuing
Security Interest; Transfer of Loans; Termination and Release.

(a)                                  This
Agreement shall create a continuing security interest in the Collateral and shall
(i) remain in full force and effect until the payment in full of the
Secured Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit (or the
collateralization thereof with cash or a letter of credit), (ii) be
binding upon Grantors and their respective successors and assigns, and
(iii) inure, together with the rights and remedies of Secured Party
hereunder, to the benefit of Secured Party, each of the Lenders and the Swap
Counterparties and its successors, transferees and assigns.  Without limiting the generality of the
foregoing clause (iii), (A) but subject to the provisions of subsection 10.1 of
the Credit Agreement, any Lender may assign or otherwise transfer any Loans held
by it to any other Person, and such other Person shall thereupon become vested
with all the benefits in respect thereof granted to Lenders herein or otherwise
and (B) any Swap

 20
 

 

Counterparty may assign
or otherwise transfer any Lender Swap Agreement to which it is a party to any
other Person in accordance with the terms of such Lender Swap Agreement, and
such other Person shall thereupon become vested with all the benefits in
respect thereof granted to Swap Counterparties herein or otherwise.

(b)                                 Upon
the payment in full of all Secured Obligations (other than contingent
obligations as to which no claim has been made), the cancellation or
termination of the Commitments and the cancellation or expiration of all
outstanding Letters of Credit (or the collateralization thereof with cash or a
letter of credit), the security interest granted hereby (other than with
respect to any cash collateral in respect of Letters of Credit) shall terminate
and all rights to the Collateral shall revert to the applicable Grantors.  Upon any such termination Secured Party will,
at Grantors’ expense, execute and deliver to Grantors such documents as
Grantors shall reasonably request to evidence such termination.  In addition, upon the proposed sale or other
disposition of any Collateral by a Grantor in accordance with, or not
prohibited by, the Credit Agreement for which such Grantor desires a security
interest release from Secured Party, such a release may be obtained pursuant to
the provisions of subsection 10.14 of the Credit Agreement.

SECTION 20.                                        Secured
Party as Agent.

(a)                                  Secured
Party has been appointed to act as Secured Party hereunder by Lenders and, by
their acceptance of the benefits hereof, Swap Counterparties.  Secured Party shall be obligated, and shall
have the right hereunder, to make demands, to give notices, to exercise or
refrain from exercising any rights, and to take or refrain from taking any
action (including, without limitation, the release or substitution of
Collateral), solely in accordance with this Agreement and the Credit Agreement;
provided that Secured Party shall exercise, or refrain from exercising, any
remedies provided for in Section 15 hereof in accordance with the instructions
of Requisite Obligees.  In furtherance of
the foregoing provisions of this Section 20(a), each Swap Counterparty, by its
acceptance of the benefits hereof, agrees that it shall have no right
individually to realize upon any of the Collateral hereunder, it being
understood and agreed by such Swap Counterparty that all rights and remedies
hereunder may be exercised solely by Secured Party for the benefit of Lenders
and Swap Counterparties in accordance with the terms of this Section 20(a).

(b)                                 Secured
Party shall at all times be the same Person that is Administrative Agent under
the Credit Agreement.  Written notice of
resignation by Administrative Agent pursuant to subsection 9.5 of the Credit
Agreement shall also constitute notice of resignation as Secured Party under
this Agreement; and appointment of a successor Administrative Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute appointment of a
successor Secured Party under this Agreement. 
Upon the acceptance of any appointment as Administrative Agent under
subsection 9.5 of the Credit Agreement by a successor Administrative Agent,
that successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Secured Party under this Agreement, and the retiring Secured Party under this
Agreement shall promptly (i) transfer to such successor Secured Party all
sums, securities and other items of Collateral held hereunder, together with
all records and other documents necessary or appropriate in connection with the
performance of the duties of the successor Secured Party under this Agreement,
and

 21
 

 

(ii) execute (if
necessary) and deliver to such successor Secured Party such amendments to
financing statements, and take such other actions, as may be necessary or
appropriate in connection with the assignment to such successor Secured Party
of the security interests created hereunder, whereupon such retiring Secured
Party shall be discharged from its duties and obligations under this
Agreement.  After any retiring
Administrative Agent’s resignation hereunder as Secured Party, the provisions
of this Agreement shall inure to its benefit as to any actions taken or omitted
to be taken by it under this Agreement while it was Secured Party hereunder.

(c)                                  Secured
Party shall not be deemed to have any duty whatsoever with respect to any Swap
Counterparty until it shall have received written notice in form and substance
satisfactory to Secured Party from a Grantor or the Swap Counterparty as to the
existence and terms of the applicable Lender Swap Agreement.

SECTION 21.                                        Additional
Grantors.

The initial Grantors hereunder shall be Company,
Holdings and such of the Subsidiaries of Company as are signatories hereto on
the date hereof.  From time to time
subsequent to the date hereof, additional Subsidiaries of Company may become
Additional Grantors, by executing a Counterpart.  Upon delivery of any such Counterpart to
Secured Party, notice of which is hereby waived by Grantors, each such
Additional Grantor shall be a Grantor and shall be as fully a party hereto as
if such Additional Grantor were an original signatory hereto.  Each Grantor expressly agrees that its
obligations arising hereunder shall not be affected or diminished by the
addition or release of any other Grantor hereunder, nor by any election of Secured
Party not to cause any Subsidiary of Company to become an Additional Grantor
hereunder.  This Agreement shall be fully
effective as to any Grantor that is or becomes a party hereto regardless of
whether any other Person becomes or fails to become or ceases to be a Grantor
hereunder.

SECTION 22.                                        Amendments;
Etc.

No amendment, modification, termination or waiver of
any provision of this Agreement, and no consent to any departure by any Grantor
therefrom, shall in any event be effective unless the same shall be in writing
and signed by Secured Party and, in the case of any such amendment or
modification, by Grantors; provided this Agreement may be modified by
the execution of a Counterpart by an Additional Grantor in accordance with
Section 21 hereof and Grantors hereby waive any requirement of notice of or
consent to any such amendment.  Any such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which it was given.

SECTION 23.                                        Notices.

Any notice or other communication herein required or
permitted to be given shall be in writing and may be personally served or sent
by telefacsimile or United States mail or courier service and shall be deemed
to have been given when delivered in person or by courier service, upon receipt
of telefacsimile, or three Business Days after depositing it in the United
States mail with postage prepaid and properly addressed; provided that
notices to Secured Party

 22
 

 

shall not be effective
until received.  For the purposes hereof,
the address of each party hereto shall be as provided in subsection 10.8 of the
Credit Agreement or as set forth under such party’s name on the signature pages
hereof or such other address as shall be designated by such party in a written
notice delivered to the other parties hereto.

SECTION 24.                                        Failure
or Indulgence Not Waiver; Remedies Cumulative.

No failure or delay on the part of Secured Party in
the exercise of any power, right or privilege hereunder shall impair such
power, right or privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial exercise of any such
power, right or privilege preclude any other or further exercise thereof or of
any other power, right or privilege.  All
rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.

SECTION 25.                                        Severability.

In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.

SECTION 26.                                        Headings.

Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive
effect.

SECTION 27.                                        Governing
Law; Rules of Construction.

THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING, WITHOUT
LIMITATION, SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT
THAT THE UCC PROVIDES THAT THE PERFECTION OF THE SECURITY INTEREST HEREUNDER,
OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY
THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK, IN WHICH CASE THE
LAWS OF SUCH JURISDICTION SHALL GOVERN WITH RESPECT TO THE PERFECTION OF THE
SECURITY INTEREST IN, OR THE REMEDIES WITH RESPECT TO, SUCH PARTICULAR
COLLATERAL.  The rules of construction set
forth in subsection 1.3 of the Credit Agreement shall be applicable to this
Agreement mutatis mutandis.

SECTION 28.                                        Consent
to Jurisdiction and Service of Process.

ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GRANTOR
ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ANY OBLIGATIONS

 23
 

 

HEREUNDER, MAY BE BROUGHT
IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY
AND CITY OF NEW YORK.  BY EXECUTING AND
DELIVERING THIS AGREEMENT, EACH GRANTOR, FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE
NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II) WAIVES ANY
DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY
SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO SUCH GRANTOR AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION
23 HEREOF; (IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH GRANTOR IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING
SERVICE IN EVERY RESPECT; (V) AGREES THAT SECURED PARTY RETAINS THE RIGHT
TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS
AGAINST SUCH GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SECTION 28 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT
PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.

SECTION 29.                                        Waiver
of Jury Trial.

GRANTORS AND SECURED PARTY HEREBY AGREE TO WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT.  THE SCOPE
OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT
MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.  EACH GRANTOR AND SECURED PARTY ACKNOWLEDGE
THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR GRANTORS AND SECURED PARTY TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT GRANTORS AND SECURED PARTY HAVE ALREADY
RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH WILL
CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS.  EACH GRANTOR AND SECURED PARTY FURTHER
WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. 
THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SECTION 29 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT.  In the
event of litigation, this Agreement may be filed as a written consent to a
trial by the court.

 24
 

 

SECTION 30.                                        Counterparts.

This Agreement may be executed in one or more
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and
attached to a single counterpart so that all signature pages are physically
attached to the same document.

SECTION
31.                                             Security
Agreement To Govern Grants.

Each Grantor and Secured Party hereby acknowledge and
agree that the rights, obligations and remedies of each Grantor and Secured
Party set forth in this Agreement with respect any Intellectual Property
Collateral shall be applicable to each Grant (and any supplement thereof)
executed by any Grantor as if the terms and provisions of this Agreement were
incorporated into each such Grant (and any supplement thereof).

SECTION 32.                                        Definitions.

(a)                                  Each
capitalized term utilized in this Agreement that is not defined in the Credit
Agreement or in this Agreement, but that is defined in the UCC, including the
categories of Collateral listed in Section 1 hereof, shall have the meaning set
forth in Articles 1, 8 or 9 of the UCC.

(b)                                 In
addition, the following terms used in this Agreement shall have the following
meanings:

“Additional Grantor”
means a Subsidiary of Company that becomes a party hereto after the date hereof
as an additional Grantor by executing a Counterpart.

“Assigned Agreements”
means, with respect to any Grantor, the agreements set forth on Schedule 15
annexed hereto, as each such agreement may be amended, restated, supplemented
or otherwise modified from time to time, including, without limitation, (a) all
rights of such Grantor to receive moneys due or to become due under or pursuant
to the Assigned Agreements, (b) all rights of such Grantor to receive proceeds
of any Supporting Obligations with respect to the Assigned Agreements, (c) all
claims of such Grantor for damages arising out of any breach of or default
under the Assigned Agreements, and (d) all rights of such Grantor to terminate,
amend, supplement, modify or exercise rights or options under the Assigned
Agreements, to perform thereunder and to compel performance and otherwise
exercise all remedies thereunder.

“Beneficiary” means
Administrative Agent, each Lender and each Swap Counterparty.

“Collateral” has
the meaning set forth in Section 1 hereof.

“Copyright Office” means the United States
Copyright Office or any successor or substitute office in which it is necessary
or, in the reasonable opinion of Secured Party, advisable to record a Grant in
order to create or perfect Liens on Copyrights, Copyright Registrations and
Copyright Rights.

 25
 

 

“Copyrights” means
all items under copyright in various published and unpublished works of
authorship including, without limitation, computer programs, computer data
bases, other computer software layouts, trade dress, drawings, designs,
writings, and formulas (including, without limitation, the works set forth on Schedule
10 annexed hereto, as the same may be amended pursuant hereto from time to
time).

“Copyright Registrations”
means all copyright registrations issued to any Grantor and applications for
copyright registration that have been or may hereafter be issued or assigned to
a Grantor or applied for by a Grantor thereon in the United States and any
state thereof and in foreign countries (including, without limitation, the
registrations set forth on Schedule 10 annexed hereto, as the same may
be amended pursuant hereto from time to time).

“Copyright Rights”
means all common law and other rights in and to the Copyrights in the United
States and any state thereof and in foreign countries including all copyright
licenses (but with respect to such copyright licenses, only to the extent
permitted by such licensing arrangements), the right (but not the obligation)
to renew and extend Copyright Registrations and any such rights and to register
works protectable by copyright and the right (but not the obligation) to sue in
the name of any Grantor or in the name of Secured Party or Lenders for past,
present and future infringements of such Copyrights and any such rights.

“Counterpart” means
a counterpart to this Agreement entered into by a Subsidiary of Company
pursuant to Section 21 hereof.

“Credit Agreement”
has the meaning set forth in the Preliminary Statements of this Agreement.

“Equity Interests”
means all shares of stock, partnership interests, interests in Joint Ventures,
limited liability company interests and all other equity interests in a Person,
whether such stock or interests are classified as Investment Property or
General Intangibles under the UCC.

“Event of Default”
means any Event of Default as defined in the Credit Agreement or, after payment
in full of all Obligations under the Credit Agreement and the other Loan
Documents, the cancellation, expiration or collateralization with cash or a
letter of credit of all Letters of Credit and the termination of the
Commitments, the occurrence of an Early Termination Date (as defined in a
Master Agreement in the form prepared by the International Swap and Derivatives
Association, Inc. or a similar event under any similar swap agreement) under
any Lender Swap Agreement.

“Grant” means a Grant
of Trademark Security Interest, substantially in the form of Exhibit I annexed
hereto, and a Grant of Patent Security Interest, substantially in the form of
Exhibit II annexed hereto, and a Grant of Copyright Security Interest,
substantially in the form of Exhibit III annexed hereto.

“Intellectual Property Collateral”
means, with respect to any Grantor all right, title and interest (including
rights acquired pursuant to a license or otherwise but only to the extent
permitted by agreements governing such license or other use) of such Grantor in
and to all:

 26

 

(a)                                  Copyrights,
Copyright Registrations and Copyright Rights, including, without limitation,
each of the Copyrights, rights, titles and interests in and to the Copyrights,
all derivative works and other works protectable by copyright, which are
presently, or in the future may be, owned, created (as a work for hire for the
benefit of such Grantor), authored (as a work for hire for the benefit of such
Grantor), or acquired by such Grantor, in whole or in part, and all Copyright
Rights with respect thereto and all Copyright Registrations therefor,
heretofore or hereafter granted or applied for, and all renewals and extensions
thereof, throughout the world, including all proceeds thereof (such as, by way
of example and not by limitation, license royalties and proceeds of
infringement suits),

(b)                                 Patents;

(c)                                  Trademarks,
Trademark Registrations, the Trademark Rights and goodwill of such Grantor’s
business symbolized by the Trademarks and associated therewith; and

(d)                                 all
trade secrets, trade secret rights, know-how, customer lists, processes of
production, ideas, confidential business information, techniques, processes,
formulas, and all other proprietary information.

“IP Supplement”
means an IP Supplement, substantially in the form of Exhibit V annexed
hereto.

“Lender Swap Agreement”
means an Interest Rate Agreement, Currency Agreement or other swap agreement
between Company or a Subsidiary of Company and a Swap Counterparty.

“Patents” means all
patents and patent applications and rights and interests in patents and patent
applications under any domestic or foreign law that are presently, or in the
future may be, owned or held by a Grantor and all patents and patent
applications and rights, title and interests in patents and patent applications
under any domestic or foreign law that are presently, or in the future may be,
owned by such Grantor in whole or in part (including, without limitation, the
patents and patent applications set forth on Schedule 9 annexed hereto),
all rights (but not obligations) corresponding thereto to sue for past, present
and future infringements and all re-issues, divisions, continuations, renewals,
extensions and continuations-in-part thereof.

“Pledged Debt”
means the Indebtedness from time to time owed to a Grantor, including the
Indebtedness set forth on Schedule 7 annexed hereto and issued by the
obligors named therein, the Instruments and certificates evidencing such
Indebtedness and all interest, cash or other property received, receivable or
otherwise distributed in respect of or exchanged therefor.

“Pledged Equity”
means all Equity Interests now or hereafter owned by a Grantor, including all
securities convertible into, and rights, warrants, options and other rights to
purchase or otherwise acquire, any of the foregoing, including those owned on
the date hereof and set forth on Schedule 6 annexed hereto, the
certificates or other instruments representing any of the foregoing and any
interest of such Grantor in the entries on the books of any securities
intermediary pertaining thereto and all distributions, dividends and other
property received, receivable or otherwise distributed in respect of or
exchanged therefor.

 27
 

 

“Pledged Subsidiary Debt”
means Pledged Debt owed to a Grantor by any obligor that is, or becomes, a
direct or indirect Subsidiary of such Grantor, of which such Grantor is a
direct or indirect Subsidiary or that controls, is controlled by or under
common control with such Grantor.

“Pledged Subsidiary Equity”
means Pledged Equity in a Person that is, or becomes a direct Subsidiary of a
Grantor.

“Pledge Supplement”
means a Pledge Supplement, in substantially the form of Exhibit IV
annexed hereto, in respect of the additional Pledged Equity or Pledged Debt
pledged pursuant to this Agreement.

“Requisite Obligees”
means either (i) Requisite Lenders or (ii), after payment in full of all
Obligations under the Credit Agreement and the other Loan Documents, the
cancellation, expiration or collateralization with cash or a letter of credit
of all Letters of Credit and the termination of the Commitments, the holders of
a majority of (A) the aggregate notional amount under all Lender Swap
Agreements (including Lender Swap Agreements that have been terminated) or (B)
if all Lender Swap Agreements have been terminated in accordance with their
terms, the aggregate amount then due and payable (exclusive of expenses and
similar payments but including any early termination payments then due) under
such Lender Swap Agreements.

“Secured Obligations”
has the meaning set forth in Section 2 hereof.

“Securities
Collateral” means, with respect to any Grantor, the Pledged Equity,
the Pledged Debt and any other Investment Property in which such Grantor has an
interest.

“Swap Counterparty”
means a Person that enters into a swap agreement with Company or a Subsidiary
and is a Lender or an Affiliate of a Lender at the time such agreement is
entered into.

“Trademarks” means
all trademarks, service marks, designs, logos, indicia, tradenames, trade
dress, corporate names, company names, business names, fictitious business
names, trade styles and/or other source and/or business identifiers and
applications pertaining thereto, owned by such Grantor, or hereafter adopted
and used by a Grantor, in its business (including, without limitation, the
trademarks specifically set forth on Schedule 10 annexed hereto).

“Trademark Registrations”
means all registrations that have been or may hereafter be issued or assigned
to a Grantor or applied for by a Grantor thereon in the United States and any
state thereof and in foreign countries (including, without limitation, the
registrations and applications set forth on Schedule 10 annexed hereto).

“Trademark Rights”
means all common law and other rights (but in no event any of the obligations)
in and to the Trademarks in the United States and any state thereof and in
foreign countries.

“UCC” means the
Uniform Commercial Code, as it exists on the date of this Agreement or as it
may hereafter be amended, in the State of New York.

 28
 

 

 

[Remainder of page
intentionally left blank]

 29

 

IN WITNESS WHEREOF,
Grantors and Secured Party have caused this Agreement to be duly executed and
delivered by their respective officers thereunto duly authorized as of the date
first written above.

HOLDINGS:

	
  

  	
  FTD GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ JON R. BURNEY

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jon R. Burney

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President, General Counsel & Secretary

  	
   

  
	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
   

  
	
   

  	
  3113 Woodcreek Drive

  
	
   

  	
  Downers Grove, DuPage
  County, IL 60515

  
	
   

  	
  Attention: Jon R.
  Burney

  
	
   

  	
  Facsimile: (630) 719
  6183

  
						

 

 XIV-S-1
 

 

 

	
  

  	
  FTD, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ JON R. BURNEY

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jon R. Burney

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President, General Counsel & Secretary

  	
   

  
	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
   

  
	
   

  	
  3113 Woodcreek Drive

  
	
   

  	
  Downers Grove, DuPage
  County, Illinois 60515

  
	
   

  	
  Attention: Jon R.
  Burney

  
	
   

  	
  Facsimile: (630) 719
  6183

  
						

 

 XIV-S-2
 

 

SUBSIDIARY
GRANTORS:

	
  

  	
   

  	
  FTD.COM INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ JON R. BURNEY

  	
   

  
	
   

  	
   

  	
  Name

  	
  : Jon R. Burney

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President, General Counsel & Secretary

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notice Address:

  	
   

  
	
   

  	
   

  
	
   

  	
  3113 Woodcreek Drive

  
	
   

  	
  Downers Grove, DuPage
  County, Illinois 60515

  
	
   

  	
  Attention: Jon R.
  Burney

  
	
   

  	
  Facsimile: (630) 719
  6183

  
						

 

	
  

  	
   

  	
  FLORISTS’ TRANSWORLD DELIVERY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ JON R. BURNEY

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jon R. Burney

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President, General Counsel & Secretary

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notice Address:

  	
   

  
	
   

  	
   

  
	
   

  	
  3113 Woodcreek Drive

  
	
   

  	
  Downers Grove, DuPage
  County, Illinois 60515

  
	
   

  	
  Attention: Jon R.
  Burney

  
	
   

  	
  Facsimile: (630) 719
  6183

  
						

 

 XIV-S-3
 

 

 

	
  

  	
  WELLS FARGO BANK, N.A., as
  Administrative

  Agent, as Secured Party

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DAVID HEMENWAY

  	
   

  
	
   

  	
   

  	
  Name:

  	
  David Hemenway

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Assistant Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
   

  
	
   

  	
  201 Third Street,
  Eighth Floor, MAC A0187-081

  
	
   

  	
  San Francisco,
  California 94103

  
	
   

  	
  Attention:

  
	
   

  	
  Facsimile:

  
						

 

 XIV-S-4

 

SCHEDULE A

TO

SECURITY AGREEMENT

	
  Name

  	
   

  	
  Notice Address for each Grantor

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

 XIV-Schedule A-1

 

SCHEDULE 1

TO

SECURITY AGREEMENT

Commercial Tort Claims

 

 XIV-Schedule 1-1

 

SCHEDULE 2

TO

SECURITY AGREEMENT

Filing Offices

	
  Grantor

  	
   

  	
  Filing Offices

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

 XIV-Schedule 2-1

 

SCHEDULE 3

TO

SECURITY AGREEMENT

Office Locations, Type and Jurisdiction of
Organization

	
  Name of

  Grantor

  	
   

  	
  Type of

  Organization

  	
   

  	
  Office Locations

  	
   

  	
  Jurisdiction of

  Organization

  	
   

  	
  Organization

  Number

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 XIV-Schedule 3-1

 

SCHEDULE 4

TO

SECURITY AGREEMENT

Locations of Equipment and Inventory

	
  Name of Grantor

  	
   

  	
  Locations of Equipment and Inventory

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

 XIV-Schedule 4-1

 

SCHEDULE 5

TO

SECURITY AGREEMENT

[Reserved]

 XIV-Schedule 5-1

 

SCHEDULE 6

TO

SECURITY AGREEMENT

	
  Equity Issuer

  	
   

  	
  Class

  of

  Equity

  	
   

  	
  Equity

  Certificate Nos.

  	
   

  	
  Par

  Value

  	
   

  	
  Amount of

  Equity Interests

  	
   

  	
  Percentage of

  Outstanding

  Equity Pledged

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 XIV-Schedule 6-1

 

SCHEDULE 7

TO

SECURITY AGREEMENT

	
  Debt Issuer

  	
   

  	
  Amount of

  Indebtedness

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

 XIV-Schedule 7-1

 

SCHEDULE 8

TO

SECURITY AGREEMENT

U.S. Trademarks:

	
  Registered Owner

  	
   

  	
  Trademark

  Description

  	
   

  	
  Registration

  Number

  	
   

  	
  Registration

  Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Foreign Trademarks:

	
  Registered Owner

  	
   

  	
  Trademark

  Description

  	
   

  	
  Registration

  Number

  	
   

  	
  Registration

  Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 XIV-Schedule 8-1

 

SCHEDULE 9

TO

SECURITY AGREEMENT

U.S. Patents Issued:

	
  Patent No.

  	
   

  	
  Issue Date

  	
   

  	
  Title

  	
   

  	
  Inventor(s)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

U.S. Patents Pending:

	
  Date

  Filed

  	
   

  	
  Application

  Number

  	
   

  	
  Title

  	
   

  	
  Inventor(s)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Foreign Patents Issued:

	
  Country

  	
   

  	
  Patent No.

  	
   

  	
  Issue Date

  	
   

  	
  Title

  	
   

  	
  Inventor(s)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Foreign Patents Pending:

	
  Country

  	
   

  	
  Applicant’s

  Name

  	
   

  	
  Date

  Filed

  	
   

  	
  Application

  Number

  	
   

  	
  Title

  	
   

  	
  Inventor(s)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 XIV-Schedule 9-1

 

SCHEDULE 10

TO

SECURITY AGREEMENT

U.S. Copyright Registrations:

	
  Title

  	
   

  	
  Registration No.

  	
   

  	
  Date of Issue

  	
   

  	
  Registered Owner

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Foreign Copyright Registrations:

	
  Country

  	
   

  	
  Title

  	
   

  	
  Registration No.

  	
   

  	
  Date of Issue

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Pending U.S. Copyright Registration Applications:

	
  Title

  	
   

  	
  Appl. No.

  	
   

  	
  Date of Application

  	
   

  	
  Copyright Claimant

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Pending Foreign Copyright Registration
Applications:

	
  Country

  	
   

  	
  Title

  	
   

  	
  Appl. No.

  	
   

  	
  Date of Application

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 XIV-Schedule 10-1

 

SCHEDULE 11

TO

SECURITY AGREEMENT

Deposit Accounts, Security Accounts, Commodity
Accounts

	
  Type of Account

  	
   

  	
  Depository Bank or

  Securities Intermediary

  	
   

  	
  Address of Depository Bank

  or Securities Intermediary

  	
   

  	
  Account Number

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 XIV-Schedule 11-1

 

SCHEDULE 12 

TO

SECURITY AGREEMENT

Chattel Paper

 XIV-Schedule 12-1

 

SCHEDULE 13 

TO

SECURITY AGREEMENT

Letter-of-Credit Rights

 

 XIV-Schedule 13-1

 

SCHEDULE 14 

TO

SECURITY AGREEMENT

Documents

 

 XIV-Schedule 14-1

 

SCHEDULE 15

TO

SECURITY AGREEMENT

Assigned Agreements

 

 XIV-Schedule 15-1

 

EXHIBIT I TO

SECURITY AGREEMENT

[FORM OF GRANT OF
TRADEMARK SECURITY INTEREST]

GRANT OF TRADEMARK
SECURITY INTEREST

WHEREAS, [NAME OF GRANTOR],
a                       
corporation (“Grantor”), owns and
uses in its business, and will in the future adopt and so use, various
intangible assets, including the Trademark Collateral (as defined below); and

WHEREAS, FTD, Inc.,
a Delaware corporation (“Company”),
has entered into a Credit Agreement dated as of July 28, 2006 (said Credit
Agreement, as it may heretofore have been and as it may hereafter be further
amended, restated, supplemented or otherwise modified from time to time, being
the “Credit Agreement”), with the
lenders named therein (collectively, together with their respective successors
and assigns party to the Credit Agreement from time to time, the “Lenders”), Wells Fargo Bank, N.A., as
Administrative Agent for the Lenders (in such capacity, “Secured Party”), and the other agents
listed therein pursuant to which Lenders have made certain commitments, subject
to the terms and conditions set forth in the Credit Agreement, to extend
certain credit facilities to Company; and

WHEREAS, Company
may from time to time enter, or may from time to time have entered, into one or
more swap agreements (collectively, the “Lender
Swap Agreements”) with one or more Persons that are Lenders or
Affiliates of Lenders at the time such Lender Swap Agreements are entered into
(in such capacity, collectively, “Swap
Counterparties”); and

[Insert if Grantor is a Subsidiary:] [WHEREAS, Grantor has executed and delivered
that certain Subsidiary Guaranty dated as of July 28, 2006 (said Subsidiary
Guaranty, as it may heretofore have been and as it may hereafter be further
amended, restated, supplemented or otherwise modified from time to time, being
the “Guaranty”), in favor of
Secured Party for the benefit of Lenders and any Swap Counterparties, pursuant
to which Grantor has guarantied the prompt payment and performance when due of
all obligations of Company under the Credit Agreement and the other Loan
Documents and all obligations of Company under the Lender Swap Agreements,
including, without limitation, the obligation of Company to make payments
thereunder in the event of early termination thereof; and]

WHEREAS, pursuant
to the terms of a Security Agreement dated as of July 28, 2006 (said Security
Agreement, as it may heretofore have been and as it may hereafter be further
amended, restated, supplemented or otherwise modified from time to time, being
the “Security Agreement”), among Grantor,
Secured Party and the other grantors named therein, Grantor has created in
favor of Secured Party a security interest in, and Secured Party  has become a secured creditor with respect
to, the Trademark Collateral;

NOW, THEREFORE, for
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, subject to the terms and conditions of the Security Agreement, to
evidence further the security interest granted by Grantor to Secured Party
pursuant to the Security Agreement, Grantor hereby grants to Secured Party a
security interest in all of

 XIV-I-1
 

 

Grantor’s right, title
and interest in and to the following, in each case whether now or hereafter
existing or in which Grantor now has or hereafter acquires an interest and
wherever the same may be located (the “Trademark
Collateral”):

(i)            all rights, title and interest
(including rights acquired pursuant to a license or otherwise) in and to all
trademarks, service marks, designs, logos, indicia, tradenames, trade dress,
corporate names, company names, business names, fictitious business names,
trade styles and/or other source and/or business identifiers and applications
pertaining thereto, owned by such Grantor, or hereafter adopted and used, in
its business (including, without limitation, the trademarks set forth on
Schedule A annexed hereto) (collectively, the “Trademarks”),
all registrations that have been or may hereafter be issued or applied for
thereon in the United States and any state thereof and in foreign countries
(including, without limitation, the registrations and applications set forth on
Schedule A annexed hereto), all common law and other rights (but in no
event any of the obligations) in and to the Trademarks in the United States and
any state thereof and in foreign countries, and all goodwill of such Grantor’s
business symbolized by the Trademarks and associated therewith; and

(ii)           all proceeds, products, rents and
profits of or from any and all of the foregoing Trademark Collateral and, to
the extent not otherwise included, all payments under insurance (whether or not
Secured Party is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing Trademark Collateral. 
For purposes of this Grant of Trademark Security Interest, the term “proceeds” includes whatever is receivable
or received when Trademark Collateral or proceeds are sold, licensed,
exchanged, collected or otherwise disposed of, whether such disposition is
voluntary or involuntary.

Notwithstanding anything herein to the contrary, in no
event shall the Trademark Collateral include, and Grantor shall not be deemed
to have granted a security interest in, any of such Grantor’s rights or
interests in the Trademark Collateral to the extent that such a grant would,
under the terms of any agreement related to the Trademark Collateral to which
Grantor is a party (including any license ) result in a breach of the terms of,
or constitute a default under, such agreement (other than to the extent that
any such term would be rendered ineffective pursuant to the UCC or any other
applicable law (including the Bankruptcy Code) or principles of equity); provided,
that immediately upon the ineffectiveness, lapse or termination of any such provision,
the Trademark Collateral shall include, and Grantor shall be deemed to have
granted a security interest in, all such rights and interests as if such
provision had never been in effect.

In the event that any asset of a Grantor is excluded
from the Trademark Collateral by virtue of the foregoing paragraph, Grantor
agrees to use all commercially reasonable efforts to obtain all requisite
consents to enable such Grantor to provide a security interest in such asset
pursuant hereto as promptly as practicable.

Grantor does hereby further acknowledge and affirm
that the rights, obligations and remedies of Secured Party with respect to the
security interest in the Trademark Collateral granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.

 XIV-I-2
 

 

 

[The remainder of
this page is intentionally left blank.]

 XIV-I-3
 

 

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

	
  

  	
  [NAME
  OF GRANTOR]

  
	
   

  	
   

  
	
  

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
						

 

 XIV-I-4

 

SCHEDULE A

TO

GRANT OF TRADEMARK SECURITY INTEREST

	
  Owner

  	
   

  	
  Trademark

  Description

  	
   

  	
  Registration/

  Appl. Number

  	
   

  	
  Registration/

  Appl. Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 XIV-I-A-1

 

EXHIBIT II TO

SECURITY AGREEMENT

[FORM OF GRANT OF PATENT
SECURITY INTEREST]

GRANT OF PATENT SECURITY
INTEREST

WHEREAS, [NAME OF GRANTOR], a                       
corporation (“Grantor”), owns and
uses in its business, and will in the future adopt and so use, various
intangible assets, including the Patent Collateral (as defined below); and

WHEREAS, FTD, Inc.,
a Delaware corporation (“Company”),
has entered into a Credit Agreement dated as of July 28, 2006 (said Credit
Agreement, as it may heretofore have been and as it may hereafter be further
amended, restated, supplemented or otherwise modified from time to time, being
the “Credit Agreement”), with the
lenders named therein (collectively, together with their respective successors
and assigns party to the Credit Agreement from time to time, the “Lenders”), Wells Fargo Bank, N.A., as
Administrative Agent for the Lenders (in such capacity, “Secured Party”), and the other agents
listed therein, pursuant to which Lenders have made certain commitments,
subject to the terms and conditions set forth in the Credit Agreement, to
extend certain credit facilities to Company; and

WHEREAS, Company
may from time to time enter, or may from time to time have entered, into one or
more swap agreements (collectively, the “Lender
Swap Agreements”) with one or more Persons that are Lenders or
Affiliates of Lenders at the time such Lender Swap Agreements are entered into
(in such capacity, collectively, “Swap
Counterparties”); and

[Insert if Grantor is a Subsidiary:] [WHEREAS, Grantor has executed and delivered
that certain Subsidiary Guaranty dated as of July 28, 2006 (said Subsidiary
Guaranty, as it may heretofore have been and as it may hereafter be further
amended, restated, supplemented or otherwise modified from time to time, being
the “Guaranty”), in favor of
Secured Party for the benefit of Lenders and any Swap Counterparties, pursuant
to which Grantor has guarantied the prompt payment and performance when due of
all obligations of Company under the Credit Agreement and the other Loan
Documents and all obligations of Company under the Lender Swap Agreements,
including, without limitation, the obligation of Company to make payments
thereunder in the event of early termination thereof; and]

WHEREAS, pursuant
to the terms of a Security Agreement dated as of July 28, 2006 (said Security
Agreement, as it may heretofore have been and as it may hereafter be further
amended, restated, supplemented or otherwise modified from time to time, being
the “Security Agreement”), among
Grantor, Secured Party and the other grantors named therein, Grantor created in
favor of Secured Party a security interest in, and Secured Party has become a
secured creditor with respect to, the Patent Collateral;

NOW, THEREFORE, for
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, subject to the terms and conditions of the Security Agreement, to
evidence further the security interest granted by Grantor to Secured Party
pursuant to the Security Agreement, Grantor hereby grants to Secured Party a
security interest in all of

 XIV-II-1
 

 

Grantor’s right, title
and interest in and to the following, in each case whether now or hereafter
existing or in which Grantor now has or hereafter acquires an interest and
wherever the same may be located (the “Patent
Collateral”):

(i)            all rights, title and interest
(including rights acquired pursuant to a license or otherwise) in and to all
patents and patent applications and rights and interests in patents and patent
applications under any domestic or foreign law that are presently, or in the
future may be, owned or held by such Grantor and all patents and patent
applications and rights, title and interests in patents and patent applications
under any domestic or foreign law that are presently, or in the future may be,
owned by such Grantor in whole or in part (including, without limitation, the
patents and patent applications set forth on Schedule A annexed hereto), all
rights (but not obligations) corresponding thereto to sue for past, present and
future infringements and all re-issues, divisions, continuations, renewals,
extensions and continuations-in-part thereof; and

(ii)           all proceeds, products, rents and
profits of or from any and all of the foregoing Patent Collateral and, to the
extent not otherwise included, all payments under insurance (whether or not
Secured Party is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing Patent Collateral. 
For purposes of this Grant of Patent Security Interest, the term “proceeds” includes whatever is receivable
or received when Patent Collateral or proceeds are sold, licensed, exchanged,
collected or otherwise disposed of, whether such disposition is voluntary or
involuntary.

Notwithstanding anything herein to the contrary, in no
event shall the Patent Collateral include, and Grantor shall not be deemed to
have granted a security interest in, any of such Grantor’s rights or interests
in the Patent Collateral to the extent that such a grant would, under the terms
of any agreement related to the Patent Collateral to which Grantor is a party
(including any license ) result in a breach of the terms of, or constitute a
default under, such agreement (other than to the extent that any such term
would be rendered ineffective pursuant to the UCC or any other applicable law
(including the Bankruptcy Code) or principles of equity); provided, that
immediately upon the ineffectiveness, lapse or termination of any such provision,
the Patent Collateral shall include, and Grantor shall be deemed to have
granted a security interest in, all such rights and interests as if such
provision had never been in effect.

In the event that any
asset of a Grantor is excluded from the Patent Collateral by virtue of the
foregoing paragraph, Grantor agrees to use all commercially reasonable efforts
to obtain all requisite consents to enable such Grantor to provide a security
interest in such asset pursuant hereto as promptly as practicable.

Grantor does hereby further acknowledge and affirm
that the rights, obligations and remedies of Secured Party with respect to the
security interest in the Patent Collateral granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.

[The remainder of
this page intentionally left blank.]

 XIV-II-2
 

 

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

	
  

  	
  [NAME
  OF GRANTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
						

 

 XIV-II-3

 

SCHEDULE A

TO

GRANT OF PATENT SECURITY INTEREST

Patents Issued:

	
  Patent No.

  	
   

  	
  Issue Date

  	
   

  	
  Title

  	
   

  	
  Inventor(s)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Patents Pending:

	
  Applicant’s

  Name

  	
   

  	
  Date

  Filed

  	
   

  	
  Application

  Number

  	
   

  	
  Invention

  	
   

  	
  Inventor(s)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 XIV-II-A-1

 

EXHIBIT III TO

SECURITY AGREEMENT

[FORM OF GRANT OF
COPYRIGHT SECURITY INTEREST]

GRANT OF COPYRIGHT
SECURITY INTEREST

WHEREAS, [NAME OF GRANTOR],
a                       
corporation (“Grantor”), owns and
uses in its business, and will in the future adopt and so use, various
intangible assets, including the Copyright Collateral (as defined below); and

WHEREAS, FTD, Inc.,
a Delaware corporation (“Company”),
has entered into a Credit Agreement dated as of July 28, 2006 (said Credit
Agreement, as it may heretofore have been and as it may hereafter be further
amended, restated, supplemented or otherwise modified from time to time, being
the “Credit Agreement”), with the
lenders named therein (collectively, together with their respective successors
and assigns party to the Credit Agreement from time to time, the “Lenders”), Wells Fargo Bank, N.A., as
Administrative Agent for the Lenders (in such capacity, “Secured Party”), and the other agents
listed therein pursuant to which Lenders have made certain commitments, subject
to the terms and conditions set forth in the Credit Agreement, to extend
certain credit facilities to Company; and

WHEREAS, Company
may from time to time enter, or may from time to time have entered, into one or
more swap agreements (collectively, the “Lender
Swap Agreements”) with one or more Persons that are Lenders or
Affiliates of Lenders at the time such Lender Swap Agreements are entered into
(in such capacity, collectively, “Swap
Counterparties”); and

[Insert if Grantor is a Subsidiary:] [WHEREAS, Grantor has executed and delivered
that certain Subsidiary Guaranty dated as of July 28, 2006 (said Subsidiary
Guaranty, as it may heretofore have been and as it may hereafter be further
amended, restated, supplemented or otherwise modified from time to time, being
the “Guaranty”), in favor of
Secured Party for the benefit of Lenders and any Swap Counterparties, pursuant
to which Grantor has guarantied the prompt payment and performance when due of
all obligations of Company under the Credit Agreement and the other Loan
Documents and all obligations of Company under the Lender Swap Agreements,
including, without limitation, the obligation of Company to make payments
thereunder in the event of early termination thereof; and]

WHEREAS, pursuant
to the terms of a Security Agreement dated as of July 28, 2006 (said Security
Agreement, as it may heretofore have been and as it may hereafter be further
amended, restated, supplemented or otherwise modified from time to time, being
the “Security Agreement”), among
Grantor, Secured Party and the other grantors named therein, Grantor created in
favor of Secured Party a security interest in, and Secured Party has become a
secured creditor with respect to, the Copyright Collateral;

NOW, THEREFORE, for
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, subject to the terms and conditions of the Security Agreement, to
evidence further the security interest granted by Grantor to Secured Party
pursuant to the Security Agreement, Grantor hereby grants to Secured Party a
security interest in all of

 XIV-III-1
 

 

Grantor’s right, title
and interest in and to the following, in each case whether now or hereafter
existing or in which Grantor now has or hereafter acquires an interest and
wherever the same may be located (the “Copyright
Collateral”):

(i)            all rights, title and interest
(including rights acquired pursuant to a license or otherwise) under copyright
in various published and unpublished works of authorship including, without
limitation, computer programs, computer data bases, other computer software
layouts, trade dress, drawings, designs, writings, and formulas (including,
without limitation, the works set forth on Schedule A annexed hereto, as
the same may be amended pursuant hereto from time to time) (collectively, the “Copyrights”), all copyright registrations
issued to Grantor and applications for copyright registration that have been or
may hereafter be issued or applied for thereon in the United States and any
state thereof and in foreign countries (including, without limitation, the
registrations set forth on Schedule A annexed hereto, as the same may be
amended pursuant hereto from time to time) (collectively, the “Copyright Registrations”), all common law
and other rights in and to the Copyrights in the United States and any state
thereof and in foreign countries including all copyright licenses (but with
respect to such copyright licenses, only to the extent permitted by such
licensing arrangements) (the “Copyright
Rights”), including, without limitation, each of the Copyrights,
rights, titles and interests in and to the Copyrights, all derivative works and
other works protectable by copyright, which are presently, or in the future may
be, owned, created (as a work for hire for the benefit of Grantor), authored
(as a work for hire for the benefit of Grantor), or acquired by Grantor, in
whole or in part, and all Copyright Rights with respect thereto and all
Copyright Registrations therefor, heretofore or hereafter granted or applied
for, and all renewals and extensions thereof, throughout the world, including
all proceeds thereof (such as, by way of example and not by limitation, license
royalties and proceeds of infringement suits), the right (but not the
obligation) to renew and extend such Copyright Registrations and Copyright
Rights and to register works protectable by copyright and the right (but not
the obligation) to sue in the name of such Grantor or in the name of Secured
Party or Lenders for past, present and future infringements of the Copyrights
and Copyright Rights; and

(ii)           all proceeds, products, rents and
profits of or from any and all of the foregoing Copyright Collateral and, to
the extent not otherwise included, all payments under insurance (whether or not
Secured Party is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing Copyright Collateral. 
For purposes of this Grant of Copyright Security Interest, the term “proceeds” includes whatever is receivable
or received when Copyright Collateral or proceeds are sold, licensed,
exchanged, collected or otherwise disposed of, whether such disposition is
voluntary or involuntary.

Notwithstanding anything herein to the contrary, in no
event shall the Copyright Collateral include, and Grantor shall not be deemed
to have granted a security interest in, any of such Grantor’s rights or
interests in the Copyright Collateral to the extent that such a grant would,
under the terms of any agreement related to the Copyright Collateral to which
Grantor is a party (including any license ) result in a breach of the terms of,
or constitute a default under, such agreement (other than to the extent that
any such term would be rendered ineffective pursuant to the UCC or any other
applicable law (including the Bankruptcy Code) or principles

 XIV-III-2
 

 

of equity); provided,
that immediately upon the ineffectiveness, lapse or termination of any such
provision, the Copyright Collateral shall include, and Grantor shall be deemed
to have granted a security interest in, all such rights and interests as if
such provision had never been in effect.

In the event that any
asset of a Grantor is excluded from the Copyright Collateral by virtue of the
foregoing paragraph, Grantor agrees to use all commercially reasonable efforts
to obtain all requisite consents to enable such Grantor to provide a security
interest in such asset pursuant hereto as promptly as practicable.

Grantor does hereby further acknowledge and affirm
that the rights, obligations and remedies of Secured Party with respect to the
security interest in the Copyright Collateral granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.

 XIV-III-3
 

 

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

	
  

  	
  [NAME
  OF GRANTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
						

 

 XIV-III-4

 

SCHEDULE A

TO

GRANT OF COPYRIGHT SECURITY INTEREST

U.S. Copyright Registrations:

	
  Title

  	
   

  	
  Registration No.

  	
   

  	
  Date of Issue

  	
   

  	
  Registered Owner

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Foreign Copyright Registrations:

	
  Country

  	
   

  	
  Title

  	
   

  	
  Registration No.

  	
   

  	
  Date of Issue

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Pending U.S. Copyright Registration Applications:

	
  Title

  	
   

  	
  Appl. No.

  	
   

  	
  Date of Application

  	
   

  	
  Copyright Claimant

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Pending Foreign Copyright Registration
Applications:

	
  Country

  	
   

  	
  Title

  	
   

  	
  Appl. No.

  	
   

  	
  Date of Application

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 XIV-III-A-1

 

EXHIBIT IV TO

SECURITY AGREEMENT

PLEDGE SUPPLEMENT

This Pledge Supplement, dated as of                                     ,
is delivered pursuant to the Security Agreement, dated as of July 28, 2006,
between                                         ,
a                               
(“Grantor”), the other Grantors
named therein, and Wells Fargo Bank, N.A., as Secured Party (said Security
Agreement, as it may heretofore have been and as it may hereafter be further
amended, restated, supplemented or otherwise modified from time to time, being
the “Security Agreement”).  Capitalized terms used herein not otherwise
defined herein shall have the meanings ascribed thereto in the Security
Agreement.

Grantor hereby agrees that the [Pledged Equity]
[Pledged Debt] set forth on Schedule A annexed hereto shall be deemed to be
part of the [Pledged Equity] [Pledged Debt] and shall become part of the
Securities Collateral and shall secure all Secured Obligations.

IN WITNESS WHEREOF,
Grantor has caused this Pledge Supplement to be duly executed and delivered by
its duly authorized officer as of                               .

	
  

  	
  [GRANTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
					

 

 XIV-IV-1

 

SCHEDULE A

TO

PLEDGE SUPPLEMENT

 

 XIV-IV-A-1

 

EXHIBIT V TO

SECURITY AGREEMENT

IP SUPPLEMENT

This IP SUPPLEMENT, dated as of               ,
is delivered pursuant to and supplements (i) the Security Agreement, dated
as of July 28, 2006 (said Security Agreement, as it may heretofore have been
and as it may hereafter be further amended, restated, supplemented or otherwise
modified from time to time, being the “Security
Agreement”), among [FTD, Inc.], [Insert Name of Grantor] (“Grantor”), the other grantors named
therein, and Wells Fargo Bank, N.A., as Secured Party, and (ii) the [Grant
of Trademark Security Interest] [Grant of Patent Security Interest] [Grant of
Copyright Security Interest] dated as of                       ,
           (the “Grant”) executed by Grantor.  Capitalized terms used herein not otherwise
defined herein shall have the meanings ascribed thereto in the Grant.

Grantor grants to Secured Party a security interest in
all of Grantor’s right, title and interest in and to the [Trademark Collateral]
[Patent Collateral] [Copyright Collateral] set forth on Schedule A annexed
hereto.  All such [Trademark Collateral]
[Patent Collateral] [Copyright Collateral] shall be deemed to be part of the
[Trademark Collateral] [Patent Collateral] [Copyright Collateral] and shall be
hereafter subject to each of the terms and conditions of the Security Agreement
and the Grant.

IN WITNESS WHEREOF,
Grantor has caused this IP Supplement to be duly executed and delivered by its
duly authorized officer as of                             .

	
  

  	
  [GRANTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
					

 

 XIV-V-1

 

EXHIBIT VI TO

SECURITY AGREEMENT

[FORM OF COUNTERPART]

COUNTERPART (this “Counterpart”),
dated as of               ,
is delivered pursuant to Section 21 of the Security Agreement referred to
below.  The undersigned hereby agrees
that this Counterpart may be attached to the Security Agreement, dated as of
July 28, 2006 (said Security Agreement, as it may heretofore have been and as
it may hereafter be further amended, restated, supplemented or otherwise
modified from time to time being the “Security
Agreement”; capitalized terms used herein not otherwise defined
herein shall have the meanings ascribed therein), among [FTD, Inc.], [Insert
Name of Grantor] (“Grantor”), the
other Grantors named therein, and Wells Fargo Bank, N.A., as Secured
Party.  The undersigned by executing and
delivering this Counterpart hereby becomes a Grantor under the Security
Agreement in accordance with Section 21 thereof and agrees to be bound by all
of the terms thereof.  Without limiting
the generality of the foregoing, the undersigned hereby:

(i)            authorizes the Secured Party to add
the information set forth on the Schedules to this Agreement to the correlative
Schedules attached to the Security Agreement;(1)

(ii)           agrees that all Collateral of the
undersigned, including the items of property described on the Schedules hereto,
shall become part of the Collateral and shall secure all Secured Obligations;
and

(iii)          makes the representations and
warranties set forth in the Security Agreement, as amended hereby, to the
extent relating to the undersigned as of the date hereof.

	
   

  	
  [NAME OF ADDITIONAL GRANTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
						

 

(1)                                  The
Schedules to the Counterpart should include copies of all Schedules that
identify collateral to be granted by the Additional Grantor.EXHIBIT 10.34

 

2006 Bonus Plan

 

Purpose:

 

The terms of the 2006 Bonus Plan (the “Plan”) have
been established to reward the executives and other senior managers of Rigel
Pharmaceuticals, Inc. (the “Company”) for assisting the Company in achieving
its operational goals through exemplary performance. The Plan was adopted to
attract, motivate and retain the Company’s executive officers and other senior
level employees. The Plan provides for the payment of cash bonuses to executive
officers and other senior level employees of the Company, based on the
performance of both the Company and the individual during 2006.

 

Determination of 2006 Cash Bonuses:

 

Under the Plan, bonuses
may range from 0% to a maximum of 33% of the recipient’s 2006 base salary. The
percentage of base salary used to determine bonus amounts varies by the level
of employee. The target bonuses for recipients will be based on the achievement
of objective performance goals relating to the Company’s clinical development
of current product candidates, expansion of the pipeline of new product
candidates and cash position by the end of 2006. The Board of Directors or the
Compensation Committee may revise any of the performance goals or target bonus
amounts at any time. Payment of cash bonuses is subject to the approval and
discretion of the Board of Directors and the Compensation Committee at the
beginning of 2007.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00107-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00107-of-00352.parquet"}]]