Document:

Exhibit
4.6

 

OMNIBUS
PLEDGE AND SECURITY AGREEMENT

 

THIS
PLEDGE AND SECURITY AGREEMENT, dated as of the 27th day of
August, 2003 (this “Agreement”), is made by WATER PIK, INC., a Delaware
corporation and LAARS, INC., a Delaware corporation (individually and
collectively and jointly and severally herein the “Borrower”), their parent,
WATER PIK TECHNOLOGIES, INC., a Delaware corporation (“Parent”), and each of
its domestic subsidiaries, including, without limitation, JANDY INDUSTRIES,
INC., a California corporation, WATERPIK INTERNATIONAL, INC., a Delaware
corporation and each domestic subsidiary that, after the date hereof, executes
an addendum hereto substantially in the form of Exhibit B (a “Pledgor
Addendum”); the undersigned Parent and subsidiaries and such other
subsidiaries, collectively the “Guarantor Pledgors,” and together with the
Borrower, the “Pledgors”), in favor of JPMORGAN
CHASE BANK, as administrative and collateral agent for the lenders
(collectively, the “Lenders”) party to the Credit Agreement referred to below
(in such capacity, the “Agent”), for the benefit of the Secured Parties (as
hereinafter defined).  Capitalized terms
used herein without definition shall have the meanings given to them in the Credit
Agreement referred to below.

 

RECITALS

 

A.                                   The
Borrower, Water Pik Technologies Canada, Inc. (“WP Canada”), the Lenders, the
Canadian Lenders, Bank One NA, as Syndication Agent, JPMorgan Chase Bank,
Toronto Branch, as Canadian Agent and the Agent are parties to an Amended and
Restated Revolving Credit Agreement, dated as of August 27, 2003 (as amended,
modified, restated or supplemented from time to time, the “Credit Agreement”),
providing for the availability of certain credit facilities to the Borrower
upon the terms and subject to the conditions set forth therein.

 

B.                                     As
a condition to the extension of credit to the Borrower under the Credit
Agreement, each of the Guarantor Pledgors that is a party to this Agreement as
of the date hereof has entered into a Guaranty, dated as of the date hereof (as
amended, modified or supplemented from time to time, a “Pledgor Guaranty”),
pursuant to which each such Guarantor Pledgor has guaranteed to the Secured
Parties the payment in full of the Secured Obligations.  Additionally, certain other subsidiaries of
the Borrower may from time to time after the date hereof enter into a Pledgor
Guaranty, pursuant to which such subsidiaries will guarantee to the Secured
Parties the payment in full of the Secured Obligations.

 

C.                                     It
is a further condition to the extension of credit to the Borrower under the
Credit Agreement that the Pledgors shall have agreed, by executing and
delivering this Agreement, to secure the payment in full of their respective
obligations under the Credit Agreement, their Pledgor Guaranty and the other
Financing Documents and the Derivative Obligations with a Lender or its
Affiliates.  The Secured Parties are
relying on this Agreement in their decision to extend credit to the Borrower
under the Credit Agreement, and would not enter into the Credit Agreement
without the execution and delivery of this Agreement by the Pledgors.

 

 

D.                                    The
Guarantor Pledgors will obtain benefits as a result of the extension of credit
to the Borrower under the Credit Agreement, which benefits are hereby acknowledged
and, accordingly, desire to execute and deliver this Agreement.

 

ARTICLE
I

 

DEFINITIONS

 

1.1                                 Defined
Terms.  For purposes of this
Agreement, in addition to the terms defined elsewhere herein, the following
terms shall have the meanings set forth below:

 

“Accounts” shall have the meaning ascribed
thereto in the Uniform Commercial Code and whether now owned or existing or
hereafter acquired or arising.

 

“Bankruptcy Code” shall mean 11 U.S.C. Sections
101 et seq., as amended from time to time, and any successor statute.

 

“Chattel Paper” shall have the meaning ascribed
thereto in the Uniform Commercial Code (including tangible and electronic
chattel paper) and whether now owned or existing or hereafter acquired or
arising.

 

“Collateral” shall have the meaning given to
such term in Section 2.1.

 

“Collateral Accounts” shall have the meaning
given to such term in Section 6.3.

 

“Commercial Tort Claim” shall have the meaning
ascribed thereto in the Uniform Commercial Code and whether now owned or
existing or hereafter acquired or arising.

 

“Contracts” shall mean, collectively, all
rights of each Pledgor under all leases, contracts and agreements to which such
Pledgor is now or hereafter a party, including, without limitation, all rights,
privileges and powers under Investment Agreements and Licenses, together with
any and all extensions, modifications, amendments and renewals of such leases,
contracts and agreements and all rights of such Pledgor to receive moneys due
or to become due thereunder or pursuant thereto and to amend, modify, terminate
or exercise rights under such leases, contracts and agreements, but excluding
rights under (but not excluding Proceeds of) any lease, contract or agreement
(including, without limitation, any License) that by the terms thereof, or
under applicable law, cannot be assigned or a security interest granted therein
in the manner contemplated by this Agreement unless consent from the relevant
party or parties has been obtained and under the terms of which lease, contract
or agreement any such assignment or grant of a security interest therein in the
absence of such consent would, or could, result in the termination thereof, but
only to the extent that (y) such rights are subject to such contractual or
legal restriction and (z) such restriction is not, or could not be, rendered
ineffective pursuant to the Uniform Commercial Code of any relevant
jurisdiction or any other applicable law (including the Bankruptcy Code) or
principles of equity.

 

“Deposit Account” shall have the meaning ascribed
thereto in the Uniform Commercial Code, including, without limitation, each
deposit account of any Pledgor maintained

 

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with the Agent or any other bank or depository institution, whether now
owned or existing or hereafter acquired or arising and including, without
limitation, each concentration account and each collateral account, together
with all funds held from time to time therein and all certificates and
instruments from time to time representing, evidencing or deposited into any
such account.

 

“Document” shall have the meaning ascribed
thereto in the Uniform Commercial Code.

 

“Domain Name” shall mean the combination of
words and abbreviations that represents a uniquely identifiable internet protocol
address of a World Wide Web internet location.

 

“Equity Interest” shall mean, collectively, all
of the issued and outstanding shares, interests or other equivalents of capital
stock of any corporation at any time now or hereafter owned by any Pledgor
(including, without limitation, any corporation that is or hereafter becomes a
subsidiary of such Pledgor), whether voting or non-voting and whether common or
preferred, all partnership, joint venture, limited liability company or other
equity interests in any person not a corporation at any time now or hereafter
owned by any Pledgor (including, without limitation, any such person that is or
hereafter becomes a subsidiary of such Pledgor), all options, warrants and
other rights to acquire, and all securities convertible into, any of the
foregoing, all rights to receive interest, income, dividends, distributions,
returns of capital and other amounts (whether in cash, securities, property, or
a combination thereof), and all additional stock, warrants, options,
securities, interests and other property, from time to time paid or payable or
distributed or distributable in respect of any of the foregoing (but subject to
the provisions of Section 5.3),
including, without limitation, all rights of such Pledgor to receive amounts
due and to become due under or in respect of any Investment Agreement or upon
the termination thereof, all rights of access to the books and records of any
such person, and all other rights, powers, privileges, interests, claims and
other property in any manner arising out of or relating to any of the
foregoing, of whatever kind or character (including any tangible or intangible
property or interests therein), and whether provided by contract or granted or
available under applicable law in connection therewith, including, without
limitation, such Pledgor’s right to vote and to manage and administer the
business of any such person pursuant to any applicable Investment Agreement,
together with all certificates, instruments and entries upon the books of
securities intermediaries at any time evidencing any of the foregoing, in each
case whether now owned or existing or hereafter acquired or arising.

 

“Excluded Interests” means equipment and
fixtures as such terms are defined in the Uniform Commercial Code.

 

“General Intangibles” shall have the meaning
ascribed thereto in the Uniform Commercial Code, including, without limitation,
all payment intangibles and software, all Contracts, all Patent Collateral, all
Trademark Collateral, all Domain Name registrations, all Intercompany
Obligations, all rights under or evidenced by choses in action or causes of
action, all judgments, tax refund claims, claims against carriers and shippers,
claims under liens and insurance policies, all rights under security agreements,
guarantees, indemnities and other instruments and contracts securing or
otherwise relating to any of the foregoing, and all other intangible personal
property of every kind and nature, and all accessions, additions,

 

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improvements, modifications and upgrades to, replacements of and
substitutions for the foregoing, in each case whether now owned or existing or
hereafter acquired or arising, but excluding Accounts and excluding leases,
contracts and agreements (including, without limitation, Licenses) to the
extent excluded from Contracts under the definition of such term herein.

 

“Instruments” shall have the meaning ascribed
thereto in the Uniform Commercial Code, whether now owned or existing or
hereafter acquired, including those evidencing, representing, securing, arising
from or otherwise relating to any Accounts, Intercompany Obligations or other
Collateral.

 

“Intercompany Obligations” shall mean,
collectively, all indebtedness, obligations and other amounts at any time owing
to any Pledgor from any of the Borrower’s subsidiaries or affiliates and all
interest, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such indebtedness, obligations or other amounts.

 

“Inventory” shall have the meaning ascribed
thereto in the Uniform Commercial Code, including, without limitation, all
goods manufactured, acquired or held for sale or lease, all raw materials,
component materials, work-in-progress and finished goods, all supplies, goods
and other items and materials used or consumed in the manufacture, production,
packaging, shipping, selling, leasing or furnishing of such inventory or
otherwise in the operation of the business of such Pledgor, all goods in which
such Pledgor now or at any time hereafter has any interest or right of any
kind, and all goods that have been returned to or repossessed by or on behalf
of such Pledgor, in each case whether or not the same is in transit or in the
constructive, actual or exclusive occupancy or possession of such Pledgor or is
held by such Pledgor or by others for the account of such Pledgor, and in each
case whether now owned or existing or hereafter acquired or arising.

 

“Investment Agreement” shall mean any articles
or certificate of incorporation, partnership agreement, joint venture
agreement, limited liability company operating agreement, stockholders
agreement or other agreement creating, governing or evidencing any Pledged
Equity Interests and to which any Pledgor is now or hereafter becomes a party,
as any such agreement may be amended, modified, supplemented, restated or
replaced from time to time.

 

“Investment Property” shall have the meaning
ascribed thereto in the Uniform Commercial Code.

 

“License” shall mean any Patent License or
Trademark License.

 

“Partner Obligations” shall have the meaning
given to such term in Section 6.6.

 

“Patents” shall mean, collectively, all of each
Pledgor’s letters patent, whether under the laws of the United States or any
other country or jurisdiction, all recordings and registrations thereof and
applications therefor, including, without limitation, the inventions described
therein, all reissues, continuations, divisions, renewals, extensions,
continuations-in-part thereof, in each case whether now owned or existing or
hereafter acquired or arising.

 

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“Patent Collateral” shall mean, collectively,
all Patents and all Patent Licenses to which any Pledgor is or hereafter
becomes a party and all other General Intangibles embodying, incorporating,
evidencing or otherwise relating or pertaining to any Patent or Patent License,
in each case whether now owned or existing or hereafter acquired or arising.

 

“Patent License” shall mean any agreement,
whether written or oral, now or hereafter in effect granting to any third party
any right to make, use or sell any invention on which a Patent, now or
hereafter owned by any Pledgor or which any Pledgor otherwise has the right to
license, is in existence, or granting to any Pledgor any right to make, use or
sell any invention on which property of the type described in the definition of
Patent herein, now or hereafter owned by any third party, is in existence, and
all rights of any Pledgor under any such agreement.

 

“Permitted Liens” shall have the meaning given
to such term in Section 3.2.

 

“Proceeds” shall have the meaning given to such
term in Section 2.1.

 

“Pledged Equity Interests” shall mean all
Equity Interests not subject to the exception set forth in Section 2.1(vi) hereof.

 

“Records” shall mean all of each Pledgor’s
present and future books of account of every kind or nature, purchase and sale
agreements, invoices, ledger cards, bills of lading and other shipping
evidence, statements, correspondence, memoranda, credit files and other date
relating to the Collateral or any account debtor, together with the tapes,
disks, diskettes and other data and software storage media and devices, file cabinets
or containers in or on which the foregoing are stored (including any rights of
any Pledgor with respect to the foregoing maintained with or by any other
Person).

 

“Secured Obligations” shall have the meaning
given to such term in Section 2.2.

 

“Secured Parties” shall mean, collectively, the
Lenders (including, without limitation, the Agent as issuer of Letters of
Credit and any counterparty to any Derivative Obligation with the Borrower
which is required or permitted under the Credit Agreement that is or was at the
time such Derivative Obligation was entered into, a Lender or an affiliate of a
Lender) and the Agent.

 

“Securities Act” shall have the meaning given
to such term in Section 6.5.

 

“Termination Requirements” shall have the
meaning given to such term in Section 8.3.

 

“Trademarks” shall mean, collectively, all of
each Pledgor’s trademarks, service marks, trade names, corporate and company
names, business names, fictitious business names, service marks, logos, trade
dress, trade styles, other source or business identifiers, designs and general
intangibles of a similar nature, whether under the laws of the United States or
any other country or jurisdiction, all recordings and registrations thereof and
applications therefor (but excluding any application to register any trademark,
service mark or other mark prior to the filing under applicable law of a
verified statement of use (or the equivalent) for such trademark,

 

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service mark or other mark if the creation of a Lien thereon or
security interest therein would void or invalidate such trademark, service mark
or other mark), all renewals and extensions thereof, all rights corresponding
thereto, and all goodwill associated therewith or symbolized thereby, in each
case whether now owned or existing or hereafter acquired or arising.

 

“Trademark Collateral” shall mean,
collectively, all Trademarks and Trademark Licenses to which any Pledgor is or
hereafter becomes a party and all other General Intangibles embodying,
incorporating, evidencing or otherwise relating or pertaining to any Trademark
or Trademark License, in each case whether now owned or existing or hereafter
acquired or arising.

 

“Trademark License” shall mean any agreement,
whether written or oral, now or hereafter in effect granting any right to any
third party under any Trademark now or hereafter owned by any Pledgor or which
any Pledgor otherwise has the right to license, or granting any right to any
Pledgor under any property of the type described in the definition of Trademark
herein now or hereafter owned by any third party, and all rights of any Pledgor
under any such agreement.

 

“Uniform Commercial Code” shall mean the
Uniform Commercial Code as the same may be in effect from time to time in the
State of New York; provided that if, by reason of applicable law, the
validity or perfection or the effect of perfection or non-perfection or the
priority of any security interest in any Collateral granted under this
Agreement is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than New York, then as to the validity or perfection or the
effect of perfection or non-perfection or the priority, as the case may be, of
such security interest, “Uniform Commercial Code” shall mean the Uniform
Commercial Code as in effect in such other jurisdiction.

 

1.2                                 Other
Terms.  All terms in this Agreement
that are not capitalized shall have the meanings provided by the Uniform
Commercial Code to the extent the same are used or defined therein.

 

ARTICLE
II

 

CREATION
OF SECURITY INTEREST

 

2.1                                 Pledge
and Grant of Security Interest. 
Each Pledgor hereby pledges and assigns to the Agent, for the ratable
benefit of the Secured Parties, and grants to the Agent, its successors and
assigns, for the ratable benefit of the Secured Parties, a Lien upon and
security interest in, all of such Pledgor’s right, title and interest in and to
the following, in each case whether now owned or existing or hereafter acquired
or arising or in which such Pledgor now has or at any time in the future may
acquire any right, title or interest (collectively, the “Collateral”):

 

(i)                                     all
Accounts;

 

(ii)                                  all
Chattel Paper;

 

(iii)                               all
Contracts;

 

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(iv)                              all
Deposit Accounts;

 

(v)                                 all
Documents and Records;

 

(vi)                              all
Equity Interests; provided, however, that no Equity Interests of
any issuer incorporated in a jurisdiction outside of the United States of
America shall be included hereunder to the extent that (A) the aggregate amount
of Equity Interests of such issuer pledged hereunder would exceed 65% of such
issuer’s Equity Interests and (B) solely with respect to WP Canada, a
percentage of such Equity Interests pledged hereunder exceeding 65% would
result in adverse tax consequences to the Borrower;

 

(vii)                           all
General Intangibles;

 

(viii)                        all
Instruments and Intercompany Obligations;

 

(ix)                                all
Inventory;

 

(x)                                   all
Investment Property;

 

(xi)                                all
Patent Collateral;

 

(xii)                             all
Trademark Collateral;

 

(xiii)                          to the
extent not covered or not specifically excluded by clauses (i) through (xii)
above, or the definitions of the terms included therein, all of such Pledgor’s
other personal property, including, without limitation, all goods, supporting
obligations and letter-of-credit rights, whether now owned or existing or
hereafter arising or acquired, but excluding the Excluded Interests; and

 

(xiv)                         any and
all proceeds, as such term is defined in the Uniform Commercial Code, products,
rents and profits of or from any and all of the foregoing and, to the extent
not otherwise included in the foregoing, (w) all payments under any insurance
(whether or not the Agent is the loss payee thereunder), indemnity, warranty or
guaranty with respect to any of the foregoing Collateral, (x) all payments in
connection with any requisition, condemnation, seizure or forfeiture with
respect to any of the foregoing Collateral, (y) all claims and rights to
recover for any past, present or future infringement or dilution of or injury
to any Patent Collateral or Trademark Collateral, and (z) all other amounts
from time to time paid or payable under or with respect to any of the foregoing
Collateral (collectively, “Proceeds”). 
Each Pledgor authorizes the Agent to file financing statements under the
Uniform Commercial Code describing the Collateral.

 

2.2                                 Security
for Secured Obligations.  This
Agreement and the Collateral of each Pledgor secure the full and prompt
payment, at any time and from time to time as and when due (whether at the
stated maturity, by acceleration or otherwise), of all liabilities and
obligations of such Pledgor, whether now existing or hereafter incurred,
created or arising and whether direct or indirect, absolute or contingent, due
or to become due, including, without limitation, all obligations in respect of
overdrafts and related liabilities owed to the Agent or any of its Affiliates
and arising from treasury, depository and cash management services in
connection 

 

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with any automated clearing house transfer of funds, and whether under,
arising out of or in connection with the Credit Agreement, this Agreement, any
Pledgor Guaranty, any other guaranty or any of the other Financing Documents to
which it is or hereafter becomes a party, or any Derivative Obligation required
or permitted under the Credit Agreement and to which the Borrower and any
Secured Party are parties, including, without limitation (i) in the case of the
Borrower, all principal of and interest on the Loans, all fees, expenses,
indemnities and other amounts payable by the Borrower under the Credit
Agreement or any other Financing Document (including interest accruing after
the filing of a petition or commencement of a case by or with respect to the
Borrower seeking relief under any applicable federal and state laws pertaining
to bankruptcy, reorganization, arrangement, moratorium, readjustment of debts,
dissolution, liquidation or other debtor relief, specifically including,
without limitation, the Bankruptcy Code and any fraudulent transfer and
fraudulent conveyance laws, whether or not the claim for such interest is
allowed in such proceeding), and all obligations of the Borrower to any Secured
Party under any Derivative Obligation required or permitted under the Credit
Agreement and to which the Borrower and such Secured Party are parties, and
(ii) in the case of any Guarantor Pledgor, all of its liabilities and
obligations as a Guarantor pursuant to its respective Pledgor Guaranty; and in
each case under (i) and (ii) above, (A) all such liabilities and obligations
that, but for the operation of the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due, and (B) all fees, costs and expenses payable
by such Pledgor under Section 8.1
(the liabilities and obligations of the Pledgors described in this Section 2.2, collectively, the “Secured
Obligations”).

 

2.3                                 Excluded
Collateral.  Notwithstanding
anything to the contrary contained in Section
2.1, no Lien is or shall be created in favor of the Agent in any
Pledgor’s right, title and interest in any Excluded Interests.

 

ARTICLE
III

 

REPRESENTATIONS
AND WARRANTIES

 

Each Pledgor represents and warrants as follows:

 

3.1                                 Defaults.  Each Pledgor acknowledges that any default
in the due observance or performance by it of any covenant, condition or
agreement contained herein shall constitute an Event of Default to the extent
provided in Article VII of the
Credit Agreement.

 

3.2                                 Ownership
of Collateral.  Each Pledgor owns,
or has valid rights as a lessee or licensee, or the power to transfer or pledge
with respect to, all Collateral purported to be pledged by it hereunder, free
and clear of any Liens, except for the Liens granted to the Agent for the
benefit of the Secured Parties pursuant to this Agreement and except for other
Liens permitted pursuant to Section 6.02
of the Credit Agreement (“Permitted Liens”). 
No security agreement, financing statement or other public notice with
respect to all or any part of the Collateral is on file or of record in any
government or public office, and no Pledgor has filed or consented to the
filing of any such statement or notice, except (i) Uniform Commercial Code

 

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financing statements naming the Agent as secured party and Uniform
Commercial Code financing statements which have been terminated, (ii) as may be
otherwise permitted by the Credit Agreement.

 

3.3                                 Security
Interests; Filings.  This Agreement,
together with (i) the filing of duly completed and authorized Uniform
Commercial Code financing statements (A) naming each Pledgor as debtor, (B)
naming the Agent as secured party, and (C) describing the Collateral, in the
jurisdictions set forth with respect to such Pledgor on Annex B hereto,
(ii) the registration of transfer thereof to the Agent on the issuer’s
books or the execution by the issuer of a control agreement satisfying the
requirements of Section 8-106 (or its successor provision) of the Uniform
Commercial Code with regard to uncertificated securities and Investment
Property (other than certificated securities) included in the Collateral, and
(iii) the delivery to the Agent of all certificated securities and
Instruments included in the Collateral together with undated stock powers or
instruments of transfer duly executed in blank, creates, and at all times shall
constitute, a valid and perfected security interest in and Lien upon the
Collateral in favor of the Agent, for the benefit of the Secured Parties, to
the extent that Articles 8 and 9 of the Uniform Commercial Code are applicable
thereto, superior and prior to the rights of all other persons therein (except
for Permitted Liens), and no other or additional filings, registrations,
recordings or actions are or shall be necessary or appropriate in order to
perfect or maintain the perfection and priority of such Lien and security
interest, other than actions required with respect to Collateral of the types
excluded from Articles 8 or 9 of the Uniform Commercial Code or from the filing
requirements under Article 9 of the Uniform Commercial Code by reason of
Sections 9-309, 9-310, 9-311 and 9-312 of the Uniform Commercial Code and other
than continuation statements required under the Uniform Commercial Code (it
being specifically noted that the Agent may at its option, but shall not be
required to, require subject to the limitations set forth in Sections 3.12 and 4.13 hereof that any bank or other
depository institution at which a Deposit Account is maintained enter into a
written agreement in form satisfactory to the Agent or take such other action
as may be necessary to perfect the security interest of the Agent in such
Deposit Account and the funds therein).

 

3.4                                 Locations.  Annex C lists, as to each Pledgor,
(i) the addresses of its chief executive office, each other place of business
and for any Pledgor which is organized under the laws of any state, its state
of registration and registration I.D. number, (ii) the address of each location
where all original invoices, ledgers, chattel paper, Instruments and other
records or information evidencing or relating to the Collateral of such Pledgor
are maintained, and (iii) the address of each location at which any Inventory
owned by such Pledgor is kept or maintained, in each instance except for any
new locations established in accordance with the provisions of Section 4.2.  Except as may be otherwise noted therein, all locations
identified in Annex C are leased by the applicable Pledgor.  No Pledgor presently conducts business under
any prior or other corporate or company name or under any trade or fictitious
names, except as indicated beneath its name on Annex C, and no Pledgor
has entered into any contract or granted any Lien within the past five years
under any name other than its legal name or a trade or fictitious name
indicated on Annex C.  Each trade
or fictitious name is a trade name and style (and not the name of an
independent corporation or other legal entity) by which a Pledgor may identify
and sell certain of its goods or services and conduct a portion of its
business; all related Accounts are owned solely by the applicable Pledgors and
are subject to the Liens and other terms of this Agreement; and any dispute
which may arise with Customers with respect to the products

 

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invoiced under the name of any trade or fictitious name are subject to
the terms of this Agreement as though such trade or fictitious name did not
exist.

 

3.5                                 Authorization;
Consent.  No authorization, consent
or approval of, or declaration or filing with, any Governmental Authority
(including, without limitation, any notice filing with state tax or revenue
authorities required to be made by account creditors in order to enforce any
Accounts in such state) is required for the valid execution, delivery and performance
by any Pledgor of this Agreement, the grant by it of the Lien and security
interest in favor of the Agent provided for herein, or the exercise by the
Agent of its rights and remedies hereunder, except for (i) the filings and
actions described in Section 3.3, (ii) in the case of Accounts owing from any
federal governmental agency or authority, the filing by the Agent of a notice
of assignment in accordance with the federal Assignment of Claims Act of 1940,
as amended, and (iii) in the case of Pledged Equity Interests, such filings and
approvals as may be required in connection with a disposition of any such
Collateral by laws affecting the offering and sale of securities generally.

 

3.6                                 No
Restrictions.  There are no
statutory or regulatory restrictions, prohibitions or limitations on any
Pledgor’s ability to grant to the Agent a Lien upon and security interest in
the Collateral pursuant to this Agreement or (except for the provisions of the
federal Assignment of Claims Act of 1940, as amended) on the exercise by the
Agent of its rights and remedies hereunder (including any foreclosure upon or
collection of the Collateral), and there are no contractual restrictions on any
Pledgor’s ability so to grant such Lien and security interest.

 

3.7                                 Accounts.  (i)  All
Accounts owned by the Pledgors on the Effective Date constitute bona fide
Receivables arising in the ordinary course of business, the amount of which is
actually owing and payable to the Pledgors in the ordinary course of business.  All such Accounts, net of a bad debt reserve
determined in accordance with generally accepted accounting principles, are
collectible in accordance with their terms.

 

(ii)                                  
Each Account constituting an Eligible Receivable arising after the Effective
Date shall be on the date of its creation a good and valid account representing
an undisputed bona fide indebtedness incurred or an amount indisputably owed by
the Customer therein named, for a fixed sum, to the extent, set forth in the
invoice relating thereto, with respect to an absolute sale and delivery upon
the specified terms of goods sold by such Pledgor, or work, labor and/or
services theretofore rendered by such Pledgor; no such Account is or shall at
any time be subject to any defense, offset, counterclaim, discount or allowance
except as may be stated in the invoice relating thereto or discounts and
allowances as may be customary in such Pledgor’s business, and such Pledgor has
no reason to believe such Account will not be paid when due; none of the
transactions underlying or giving rise to any such Account shall violate any
applicable state or federal laws or regulations, and all documents relating to
any such Account shall be legally sufficient under such laws or regulations and
are legally enforceable in accordance with their terms; to the best knowledge
of such Pledgor, each customer, guarantor or endorser is solvent and will
continue to be fully able to pay such Account on which it is obligated in full
when due; no agreement under which any deduction or offset of any kind, other
than normal trade discounts and discounts granted by a Pledgor in the ordinary
course of its business in accordance with its historical practices, have been
granted by such Pledgor, at or before the time such Account was created; all
documents and agreements relating to such

 

10

 

Account shall be true and correct and in all respects what they purport
to be; to the best of such Pledgor’s knowledge, all signatures and endorsements
that appear on all documents and agreements relating to such Account are
genuine and all signatories and endorsers shall have full capacity to contract;
and such Account is not evidenced by Chattel Paper or an Instrument, or if so,
such Chattel Paper or Instrument shall be duly endorsed to the order of the
Agent and delivered to the Agent to be held as Collateral hereunder.

 

3.8                                 Equity
Interests.  As of the date hereof,
the Equity Interests required to be pledged hereunder by each Pledgor that owns
any Equity Interests consist of the number and type of shares of capital stock
(in the case of issuers that are corporations) or the percentage and type of
other Equity Interests (in the case of issuers other than corporation) as
described beneath such Pledgor’s name in Annex A.  All of the Equity Interests have been duly
and validly issued and are fully paid and nonassessable (or, in the case of
partnership, limited liability company or similar Equity Interests, not subject
to any capital call or other additional capital requirement) and not subject to
any preemptive rights, warrants, options or similar rights or restrictions in
favor of third parties or any contractual or other restrictions upon transfer
other than as may be permitted under the Credit Agreement.

 

3.9                                 Specified
Contracts.  As to each (i)
Investment Agreement, and (ii) each material Contract to which any Pledgor is
now or hereafter becomes a party, (w) such Pledgor is not in default in any
material respect under such Investment Agreement or material Contract, and to
the knowledge of such Pledgor, none of the other parties to such Investment
Agreement or material Contract is in default in any material respect thereunder
(except as shall have been disclosed in writing to the Agent), (x) such
Investment Agreement or material Contract is, or at the time of execution will
be, the legal, valid and binding obligations of all parties thereto,
enforceable against such parties in accordance with the respective terms
thereof, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors’ rights generally, and no
defense, offset, deduction or counterclaim will exist thereunder in favor of
any such party, (y) the performance by such Pledgor of its obligations
under such Investment Agreement or material Contract in accordance with its
terms will not contravene such Investment Agreement and any statute, law,
treaty, rule, regulation, order, decree, injunction or determination of any
arbitrator or Governmental Authority applicable to or binding on such Pledgor
or any contractual restriction binding on or affecting such Pledgor or any of
its properties, and will not result in or require the creation of any Lien upon
or with respect to any of its properties, except for Permitted Liens and (z) such
Pledgor has (or promptly upon the execution thereof will have) furnished the
Agent with a correct and complete copy of each Investment Agreement (certified
by the appropriate state official to the extent such Agreement is registered
with a state, together with a good standing certificate).

 

3.10                           Intellectual
Property.  Each Pledgor owns or
possesses the valid right to use all of its Patents, Trademarks and Domain
Names; all registrations therefor have been validly issued under applicable law
and are in full force and effect; all applicable material maintenance fees,
affidavits and other filings or payments are current and shall remain current
throughout the duration of this Agreement; no claim has been made in writing
or, to the knowledge of such Pledgor, orally, that any of such Patents,
Trademarks and Domain Names is invalid or unenforceable or violates or
infringes the rights of any other person, and there is no such violation or
infringement in existence; and to the knowledge of such Pledgor, no other person
is

 

11

 

presently infringing upon the rights of such Pledgor with regard to any
such Patents, Trademarks and Domain Names.

 

3.11                           Documents
of Title.  No material bill of
lading, warehouse receipt or other document or instrument of title is
outstanding with respect to any Collateral other than Inventory in transit in
the ordinary course of business to a location set forth on Annex C
or to a Customer of a Pledgor.

 

3.12                           Deposit
Accounts.  Annex D
correctly sets forth all Deposit Accounts of each Pledgor as of the date
hereof.  Each Deposit Account (other
than Deposit Accounts maintained with the Agent) with an average monthly
balance exceeding $100,000 is covered by an account agreement, in form and
substance satisfactory to the Agent, but in no event shall the aggregate
average monthly balances of Deposit Accounts (other than Deposit Accounts
maintained with the Agent) not covered by satisfactory account agreements
exceed $100,000.

 

ARTICLE
IV

 

COVENANTS

 

4.1                                 Use
and Disposition of Collateral.  So
long as no Event of Default shall have occurred and be continuing, each Pledgor
may, in any lawful manner not inconsistent with the provisions of this
Agreement and the other Financing Documents, use, control and manage the
Collateral in the operation of its businesses, and receive and use the income,
revenue and profits arising therefrom and the Proceeds thereof, in the same
manner and with the same effect as if this Agreement had not been made; provided,
however, that no Pledgor will sell or otherwise dispose of, grant any
option with respect to, or grant any Lien with respect to or otherwise encumber
any of the Collateral or any interest therein, except for the security interest
created in favor of the Agent hereunder and except as may be otherwise
expressly permitted in accordance with the terms of this Agreement and the
Credit Agreement (including any applicable provisions therein regarding
delivery of proceeds of sale or disposition to the Agent).

 

4.2                                 Change
of Name, Locations, etc.  No Pledgor
will (i) change its name, or, if applicable, the state in which it is
registered, (ii) change its chief executive office from the location
thereof listed on Annex C, (iii) remove any Collateral (other than
goods in transit), or any books, records or other information relating to
Collateral, from the applicable location thereof listed on Annex C,
or keep or maintain any Collateral at a location not listed on Annex C,
unless in each case such Pledgor has (A) given fifteen (15) days’ prior written
notice to the Agent of its intention to do so, together with information
regarding any such new location and such other information in connection with
such proposed action as the Agent may reasonably request, and (B) delivered to the
Agent fifteen (15) days prior to any such change or removal of such documents,
instruments and financing statements as may be required by the Agent, all in
form and substance satisfactory to the Agent, paid all necessary filing and
recording fees and taxes, and taken all other actions reasonably requested by
the Agent (including, at the request of the Agent, delivery of opinions of
counsel reasonably satisfactory to the Agent to the effect that all such
actions have been taken), in order to perfect and maintain the Lien upon and
security interest in the Collateral provided for herein in accordance with the
provisions of Section 3.3.

 

12

 

4.3                                 Records;
Inspection.

 

(a)                                  Each
Pledgor will keep and maintain at its own cost and expense satisfactory and
complete records of the Accounts and all other Collateral, including, without
limitation, records of all payments received, all credits granted thereon, all
merchandise returned and all other documentation relating thereto, and will
furnish to the Agent from time to time such statements, schedules and reports
(including, without limitation, accounts receivable aging schedules) with
regard to the Collateral as the Agent may reasonably request.

 

(b)                                 Each
Pledgor shall, during normal business hours, make available to the Agent for
inspection and review at such Pledgor’s offices copies of all invoices and
other documents and information relating to the Collateral (including, without
limitation, itemized schedules of all collections of Accounts, showing the name
of each account debtor, the amount of each payment and such other information
as the Agent shall reasonably request); provided that such Pledgor may, at its
option, have one or more employees or representatives present at any such
inspection or review.  At the request of
the Agent, each Pledgor will legend, in form and manner satisfactory to the
Agent, the books, records and materials evidencing or relating to the
Collateral with an appropriate reference to the fact that the Collateral has
been assigned to the Agent and that the Agent has a security interest
therein.  The Agent shall have the right
to make test verifications of Accounts in any reasonable manner and through any
reasonable medium, and each Pledgor agrees to furnish all such reasonable,
assistance and information as the Agent may require in connection therewith, provided,
that, so long as no Event of Default shall have occurred and be continuing, any
such verification shall be conducted in the name of the Pledgor or in such
other manner so as not to disclose the Agent’s identity or interest in the
Collateral.

 

4.4                                 Accounts.   (a) 
Unless notified otherwise by the Agent in accordance with the terms
hereof, each Pledgor shall endeavor to collect its Accounts and all amounts
owing to it thereunder in the ordinary course of its business consistent with
past practices and shall apply forthwith upon receipt thereof all such amounts
as are so collected to the outstanding balances thereof, and in connection
therewith, upon the occurrence and continuance of an Event of Default, shall,
at the request of the Agent, take such action as the Agent may deem necessary
or advisable (within applicable laws) to enforce such collection.  No Pledgor shall, except to the extent done
in the ordinary course of its business consistent with past practices and in
accordance with sound business judgment and provided that no Event of Default
shall have occurred and be continuing, (i) grant any extension of the time
for payment of any Account, (ii) compromise or settle any Account for less
than the full amount thereof, (iii) release, in whole or in part, any
person or property liable for the payment of any Account, or (iv) allow
any credit or discount on any Account. 
Each Pledgor shall promptly inform the Agent of any material disputes
with any account debtor or obligor and of any claimed offset and counterclaim
that may be asserted with respect thereto, where such Pledgor reasonably
believes that the likelihood of payment by such account debtor is materially
impaired, indicating in detail the reason for the dispute, all claims relating
thereto and the amount in controversy.

 

(b)                                 Each
Pledgor will, at its own cost and expense, (i) arrange for remittances on
Accounts to be made directly to lockboxes designated by the Agent and which may
be at other financial institutions acceptable to the Agent subject to an
acceptable tri-party agreement, and (ii) promptly deposit, or cause to be
deposited, all payments received by such Pledgor on

 

13

 

account of Accounts and the Proceeds of other Collateral or from the
sale or other disposition of assets permitted pursuant to the Credit Agreement,
whether in the form of cash, checks, notes, drafts, bills of exchange, money
orders or otherwise, in the cash collateral account established in connection
therewith in precisely the form received (but with any endorsements of such
Pledgor necessary for deposit or collection), and until such payments are
deposited, such payments shall be deemed to be held in trust by such Pledgor
for and as the Lenders’ property and shall not be commingled with such
Pledgor’s other funds.  If at any time
(i) Availability shall be less than $5,000,000 or (ii) a Default shall have
occurred and be continuing, all remittances and payments that are deposited in
accordance with the foregoing will be applied by the Agent to reduce the
outstanding balance (or if such balance is reduced to zero, to be held by the
Agent as cash collateral) of the Loans, subject to final collection in cash of
the item deposited and, if such lockboxes are maintained with the Agent,
subject to the assessment of a two-day collection charge.  Upon the occurrence and continuance of an
Event of Default, the Agent may send a notice of assignment and/or notice of
the Agent’s security interest to any and all customers or any third party
holding or otherwise concerned with any of the Collateral, and thereafter the
Agent shall have the sole right to collect Accounts and/or take possession of
the Collateral and the books and records relating thereto and to establish
Collateral Accounts as provided for in Section 6.3 hereof.

 

4.5                                 Instruments
and Chattel Paper.  Each Pledgor
agrees that if any Intercompany Obligations, Accounts or other Collateral shall
at any time be evidenced by a promissory note, Chattel Paper or other
Instrument (other than checks or other Instruments for deposit in the ordinary
course of business), the same shall promptly be duly endorsed to the order of
the Agent and delivered to the Agent to be held as Collateral hereunder.  At Agent’s option, each Pledgor shall, or
Agent may at any time on behalf of any Pledgor, cause the original of any such
Instrument or Chattel Paper to be conspicuously marked in a form and manner
acceptable to Agent with the following legend referring to Chattel Paper or
Instruments as applicable:  “This
[Chattel Paper] [Instrument] is subject to the security interest of JPMorgan
Chase Bank, as Administrative and Collateral Agent, and any sale, transfer,
assignment or encumbrance of this [Chattel Paper] [Instrument] violates the
rights of such secured party.”  In the
event that any Pledgor shall at any time hold or acquire an interest in any
electronic chattel Paper or any “transferable record” (as such term is defined
in Section 201 of the Federal Electronic Signatures in Global and National
Commerce Act or in Section 16 of the Uniform Electronic Transactions Act as in
effect in any relevant jurisdiction), such Pledgor shall promptly notify Agent
thereof in writing.  Promptly upon
Agent’s request, such Pledgor shall take, or cause to be taken, such actions as
Agent may reasonably request to give Agent “control” (as contemplated by
Section 9-314 (or its successor provision) of the Uniform Commercial Code) of
such electronic Chattel Paper under the Uniform Commercial Code and control of
such transferable record under Section 201 of the Federal Electronic Signatures
in Global and National Commerce Act or, as the case may be, Section 16 of the Uniform
Electronic Transactions Act, as in effect in such jurisdiction.

 

4.6                                 Intentionally
Deleted.

 

4.7                                 Inventory.  Each Pledgor will, in accordance with sound
business practices, maintain all Inventory held by it or on its behalf in good
saleable or useable condition.

 

14

 

Unless notified otherwise by the Agent in accordance with the terms
hereof, each Pledgor may, in any lawful manner not inconsistent with the
provisions of this Agreement and the other Financing Documents, process, use
and, in the ordinary course of business and as permitted under the Credit
Agreement, but not otherwise, sell its Inventory.  Without limiting the generality of the foregoing, each Pledgor
agrees that it shall not permit any Inventory to be in the possession of any
bailee, warehouseman, agent or processor at any time unless such bailee,
warehouseman, agent or processor shall have been notified of the security
interest created by this Agreement and such Pledgor shall have obtained, at
such Pledgor’s sole cost and expense, a written agreement by such person to
hold such Inventory subject to the security interest created by this Agreement
and the instructions of the Agent and to waive and release any Lien (whether
arising by operation of law or otherwise) such person may have with respect to
such Inventory, such agreement to be in form and substance satisfactory to the
Agent.  Each Pledgor further agrees that
its Inventory will be produced in compliance with the applicable requirements
of the Fair Labor Standards Act, as amended.

 

4.8                                 Contracts.  Each Pledgor will, at its expense, at all
times perform and comply with, in all material respects, all terms and
provisions of each material Contract to which it is or hereafter becomes a
party required to be performed or complied with by it (including, without
limitation, the payment of all rent due and payable under each lease) and
enforce the terms and provisions thereof in accordance with its terms, and will
not waive, amend or modify any provision thereof in any manner other than in
the ordinary course of business of such Pledgor in accordance with past
practices and for a valid economic reason benefitting such Pledgor (provided
that in no event may any waiver, amendment or modification be made that could
reasonably be expected to have a Material Adverse Effect).  Each Pledgor will deliver copies of each
material Contract to which it is a party and each material amendment or
modification thereof to the Agent promptly upon the execution and delivery
thereof.  With regard to all leases,
contracts and agreements that are excluded from the definition of the term “Contracts,”
each Pledgor covenants and agrees to exercise all of its material rights and
remedies under such leases, agreements and contracts to which it is a party in
a commercially reasonable manner consistent with past practices.  No Pledgor will enter into any material
Contract (including leases and Licenses) that by its terms prohibits the assignment
of such Pledgor’s rights and interest thereunder in the manner contemplated by
this Agreement, other than as may be entered into in the ordinary course of
business of such Pledgor in accordance with past practices and for a valid
economic reason benefitting such Pledgor. 
Each Pledgor further covenants and agrees to use its commercially
reasonable efforts to obtain any required consent to the collateral assignment
and grant of security interest in any material Contract (including personal
property leases and Licenses), in form and substance satisfactory to the Agent,
upon the request of the Agent, and will deliver copies thereof to the Agent
promptly upon execution and delivery thereof. 
As to all real estate leases by each Pledgor after the date hereof, such
Pledgor shall use its commercially reasonable effort to obtain waivers from
landlords of all such real estate, substantially in form reasonably acceptable
to the Agent.  Each Pledgor will notify
the Agent promptly in writing upon any termination of any material Contract, in
whole or in part, or any material breach, default or event of default by any
party thereunder.

 

4.9                                 Intentionally
Deleted.

 

4.10                           Intentionally
Deleted.

 

15

 

4.11                           Intellectual
Property.

 

(a)                                  Each
Pledgor (either itself or through its licensees or its sublicensees) will, for
each material Trademark used in the conduct of its business, use its
commercially reasonable efforts to (i) maintain such Trademark in full
force and effect, free from any claim of abandonment or invalidity for non-use,
(ii) maintain the quality of products and services offered under such
Trademark, (iii) display such Trademark with notice of federal
registration to the extent required by applicable law, (iv) take
appropriate and reasonable steps to police and defend such Trademark and
prevent or arrest infringement, dilution or other harm to such Trademark and
(v) not knowingly use or knowingly permit the use of such Trademark in
violation of any third-party rights.

 

(b)                                 Each
Pledgor (either itself or through its licensees or sublicensees) will refrain
from committing any act, or omitting any act, whereby any material Patent used
in the conduct of such Pledgor’s business may become invalidated or dedicated
to the public, and shall continue to mark any products covered by a material
Patent with the relevant patent number as required by applicable patent laws.

 

(c)                                  Each
Pledgor shall notify the Agent immediately if it knows or has reason to know
that any material Patent or Trademark used in the conduct of its business may
become abandoned or dedicated to the public, or of any adverse determination or
development (including the institution of, or any such determination or
development in, any proceeding in the U.S. Patent and Trademark Office or any
court) regarding, such Pledgor’s ownership of any material Patent or Trademark,
its right to register the same, or to keep and maintain the same.

 

(d)                                 Each
Pledgor will take all necessary steps that are consistent with the practice in
any proceeding before the U.S. Patent and Trademark Office or any office or
agency in any political subdivision of the United States or in any other
country or any political subdivision thereof, to maintain and pursue each
application relating to any material Patents or Trademarks (and to obtain the
relevant grant or registration) and to maintain each registration of any
Patents or Trademarks used in the conduct of such Pledgor’s business, including
the filing of applications for renewal, affidavits of use, affidavits of
incontestability and maintenance fees, and, if consistent with sound business
judgment, to initiate opposition, interference and cancellation proceedings
against third parties.

 

(e)                                  In
the event that any Collateral consisting of a material Patent or Trademark used
in the conduct of any Pledgor’s business is believed infringed, misappropriated
or diluted by a third party, such Pledgor shall notify the Agent promptly after
it learns thereof and shall, if consistent with sound business judgment,
promptly sue for infringement, misappropriation or dilution and to recover any
and all damages for such infringement, misappropriation or dilution, and take
such other actions as are appropriate under the circumstances to protect such
Collateral.

 

(f)                                    At
the request of the Agent following the occurrence and during the continuance of
any Event of Default, each Pledgor shall use its commercially reasonable
efforts to obtain all requisite consents or approvals from the licensor of each
License included within the

 

16

 

Patent Collateral or Trademarks Collateral to effect the assignment of
all of such Pledgor’s right, title and interest thereunder to the Agent or its
designee.

 

4.12                           Delivery
of Collateral.  All certificates or
instruments representing or evidencing any material Account, Intercompany
Obligation, Pledged Equity Interest or other Collateral delivered to the Agent
pursuant hereto, shall be in form suitable for transfer by delivery and shall
be delivered together with undated stock powers duly executed in blank,
appropriate endorsements or other necessary instruments of registration,
transfer or assignment, duly executed and in form and substance satisfactory to
the Agent, and in each case such other instruments or documents as the Agent
may reasonably request.

 

4.13                           Deposit
and Collection Procedures.  Each
Pledgor agrees that, upon the creation of a new Deposit Account (other than a
new Deposit Account created with the Agent) with an average monthly balance
exceeding $100,000, it will immediately, enter into an account agreement for
such Deposit Account in form and substance satisfactory to the Agent; provided
that in no event shall the aggregate average monthly balances of Deposit
Accounts (other than Deposit Accounts maintained with the Agent) not covered by
such account agreements exceed $100,000. 
Subject to the foregoing exceptions, no Proceeds of Accounts will be
deposited in or at any time transferred to a Deposit Account other than a Deposit
Account covered by an account agreement in form and substance satisfactory to
the Agent or a Deposit Account maintained with the Agent.

 

4.14                           Control
of Investment Property and Other Collateral.  If any Investment Property (whether now owned or hereafter
acquired) is included in the Collateral, each applicable Pledgor will notify
the Agent thereof and, at the request of the Agent, will promptly take and
cause to be taken all actions required under Articles 8 and 9 of the Uniform
Commercial Code and any other applicable law to enable the agent to acquire
“control” (within the meaning of such term under Section 8-106 (or its
successor provision) of the Uniform Commercial Code) of such Investment
Property and as may be otherwise necessary or deemed appropriate by the Agent
to perfect the security interest of the Agent therein.  In that connection, each applicable Pledgor
shall execute, and cause to be executed, a control agreement in the form
provided by the Agent.  In the event
that any Pledgor shall be entitled to or shall receive any right to payment
under any letter of credit, banker’s acceptance or any similar instrument,
whether as beneficiary thereof or otherwise after the date hereof, such Pledgor
shall promptly notify Agent thereof in writing.  Such Pledgor shall immediately, as Agent may specify, either (i)
deliver, or cause to be delivered to Agent, with respect to any such letter of
credit, banker’s acceptance or similar instrument, the written agreement of the
issuer and any other nominated person obligated to make any payment in respect thereof
(including any confirming or negotiating bank), in form and substance
satisfactory to Agent, consenting to the assignment of the proceeds of the
letter of credit to Agent by Pledgor and agreeing to make all payments thereon
directly to Agent or as Agent may otherwise direct or (ii) cause Agent to
become, at such Pledgor’s expense, the transferee beneficiary of the letter of
credit, banker’s acceptance or similar instrument (as the case may be).  In the event that any Pledgor shall at any
time after the date hereof have any Commercial Tort Claims in excess of
$100,000 prior to the occurrence of an Event of Default, and any Commercial
Tort Claim after the occurrence of an Event of Default, such Pledgor shall
promptly notify Agent thereof in writing, which notice shall (i) set forth in
reasonable detail the basis for and nature of such Commercial Tort Claim and
(ii) include the express grant by such

 

17

 

Pledgor to Agent of a security interest in such Commercial Tort Claim
(and the proceeds thereof).  In the
event that such notice does not include such grant of a security interest, the
sending thereof by such Pledgor to Agent shall be deemed to constitute such
grant to Agent.  Upon the sending of
such notice, any Commercial Tort Claim described therein shall constitute part
of the Collateral and shall be deemed included therein.  Without limiting the authorization of Agent
provided for in this Agreement to file financing statements, Agent is hereby
irrevocably authorized from time to time and at any time to file financing
statements naming Agent or its designee as secured party and any such Pledgor
as debtor, or any amendments to any financing statements, covering any such
Commercial Tort Claim.

 

4.15                           Protection
of Security Interest.  Each Pledgor
agrees that it will use commercially reasonable efforts, at its own cost and
expense, to take any and all actions necessary to warrant and defend the right,
title and interest of the Agent and Secured Parties in and to the Collateral
against the claims and demands of all other persons.

 

ARTICLE
V

 

CERTAIN
PROVISIONS RELATING TO EQUITY INTERESTS

 

5.1                                 Ownership;
After-Acquired Equity Interests.

 

(a)                                  Except
to the extent otherwise expressly permitted by or pursuant to the Credit
Agreement, each Pledgor will cause the Pledged Equity Interests to constitute
at all times 100% of the capital stock or other Equity Interests in each issuer
held by such Pledgor thereof, such that the issuer thereof shall be a wholly
owned subsidiary of such Pledgor, and unless the Agent shall have given its
prior written consent, no Pledgor will cause or permit any such issuer to issue
or sell any new capital stock, any warrants, options or rights to acquire the
same, or other Equity Interests of any nature to any person other than such
Pledgor, or cause, permit or consent to the admission of any other person as a
stockholder, partner or member of any such issuer.

 

(b)                                 Subject
to the exception set forth in Section 2.1(vi) hereof, if any Pledgor shall,
at any time and from time to time after the date hereof, acquire any additional
capital stock or other Equity Interests in any person of the types described in
the definition of the term “Equity Interests,” the same shall be
automatically deemed to be Equity Interests, and to be pledged to the Agent
pursuant to Section 2.1, and such
Pledgor will forthwith pledge and deposit the same with the Agent and deliver
to the Agent any certificates or instruments therefor, together with the
endorsement of such Pledgor (in the case of any promissory notes or other
Instruments), undated stock powers (in the case of Equity Interests evidenced
by certificates) or other necessary instruments of transfer or assignment, duly
executed in blank and in form and substance satisfactory to the Agent, together
with such other certificates and instruments as the Agent may reasonably
request (including Uniform Commercial Code financing statements or appropriate
amendments thereto), and will promptly thereafter deliver to the Agent a fully
completed and duly executed amendment to this Agreement in the form of Exhibit A
(each, a “Pledge Amendment”) in respect thereof.  Each Pledgor hereby authorizes the Agent to
attach each such Pledge Amendment to this Agreement, and agrees that all such
Collateral listed on any Pledge Amendment shall for all purposes be deemed
Collateral hereunder and shall be subject to the

 

18

 

provisions hereof; provided that the failure of any Pledgor to
execute and deliver any Pledge amendment with respect to any such additional
Collateral as required hereinabove shall not impair the security interest of
the Agent in such Collateral or otherwise adversely, affect the rights and
remedies of the Agent hereunder with respect thereto.

 

(c)                                  If
any Pledged Equity Interests (whether now owned or hereafter acquired) included
in the Collateral are “uncertificated securities” within the meaning of the
Uniform Commercial Code or are otherwise not evidenced by any certificate or
instrument, each applicable Pledgor will promptly notify the Agent thereof and
will promptly take and cause to be taken, and will (if the issuer of such
uncertificated securities is a person other than a subsidiary of the Borrower)
use its best efforts to cause the issuer to take, all actions required under Articles 8 and 9 of the Uniform Commercial Code and any
other applicable law, to enable the Agent to acquire “control” (within the
meaning of such term under Section 8-106 (or its successor provision) of
the Uniform Commercial Code) of such uncertificated securities and as may be
otherwise necessary or deemed appropriate by the Agent to perfect the security
interest of the Agent therein.

 

5.2                                 Voting
Rights.  So long as no Event of
Default shall have occurred and be continuing, each Pledgor shall be entitled
to exercise all voting and other consensual rights pertaining to its Pledged
Equity Interests (subject to its obligations under Section 5.1), and for that purpose the Agent will execute
and deliver or cause to be executed and delivered to each applicable Pledgor
all such proxies and other instruments as such Pledgor may reasonably request
in writing to enable the Pledgor to exercise such voting and other consensual
rights; provided, however, that no Pledgor will cast any vote,
give any consent, waiver or ratification, or take or fail to take any action,
in any manner that would, or could reasonably be expected to, violate or be
inconsistent with any of the terms of this Agreement, the Credit Agreement or
any other Financing Document , or have the effect of impairing the position or
interests of the Agent or any other Secured Party.

 

5.3                                 Dividends
and Other Distributions.  So long as
no Event of Default shall have occurred and be continuing (or would occur as a
result thereof), and except as provided otherwise herein, all interest, income,
dividends, distributions and other amounts payable in cash in respect of the
Pledged Equity Interests may be paid to and retained by the Pledgors; provided,
however, that all such interest, income, dividends, distributions and
other amounts shall, at all times after the occurrence and during the
continuance of an Event of Default, be paid to the Agent and retained by it as
part of the Collateral (except to the extent applied upon receipt to the
repayment of the Secured Obligations). 
The Agent shall also be entitled at all times (whether or not during the
continuance of an Event of Default) to receive directly, and to retain as part
of the Collateral, (i) all interest, income, dividends, distributions or
other amounts paid or payable in cash or other property in respect of any
Pledged Equity Interests in connection with the dissolution, liquidation,
recapitalization or reclassification of the capital of the applicable issuer to
the extent representing an extraordinary, liquidating or other distribution in
return of capital, (ii) subject to the exception set forth in Section
2.1(vi) hereof, all additional Equity Interests or other securities or property
(other than cash) paid or payable or distributed or distributable in respect of
any Pledged Equity Interests in connection with any noncash dividend,
distribution, return of capital, spin-off, stock split, split-up,
reclassification, combination of shares or interests or similar rearrangement,
and (iii) without affecting any restrictions against such actions

 

19

 

contained in the Credit Agreement and subject to the exception set
forth in Section 2.1(vi) hereof, all additional Equity Interests or other
securities or property (including cash) paid or payable or distributed or
distributable in respect of any Pledged Equity Interests in connection with any
consolidation, merger, exchange of securities, liquidation or other reorganization.  All interest, income, dividends,
distributions or other amounts that are received by any Pledgor in violation of
the provisions of this Section shall be received in trust for the benefit of
the Agent, shall be segregated from other property or funds of such Pledgor and
shall be forthwith delivered to the Agent as Collateral in the same form as so
received (with any necessary endorsements).

 

ARTICLE
VI

 

REMEDIES

 

6.1                                 Remedies.  If an Event of Default shall have occurred
and be continuing, the Agent shall be entitled to exercise in respect of the
Collateral all of its rights, powers and remedies provided for herein or
otherwise available to it under any other Financing Document, by law, in equity
or otherwise, including all rights and remedies of a secured party under the
Uniform Commercial Code, and shall be entitled in particular, but without
limitation of the foregoing, to exercise the following rights, which each
Pledgor agrees to be commercially reasonable:

 

(a)                                  To
notify any or all account debtors or obligors under any Accounts, Contracts or
other Collateral of the security interest in favor of the Agent created hereby
and to direct all such persons to make payments of all amounts due thereon or
thereunder directly to the Agent or to an account designated by the Agent; and
in such instance and from and after such notice, all amounts and Proceeds
(including wire transfers, checks and other instruments) received by any
Pledgor in respect of any Accounts, Contracts or other Collateral shall be
received in trust for the benefit of the Agent hereunder, shall be segregated
from the other funds of such Pledgor and shall be forthwith deposited into such
account or paid over or delivered to the Agent in the same form as so received
(with any necessary endorsements or assignments), to be held as Collateral and
applied to the Secured Obligations as provided herein; and by this provision,
each Pledgor irrevocably authorizes and directs each Person who is or shall be
a party to or liable for the performance of any Contract, upon receipt of
notice from the Agent to the effect that an Event of Default has occurred and
is continuing, to attorn to or otherwise recognize the Agent as owner under
such Contract and to pay, observe and otherwise perform the obligations under
such Contract to or for the Agent or the Agent’s designee as though the Agent
or such designee were such Pledgor named therein, and to do so until otherwise
notified by the Agent;

 

(b)                                 To
take possession of, receive, endorse, assign and deliver, in its own name or in
the name of any Pledgor, all checks, notes, drafts and other instruments
relating to any Collateral, including receiving, opening and properly disposing
of all mail addressed to any Pledgor concerning Accounts and other Collateral
and to notify the appropriate postal authority to change the mailing or
delivery address of such mail; to verify with account debtors or other contract
parties the validity, amount or any other matter relating to any Accounts or
other Collateral, in its own name or in the name of any Pledgor; to accelerate
any indebtedness or other

 

20

 

obligation constituting Collateral that may be accelerated in
accordance with its terms; to take or bring all actions and suits deemed necessary
or appropriate to effect collections and to enforce payment of any Accounts or
other Collateral; to settle, compromise or release in whole or in part any
amounts owing on Accounts or other Collateral; and to extend the time of
payment of any and all Accounts or other amounts owing under any Collateral and
to make allowances and adjustments with respect thereto, all in the same manner
and to the same extent as any Pledgor might have done;

 

(c)                                  To
notify any or all depository institutions with which any Deposit Accounts are
maintained to remit and transfer all monies, securities and other property on
deposit in such Deposit Accounts or deposited or received for deposit
thereafter to the Agent, for deposit in a Collateral Account or such other
accounts as may be designated by the Agent, for application to the Secured
Obligations as provided herein;

 

(d)                                 To
transfer to or register in its name or the name of any of its agents or
nominees all or any part of the Collateral, without notice to any Pledgor and
with or without disclosing that such Collateral is subject to the security
interest created hereunder;

 

(e)                                  To
require any Pledgor to, and each Pledgor hereby agrees that it will at its
expense and upon request of the Agent forthwith, assemble all or any part of
the Collateral as directed by the Agent and make it available to the Agent at a
place designated by the Agent and each Pledgor further agrees that the Agent
shall have no obligation to clean-up or otherwise prepare the Collateral for
sale;

 

(f)                                    To
enter and remain upon the premises of any Pledgor and take possession of all or
any part of the Collateral, with or without judicial process; to use the
materials, services, books and records of any Pledgor for the purpose of
liquidating or collecting the Collateral, whether by foreclosure, auction or
otherwise; and to remove the same to the premises of the Agent or any
designated agent for such time as the Agent may desire, in order to effectively
collect or liquidate the Collateral;

 

(g)                                 To
exercise, to the extent permitted by applicable law, (i) all voting,
consensual and other rights and powers pertaining to the Pledged Equity
Interests (whether or not transferred into the name of the Agent), at any
meeting of shareholders, partners, members or otherwise, and (ii) any and
all rights of conversion, exchange, subscription and any other rights,
privileges or options pertaining to the Pledged Equity Interests as if it were
the absolute owner thereof (including, without limitation, the right to exchange
at its discretion any and all of the Pledged Equity Interests upon the merger,
consolidation, reorganization, reclassification, combination of shares or
interests, similar rearrangement or other similar fundamental change in the
structure of the applicable issuer, or upon the exercise by any Pledgor or the
Agent of any right, privilege or option pertaining to such Pledged Equity
Interests), and in connection therewith, the right to deposit and deliver any
and all of the Pledged Equity Interests with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms and
conditions as the Agent may determine, and give all consents, waivers and
ratifications in respect of the Pledged Equity Interests, all without liability
except to account for any property actually received by it, but the Agent shall
have no duty to exercise any such right, privilege or option or give any such
consent, waiver or ratification and shall not be responsible for any failure to
do so

 

21

 

or delay in so doing; and for the foregoing purposes each Pledgor will
promptly execute and deliver or cause to be executed and delivered to the
Agent, upon request, all such proxies and other instruments as the Agent may
reasonably request to enable the Agent to exercise such rights and powers; AND
IN FURTHERANCE OF THE FOREGOING AND WITHOUT LIMITATION THEREOF, EACH PLEDGOR
HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS THE AGENT AS THE TRUE AND LAWFUL
PROXY AND ATTORNEY-IN-FACT OF SUCH PLEDGOR, WITH FULL POWER OF SUBSTITUTION IN
THE PREMISES, TO EXERCISE ALL SUCH VOTING, CONSENSUAL AND OTHER RIGHTS AND
POWERS TO WHICH ANY HOLDER OF ANY PLEDGED EQUITY INTERESTS WOULD BE ENTITLED BY
VIRTUE OF HOLDING THE SAME, WHICH PROXY AND POWER OF ATTORNEY, BEING COUPLED
WITH AN INTEREST, IS IRREVOCABLE AND SHALL BE EFFECTIVE FOR SO LONG AS THIS
AGREEMENT SHALL BE IN EFFECT; and

 

(h)                                 To
sell, resell, assign and deliver, in its sole discretion, all or any of the
Collateral, in one or more parcels, on any securities exchange on which any
Pledged Equity Interests may be listed, at public or private sale, at any of
the Agent’s offices or elsewhere, for cash, upon credit or for future delivery,
at such time or times and at such price or prices and upon such other terms as
the Agent may deem satisfactory.  If any
of the Collateral is sold by the Agent upon credit or for future delivery, the
Agent shall not be liable for the failure of the purchaser to purchase or pay
for the same and, in the event of any such failure, the Agent may resell such
Collateral.  In no event shall any
Pledgor be credited with any part of the Proceeds of sale of any Collateral
until and to the extent cash payment in respect thereof has actually been
received by the Agent.  Each purchaser
at any such sale shall hold the property sold absolutely, free from any claim
or right of whatsoever kind, including any equity or right of redemption of any
Pledgor, and each Pledgor hereby expressly waives, to the fullest extent
permitted under applicable law, all rights of redemption, stay or appraisal,
and all rights to require the Agent to marshal any assets in favor of such
Pledgor or any other party or against or in payment of any or all of the
Secured Obligations, that it has or may have under any rule of law or statute
now existing or hereafter adopted.  No
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law, as referred to below), all of which are hereby
expressly waived by each Pledgor, shall be required in connection with any sale
or other disposition of any part of the Collateral.  If any notice of a proposed sale or other disposition of any part
of the Collateral shall be required under applicable law, the Agent shall give
the applicable Pledgor at least ten (10) days’ prior notice of the time and
place of any public sale and of the time after which any private sale or other
disposition is to be made, which notice each Pledgor agrees is commercially
reasonable.  The Agent shall not be
obligated to make any sale of Collateral if it shall determine not to do so,
regardless of the fact that notice of sale may have been given.  The Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. 
Upon each public sale and, to the extent permitted by applicable law,
upon each private sale, the Agent may purchase all or any of the Collateral
being sold, free from any equity, right of redemption or other claim or demand,
and may make payment therefor by endorsement and application (without recourse)
of the Secured Obligations in lieu of cash as a credit on account of the
purchase price for such Collateral.  The
Agent may comply with any applicable state or federal law requirements in
connection with the sale or other disposition of the Collateral

 

22

 

and each Pledgor agrees that such compliance is commercially
reasonable.  The Agent may sell or
otherwise dispose of the Collateral without giving any warranties, specifically
disclaiming any warranties of title or the like and each Pledgor agrees that
such disclaimer is commercially reasonable.

 

6.2                                 Application
of Proceeds.

 

(a)                                  All
Proceeds collected by the Agent upon any sale, other disposition of or
realization upon any of the Collateral, together with all other moneys received
by the Agent hereunder, shall be applied as follows:

 

FIRST, to the Issuing Bank and Agent to reimburse the
Issuing Bank and Agent for that portion of the payments, if any, made by it
with respect to Letters of Credit and LC Guaranties for which a Lender, as a
participant in such Letter of Credit or LC Guaranty pursuant to Section 2.04 of
the Credit Agreement, failed to pay its pro rata share thereof as required
pursuant to such Section 2.04;

 

SECOND, to the payment of all reasonable costs and
expenses incurred by the Agent in connection with such collection or sale or
otherwise in connection with this Agreement or any of the Secured Obligations,
including, but not limited to, those under Section
8.1, all court costs and the reasonable fees and expenses of its agents
and legal counsel, the repayment of all advances made by the Agent hereunder on
behalf of the Pledgors and any other reasonable costs or expenses incurred in
connection with the exercise of any right or remedy hereunder;

 

THIRD, to the Agent to be held as cash collateral to
the extent of the undrawn amounts, if any, of outstanding Letters of Credit or
LC Guaranties;

 

FOURTH, pro rata to the payment in full of (i)
principal and interest in respect of any Loans outstanding (pro rata as among
the Lenders in accordance with the amounts of the Loans made by them pursuant
to the Credit Agreement) and (ii) all unpaid monetary obligations of any
Pledgor to a Secured Party under any Derivative Obligations;

 

FIFTH, pro rata to the payment in full of all Secured
Obligations (other than those referred to above) owed to the Secured Parties
(pro rata as among the Secured Parties in accordance with the amount of the
Secured Obligations owed to them on the date of any such distribution).

 

SIXTH, to the Pledgors, their successors and assigns,
or as a court of competent jurisdiction may otherwise direct.

 

(b)                                 For
purposes of applying amounts in accordance with this Section, the Agent shall
be entitled to rely upon any Secured Party that has entered into a Derivative
Obligation with the Borrower for a determination (which such Secured Party
agrees to provide or cause to be provided upon request of the Agent) of the
outstanding Secured Obligations owed to such Secured Party under any such
Derivative Obligation.  Unless it has
actual knowledge (including by way of written notice from any such Secured
Party) to the contrary, the Agent, in

 

23

 

acting hereunder, shall be entitled to assume that no Derivative
Obligations or Secured Obligations in respect thereof are in existence between
any Secured Party and the Borrower.

 

(c)                                  Each
Pledgor shall remain liable to the extent of any deficiency between the amount
of all Proceeds realized upon sale, other disposition or collection of the
Collateral, and monies held as Collateral pursuant to this Agreement and the
aggregate amount of Secured Obligations. 
Upon any sale of any Collateral hereunder by the Agent (whether by
virtue of the power of sale herein granted, pursuant to judicial proceeding, or
otherwise), the receipt by the Agent or the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the Collateral so sold,
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Agent or such
officer or be answerable in any way for the misapplication thereof.

 

6.3                                 Collateral
Accounts.  Upon the occurrence and
during the continuance of an Event of Default, the Agent shall have the right
to cause to be established and maintained, at its principal office or such
other location or locations as it may establish from time to time in its
discretion, one or more accounts (collectively, “Collateral Accounts”)
for the collection of cash Proceeds of the Collateral.  Such Proceeds, when deposited, shall
continue to constitute Collateral for the Secured Obligations and shall not
constitute payment thereof until applied as herein provided.  The Agent shall have sole dominion and
control over all funds deposited in any Collateral Account, and such funds may
be withdrawn therefrom only by the Agent. 
Upon the occurrence and during the continuance of an Event of Default,
the Agent shall have the right to (and, if directed by the Required Lenders
pursuant to the Credit Agreement, shall) apply amounts held in the Collateral
Accounts in payment of the Secured Obligations in the manner provided for in Section 6.2.

 

6.4                                 Grant
of License.  Each Pledgor hereby
grants to the Agent an irrevocable, non-exclusive license (exercisable without
payment of royalty or other compensation to any Pledgor) to use, license or
sublicense any Patent Collateral or Trademark Collateral now owned or licensed
or hereafter acquired or licensed by such Pledgor, wherever the same may be
located throughout the world, for such term or terms, on such conditions and in
such manner as the Agent shall determine, whether general, special or
otherwise, and whether on an exclusive or nonexclusive basis, and including in
such license reasonable access to all media in which any of the licensed items
may be recorded or stored and to all computer software and programs used for
the compilation or printout thereof.  
The use of such license or sublicense by the Agent shall be exercised,
at the option of the Agent, and only upon the occurrence and during the
continuation of an Event of Default; provided that any license,
sublicense or other transaction entered into by the Agent in accordance
herewith shall be binding upon each applicable Pledgor notwithstanding any
subsequent cure of an Event of Default.

 

6.5                                 Private
Sales.

 

(a)                                  Each
Pledgor recognizes that, by reason of certain prohibitions contained in the
Securities Act and applicable state securities laws as in effect from time to
time, the Agent may be compelled, with respect to any sale of all or any part
of the Pledged Equity Interests conducted without registration or qualification
under the Securities Act and such state securities laws, to limit purchasers to
any one or more persons who will represent and agree, among other

 

24

 

things, to acquire such Pledged Equity Interests for their own account,
for investment and not with a view to the distribution or resale thereof.  Each Pledgor acknowledges that any such
private sales may be made in such manner and under such circumstances as the
Agent may deem necessary or advisable in its sole and absolute discretion,
including at prices and on terms less favorable than those obtainable through a
public sale without such restrictions (including, without limitation, a public
offering made pursuant to a registration statement under the Securities Act),
and, notwithstanding such circumstances, agrees that any such private sale
shall be deemed to have been made in a commercially reasonable manner and
agrees that the Agent shall have no obligation to conduct any public sales and
no obligation to delay the sale of any Pledged Equity Interests for the period
of time necessary to permit its registration for public sale under the
Securities Act and applicable state securities laws, and shall not have any
responsibility or liability as a result of its election so not to conduct any
such public sales or delay the sale of any Pledged Equity Interests,
notwithstanding the possibility that a substantially higher price might be
realized if the sale were deferred until after such registration.  Each Pledgor hereby waives any claims
against the Agent or any other Secured Party arising by reason of the fact that
the price at which any Pledged Equity Interests may have been sold at any
private sale was less than the price that might have been obtained at a public
sale or was less than the aggregate amount of the Secured Obligations, even if
the Agent accepts the first offer received and does not offer such Pledged
Equity Interests to more than one offeree.

 

(b)                                 Each
Pledgor agrees that a breach of any of the covenants contained in this Section
will cause irreparable injury to the Agent and the other Secured Parties, that
the Agent and the other Secured Parties have no adequate remedy at law in
respect of such breach and, as a consequence, that each and every covenant
contained in this Section shall be specifically enforceable against the
Pledgors.

 

6.6                                 The
Pledgors Remain Liable.  Notwithstanding
anything herein to the contrary, (i) each Pledgor shall remain liable under all
Contracts to which it is a party included within the Collateral (including,
without limitation, all Investment Agreements) to perform all of its
obligations thereunder to the same extent as if this Agreement had not been
executed, (ii) the exercise by the Agent of any of its rights or remedies
hereunder shall not release any Pledgor from any of its obligations under any
of such Contracts, and (iii) except as specifically provided for hereinbelow,
neither the Agent nor any other Secured Party shall have any obligation or
liability by reason of this Agreement under any of such Contracts, nor shall
the Agent or any Lender be obligated to perform any of the obligations or
duties of any Pledgor thereunder or to take any action to collect or enforce
any claim for payment assigned hereunder. 
This Agreement shall not in any way be deemed to obligate the Agent, any
other Secured Party or any purchaser at a foreclosure sale under this Agreement
to assume any of a Pledgor’s obligations, duties or liabilities under any
Investment Agreement, including, without limitation, any Pledgor’s obligations,
if any, to manage the business and affairs of the applicable partnership, joint
venture, limited liability company, limited liability partnership or other
issuer (collectively, the “Partner Obligations”), unless the Agent or
such other Secured Party or purchaser otherwise agrees in writing to assume any
or all of such Partner Obligations.  In
the event of foreclosure by the Agent hereunder, then except as provided in the
preceding sentence, each applicable Pledgor shall remain bound and obligated to
perform its Partner Obligations and neither the Agent nor any other Secured
Party shall be deemed to have assumed any Partner Obligations.  In the event the Agent, any other Secured
Party or any purchaser at a foreclosure sale elects to become a

 

25

 

substitute partner or member in place of a Pledgor, the party making
such election shall adopt in writing such Investment Agreement and agree to be
bound by the terms and provisions thereof; and subject to the execution of such
written agreement, each Pledgor hereby irrevocably consents in advance to the
admission of the Agent, any other Secured Party or any such purchaser as a
substitute partner or member to the extent of the Pledged Equity Interests
acquired pursuant to such sale, and agrees to execute any documents or
instruments and take any other action as may be necessary or as may be
reasonably requested in connection therewith. 
The powers, rights and remedies conferred on the Agent hereunder are
solely to protect its interest and privilege in such Contracts, as Collateral,
and shall not impose any duty upon it to exercise any such powers, rights or
remedies.

 

6.7                                 Waivers.  Each Pledgor, to the greatest extent not
prohibited by applicable law, hereby (i) agrees that it will not invoke, claim
or assert the benefit of any rule of law or statute now or hereafter in effect
(including, without limitation, any right to prior notice or judicial hearing
in connection with the Agent’s possession, custody or disposition of any
Collateral or any appraisal, valuation, stay, extension, moratorium or redemption
law), or take or omit to take any other action, that would or could reasonably
be expected to have the effect of delaying, impeding or preventing the exercise
of any rights and remedies in respect of the Collateral, the absolute sale of
any of the Collateral or the possession thereof by any purchaser at any sale
thereof, and waives the benefit of all such laws and further agrees that it
will not hinder, delay or impede the execution of any power granted hereunder
to the Agent, but that it will permit the execution of every such power as
though no such laws were in effect, (ii) waives all rights that it has or may
have under any rule of law or statute now existing or hereafter adopted to
require the Agent to marshal any Collateral or other assets in favor of such
Pledgor or any other party or against or in payment of any or all of the
Secured Obligations, and (iii) waives all rights that it has or may have under
any rule of law or statute now existing or hereafter adopted to demand,
presentment, protest, advertisement or notice of any kind (except notices
expressly provided for herein or in the other Financing Documents) or to
require the Agent to pursue any third party for any of the Secured Obligations.

 

ARTICLE
VII

 

THE
AGENT

 

7.1                                 The
Agent; Standard of Care.  The Agent
will hold all items of the Collateral at any time received under this Agreement
in accordance with the provisions hereof and the other Financing
Documents.  The obligations of the Agent
as holder of the Collateral and interests therein and with respect to the
disposition thereof, and otherwise under this Agreement and the other Financing
Documents, are only those expressly set forth in this Agreement and the other
Financing Documents.  The Agent, to the
extent required under the Credit Agreement, shall act hereunder at the
direction, or with the consent, of the Required Lenders on the terms and
conditions set forth in the Credit Agreement. 
The powers conferred on the Agent hereunder are solely to protect its
interest, on behalf of the Secured Parties, in the Collateral, and shall not
impose any duty upon it to exercise any such powers.  Except for treatment of the Collateral in its possession in the
same manner as that which the Agent, in its individual capacity, accords its
own property of a similar nature for its own account, and the accounting for
moneys actually

 

26

 

received by it hereunder, the Agent 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 the Collateral.  Neither the Agent nor any other Secured
Party shall be liable to any Pledgor (i) for any loss or damage sustained by
such Pledgor, or (ii) for any loss, damage, depreciation or other diminution in
the value of any of the Collateral that may occur as a result of or in
connection with or that is in any way related to any exercise by the Agent or
any other Secured Party of any right or remedy under this Agreement, any
failure to demand, collect or realize upon any of the Collateral or any delay
in doing so, or any other act or failure to act on the part of the Agent or any
other Secured Party, except to the extent that the same is caused by its own
gross negligence or willful misconduct.

 

7.2                                 Further
Assurances; Attorney-in-Fact.

 

(a)                                  Each
Pledgor hereby authorizes the Agent to sign and file financing statements and
amendments thereto relating to all or any part of the Collateral (including,
without limitation, information required by part 5 of Article 9 of the Uniform
Commercial Code) without the signature of such Pledgor, and agrees to do such
further acts and things (including, without limitation, making any notice
filings with state tax or revenue authorities required to be made by account
creditors in order to enforce any Accounts in such state) and to execute and
deliver to the Agent such additional conveyances, assignments, agreements and
instruments as the Agent may reasonably require or deem advisable to perfect,
establish, confirm and maintain the security interest and Lien provided for
herein, to carry out the purposes of this Agreement or to further assure and
confirm unto the Agent its rights, powers and remedies hereunder.  Each Pledgor hereby ratifies and approves
all financing statements naming Agent or its designee as secured party and any
Pledgor as debtor with respect to the Collateral (and any amendments with
respect to such financing statements) filed by or on behalf of Agent prior to
the date hereof and ratifies and confirms the authorization of Agent to file
such financing statements (and amendments, if any).  Each Pledgor hereby authorizes Agent to adopt on behalf of the
Pledgors any symbol required for authenticating any electronic filing.  In no event shall Pledgors at any time file,
or permit or cause to be filed, any correction statement or termination
statement with respect to any financing statement (or amendment or continuation
with respect thereto) naming Agent or its designee as secured party and any Pledgor
as debtor.

 

(b)                                 Each
Pledgor hereby irrevocably appoints the Agent its lawful attorney-in-fact, with
full authority in the place and stead of such Pledgor and in the name of such
Pledgor, the Agent or otherwise, and with full power of substitution in the
premises (which power of attorney, being coupled with an interest, is
irrevocable for so long as this Agreement shall be in effect), from time to
time in the Agent’s discretion after the occurrence and during the continuance
of an Event of Default (except for the actions described in clause (vii) below
which may be taken by the Agent without regard to whether an Event of Default
has occurred) to take any action and to execute any instruments that the Agent
may deem necessary or advisable to accomplish the purpose of this Agreement,
including, without limitation:

 

(i)                                     to
ask, demand, collect, sue for, recover, compound, receive and give acquittance
and receipts for moneys due and to become due under or in respect of any of the
Collateral;

 

27

 

(ii)                                  to
receive, endorse and collect any checks, drafts, instruments, chattel paper and
other orders for the payment of money made payable to such Pledgor representing
any interest, income, dividend, distribution or other amount payable in respect
of any of the Collateral and to give full discharge for the same;

 

(iii)                               to
obtain, maintain and adjust any property or casualty insurance required to be
maintained by such Pledgor and direct the payment of proceeds thereof to the
Agent;

 

(iv)                              to
pay or discharge taxes, Liens or other encumbrances levied or placed on or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by the Agent in its
sole discretion, any such payments made by the Agent to become Secured
Obligations of the Pledgors to the Agent, due and payable immediately and
without demand;

 

(v)                                 to
file any claims or take any action or institute any proceedings that the Agent
may deem necessary or advisable for the collection of any of the Collateral or
otherwise to enforce the rights of the Agent with respect to any of the
Collateral;

 

(vi)                              to
use, sell, assign, transfer, pledge, make any agreement with respect to or
otherwise deal with any and all of the Collateral as fully and completely as
though the Agent were the absolute owner of the Collateral for all purposes,
and to do from time to time, at the Agent’s option and the Pledgors’ expense,
all other acts and things deemed necessary by the Agent to protect, preserve or
realize upon the Collateral and to more completely carry out the purposes of
this Agreement; and

 

(vii)                           to sign
the name of such Pledgor on any financing statement, continuation statement,
notice or other similar document that, in the Agent’s opinion, should be made
or filed in order to perfect or continue to perfect the security interest
granted under this Agreement;

 

(c)                                  If
any Pledgor fails to perform any covenant or agreement contained in this
Agreement after written request to do so by the Agent (provided that no
such request shall be necessary at any time after the occurrence and during the
continuance of an Event of Default), the Agent may itself perform, or cause the
performance of, such covenant or agreement and may take any other action that
it deems necessary and appropriate for the maintenance and preservation of the
Collateral or its security interest therein, and the reasonable expenses so
incurred in connection therewith shall be payable by the Pledgors under Section 8.1.

 

28

 

ARTICLE
VIII

 

MISCELLANEOUS

 

8.1                                 Indemnity
and Expenses.  The Pledgors agree
jointly and severally:

 

(a)                                  to
indemnify and hold harmless the Agent, each other Secured Party and each of
their respective directors, officers, employees, agents and affiliates from and
against any and all claims, damages, demands, losses, obligations, judgments
and liabilities (including, without limitation, reasonable attorneys’ fees and
expenses) in any way arising out of or in connection with this Agreement,
except to the extent the same shall arise as a result of the gross negligence
or willful misconduct of the party seeking to be indemnified; and

 

(b)                                 to
pay and reimburse the Agent upon demand for all reasonable costs and expenses
(including, without limitation, reasonable attorneys’ fees and expenses) that
the Agent may incur in connection with (i) the custody, use or preservation of,
or the sale of, collection from or other realization upon, any of the Collateral,
including the reasonable expenses of re-taking, holding, preparing for sale or
lease, selling or otherwise disposing of or realizing on the Collateral, (ii)
the exercise or enforcement of any rights or remedies granted hereunder
(including, without limitation, under Article
VI), under any of the other Financing Documents or otherwise
available to it (whether at law, in equity or otherwise), or (iii) the failure
by any Pledgor to perform or observe any of the provisions hereof.   The provisions of this Section shall
survive the execution and delivery of this Agreement, the repayment of any of
the Secured Obligations, the termination or expiration of all Letters of Credit
under the Credit Agreement, the termination of the Commitments under the Credit
Agreement and the termination of this Agreement or any other Financing
Document.

 

8.2                                 No
Waiver.  The rights and remedies of
the Secured Parties expressly set forth in this Agreement and the other
Financing Documents are cumulative and in addition to, and not exclusive of,
all other rights and remedies available at law, in equity or otherwise.  No failure or delay on the part of any
Secured Party in exercising any right, power or privilege shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or privilege preclude any other or further exercise thereof or the
exercise of any other right, power or privilege or be construed to be a waiver
of any Default or Event of Default.  No course
of dealing between the Pledgors and the Secured Parties or their agents or
employees shall be effective to amend, modify or discharge any provision of
this Agreement or any other Financing Document or to constitute a waiver of any
Default or Event of Default.  No notice
to or demand upon any Pledgor in any case shall entitle such Pledgor or any
other Pledgor to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the right of any Secured Party to
exercise any right or remedy or take any other or further action in any
circumstances without notice or demand.

 

8.3                                 Pledgors’
Obligations Absolute.  Each Pledgor
agrees that its obligations hereunder, and the security interest granted to and
all rights, remedies and powers of the Agent hereunder, are irrevocable,
absolute and unconditional and shall not be discharged, limited or otherwise
affected by reason of any of the following, whether or not such Pledgor has
knowledge thereof:

 

29

 

(i)                                     any
change in the time, manner or place of payment of, or in any other term of, any
Secured Obligations, or any amendment, modification or supplement to,
restatement of, or consent to any rescission or waiver of or departure from,
any provisions of the Credit Agreement, any Pledgor Guaranty, any other Loan
Document or any agreement or instrument delivered pursuant to any of the
foregoing;

 

(ii)                                  the
invalidity or unenforceability of any Secured Obligations or any provisions of
the Credit Agreement, any Pledgor Guaranty, any other Financing Document or any
agreement or instrument delivered pursuant to any of the foregoing;

 

(iii)                               the
addition or release of Pledgors hereunder or the taking, acceptance or release
of any Secured Obligations or additional Collateral or other security therefor;

 

(iv)                              any
sale, exchange, release, substitution, compromise, nonperfection or other
action or inaction in respect of any Collateral or other direct or indirect
security for any Secured Obligations, or any discharge, modification,
settlement, compromise or other action or inaction in respect of any Secured
Obligations;

 

(v)                                 any
agreement not to pursue or enforce or any failure to pursue or enforce (whether
voluntarily or involuntarily as a result of operation of law, court order or
otherwise) any right or remedy in respect of any Secured Obligations or any
Collateral or other security therefor, or any failure to create, protect,
perfect, secure, insure, continue or maintain any Liens in any such Collateral
or other security;

 

(vi)                              the
exercise of any right or remedy available under the Financing Documents, at
law, in equity or otherwise in respect of any Collateral or other security for
any Secured Obligations, in any order and by any manner thereby permitted,
including, without limitation, foreclosure on any such Collateral or other
security by any manner of sale thereby permitted, whether or not every aspect
of such sale is commercially reasonable;

 

(vii)                           any
bankruptcy, reorganization, arrangement, liquidation, insolvency, dissolution,
termination, reorganization or like change in the corporate structure or
existence of the Borrower, any other Pledgor or any other person directly or
indirectly liable for any Secured Obligations;

 

(viii)                        any manner
of application of any payments by or amounts received or collected from any
person, by whomsoever paid and howsoever realized, whether in reduction of any
Secured Obligations or any other obligations of the Borrower or any other
person directly or indirectly liable for any Secured Obligations, regardless of
what Secured Obligations may remain unpaid after any such application; or

 

30

 

(ix)                                any
other circumstance that might otherwise constitute a legal or equitable
discharge of, or a defense, set-off or counterclaim available to, the Borrower,
any Pledgor or a surety or guarantor generally, other than the occurrence of
all of the following:  (x) the payment
in full of the Secured Obligations, (y) the termination or expiration of all
Letters of Credit and LC Guaranties under the Credit Agreement and (z) the
termination of the Commitments under the Credit Agreement (the events in
clauses (x), (y) and (z) above, collectively, the “Termination Requirements”).

 

8.4                                 Enforcement.  By its acceptance of the benefits of this
Agreement, each Secured Party agrees that this Agreement may be enforced only
by the Agent, acting upon the instructions or with the consent of the Lenders
to the extent provided for in the Credit Agreement, and that no Secured Party
shall have any right individually to enforce or seek to enforce this Agreement
or to realize upon any Collateral or other security given to secure the payment
and performance of the Secured Obligations.

 

8.5                                 Amendments,
Waivers, etc.  No amendment,
modification, waiver, discharge or termination of, or consent to any departure
by any Pledgor from, any provision of this Agreement, shall be effective unless
in a writing executed and delivered in accordance with Section 9.02 of the Credit Agreement, and
then the same shall be effective only in the specific instance and for the
specific purpose for which given.

 

8.6                                 Continuing
Security Interest; Term; Successors and Assigns; Assignment; Termination and
Release; Survival.  This Agreement
shall create a continuing security interest in the Collateral and shall secure
the payment and performance of all of the Secured Obligations as the same may
arise and be outstanding at any time and from time to time from and after the
date hereof, and shall (i) remain in full force and effect until the occurrence
of the Termination Requirements, (ii) be binding upon and enforceable against
each Pledgor and its successors and assigns (provided, however,
that no Pledgor may sell, assign or transfer any of its rights, interests,
duties or obligations hereunder without the prior written consent of the
Lenders) and (iii) inure to the benefit of and be enforceable by each Secured
Party and its successors and assigns. 
Additionally, the Pledgors hereby ratify and confirm the grant of a
security interest in and Lien on the Collateral contained in the Security
Agreement dated as of November 29, 1999, as amended to the Effective Date (the
“Original Security Agreement”) which was executed in connection with the Credit
Agreement dated as of November 29, 1999, of which this Credit Agreement is an
amendment and restatement, which security interest shall continue in full force
and effect without interruption, and the security interests granted hereunder
and in the Original Security Agreement shall constitute the single grant of a
security interest.  Upon any sale or
other disposition by any Pledgor of any Collateral in a transaction expressly
permitted hereunder or under or pursuant to the Credit Agreement or any other
applicable Financing Document, or any amendment or waiver hereunder or
thereunder, the Lien and security interest created by this Agreement in and
upon such Collateral shall be automatically released, upon any Pledgor ceasing
to be a Guarantor pursuant to a transaction so permitted, the Lien and security
interest created by this Agreement in any Collateral of such Pledgor shall be
automatically released and upon the satisfaction of all of the Termination
Requirements, this Agreement and the Lien and security interest created hereby
shall terminate; and in connection with any such release or termination, the
Agent, at the request and expense of the applicable Pledgor, will execute and 

 

31

 

deliver to such Pledgor such documents and instruments evidencing such
release or termination as such Pledgor may reasonably request and will assign,
transfer and deliver to such Pledgor, without recourse and without
representation or warranty, such of the Collateral as may then be in the
possession of the Agent (or, in the case of any partial release of Collateral,
such of the Collateral so being released as may be in its possession).  All representations, warranties, covenants
and agreements herein shall survive the execution and delivery of this
Agreement and any Pledge Amendment or Pledgor Addendum.

 

8.7                                 Additional
Pledgors.  Each Pledgor recognizes
that the provisions of the Credit Agreement require persons that become
subsidiaries of the Borrower, and that are not already parties hereto, to
execute and deliver a Pledgor Addendum, whereupon each such Person shall become
a Pledgor hereunder with the same force and effect as if originally a Pledgor
hereunder on the date hereof, and agrees that its obligations hereunder shall
not be discharged, limited or otherwise affected by reason of the same, or by
reason of the Agent’s actions in effecting the same or in releasing any Pledgor
hereunder, in each case without the necessity of giving notice to or obtaining
the consent of such Pledgor or any other Pledgor.

 

8.8                                 Notices.  All notices and other communications
provided for hereunder shall be given to the parties in the manner and subject
to the other notice provisions set forth in (i) in the case of the Borrower or
the Agent, the Credit Agreement and (ii) in the case of any other Pledgor, its
Pledgor Guaranty.

 

8.9                               Applicable
Law.  THIS AGREEMENT, IN ACCORDANCE
WITH SECTION 5-1401 OF THE GENERAL OBLIGATION LAW OF THE STATE OF NEW
YORK, SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO ANY CONFLICTS OF LAWS PRINCIPLES THEREOF
THAT WOULD CALL FOR THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION.

 

8.10                           Severability.  To the extent any provision of this
Agreement is prohibited by or invalid under the applicable law of any
jurisdiction, such provision shall be ineffective only to the extent of such
prohibition or invalidity and only in such jurisdiction, without prohibiting or
invalidating such provision in any other jurisdiction or the remaining
provisions of this Agreement in any jurisdiction.

 

8.11                           Construction.  The headings of the various sections and
subsections of this Agreement have been inserted for convenience only and shall
not in any way affect the meaning or construction of any of the provisions
hereof.  Unless the context otherwise
requires, words in the singular include the plural and words in the plural
include the singular.

 

8.12                           Counterparts.  This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original but all of which when taken together
shall constitute but one contract, and shall become effective when copies
hereof which, when taken together, bear the signatures of each of the parties
hereto shall be delivered to the Agent. 
Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
signature page hereto.

 

32

 

8.13                           Submission
to Jurisdiction.  Any legal action
or proceeding with respect to this Agreement may be brought in the courts of
the State of New York or of the United States of America for the Southern
District of New York, and, by execution and delivery of this Agreement, each
Pledgor hereby submits for itself and in respect of its property, generally and
unconditionally, to the jurisdiction of the aforesaid courts, waives any
objection, including, without limitation, any objection to the laying of venue
or based on the grounds of forum non conveniens, which such Pledgor now or
hereafter has to the bringing of any such action or proceeding in such
respective jurisdictions and consents to the service of process of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to each such person,
as the case may be, as provided for in Section
8.8.  The Agent may also
serve process in any other manner permitted by law or commence legal
proceedings or otherwise proceed against any Pledgor in any other jurisdiction.

 

8.14                           WAIVER
OF JURY TRIAL.  EACH PARTY HERETO
HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

33

 

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

 

	
   

  	
  WATER PIK TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ VICTOR C. STREUFERT

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President – Finance

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WATER PIK, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ VICTOR C. STREUFERT

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President – Finance

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LAARS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ VICTOR C. STREUFERT

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President – Finance

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JANDY INDUSTRIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ VICTOR C. STREUFERT

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President – Finance

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WATERPIK INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ VICTOR C. STREUFERT

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President – Finance

  	
   

  

 

34

 

Accepted and agreed to:

 

JPMORGAN CHASE BANK,
as

Administrative and Collateral Agent

 

	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  

 

35

 

Annex A to Omnibus

Pledge and Security Agreement

 

PLEDGED
EQUITY INTERESTS

 

	
  Pledgor

  	
   

  	
  Name of

  Issuer

  	
   

  	
  Type of

  Interests

  	
   

  	
  Certificate

  Number, if

  applicable

  	
   

  	
  Number of

  Shares/Units,

  if applicable

  	
   

  	
  Percentage of

  Outstanding

  Interests in

  Issuer

  	
   

  
	
  Water Pik
  Technologies, Inc.

  	
   

  	
  Water Pik, Inc.

  	
   

  	
  Common Stock

  	
   

  	
  1

  	
   

  	
  1,000 Shares

  	
   

  	
  100

  	
  %

  
	
  Water Pik
  Technologies, Inc.

  	
   

  	
  Laars, Inc.

  	
   

  	
  Common Stock

  	
   

  	
  1

  	
   

  	
  1,000 Shares

  	
   

  	
  100

  	
  %

  
	
  Laars, Inc.

  	
   

  	
  Jandy Industries, Inc.

  	
   

  	
  Class A Common Stock

  	
   

  	
  30

  	
   

  	
  160 Shares

  	
   

  	
  100

  	
  %

  
	
  Laars, Inc.

  	
   

  	
  Jandy Industries, Inc.

  	
   

  	
  Class B Nonvoting Common Stock

  	
   

  	
  31

  	
   

  	
  840 Shares

  	
   

  	
  100

  	
  %

  
	
  Water Pik, Inc.

  	
   

  	
  Waterpik International, Inc.

  	
   

  	
  Common Stock

  	
   

  	
  1

  	
   

  	
  1,000 Shares

  	
   

  	
  100

  	
  %

  
	
  Water Pik
  Technologies, Inc.

  	
   

  	
  Water Pik Technologies Canada, Inc.

  	
   

  	
  Class A Common Stock

  	
   

  	
  A-3

  	
   

  	
  650

  	
   

  	
  65

  	
  %

  

 

36

 

Annex B to Omnibus

Pledge and Security
Agreement

 

FILING
LOCATIONS

 

	
  [NAME OF PLEDGOR]

  
	
   

  
	
  Secretary of State of

  	
   

  	
   

  

 

37

 

Annex C to Omnibus

Pledge and Security
Agreement

 

LOCATIONS
OF CHIEF EXECUTIVE OFFICES, RECORDS

RELATING
TO COLLATERAL AND INVENTORY

 

	
  [NAME OF PLEDGOR]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Chief Executive Office:

  	
   

  	
   

  	
  Tax I.D. #

  	
   

  	
   

  
	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Records relating to Collateral:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Equipment or Inventory:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Other Places of Business:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Trade/Fictitious or Prior Corporate

  	
   

  
	
   

  	
  Names (last five years):

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  6.

  	
  State of Registration,

  	
   

  
	
   

  	
  if applicable and Registration I.D.#:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

38

 

Annex D to Omnibus

Pledge and Security
Agreement

 

DEPOSIT
ACCOUNTS

 

 

39

 

Exhibit A to Omnibus

Pledge and Security
Agreement

 

PLEDGE
AMENDMENT

 

THIS
PLEDGE AMENDMENT, dated as of
             ,
200  , is delivered by [NAME OF
PLEDGOR] (the “Pledgor”) pursuant to Section 5.1 of the Security Agreement
referred to hereinbelow.  The Pledgor
hereby agrees that this Pledge Amendment may be attached to the Omnibus Pledge
and Security Agreement, dated as of
             ,
2003, made by the Pledgor and certain other pledgors named therein in favor of
JPMorgan Chase Bank, as Administrative and Collateral Agent (as amended,
modified or supplemented from time to time, the “Security Agreement,”
capitalized terms defined therein being used herein as therein defined), and
that the Equity Interests listed on Annex A to this Pledge Agreement
shall be deemed to be part of the Pledged Equity Interests within the meaning
of the Security Agreement and shall become part of the Collateral and shall
secure all of the Secured Obligations as provided in the Security
Agreement.  This Pledge Agreement and
its attachments are hereby incorporated into the Security Agreement and made a
part thereof.

 

	
   

  	
  [NAME OF PLEDGOR]

  
	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
					

 

 

Exhibit B to Omnibus

Pledge and Security
Agreement

 

FORM OF

PLEDGOR
ADDENDUM

 

THIS
PLEDGOR ADDENDUM (this “Addendum”), dated as of
             ,
2003, is executed and delivered by
                               ,
a
                             
(the “Company”), in favor of JPMorgan Chase Bank, in its capacity as
Administrative and Collateral Agent under the Credit Agreement referred to
hereinbelow (in such capacity, the “Agent”), pursuant to the Pledge and
Security Agreement referred to hereinbelow.

 

Reference is made to the Credit Agreement, dated as of
                      ,
200  , among, Water Pik, Inc. and Laars, Inc. (collectively and
individually, the “Borrower”), Water Pik Canada, Inc., the lenders party
thereto, the Canadian lenders party thereto, JPMorgan Chase Bank, Toronto
Branch, as Canadian Agent and the Agent (as amended, modified or supplemented
from time to time, the “Credit Agreement”).  In connection with and as a condition to the initial and
continued extensions of credit under the Credit Agreement, the Borrower and its
subsidiaries and Parent have executed and delivered (i) a Pledgor Guaranty and
(ii) an Omnibus Pledge and Security Agreement, dated as of
                      ,
2003 (as amended, modified or supplemented from time to time, the “Security
Agreement”), pursuant to which they have granted in favor of the Agent a
security interest in and Lien upon the Collateral as security for the Secured
Obligations.  Capitalized terms used
herein without definition shall have the meanings given to them in the Security
Agreement.

 

The Borrower has agreed under the Credit Agreement to
cause such of its future subsidiaries to become a party to the Security
Agreement as a Pledgor thereunder in accordance with the terms thereof and to
execute and deliver a Pledgor Guaranty. 
The Company is a subsidiary of the Borrower and, as required by the
Credit Agreement, has executed and delivered a Pledgor Guaranty as of the date
hereof.  The Company will obtain
benefits as a result of the continued extension of credit to the Borrower under
the Credit Agreement, which benefits are hereby acknowledged, and, accordingly,
desire to execute and deliver this Addendum. 
Therefore, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
and to induce the lenders to continue to extend credit to the Borrower under
the Credit Agreement, the Company hereby agrees as follows:

 

1.                                       The
Company hereby joins in and agrees to be bound by each and all of the
provisions of the Security Agreement as a Pledgor thereunder.  In furtherance (and without limitation) of
the foregoing, pursuant to Section 2.1 of the Security Agreement, and as
security for all of the Secured Obligations, the Company hereby pledges,
assigns and delivers to the Agent, for the ratable benefit of the Secured
Parties, and grants to the Agent, for the ratable benefit of the Secured
Parties, a Lien upon and security interest in, all of its right, title and
interest in and

 

2

 

to the Collateral as set forth in Section 2.1 of the
Security Agreement, all on the terms and subject to the conditions set forth in
the Security Agreement.

 

2.                                       The
Company hereby represents and warrants that (i) Schedule 1 hereby sets
forth all information required to be listed on Annexes A, B, C, D, and I to the
Security Agreement in order to make each representation and warranty contained
in Article III of the Security Agreement true and correct with respect to the
Company as of the date hereof and after giving effect to this Addendum and (ii)
after giving effect to this Addendum and to the incorporation into such
Annexes, as applicable, of the information set forth in Schedule 1, each
representation and warranty contained in Article III of the Security Agreement
is true and correct with respect to the Company as of the date hereof, as if
such representations and warranties were set forth at length herein.

 

3.                                       This
Addendum shall be a Financing Document, shall be binding upon and enforceable
against the Company and its successors and assigns, and shall inure to the
benefit of and be enforceable by such Secured Party and its successors and
assigns.  This Addendum and its
attachments are hereby incorporated into the Security Agreement and made a part
thereof.

 

IN
WITNESS WHEREOF, the Company has caused this Addendum to be
executed by its duly authorized officer as of the date first above written.

 

	
   

  	
  [NAME OF COMPANY]

  	 

	
   

  	 

	
   

  	
  By:

  	
   

  	
   

  
	
   

  	 

	
   

  	
  Title:

  	
   

  	
   

  	 

						

 

3

 

Schedule
1

 

Information to be added to Annex B of the Security Agreement:

 

FILING
LOCATIONS

 

Information to be added to Annex C of the Security Agreement:

 

LOCATIONS
OF CHIEF EXECUTIVE OFFICES, RECORDS

RELATING
TO COLLATERAL AND INVENTORY

 

	
  1.

  	
  Chief Executive Office:

  	
   

  	
  Tax I.D. # 

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Records relating to Collateral:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Equipment or Inventory:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Other Places of Business:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Trade/Fictitious or Prior Corporate

  	
   

  
	
   

  	
  Names (last five years):

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

4

 

	
  6.

  	
  State of Registration,

  
	
   

  	
  if applicable:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

Information to be added to [Annexes A/D] of the Security Agreement:

 

[Complete as applicable]

 

5Exhibit 4.7

 

GUARANTEE

 

GUARANTEE
dated as of August 27, 2003, by WATER PIK TECHNOLOGIES, INC., a Delaware
corporation (the “Guarantor”), in favor of JPMorgan Chase Bank, a New
York banking corporation, as administrative and collateral agent (“Agent”)
for (i) the Lenders (the “Lenders”) named in Schedule 1.01 of
the Amended and Restated Revolving Credit Agreement dated as of the date
hereof, among Water Pik, Inc., Laars, Inc. and Water Pik Technologies Canada,
Inc. (collectively, the “Borrowers”), the Agent, J.P. Morgan Chase Bank,
Toronto Branch, as Canadian Agent, the Canadian Lenders party thereto and the
Lenders (as amended, modified or supplemented from time to time in accordance
with its terms, the “Credit Agreement”; capitalized terms used herein
and not otherwise defined herein shall have the meanings attributed thereto in
the Credit Agreement), (ii) itself and any other Lender as issuer of the
Letters of Credit and itself as issuer of the LC Guaranties and (iii) the
Persons (other than the Guarantor or any of its subsidiaries) party to the
Derivative Obligations permitted under the Credit Agreement (collectively, the
“Other Obligations”) that are, or were at the time of their entering
into such Derivative Obligations, Lenders or Affiliates of Lenders (the “Other
Secured Parties”).

 

The
Agent, the Canadian Lenders and the Lenders have agreed to extend Loans and
certain other financial accommodations to, including, without limitation, the
issuance of the Letters of Credit and LC Guaranties for the account of the
Borrowers pursuant to, and subject to the terms and conditions of, the Credit
Agreement.  In addition, the Other
Secured Parties have entered, or may from time to time enter, into Derivative
Obligations with the Borrowers or any of their Subsidiaries.  The obligation of the Lenders to extend such
Loans and of the Agent and other Issuing Banks to issue the Letters of Credit
and LC Guaranties under the Credit Agreement is conditioned on the execution
and delivery by the Guarantor of a guarantee in the form hereof of the due and
punctual payment and performance of (a) all obligations at any time and
from time to time under the Other Obligations, (b) the principal of and
interest on the Loans, when and as due, whether at maturity, by acceleration,
upon one or more dates set for prepayment or otherwise, (c) Indebtedness
at any time and from time to time under the Letters of Credit and LC Guaranties
and (d) all other obligations of the Borrowers at any time and from time to
time under the Credit Agreement and the other Financing Documents (the
foregoing collectively being herein referred to as the “Guaranteed
Obligations”).

 

Accordingly,
in consideration of the premises and in order to induce the Agent and the
Lenders to make Loans and extend other financial accommodations under the
Credit Agreement, the Guarantor hereby agrees as follows:

 

Section 1.                    Guarantee.  The Guarantor hereby irrevocably and
unconditionally guarantees the punctual payment when due, whether at stated
maturity, by acceleration or otherwise, and the punctual performance, of all
present and future Guaranteed Obligations.

 

 

Section 2.                    Waiver.  The Guarantor hereby absolutely,
unconditionally and irrevocably waives, to the fullest extent permitted by law,
(i) promptness, diligence, notice of acceptance and any other notice with
respect to this Guarantee, (ii) presentment, demand of payment, protest,
notice of dishonor or nonpayment and any other notice with respect to the
Guaranteed Obligations, (iii) any requirement that the Agent, the Lenders
or the Other Secured Parties protect, secure, perfect or insure any security
interest or Lien or any property subject thereto or exhaust any right or take
any action against the Borrowers or any other Person or any Collateral, and
(iv) any other action, event or precondition to the enforcement of this
Guarantee or the performance by the Guarantor of its obligations hereunder.

 

Section 3.                    Guarantee Absolute.

 

(a)                                  This
Guarantee is one of payment and performance, not collection, and the
obligations of the Guarantor under this Guarantee are independent of the
obligations of the Borrowers under the Credit Agreement and any other Financing
Document, and a separate action or actions may be brought and prosecuted
against the Guarantor to enforce this Guarantee, irrespective of whether any
action is brought against the Borrowers or whether the Borrowers are joined in
any such action or actions.

 

(b)                                 The
liability of the Guarantor under this Guarantee shall, to the fullest extent
permitted under applicable law, be absolute and unconditional irrespective of:

 

(i)                                     any
invalidity, irregularity, voidability, voidness or unenforceability of the
Credit Agreement, the Notes, or any other Financing Document or any other
agreement or instrument relating thereto, or of all or any part of the
Guaranteed Obligations or of any security therefor;

 

(ii)                                  any
change in the manner, place or terms of payment or performance, and/or any
change or extension of the time of payment or performance of, renewal or
alteration of, any Guaranteed Obligation, any security therefor, or any
liability incurred directly or indirectly in respect thereof, or any other
amendment or waiver of or any consent to departure from the Credit Agreement or
the Notes or any other Financing Document or Other Obligation, including any
increase in the Guaranteed Obligations resulting from the extension of
additional credit to the Borrowers or any of their Subsidiaries or otherwise;

 

(iii)                               any
sale, exchange, release, surrender, realization upon any property by whomsoever
at any time pledged or mortgaged to secure, or howsoever securing, all or any
of the Guaranteed Obligations, and/or any offset against, or failure to
perfect, or continue the perfection of, any Lien in any such property, or delay
in the perfection of any such Lien, or any 

 

2

 

amendment or
waiver of or consent to departure from any other guaranty for all or any of the
Guaranteed Obligations;

 

(iv)                              any
exercise or failure to exercise any rights against the Borrowers or others
(including the Guarantor);

 

(v)                                 any
settlement or compromise of any Guaranteed Obligation, any security therefor or
any liability (including any of those hereunder) incurred directly or
indirectly in respect thereof or hereof, and any subordination of the payment
of all or any part thereof to the payment of any Guaranteed Obligation (whether
due or not) of the Borrowers to creditors of the Borrowers other than the
Guarantor;

 

(vi)                              any
manner of application of Collateral, or proceeds thereof, to all or any of the
Guaranteed Obligations, or any manner of sale or other disposition of any
Collateral for all or any of the Guaranteed Obligations or any other assets of
the Borrowers or any of their Subsidiaries;

 

(vii)                           any
change, restructuring or termination of the existence of any of the Borrowers
or any of their Subsidiaries; or

 

(viii)                        any other
agreements or circumstance of any nature whatsoever which might otherwise
constitute a defense available to, or a discharge of, this Guarantee and/or
obligations of the Guarantor hereunder, or a defense to, or discharge of, any
of the Borrowers or any other Person or party relating to this Guarantee or the
obligations of the Guarantor hereunder or otherwise with respect to the Loans,
Letters of Credit, LC Guaranties or Other Obligations extended to the
Borrowers, in each case other than the indefeasible payment in full of the
Guaranteed Obligations.

 

(c)                                  The
Agent may at any time and from time to time (whether or not after revocation or
termination of this Guarantee) without the consent of, or notice (except as
shall be required by applicable law that cannot be waived) to, the Guarantor,
and without incurring responsibility to the Guarantor or impairing or releasing
the obligations of the Guarantor hereunder, apply any sums by whomsoever paid
or howsoever realized to any Guaranteed Obligation regardless of what
Guaranteed Obligations remain unpaid.

 

(d)                                 This
Guarantee shall continue to be effective or be reinstated, as the case may be,
if claim is ever made upon the Agent, any Lender or any Other Secured Party for
repayment or recovery of any amount or amounts received by the Agent, such
Lender or such Other Secured Party in payment or on account of any of the
Guaranteed Obligations and the Agent, such Lender or such Other Secured Party
repays all or part of said amount by reason of any judgment, decree or order of
any court or administrative body having jurisdiction over the Agent, such
Lender or such Other Secured Party or the respective property of each, or any
settlement or 

 

3

 

compromise of any such claim effected by the Agent,
such Lender or such Other Secured Party with any such claimant (including the
Borrowers), the Guarantor shall be and remain liable to the Agent, such Lender
and/or such Other Secured Party hereunder for the amount so repaid or recovered
to the same extent as if such amount had never originally been received by the
Agent, such Lender or such Other Secured Party.

 

Section 4.                    Continuing Guarantee.  This Guarantee is a continuing one and shall
(i) remain in full force and effect until the indefeasible payment and
satisfaction in full of the Guaranteed Obligations, (ii) be binding upon
the Guarantor, its successors and assigns, and (iii) inure to the benefit
of, and be enforceable by, the Agent and its successors, transferees and
assigns.  All obligations to which this
Guarantee applies or may apply under the terms hereof shall be conclusively
presumed to have been created in reliance hereon.

 

Section 5.                    Representations, Warranties and
Covenants.  The Guarantor hereby
represents, warrants and covenants to and with the Agent that:

 

(a)                                  The
Guarantor has the power to execute and deliver this Guarantee and to incur and
perform its obligations hereunder;

 

(b)                                 The
Guarantor has duly taken all necessary action to authorize the execution,
delivery and performance of this Guarantee and to incur and perform its
obligations hereunder;

 

(c)                                  No
consent, approval, authorization or other action by, and no notice to or of, or
declaration or filing with, any governmental or other public body, or any other
Person, is required for the due authorization, execution, delivery and
performance by the Guarantor of this Guarantee or the consummation of the transactions
contemplated hereby;

 

(d)                                 The
execution, delivery and performance by the Guarantor of this Guarantee do not
and will not violate or otherwise conflict with any term or provision of any
material agreement, instrument, judgment, decree, order or any statute, rule or
governmental regulation applicable to the Guarantor or result in the creation
of any Lien upon any of its properties or assets pursuant thereto (other than
any Liens created pursuant to the Financing Documents);

 

(e)                                  This
Guarantee has been duly authorized, executed and delivered by the Guarantor and
constitutes the legal, valid and binding obligation of the Guarantor, and is
enforceable against the Guarantor in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditors’ rights generally and general principles of equity
(regardless of whether such enforcement is sought in a proceeding in equity or
at law);

 

(f)                                    No
proceeding referred to in paragraph (g) or (h) of Article VII of the
Credit Agreement is pending against the Guarantor and no other event referred
to in such paragraphs (g) and (h) of such Article VII has occurred and is
continuing with

 

4

 

respect to the Guarantor, and the property of the
Guarantor is not subject to any assignment for the benefit of creditors;

 

(g)                                 The
Guarantor is the sole shareholder of the Borrowers and the Borrowers have no
outstanding rights, options, warrants or agreements pursuant to which they may
be required to sell any of their capital stock; and

 

(h)                                 Without
the prior written consent of the Agent, the Guarantor will not own or operate
any assets or properties or engage in any business or other activity whatsoever
(including, without limitation, the incurring of Indebtedness or the granting
of Liens (other than as permitted under the Credit Agreement, including
Permitted Encumbrances), except for its ownership of the capital stock of the
Borrowers and activities incidental thereto, except for activities incidental
to its ordinary course operations as a public reporting company and except as
otherwise may be specifically permitted by the other Financing Documents; and

 

(i)                                     The
Guarantor will take all necessary actions to comply with the provisions of
Articles V and VI of the Credit Agreement applicable to it.

 

Section 6.                    Expenses.  The Guarantor will upon demand reimburse the
Agent for any sums, costs, and expenses which the Agent may pay or incur
pursuant to the provisions of this Guarantee or in negotiating, executing,
perfecting, defending, protecting or enforcing this Guarantee or in enforcing
payment of the Guaranteed Obligations or otherwise in connection with the
provisions hereof, including court costs, collection charges, travel expenses,
and reasonable attorneys’ fees, together with interest thereon as specified in
Section 12 hereof.

 

Section 7.                    Terms.  (a)                All
terms defined in the UCC and used herein shall have the meanings as defined in
the UCC, unless the context otherwise requires.

 

(b)                                 The
words “include,” “includes” and “including” shall be deemed to be followed by
the phrase “without limitation”.

 

(c)                                  All
references herein to Sections and subsections shall be deemed to be references
to Sections and subsections of this Guarantee unless the context shall
otherwise require.

 

Section 8.                    Amendments and Modification.  No provision hereof shall be modified,
altered or limited except by written instrument expressly referring to this
Guarantee and to such provision, and executed by the party to be charged.

 

Section 9.                    Subrogation.  Upon making full payment with respect to any
Guaranteed Obligation hereunder, the Guarantor shall be subrogated to the
rights of the payee against the Borrowers with respect to such obligation; provided that the Guarantor shall not
enforce any payment by way of subrogation so long as any Lender has any
Commitment under the Credit Agreement, any Letter of Credit or LC Guaranty
shall remain outstanding or any Guaranteed Obligation remains unpaid.

 

5

 

Section 10.              Remedies Upon Default; Right of
Set-Off.  (a)                        Upon the occurrence and during
the continuance of any Event of Default, the Agent may, without notice to or
demand upon the Borrowers or the Guarantor, declare any Guaranteed Obligations
immediately due and payable, and shall be entitled to enforce the obligations
of the Guarantor hereunder.

 

(b)                                 Upon
such declaration by the Agent, the Agent and any Lender is hereby authorized at
any time and from time to time, to the fullest extent permitted by law, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by the Agent or any Lender to or for the credit or the account of the Guarantor
against any and all of the obligations of the Guarantor now or hereafter
existing under this Guarantee that are then due, whether or not the Agent or
such Lender shall have made any demand under this Guarantee.  The Agent agrees promptly to notify the
Guarantor after any such set-off and application, provided that the
failure to give such notice shall not affect the validity of such set-off and
application.  The rights of the Agent
and Lenders under this Section 10 are in addition to other rights and
remedies (including other rights of set-off) which the Agent and Lenders may
have.

 

Section 11.              Statute of Limitations.  Any acknowledgment or new promise, whether
by payment of principal or interest or otherwise and whether by the Borrowers
or others (including the Guarantor), with respect to any of the Guaranteed
Obligations shall, to the fullest extent permitted under applicable law, if the
statute of limitations in favor of the Guarantor against the Agent or Lenders
shall have commenced to run, toll the running of such statute of limitations
and, if the period of such statute of limitations shall have expired, prevent
the operation of such statute of limitations.

 

Section 12.              Interest.  All amounts payable from time to time by the
Guarantor hereunder shall bear interest at an interest rate per annum
determined in accordance with Section 2.11 of the Credit Agreement as if
such amounts were payable by the Borrowers.

 

Section 13.              Rights and Remedies Not Waived.  No act, omission or delay by the Agent shall
constitute a waiver of its rights and remedies hereunder or otherwise.  No single or partial waiver by the Agent of
any default hereunder or right or remedy which it may have shall operate as a
waiver of any other default, right or remedy or of the same default, right or
remedy on a future occasion.

 

Section 14.              Admissibility of Guarantee.  The Guarantor agrees that any copy of this
Guarantee signed by the Guarantor and transmitted by telecopier for delivery to
the Agent shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence.

 

Section 15.              Notices.  All notices, requests and demands to or upon the Agent or the
Guarantor under this Agreement shall be in writing and given as provided

 

6

 

in the Credit Agreement (with respect to the
Guarantor, to the address of the Borrowers as set forth in the Credit
Agreement).

 

Section 16.              Counterparts.  This Guarantee may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original and all of
which shall together constitute one and the same agreement.  Delivery of an executed counterpart of a
signature page of this Guarantee by telecopy shall be effective as delivery of
a manually executed counterpart of this Guarantee.

 

Section 17.           CONSENT TO
JURISDICTION; WAIVER OF JURY TRIAL; ETC. 
(a)  THE GUARANTOR HEREBY SUBMITS FOR ITSELF AND IN RESPECT OF
ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, TO THE NONEXCLUSIVE JURISDICTION
OF THE SUPREME COURT OF THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT THEREFROM
IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.  THE GUARANTOR HEREBY IRREVOCABLY WAIVES, IN
CONNECTION WITH ANY SUCH ACTION OR PROCEEDING, (i) TRIAL BY JURY, (ii) TO
THE EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS AND (iii) THE RIGHT TO
INTERPOSE ANY SET-OFF, COUNTERCLAIM OR CROSS-CLAIM (UNLESS SUCH SET-OFF,
COUNTERCLAIM OR CROSS-CLAIM COULD NOT, BY REASON OF ANY APPLICABLE FEDERAL OR
STATE PROCEDURAL LAWS, BE INTERPOSED, PLEADED OR ALLEGED IN ANY OTHER ACTION).

 

(b)                                 The
Guarantor irrevocably consents to the service of process of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by certified mail, postage prepaid, to the Guarantor at its address
determined pursuant to Section 15 hereof.

 

(c)                                  Nothing
herein shall affect the right of the Agent to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed against
the Guarantor in any other jurisdiction.

 

(d)                                 The
Guarantor hereby waives presentment, notice of dishonor and protests of all
instruments included in or evidencing any of the Guaranteed Obligations, and
any and all other notices and demands whatsoever (except as expressly provided
herein).

 

Section 18.           GOVERNING LAW.  THIS GUARANTEE SHALL BE CONSTRUCTED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO ANY CONFLICTS OF LAWS 

 

7

 

PRINCIPLES THEREOF THAT WOULD CALL FOR THE APPLICATION OF THE
LAWS OF ANY OTHER JURISDICTION.

 

Section 19.              Captions; Separability.  (a)  The captions of the Sections
and subsections of this Guarantee have been inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of
this Guarantee.

 

(b)                                 If
any term of this Guarantee shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall in no way be
affected thereby.

 

Section 20.              Acknowledgment of Receipt.  The Guarantor acknowledges receipt of a copy
of this Guarantee and each of the Financing Documents.

 

[Remainder of Page Intentionally Left Blank]

 

8

 

 

IN
WITNESS WHEREOF, the Guarantor has duly executed or caused this Guarantee to be
duly executed in the State of New York as of the date first above set forth.

 

	
   

  	
  WATER PIK
  TECHNOLOGIES, INC.

  
	
   

  
	
   

  
	
   

  	
  By:

  	
  /s/ VICTOR C.
  STREUFERT

  	
   

  	 

	
   

  	
  Name:

  	
  Victor C.
  Streufert

  
	
   

  	
  Title:

  	
  Vice President -
  Finance

  
							

 

9

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