Document:

Exhibit
10.6

 

SECOND
LIEN SECURITY AGREEMENT

 

By

 

RISKMETRICS
GROUP HOLDINGS, LLC, 

as Borrower

 

and

 

THE
GUARANTORS PARTY HERETO

 

and

 

BANK
OF AMERICA, N.A.,

as Collateral Agent

 

 

Dated
as of January 11, 2007

 

 

TABLE
OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
  PREAMBLE 

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  RECITALS 

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  AGREEMENT 

  	
   

  	
  2

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  I

  
	
   

  
	
  DEFINITIONS
  AND INTERPRETATION

  
	
   

  
	
  SECTION 1.1.

  	
   

  	
  Definitions

  	
   

  	
  2

  
	
  SECTION 1.2.

  	
   

  	
  Interpretation

  	
   

  	
  7

  
	
  SECTION 1.3.

  	
   

  	
  Resolution of Drafting
  Ambiguities

  	
   

  	
  8

  
	
  SECTION 1.4.

  	
   

  	
  Perfection Certificate

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  II

  
	
   

  
	
  GRANT
  OF SECURITY AND SECURED OBLIGATIONS

  
	
   

  
	
  SECTION 2.1.

  	
   

  	
  Grant of Security Interest

  	
   

  	
  8

  
	
  SECTION 2.2.

  	
   

  	
  Filings

  	
   

  	
  9

  
	
  SECTION 2.3.

  	
   

  	
  Second Priority Nature of
  Liens

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  III

  
	
   

  
	
  PERFECTION;
  SUPPLEMENTS; FURTHER ASSURANCES; 

  
	
  USE
  OF PLEDGED COLLATERAL

  
	
   

  
	
  SECTION 3.1.

  	
   

  	
  Delivery of Certificated
  Securities Collateral

  	
   

  	
  10

  
	
  SECTION 3.2.

  	
   

  	
  Perfection of
  Uncertificated Securities Collateral

  	
   

  	
  10

  
	
  SECTION 3.3.

  	
   

  	
  [Reserved]

  	
   

  	
  11

  
	
  SECTION 3.4.

  	
   

  	
  Other Actions

  	
   

  	
  11

  
	
  SECTION 3.5.

  	
   

  	
  Joinder of Additional Guarantors

  	
   

  	
  13

  
	
  SECTION 3.6.

  	
   

  	
  Supplements; Further
  Assurances

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  IV

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  REPRESENTATIONS,
  WARRANTIES AND COVENANTS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.1.

  	
   

  	
  Defense of Claims;
  Transferability of Pledged Collateral

  	
   

  	
  14

  
	
  SECTION 4.2.

  	
   

  	
  Other Financing Statements

  	
   

  	
  14

  
						

 

i

 

 

	
  SECTION 4.3.

  	
   

  	
  Location of Inventory and
  Equipment

  	
   

  	
  15

  
	
  SECTION 4.4.

  	
   

  	
  [Reserved]

  	
   

  	
  15

  
	
  SECTION 4.5.

  	
   

  	
  Consents, etc

  	
   

  	
  15

  
	
  SECTION 4.6.

  	
   

  	
  Pledged Collateral

  	
   

  	
  15

  
	
  SECTION 4.7.

  	
   

  	
  Insurance

  	
   

  	
  15

  
	
  SECTION 4.8.

  	
   

  	
  Chief Executive Office;
  Change of Name; Jurisdiction of Organization

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  V

  
	
   

  
	
  CERTAIN
  PROVISIONS CONCERNING SECURITIES COLLATERAL

  
	
   

  
	
  SECTION 5.1.

  	
   

  	
  Pledge of Additional
  Securities Collateral

  	
   

  	
  16

  
	
  SECTION 5.2.

  	
   

  	
  Voting Rights;
  Distributions; etc

  	
   

  	
  16

  
	
  SECTION 5.3.

  	
   

  	
  [Reserved]

  	
   

  	
  17

  
	
  SECTION 5.4.

  	
   

  	
  Certain Agreements of
  Pledgors As Issuers and Holders of Equity Interests

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  VI

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CERTAIN
  PROVISIONS CONCERNING INTELLECTUAL

  
	
  PROPERTY
  COLLATERAL

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.1.

  	
   

  	
  Grant of Intellectual
  Property License

  	
   

  	
  18

  
	
  SECTION 6.2.

  	
   

  	
  Protection of Collateral
  Agent’s Security

  	
   

  	
  18

  
	
  SECTION 6.3.

  	
   

  	
  After-Acquired Property

  	
   

  	
  19

  
	
  SECTION 6.4.

  	
   

  	
  Litigation

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  VII

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CERTAIN
  PROVISIONS CONCERNING RECEIVABLES

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.1.

  	
   

  	
  Maintenance of Records

  	
   

  	
  20

  
	
  SECTION 7.2.

  	
   

  	
  [Reserved]

  	
   

  	
  20

  
	
  SECTION 7.3.

  	
   

  	
  [Reserved]

  	
   

  	
  20

  
	
  SECTION 7.4.

  	
   

  	
  Collection

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  VIII

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TRANSFERS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.1.

  	
   

  	
  [Reserved]

  	
   

  	
  21

  

 

ii

 

 

	
  ARTICLE
  IX

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  REMEDIES

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.1.

  	
   

  	
  Remedies

  	
   

  	
  21

  
	
  SECTION 9.2.

  	
   

  	
  Notice of Sale

  	
   

  	
  23

  
	
  SECTION 9.3.

  	
   

  	
  Waiver of Notice and
  Claims

  	
   

  	
  23

  
	
  SECTION 9.4.

  	
   

  	
  Certain Sales of Pledged
  Collateral

  	
   

  	
  23

  
	
  SECTION 9.5.

  	
   

  	
  No Waiver; Cumulative
  Remedies

  	
   

  	
  24

  
	
  SECTION 9.6.

  	
   

  	
  Certain Additional Actions
  Regarding Intellectual Property

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  X

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  APPLICATION
  OF PROCEEDS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.1.

  	
   

  	
  Application of Proceeds

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  XI

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.1.

  	
   

  	
  Concerning Collateral
  Agent

  	
   

  	
  25

  
	
  SECTION 11.2.

  	
   

  	
  Collateral Agent May
  Perform; Collateral Agent Appointed

  	
   

  	
   

  
	
   

  	
   

  	
    Attorney-in-Fact

  	
   

  	
  27

  
	
  SECTION 11.3.

  	
   

  	
  Continuing Security
  Interest; Assignment

  	
   

  	
  27

  
	
  SECTION 11.4.

  	
   

  	
  Termination; Release

  	
   

  	
  28

  
	
  SECTION 11.5.

  	
   

  	
  Modification in Writing

  	
   

  	
  28

  
	
  SECTION 11.6.

  	
   

  	
  Notices

  	
   

  	
  29

  
	
  SECTION 11.7.

  	
   

  	
  Governing Law, Consent to
  Jurisdiction and Service of Process;

  	
   

  	
   

  
	
   

  	
   

  	
  Waiver of Jury Trial

  	
   

  	
  29

  
	
  SECTION 11.8.

  	
   

  	
  Severability of Provisions

  	
   

  	
  29

  
	
  SECTION 11.9.

  	
   

  	
  Execution in Counterparts

  	
   

  	
  29

  
	
  SECTION 11.10.

  	
   

  	
  Business Days

  	
   

  	
  29

  
	
  SECTION 11.11.

  	
   

  	
  No Credit for Payment of
  Taxes or Imposition

  	
   

  	
  29

  
	
  SECTION 11.12.

  	
   

  	
  No Claims Against Collateral
  Agent

  	
   

  	
  29

  
	
  SECTION 11.13.

  	
   

  	
  No Release

  	
   

  	
  30

  
	
  SECTION 11.14.

  	
   

  	
  Obligations Absolute

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SIGNATURES

  	
   

  	
   

  	
   

  	
  S-1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT 1

  	
   

  	
  Form of Issuer’s
  Acknowledgment

  	
   

  	
   

  
	
  EXHIBIT 2

  	
   

  	
  Form of Securities Pledge
  Amendment

  	
   

  	
   

  
	
  EXHIBIT 3

  	
   

  	
  Form of Joinder Agreement

  	
   

  	
   

  
	
  EXHIBIT 4

  	
   

  	
  [Reserved]

  	
   

  	
   

  

 

iii

	
  EXHIBIT 5

  	
   

  	
  [Reserved]

  	
   

  	
   

  
	
  EXHIBIT 6

  	
   

  	
  Form of Second Lien
  Copyright Security Agreement

  	
   

  	
   

  
	
  EXHIBIT 7

  	
   

  	
  Form of Second Lien Patent
  Security Agreement

  	
   

  	
   

  
	
  EXHIBIT 8

  	
   

  	
  Form of Second Lien
  Trademark Security Agreement

  	
   

  	
   

  

 

iv

 

SECOND LIEN SECURITY AGREEMENT

 

This SECOND LIEN SECURITY AGREEMENT dated as of January 11,2007
(as amended, amended and restated, supplemented or otherwise modified from time
to time in accordance with the provisions hereof, this “Agreement”) made
by RISKMETRICS GROUP HOLDINGS, LLC, a Delaware limited liability company (the “Borrower”),
and the Guarantors from to time to time party hereto (the “Guarantors”),
as pledgors, assignors and debtors (the Borrower, together with the Guarantors,
in such capacities and together with any successors in such capacities, the “Pledgors,”
and each, a “Pledgor”), in favor of BANK OF AMERICA, N.A., in its
capacity as collateral agent pursuant to the Credit Agreement (as hereinafter
defined), as pledgee, assignee and secured party (in such capacities and
together with any successors in such capacities, the “Collateral Agent”).

 

R E C I T A L S:

 

A.                                   The
Borrower, RiskMetrics Group, Inc., a Delaware corporation (“Holding”),
Bank of America, N.A., as Administrative Agent and the lenders from time to
time party thereto have, in connection with the execution and delivery of this
Agreement, entered into that certain Second Lien Credit Agreement, dated as of
the date hereof (as amended, amended and restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”; which term shall also include
and refer to any increase in the amount of indebtedness under the Credit
Agreement and any refinancing or replacement of the Credit Agreement (whether
under a bank facility, securities offering or otherwise) or one or more
successor or replacement facilities whether or not with a different group of
agents or lenders (whether under a bank facility, securities offering or
otherwise) and whether or not with different obligors upon the Administrative
Agent’s acknowledgment of the termination of the predecessor Credit Agreement).

 

B.                                    Each
Guarantor has, pursuant to the Guaranty, unconditionally guaranteed the Secured
Obligations (as hereinafter defined).

 

C.                                    The Borrower and
each Guarantor will receive substantial benefits from the execution, delivery
and performance of the obligations under the Credit Agreement, the Guaranty and
the other Loan Documents and each is, therefore, willing to enter into this
Agreement.

 

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

 

F.                                   It
is a condition to the obligations of the Lenders to make the Loans under the
Credit Agreement that each Pledgor execute and deliver the applicable Loan
Documents, including this Agreement.

 

G.                                  In
order to secure the obligations under the First Lien Credit Agreement, the
Pledgors are concurrently granting to the collateral agent under the First Lien
Credit Agreement (the “First Lien Collateral Agent”), for the benefit of
the holders of obligations under the

 

 

Second Lien
Credit Agreement and certain other secured parties, a first priority security
interest in the Pledged Collateral, it being understood that the relative
rights and priorities of the grantees in respect of the Pledged Collateral are
governed by the Intercreditor Agreement (as hereinafter defined).

 

A G R E E M E N T:

 

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

 

ARTICLE I

 

DEFINITIONS AND INTERPRETATION

 

SECTION 1.1.                          Definitions.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

“Contracts” shall mean, collectively, with respect to each
Pledgor, all sale, service, performance, equipment or property lease contracts,
agreements and grants and all other contracts, agreements or grants (in each
case, whether written or oral, or third party or intercompany), between such
Pledgor and any third party, and all assignments, amendments, restatements,
supplements, extensions, renewals, replacements or modifications thereof.

 

“Control” shall mean in the case of
any Security Entitlement, “control,” as such term is defined in Section 8-106
of the UCC.

 

“Control Agent” has the meaning
assigned to such term in the Intercreditor Agreement.

 

“Control Collateral” has the meaning
assigned to such term in the Intercreditor Agreement.

 

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

 

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

 

“Discharge of First Lien Obligations”
shall have the meaning assigned to such term in the Intercreditor Agreement.

 

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

 

3

 

“First Lien Collateral Agent” shall have the meaning assigned to
such term in Recital G hereof.

 

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

 

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

 

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

 

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

 

 

4

 

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

 

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

 

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

 

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

 

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

 

“Material Intellectual Property Collateral”
shall mean any Intellectual Property Collateral that is material (i) to
the use and operation of the Pledged Collateral or (ii) to the business,
results of operations, properties or financial condition, of the Pledgors,
taken as a whole.

 

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

 

5

 

“Perfection Certificate” shall mean that certain perfection
certificate dated January 11, 2007, executed and delivered by each Pledgor
in favor of the Collateral Agent for the benefit of the Secured Parties, and
each other Perfection Certificate (which shall be in form and substance
reasonably acceptable to the Collateral Agent) executed and delivered by the
applicable Guarantor in favor of the Collateral Agent for the benefit of the
Secured Parties contemporaneously with the execution and delivery of each
Joinder Agreement executed in accordance with Section 3.5 hereof, in each case, as the same may be amended, amended and restated,
supplemented or otherwise modified from time to time in accordance with
the Credit Agreement or upon the request of the Collateral Agent.

 

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

 

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

 

“Pledged Securities” shall mean,
collectively, with respect to each Pledgor, (i) all issued and outstanding
Equity Interests of each issuer set forth on Schedules 10(a) and 10(b) to
the Perfection Certificate as being owned by such Pledgor and all options,
warrants, rights, agreements and additional Equity Interests of whatever class
of any such issuer acquired by such Pledgor (including by issuance), together
with all rights, privileges, authority and powers of such Pledgor relating to
such Equity Interests in each such issuer or under any Organizational Document
of each such issuer, and the certificates, instruments and agreements
representing such Equity Interests and any and all interest of such Pledgor in
the entries on the books of any financial intermediary pertaining to such
Equity Interests, (ii) all Equity Interests of any issuer, which Equity
Interests are hereafter acquired by such Pledgor (including by issuance) and
all options, warrants, rights, agreements and additional Equity Interests of
whatever class of any such issuer acquired by such Pledgor (including by
issuance), together with all rights, privileges, authority and powers of such
Pledgor relating to such Equity Interests or under any Organizational Document
of any such issuer, and the certificates, instruments and agreements
representing such Equity Interests and any and all interest of such Pledgor in
the entries on the books of any financial intermediary pertaining to such
Equity Interests, from time to time acquired by such Pledgor in any manner, and
(iii) all Equity Interests issued in respect of the Equity Interests referred
to in clause (i) or (ii) upon any consolidation or merger of any
issuer of such Equity Interests; provided, however, that Pledged
Securities shall not include (i) any Equity Interests which are not
required to be pledged pursuant to Section 6.12 of the Credit
Agreement, (ii) any Equity Interests in any Joint Venture to the extent
and for so long as the applicable joint venture agreement or other
Organizational Document prohibits the pledge of such Equity Interests to the
Collateral Agent or (iii) any Equity Interests of any CFC which represent
more than 65% of the total voting power of all Equity Interests of such CFC.

 

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

 

“Receivables” shall mean all (i) Accounts,
(ii) Chattel Paper, (iii) Payment Intangibles, (iv) General
Intangibles, (v) Instruments and (vi) all other rights to payment,
whether or

 

6

 

not earned by
performance, for goods or other property sold, leased, licensed, assigned or
otherwise disposed of, or services rendered or to be rendered, regardless of
how classified under the UCC together with all of Pledgors’ rights, if any, in
any goods or other property giving rise to such right to payment and all
Collateral Support and Supporting Obligations related thereto and all Records
relating thereto.

 

“Second Lien Copyright Security Agreement”
shall mean an agreement substantially in the form of Exhibit 6
hereto.

 

“Second Lien Patent Security Agreement”
shall mean an agreement substantially in the form of Exhibit 7
hereto.

 

“Second Lien Trademark Security Agreement”
shall mean an agreement substantially in the form of Exhibit 8
hereto.

 

“Secured Obligations” shall mean the Obligations.

 

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

 

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

 

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

 

SECTION 1.2.                          Interpretation. The rules of
interpretation specified in the Credit Agreement (including Section 1.02
thereof) shall be applicable to this Agreement.

 

7

 

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

 

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

 

ARTICLE II

 

GRANT OF SECURITY AND SECURED OBLIGATIONS

 

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

 

	
   

  	
  (i)

  	
   

  	
  all
  Accounts;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
   

  	
  all
  Equipment, Goods, Inventory and Fixtures;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (iii)

  	
   

  	
  all Documents, Instruments and Chattel Paper;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (iv)

  	
   

  	
  all Letters of Credit and Letter-of-Credit Rights;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (v)

  	
   

  	
  all Securities Collateral;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (vi)

  	
   

  	
  all
  Investment Property;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (vii)

  	
   

  	
  all Intellectual Property Collateral;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (viii)

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (ix)

  	
   

  	
  all General Intangibles;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (x)

  	
   

  	
  all
  Supporting Obligations;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (xi)

  	
   

  	
  all books and records relating to the Pledged Collateral; and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (xii)

  	
   

  	
  to the extent not covered by clauses (i) through (xi) of this
  sentence, all other personal property of such Pledgor, whether tangible or
  intangible,

  

 

8

 

and all Proceeds and products of each of the foregoing and all
accessions to,
substitutions and replacements for, and rents, profits and products of, each
of the foregoing, any and all Proceeds of any insurance, indemnity, warranty or guaranty payable to such Pledgor
from time to time with respect to any of the foregoing.

 

Notwithstanding anything to the contrary contained in clauses (i) through
(xii) above, the security interest created by this Agreement shall not extend
to, and the term “Pledged Collateral” shall not include, any Excluded Property.
The Pledgors shall provide to the Collateral Agent such information regarding
any Excluded Property as the Collateral Agent may reasonably request. In
addition, as collateral security for the payment and performance in full of all
the Secured Obligations, each Pledgor hereby pledges and grants to the Control
Agent for the benefit of the Collateral Agent and the Secured Parties, a Lien
on and security interest in all of the right, title and interest of such
Pledgor in, to and under the Control Collateral. It is further understood and
agreed that at any time that the Intercreditor Agreement is in effect, any
Control Collateral that is required to be delivered, or control over which is
required to be granted, to the Collateral Agent hereunder shall be delivered to
the Control Agent or be subject to Control Agent’s control.

 

SECTION 2.2.                          Filings.

 

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

 

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

 

(c)                                  Each Pledgor hereby
further authorizes the Collateral Agent to file filings with the United States
Patent and Trademark Office or United States Copyright Office (or any successor
office or any similar office in any other country), including this Agreement
and the Second Lien Copyright Security Agreement, Second Lien Patent Security
Agreement, Second Lien Trademark Security Agreement, or other documents for the
purpose of perfecting, confirming,

 

9

 

continuing,
enforcing or protecting the security interest granted by such Pledgor
hereunder, without the signature of such Pledgor, and naming such Pledgor, as
debtor, and the Collateral Agent, as secured party.

 

SECTION 2.3.                          Second
Priority Nature of Liens. Notwithstanding anything herein to the contrary,
the lien and security interest granted to the Collateral Agent pursuant to this
Agreement shall be a second priority lien on and security interest in the
Pledged Collateral and the exercise of any right or remedy by the Collateral
Agent hereunder is subject to the provisions of the Intercreditor Agreement. In
the event of any conflict between the terms of the Inter-creditor Agreement and
this Agreement, the terms of the Intercreditor Agreement shall govern and
control. Notwithstanding anything herein to the contrary, prior to the
Discharge of the First Lien Obligations, the requirements of this Agreement to
deliver Collateral and any certificates, Instruments or Documents in relation
thereto to the Collateral Agent shall be deemed satisfied by delivery of such
Collateral and such certificates, Instruments or Documents in relation thereto
to the First Lien Collateral Agent or to the Control Agent, as applicable.

 

ARTICLE III

 

PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES;

USE OF PLEDGED COLLATERAL

 

SECTION 3.1.                          Delivery
of Certificated Securities Collateral. Each Pledgor represents and warrants
that all certificates, agreements or instruments representing or evidencing the
Securities Collateral in existence on the date hereof have been delivered to
the Control Agent in suitable form for transfer by delivery or accompanied by
duly executed instruments of transfer or assignment in blank and that the
Collateral Agent has a perfected second priority security interest therein.
Each Pledgor hereby agrees that all certificates, agreements or instruments
representing or evidencing Securities Collateral acquired by such Pledgor after
the date hereof shall promptly (but in any event within five days after receipt
thereof by such Pledgor) be delivered to and held by or on behalf of the
Control Agent pursuant hereto. All certificated Securities Collateral shall be
in suitable form for transfer by delivery or shall be accompanied by duly
executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Collateral Agent. After the Discharge of First
Lien Obligations, the Collateral Agent shall have the right, at any time upon
the occurrence and during the continuance of any Event of Default, to endorse,
assign or otherwise transfer to or to register in the name of the Collateral
Agent or any of its nominees or endorse for negotiation any or all of the
Securities Collateral, without any indication that such Securities Collateral
is subject to the security interest hereunder. In addition, upon the occurrence
and during the continuance of an Event of Default and after the Discharge of
First Lien Obligations, the Collateral Agent shall have the right at any time
to exchange certificates representing or evidencing Securities Collateral for
certificates of smaller or larger denominations.

 

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

 

 

10

 

hereof. Each
Pledgor hereby agrees that if any of the Pledged Securities are at any time not
evidenced by certificates of ownership, then each applicable Pledgor shall, to
the extent permitted by applicable law, (i) cause the issuer to execute
and deliver to the Collateral Agent an acknowledgment of the pledge of such
Pledged Securities substantially in the form of Exhibit 1 hereto or
such other form that is reasonably satisfactory to the Collateral Agent, (ii) if
necessary to perfect a security interest in such Pledged Securities, cause such
pledge to be recorded on the equity-holder register or the books of the issuer,
execute any customary pledge forms or other documents necessary or appropriate
to complete the pledge and, subject to the Intercreditor Agreement, give the
Collateral Agent the right to transfer such Pledged Securities under the terms
hereof, and (iii) after the occurrence and during the continuance of any
Event of Default and after Discharge of the First Lien Obligations, upon
request by the Collateral Agent, (A) cause the Organizational Documents of
each such issuer that is a Subsidiary of the Borrower to be amended to provide
that such Pledged Securities shall be treated as “securities” for purposes of
the UCC and (B) cause such Pledged Securities to become certificated and
delivered to the Collateral Agent in accordance with the provisions of Section 3.1.

 

SECTION 3.3.                          [Reserved].

 

SECTION 3.4.                          Other Actions. In
order to further ensure the attachment, perfection and priority of, and the
ability of the Collateral Agent to enforce, the Collateral Agent’s security
interest in the Pledged Collateral, each Pledgor represents and warrants (as to
itself) as follows and agrees, in each case at such Pledgor’s own expense, to
take the following actions with respect to the following Pledged Collateral:

 

(a)                               Instruments and
Tangible Chattel Paper. As of the date hereof, no amounts payable under or
in connection with any of the Pledged Collateral are evidenced by any
Instrument or Tangible Chattel Paper other than such Instruments and Tangible
Chattel Paper listed in Schedule 11 to the Perfection Certificate
or with an aggregate value of less than $1,000,000. Each Instrument and each
item of Tangible Chattel Paper with an aggregate value in excess of $1,000,000
has been properly endorsed, assigned and delivered to the Control Agent,
accompanied by instruments of transfer or assignment duly executed in blank. If
any amount then payable under or in connection with any of the Pledged
Collateral shall be evidenced by any Instrument or Tangible Chattel Paper, and
such amount, together with all amounts payable evidenced by any Instrument or
Tangible Chattel Paper not previously delivered to the Control Agent exceeds
$1,000,000 in the aggregate for all Pledgors, the Pledgor acquiring such
Instrument or Tangible Chattel Paper shall promptly (but in any event within
ten days after receipt thereof) endorse, assign and deliver the same to the
Control Agent, accompanied by such instruments of transfer or assignment duly
executed in blank as the Control Agent may from time to time reasonably
specify.

 

(b)                             [Reserved]

 

(c)                              [Reserved]

 

 

11

 

(d)                                  Electronic
Chattel Paper and Transferable Records. As of the date hereof, no amount
under or in connection with any of the Pledged Collateral is evidenced by any
Electronic Chattel Paper or any “transferable record” (as that term is defined
in Section 201 of the Federal Electronic Signatures in Global and National
Commerce Act, or in Section 16 of the Uniform Electronic Transactions Act
as in effect in any relevant jurisdiction) other than such Electronic Chattel
Paper and transferable records listed in Schedule 11 to the
Perfection Certificate or with an aggregate value of less than $1,000,000. If
any amount payable under or in connection with any of the Pledged Collateral
shall be evidenced by any Electronic Chattel Paper or any transferable record,
the Pledgor acquiring such Electronic Chattel Paper or transferable record
shall promptly notify the Collateral Agent thereof and shall take such action
as the Collateral Agent may reasonably request to vest in the Control Agent
control of such Electronic Chattel Paper under Section 9-105 of the UCC or
control 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 so in effect in such jurisdiction, of
such transferable record. The requirement in the preceding sentence shall not
apply to the extent that such amount, together with all amounts payable
evidenced by Electronic Chattel Paper or any transferable record in which the Control
Agent has not been vested control within the meaning of the statutes described
in the immediately preceding sentence, does not exceed $1,000,000 in the
aggregate for all Pledgors. The Collateral Agent agrees with such Pledgor that
the Collateral Agent will arrange, pursuant to procedures satisfactory to the
Collateral Agent and so long as such procedures will not result in the Control
Agent’s loss of control, for the Pledgor to make alterations to the Electronic
Chattel Paper or transferable record permitted under Section 9-105 of the
UCC or, as the case may be, Section 201 of the Federal Electronic
Signatures in Global and National Commerce Act or Section 16 of the
Uniform Electronic Transactions Act for a party in control to allow without
loss of control, unless an Event of Default has occurred and is continuing or
would occur after taking into account any action by such Pledgor with respect
to such Electronic Chattel Paper or
transferable record.

 

(e)                               Letter-of-Credit
Rights. If any Pledgor is at any time a beneficiary under a Letter of
Credit now or hereafter issued with a face amount in excess of $250,000, such
Pledgor shall promptly notify the Collateral Agent thereof and such Pledgor
shall, subject to the Intercreditor Agreement, at the request of the Collateral
Agent, pursuant to an agreement in form and substance reasonably satisfactory
to the Collateral Agent, either (i) arrange for the issuer and any
confirmer of such Letter of Credit to consent to an assignment to the
Collateral Agent of the proceeds of any drawing under the Letter of Credit or (ii) arrange
for the Collateral Agent to become the transferee beneficiary of such Letter of
Credit, with the Collateral Agent agreeing, in each case, that the proceeds of
any drawing under the Letter of Credit are to be applied as provided in the
Credit Agreement. The actions in the preceding sentence shall not be required
to the extent that the amount of any such Letter of Credit, together with the
aggregate amount of all other Letters of Credit for which the actions described
above in clause (i) and (ii) have not been taken, does not exceed
$1,000,000 in the aggregate for all Pledgors.

 

 

12

 

(f)                                        Commercial
Tort Claims. As of the date hereof, each Pledgor hereby represents and
warrants that it holds no Commercial Tort Claims other than those listed in Schedule 13
to the Perfection Certificate. If any Pledgor shall at any time hold or acquire
a Commercial Tort Claim, such Pledgor shall immediately notify the Collateral
Agent in writing signed by such Pledgor of the brief details thereof and grant
to the Collateral Agent in such writing a security interest therein and in the
Proceeds thereof, all upon the terms of this Agreement, with such writing to be
in form and substance reasonably satisfactory to the Collateral Agent. The
requirement in the preceding sentence shall not apply to the extent that the
amount of such Commercial Tort Claim, together with the amount of all other
Commercial Tort Claims held by any Pledgor in which the Collateral Agent does
not have a security interest, does not exceed $2,000,000 in the aggregate for
all Pledgors.

 

SECTION 3.5.                        Joinder
of Additional Guarantors. The Pledgors shall cause each Subsidiary of the
Borrower which, from time to time, after the date hereof shall be required to
pledge any assets to the Collateral Agent for the benefit of the Secured
Parties pursuant to the provisions of the Credit Agreement, to execute and
deliver to the Collateral Agent (i) a Joinder Agreement substantially in
the form of Exhibit 3 hereto and (ii) a Perfection
Certificate, in each case, within thirty (30) days of the date on which it was
acquired or created, upon such execution and delivery, such Subsidiary shall
constitute a “Guarantor” and a “Pledgor” for all purposes hereunder with the
same force and effect as if originally named as a Guarantor and Pledgor herein.
The execution and delivery of such Joinder Agreement shall not require the
consent of any Pledgor hereunder. The rights and obligations of each Pledgor
hereunder shall remain in full force and effect notwithstanding the addition of
any new Guarantor and Pledgor as a party to this Agreement.

 

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

 

 

13

 

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

 

ARTICLE IV

 

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

Each Pledgor represents, warrants and covenants as follows:

 

SECTION 4.1.                       Defense
of Claims; Transferability of Pledged Collateral. Subject to Section 7.09
of the Credit Agreement, each Pledgor shall, at its own cost and expense,
defend title to the Pledged Collateral pledged by it hereunder and the security
interest therein and Lien thereon granted to the Collateral Agent and the
priority thereof against all claims and demands of all persons, at its own cost
and expense, at any time claiming any interest therein adverse to the
Collateral Agent or any other Secured Party other than Liens permitted by Section 7.01
of the Credit Agreement. Other than the First Lien Loan Documents and the
Intercreditor Agreement, there is no agreement, order, judgment or decree, and
no Pledgor shall enter into any agreement or take any other action, that would
restrict the transferability of any of the Pledged Collateral or otherwise
impair or conflict with such Pledgor’s obligations or the rights of the
Collateral Agent hereunder.

 

SECTION 4.2.                      Other
Financing Statements. It has not filed, nor authorized any third party to
file (nor will there be), any valid or effective financing statement (or
similar statement, instrument of registration or public notice under the law of
any jurisdiction) covering or purporting to cover any interest of any kind in
the Pledged Collateral, except such as have been filed in favor of the
Collateral Agent pursuant to this Agreement or in favor of any holder of a Lien
permitted by Section 7.01 of the Credit Agreement with respect to
such Lien or financing statements or public notices relating to the termination
statements listed on Schedule 9 to the Perfection Certificate. No
Pledgor shall execute, authorize or permit to be filed in any public office any
financing statement (or similar statement, instrument of registration or public
notice under the law of any jurisdiction) relating to any Pledged Collateral,
except financing statements and other statements and instruments filed or to be
filed in respect of and covering the security interests granted by such Pledgor
to the holder of the Liens permitted by Section 7.01 of the Credit Agreement.

 

 

14

 

SECTION 4.3.                        Location
of Inventory and Equipment. It shall not move any Equipment or Inventory to
any location (other than Equipment and Inventory in transit, out for repair or
otherwise movable, in each case, in the ordinary course of business), other
than any location that is listed in the relevant Schedules to the Perfection
Certificate, unless it shall have given the Collateral Agent not less than 30
days’ prior written notice (in the form of an Officers’ Certificate) of its
intention so to do, clearly describing such new location and providing such
other information in connection therewith as the Collateral Agent may request;
provided that in no event shall any Equipment or Inventory be moved to any
location outside of the continental United States.

 

SECTION 4.4.                       [Reserved].

 

SECTION 4.5.                       Consents, etc. In the event that
the Collateral Agent desires to exercise any remedies, voting or consensual
rights or attorney-in-fact powers set forth in this Agreement and permitted by
the Intercreditor Agreement and determines it necessary to obtain any approvals
or consents of any Governmental Authority or any other person therefor, then,
upon the reasonable request of the Collateral Agent, such Pledgor agrees to use
its commercially reasonable efforts to assist and aid the Collateral Agent to
obtain as soon as practicable any necessary approvals or consents for the
exercise of any such remedies, rights and powers.

 

SECTION 4.6.                      Pledged
Collateral. All information set forth herein, including the schedules
hereto, and all information contained in any documents, schedules and lists
heretofore delivered to any Secured Party, including the Perfection Certificate
and the schedules thereto, in connection with this Agreement, in each case,
relating to the Pledged Collateral, is accurate and complete in all material
respects. The Pledged Collateral described on the schedules to the Perfection
Certificate constitutes all of the property of such type of Pledged Collateral
owned or held by the Pledgors.

 

SECTION 4.7.                    Insurance.
Subject to the Intercreditor Agreement and after Discharge of the First Lien
Obligations, in the event that the proceeds of any insurance claim are paid to
any Pledgor after the Collateral Agent has exercised its right to foreclose
after an Event of Default, such Net Cash Proceeds shall be held in trust for
the benefit of the Collateral Agent and immediately after receipt thereof shall
be paid to the Collateral Agent for application in accordance with the Credit
Agreement.

 

SECTION 4.8.                    Chief
Executive Office: Change of Name: Jurisdiction of Organization. Except as
otherwise permitted by Section 7.04 of the Credit Agreement, no Pledgor
will effect any change (i) to its legal name, (ii) in its identity or
organizational structure, (iii) in its organizational identification
number, if any, or (iv) in its jurisdiction of organization (in each case,
including by merging with or into any other entity, reorganizing, dissolving,
liquidating, reorganizing or organizing in any other jurisdiction), unless (A) it
shall have given the Collateral Agent promptly but in any event within 10 days
after such change, written notice clearly describing such change and providing
such other information in connection therewith as the Collateral Agent may
reasonably request and (B) it shall take all action necessary to maintain
the perfection

 

 

15

 

and priority
of the security interest of the Collateral Agent for the benefit of the Secured
Parties in the Collateral.

 

ARTICLE V

 

CERTAIN PROVISIONS CONCERNING SECURITIES
COLLATERAL

 

SECTION 5.1.                        Pledge
of Additional Securities Collateral. Each Pledgor shall, upon obtaining any
Pledged Securities or Intercompany Notes of any person with an aggregate value
in excess of $1,000,000, accept the same in trust for the benefit of the
Control Agent and promptly (but in any event within ten days after receipt
thereof) deliver to the Control Agent a pledge amendment, duly executed by such
Pledgor, in substantially the form of Exhibit 2 hereto (each, a “Pledge
Amendment”), and deliver to the Control Agent the certificates and other
documents required under Section 3.1 and Section 3.2
hereof in respect of the additional Pledged Securities or Intercompany Notes
which are to be pledged pursuant to this Agreement, and confirming the
attachment of the Lien hereby created on and in respect of such additional
Pledged Securities or Intercompany Notes. The actions in the preceding sentence
shall not be required to the extent that the amount of any such Pledged
Securities or Intercompany Notes for which the actions described above have not
been taken does not exceed $1,000,000 in the aggregate for all Pledgors. Each
Pledgor hereby authorizes the Collateral Agent to attach each Pledge Amendment
to this Agreement and agrees that all Pledged Securities or Intercompany Notes
listed on any Pledge Amendment delivered to the Collateral Agent shall for all
purposes hereunder be considered Pledged Collateral.

 

SECTION 5.2.                      Voting
Rights: Distributions; etc.

 

(a)                                 So long as no Event of Default shall have
occurred and be continuing and, subject to the Intercreditor Agreement,
the Collateral Agent has not given notice of the revocation of the following
rights:

 

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

 

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

 

16

 

within five days after receipt thereof) delivered to the Control Agent
as Pledged Collateral in the same form as so received (with any necessary
endorsement).

 

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

 

(c)                                   Upon the occurrence
and during the continuance of any Event of Default and subject to the terms of
the Intercreditor Agreement and after notice from the Collateral Agent:

 

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

 

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

 

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

 

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

 

SECTION 5.3.                    [Reserved]

 

17

 

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

 

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

 

(b)                                  In the case of each
Pledgor which is a partner, shareholder or member, as the case may be, in a
partnership, limited liability company or other entity, such Pledgor hereby
consents to the extent required by the applicable Organizational Document to
the pledge by each other Pledgor, pursuant to the terms hereof, of the Pledged
Securities in such partnership, limited liability company or other entity and,
upon the occurrence and during the continuance of an Event of Default, subject
to the terms of the Intercreditor Agreement and after Discharge of the First
Lien Obligations, to the transfer of such Pledged Securities to the Collateral
Agent or its nominee and to the substitution of the Collateral Agent or its
nominee as a substituted partner, shareholder or member in such partnership,
limited liability company or other entity with all the rights, powers and
duties of a general partner, limited partner, shareholder or member, as the
case may be.

 

ARTICLE VI

 

CERTAIN PROVISIONS CONCERNING INTELLECTUAL

PROPERTY COLLATERAL

 

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

 

SECTION 6.2.                    Protection
of Collateral Agent’s Security. On a continuing basis, each Pledgor shall,
at its sole cost and expense, (i) promptly following its becoming aware
thereof, notify the Collateral Agent of any adverse determination in any
proceeding or the institution of any proceeding in any federal, state or local
court or administrative body or in the United States Patent and Trademark
Office or the United States Copyright Office regarding any Material
Intellectual Property Collateral, such Pledgor’s right to register such
Material Intellectual Property Collateral or its right to keep and maintain
such registration in full force and effect, (ii) maintain all Material
Intellectual Property Collateral as presently used and operated, (iii) not
permit to lapse or become abandoned any Material Intellectual Property
Collateral, and not settle or compromise any pending or future litigation or
administrative proceeding with respect to any such Material Intellectual
Property Collateral, in either case except as shall be consistent with

 

18

 

commercially
reasonable business judgment, (iv) upon such Pledgor obtaining knowledge
thereof, promptly notify the Collateral Agent in writing of any event which may
be reasonably expected to materially and adversely affect the value or utility
of any Material Intellectual Property Collateral or the rights and remedies of
the Collateral Agent in relation thereto including a levy or threat of levy or
any legal process against any Material Intellectual Property Collateral, (v) not
license any Intellectual Property Collateral other than licenses entered into
by such Pledgor in, or incidental to, the ordinary course of business, or amend
or permit the amendment of any of the licenses in a manner that materially and
adversely affects the right to receive payments thereunder, or in any manner
that would materially impair the value of any Intellectual Property Collateral
or the Lien on and security interest in the Intellectual Property Collateral
created therein hereby, without the consent of the Collateral Agent, (vi) diligently
keep adequate records respecting all Intellectual Property Collateral and (vii) furnish
to the Collateral Agent from time to time upon the Collateral Agent’s request
therefor reasonably detailed statements and amended schedules further
identifying and describing the Intellectual Property Collateral and such other
materials evidencing or reports pertaining to any Intellectual Property
Collateral as the Collateral Agent may from time to time request.

 

SECTION 6.3.                       After-Acquired
Property. If any Pledgor shall at any time after the date hereof (i) obtain
any rights to any additional Intellectual Property Collateral or (ii) become
entitled to the benefit of any additional Intellectual Property Collateral or
any renewal or extension thereof, including any reissue, division,
continuation, or continuation-in-part of any Intellectual Property Collateral,
or any improvement on any Intellectual Property Collateral, the provisions
hereof shall automatically apply thereto and any such item enumerated in the
preceding clause (i) or (ii) shall automatically constitute
Intellectual Property Collateral as if such would have constituted Intellectual
Property Collateral at the time of execution hereof and be subject to the Lien
and security interest created by this Agreement without further action by any
party. Each Pledgor shall promptly provide to the Collateral Agent written
notice of any of the foregoing and confirm the attachment of the Lien and
security interest created by this Agreement to any rights described in clauses (i) and
(ii) above by execution of an instrument in form reasonably acceptable to the
Collateral Agent and the filing of any instruments or statements as shall be
reasonably necessary to create, preserve, protect or perfect the Collateral
Agent’s security interest in such Intellectual Property Collateral. Further,
each Pledgor authorizes the Collateral Agent to modify this Agreement by
amending Schedules 12(a) and 12(b) to the Perfection
Certificate to include any Intellectual Property Collateral of such Pledgor
acquired or arising after the date hereof.

 

SECTION 6.4.                    Litigation.
Unless there shall occur and be continuing any Event of Default, each Pledgor
shall have the right to commence and prosecute in its own name, as the party in
interest, for its own benefit and at the sole cost and expense of the Pledgors,
such applications for protection of the Intellectual Property Collateral and
suits, proceedings or other actions to prevent the infringement,
counterfeiting, unfair competition, dilution, diminution in value or other
damage as are necessary to protect the Intellectual Property Collateral. Upon
the occurrence and during the continuance of any Event of Default and subject
to the Intercreditor Agreement, the Collateral Agent shall have the right but
shall in no way be obligated to file 

 

 

19

 

applications
for protection of the Intellectual Property Collateral and/or bring suit in the
name of any Pledgor, the Collateral Agent or the Secured Parties to enforce the
Intellectual Property Collateral and any license thereunder. In the event of such
suit, each Pledgor shall, at the reasonable request of the Collateral Agent, do
any and all lawful acts and execute any and all documents requested by the
Collateral Agent in aid of such enforcement and the Pledgors shall promptly
reimburse and indemnify the Collateral Agent for all costs and expenses
incurred by the Collateral Agent in the exercise of its rights under this Section 6.4
in accordance with Section 11.04 of the Credit Agreement. In the
event that the Collateral Agent shall elect not to bring suit to enforce the
Intellectual Property Collateral, each Pledgor agrees, at the reasonable
request of the Collateral Agent, to take all commercially reasonable actions
necessary, whether by suit, proceeding or other action, to prevent the
infringement, counterfeiting, unfair competition, dilution, diminution in value
of or other damage to any of the Intellectual Property Collateral by any person.

 

ARTICLE VII

 

CERTAIN PROVISIONS CONCERNING RECEIVABLES

 

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

 

SECTION 7.2.                    [Reserved].

 

SECTION 7.3.                    [Reserved].

 

SECTION 7.4.                    Collection.
Each Pledgor shall use commercially reasonable efforts to collect from the
Account Debtor of each of the Receivables, as and when due in the ordinary
course of business and consistent with prudent business practice (including
Receivables that are delinquent, such Receivables to be collected in accordance
with generally accepted commercial collection procedures), any and all amounts
owing under or on account of such Receivable, and apply forthwith upon receipt
thereof all such amounts as are so collected to the outstanding balance of such
Receivable, except that any Pledgor may, with respect to a Receivable, allow in

 

20

 

the ordinary
course of business (i) a refund or credit due as a result of returned or
damaged or defective merchandise and (ii) such extensions of time to pay
amounts due in respect of Receivables and such other modifications of payment
terms or settlements in respect of Receivables as shall be commercially
reasonable in the circumstances, all in accordance with such Pledgor’s ordinary
course of business consistent with its collection practices as in effect from
time to time. The costs and expenses (including attorneys’ fees) of collection,
in any case, whether incurred by any Pledgor, the Collateral Agent or any
Secured Party, shall be paid by the Pledgors.

 

ARTICLE VIII

 

TRANSFERS

 

SECTION 8.1.                        [Reserved].

 

ARTICLE IX

 

REMEDIES

 

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

 

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

 

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

 

 

21

 

(iii)                                    Sell,
assign, grant a license to use or otherwise liquidate, or direct any Pledgor to
sell, assign, grant a license to use or otherwise liquidate, any and all
investments made in whole or in part with the Pledged Collateral or any part
thereof, and take possession of the proceeds of any such sale, assignment,
license or liquidation;

 

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

 

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

 

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

 

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

 

22

 

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

 

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

 

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

 

SECTION 9.4.                      Certain
Sales of Pledged Collateral.

 

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

 

23

 

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

 

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

 

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

 

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

 

SECTION 9.5.                    No
Waiver: Cumulative Remedies.

 

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

 

24

 

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

 

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

 

ARTICLE X

 

APPLICATION OF PROCEEDS

 

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

 

ARTICLE XI

 

MISCELLANEOUS

 

SECTION 11.1.              Concerning Collateral Agent.

 

(a)                               The Collateral Agent has
been appointed as collateral agent pursuant to the Credit Agreement and the
Intercreditor Agreement. The actions of the Collateral Agent hereunder are
subject to the provisions of the Credit Agreement and the Intercreditor
Agreement. The Collateral Agent shall have the right hereunder to make demands,
to give notices, to exercise or refrain from exercising any rights, and to take
or refrain from taking action (including the

 

25

 

release or
substitution of the Pledged Collateral), in accordance with this Agreement and
the Credit Agreement. The Collateral Agent may employ agents and
attorneys-in-fact in connection herewith and shall not be liable for the
negligence or misconduct of any such agents or attorneys-in-fact selected by it
in good faith. The Collateral Agent may resign and a successor Collateral Agent
may be appointed in the manner provided in the Credit Agreement. Upon the
acceptance of any appointment as the Collateral Agent by a successor Collateral
Agent, that successor Collateral Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Collateral Agent under this Agreement, and the retiring Collateral Agent shall
thereupon be discharged from its duties and obligations under this Agreement.
After any retiring Collateral Agent’s resignation, the provisions hereof shall
inure to its benefit as to any actions taken or omitted to be taken by it under
this Agreement while it was the Collateral Agent.

 

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

 

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

 

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

 

(e)                               Notwithstanding any
provision to the contrary contained herein, the terms of this Agreement, the
Liens created hereby and the rights and remedies of the Collateral Agent
hereunder are subject to the terms of the Intercreditor Agreement. In the event
of any conflict between the terms of this Agreement and the Intercreditor
Agreement, the terms of the Inter-creditor Agreement shall govern.

 

(f)                                The
Collateral Agent may rely on advice of counsel as to whether any or all UCC
financing statements of the Pledgors need to be amended as a result of any of
the

 

26

 

changes
described in Section 4.10.         If any Pledgor fails to provide information to
the Collateral Agent about such changes on a timely basis, the Collateral Agent
shall not be liable or responsible to any party for any failure to maintain a
perfected security interest in such Pledgor’s property constituting Pledged
Collateral, for which the Collateral Agent needed to have information relating
to such changes. The Collateral Agent shall have no duty to inquire about such
changes if any Pledgor does not inform the Collateral Agent of such changes,
the parties acknowledging and agreeing that it would not be feasible or
practical for the Collateral Agent to search for information on such changes if
such information is not provided by any Pledgor.

 

SECTION 11.2.                 Collateral
Agent May Perform; Collateral Agent Appointed Attorney-in-Fact. If any
Pledgor shall fail to perform any covenants contained in this Agreement
(including such Pledgor’s covenants to (i) pay the premiums in respect of
all required insurance policies hereunder, (ii) pay and discharge any
taxes, assessments and special assessments, levies, fees and governmental
charges imposed upon or assessed against, and landlords’, carriers’, mechanics’,
workmen’s, repairmen’s, laborers’, materialmen’s, suppliers’ and ware-housemen’s
Liens and other claims arising by operation of law against, all or any portion
of the Pledged Collateral, (iii) make repairs, (iv) discharge Liens
or (v) pay or perform any obligations of such Pledgor under any Pledged
Collateral) or if any representation or warranty on the part of any Pledgor
contained herein shall be breached, the Collateral Agent may (but shall not be
obligated to) do the same or cause it to be done or remedy any such breach, and
may expend funds for such purpose; provided, however, that the
Collateral Agent shall in no event be bound to inquire into the validity of any
tax, Lien, imposition or other obligation which such Pledgor fails to pay or
perform as and when required hereby and which such Pledgor does not contest in
accordance with the provisions of the Credit Agreement. Any and all amounts so
expended by the Collateral Agent shall be paid by the Pledgors in accordance
with the provisions of Section 11.04 of the Credit Agreement.
Neither the provisions of this Section 11.2 nor any action taken by
the Collateral Agent pursuant to the provisions of this Section 11.2
shall prevent any such failure to observe any covenant contained in this
Agreement nor any breach of representation or warranty from constituting an
Event of Default. Each Pledgor hereby appoints the Collateral Agent its
attorney-in-fact, with full power and authority in the place and stead of such
Pledgor and in the name of such Pledgor, or otherwise, from time to time in the
Collateral Agent’s discretion to take any action and to execute any instrument
consistent with the terms of the Credit Agreement, the Intercreditor Agreement,
this Agreement and the other Security Documents which the Collateral Agent may
deem necessary or advisable to accomplish the purposes hereof (but the
Collateral Agent shall not be obligated to and shall have no liability to such
Pledgor or any third party for failure to so do or take action). The foregoing
grant of authority is a power of attorney coupled with an interest and such
appointment shall be irrevocable for the term hereof. Each Pledgor hereby
ratifies all that such attorney shall lawfully do or cause to be done by virtue
hereof.

 

SECTION 11.3.             Continuing
Security Interest; Assignment. This Agreement shall create a continuing
security interest in the Pledged Collateral and shall (i) be binding upon
the Pledgors, their respective successors and assigns and (ii) inure,
together with the rights and remedies of the Collateral Agent hereunder, to the
benefit of the Collateral Agent and the other Secured Parties and each of their
respective successors, transferees and assigns. No other

 

27

 

persons (including any other creditor of any Pledgor) shall have any
interest herein or any right or benefit with respect hereto. Without limiting
the generality of the foregoing clause (ii), any Secured Party may assign or
otherwise transfer any indebtedness held by it secured by this Agreement to any
other person, and such other person shall thereupon become vested with all the
benefits in respect thereof granted to such Secured Party, herein or otherwise,
subject however, to the provisions of the Credit Agreement. Each of the
Pledgors agrees that its obligations hereunder and the security interest
created hereunder shall continue to be effective or be reinstated, as
applicable, if at any time payment, or any part thereof, of all or any part of
the Secured Obligations is rescinded or must otherwise be restored by the
Secured Party upon the bankruptcy or reorganization of any Pledgor or
otherwise.

 

SECTION 11.4.                 Termination; Release.

 

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

 

(b)                              Notwithstanding the
foregoing and subject to the terms of the Intercreditor Agreement, if any of
the Collateral shall be sold, transferred or otherwise disposed of by any
Grantor to a Person that is not a Grantor in a transaction permitted by the
Credit Agreement, then the Collateral Agent, at the request and sole expense of
such Grantor, shall promptly execute and deliver to such Grantor all releases
or other documents reasonably necessary for the release of the Liens created hereby
on such Collateral.

 

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

 

28

 

Obligations,
no notice to or demand on any Pledgor in any case shall entitle any Pledgor to
any other or further notice or demand in similar or other circumstances.

 

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

 

SECTION 11.7.                  Governing
Law, Consent to Jurisdiction and Service of Process; Waiver of Jury Trial. Sections
11.14 and 11.15 of the Credit Agreement are incorporated herein, mutatis mutandis, as if a part hereof.

 

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

 

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

 

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

 

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

 

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

 

29

 

claim against the Collateral Agent in respect thereof or any claim that
any Lien based on the performance of such labor or services or the furnishing
of any such materials or other property is prior to the Lien hereof.

 

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

 

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

 

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

 

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

 

(iii)                                any change in the time,
manner or place of payment of, or in any other term of, all or any of the
Secured Obligations, or any other amendment or waiver of or any consent to any
departure from the Credit Agreement or any other Loan Document or any other
agreement or instrument relating thereto;

 

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

 

(v)                            any
exercise, non-exercise or waiver of any right, remedy, power or privilege under
or in respect hereof, the Credit Agreement or any other Loan Document

 

30

 

except as
specifically set forth in a waiver granted pursuant to the provisions of Section 11.5
hereof; or

 

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

 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]

 

31

 

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

 

	
   

  	
  RISKMETRICS
  GROUP HOLDINGS, LLC,

  
	
   

  	
   

  	
  as Pledgor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ M. Ethan
  Berman

  
	
   

  	
   

  	
  Name: 

  	
  M. Ethan
  Berman

  	
   

  
	
   

  	
   

  	
  Title: 

  	
  President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  RISKMETRICS
  GROUP, INC.,

  
	
   

  	
   

  	
  as Pledgor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ M. Ethan
  Berman

  
	
   

  	
   

  	
  Name: 

  	
  M. Ethan
  Berman

  	
   

  
	
   

  	
   

  	
  Title: 

  	
  Chief
  Executive Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INSTITUTIONAL
  SHAREHOLDER SERVICES

  
	
   

  	
   

  	
  HOLDINGS,
  INC.,

  
	
   

  	
   

  	
  as Pledgor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John M.
  Connolly

  
	
   

  	
   

  	
  Name: 

  	
  John M.
  Connolly

  	
   

  
	
   

  	
   

  	
  Title: 

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INSTITUTIONAL
  SHAREHOLDER SERVICES,

  
	
   

  	
   

  	
  INC.,

  
	
   

  	
   

  	
  as Pledgor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John M.
  Connolly

  
	
   

  	
   

  	
  Name: 

  	
  John M.
  Connolly

  	
   

  
	
   

  	
   

  	
  Title: 

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INVESTOR
  RESPONSIBILITY RESEARCH

  
	
   

  	
   

  	
  CENTER,
  INC.,

  
	
   

  	
   

  	
  as Pledgor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John M.
  Connolly

  
	
   

  	
   

  	
  Name: 

  	
  John M.
  Connolly

  	
   

  
	
   

  	
   

  	
  Title: 

  	
  President

  	
   

  
	
   

  	
   

  	
   

  
								

 

 

[Second
Lien Security Agreement]

 

 

	
   

  	
  ISS
  CORPORATE SERVICES, INC.,

  
	
   

  	
   

  	
  as Pledgor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John M.
  Connolly

  
	
   

  	
   

  	
  Name:

  	
   John M. Connolly

  	
   

  
	
   

  	
   

  	
  Title: 

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ISS RREV, INC.,

  
	
   

  	
   

  	
  as Pledgor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John M.
  Connolly

  
	
   

  	
   

  	
  Name: 

  	
  John M.
  Connolly

  	
   

  
	
   

  	
   

  	
  Title: 

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  RISKMETRICS
  SOLUTIONS, INC.,

  
	
   

  	
   

  	
  as Pledgor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ M. Ethan Berman

  
	
   

  	
   

  	
  Name: 

  	
  M. Ethan Berman

  	
   

  
	
   

  	
   

  	
  Title: 

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SECURITIES
  CLASS ACTION SERVICES LLC,

  
	
   

  	
   

  	
  as Pledgor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John M.
  Connolly

  
	
   

  	
   

  	
  Name:

  	
  John M.
  Connolly

  	
   

  
	
   

  	
   

  	
  Title: 

  	
  President

  	
   

  
								

 

 

[Second
Lien Security Agreement]

 

 

 

	
   

  	
  BANK OF AMERICA, N.A.,

  
	
   

  	
  as
  Collateral Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert
  Klawinski

  
	
   

  	
   

  	
  Name: 

  	
  Robert
  Klawinski

  	
   

  
	
   

  	
   

  	
  Title: 

  	
  Senior Vice
  President

  	
   

  
						

 

[Second Lien Security Agreement]Exhibit 10.7

 

RiskMetrics Group, Inc.

2007 Omnibus Incentive Compensation Plan

 

ARTICLE I 

General

 

1.1                               Purpose

 

The RiskMetrics Group, Inc.
2007 Omnibus Incentive Compensation  Plan
(the “Plan”) is designed to provide certain key persons, on whose initiative
and efforts the successful conduct of the business of RiskMetrics Group, Inc.
(the “Company”) depends, and who are responsible for the management, growth and
protection of the business of the Company, with incentives to: (a) enter into
and remain in the service of the Company, a Company subsidiary or a Company
joint venture, (b) acquire a proprietary interest in the success of the
Company, (c) maximize their performance and (d) enhance the long-term
performance of the Company (whether directly or indirectly through enhancing
the long-term performance of a Company subsidiary or a Company joint venture).

 

1.2                               Administration

 

(a)                                  Administration by Committee; Constitution of
Committee. The Plan shall be
administered by the Compensation Committee of the Board of Directors of the
Company (the “Board”) or such other committee or subcommittee as the Board may
designate or as shall be formed by the abstention or recusal of a non-Qualified
Member (as defined below) of such committee (the “Committee”). The members of
the Committee shall be appointed by, and serve at the pleasure of, the Board. While
it is intended that at all times that the Committee acts in connection with the
Plan, the Committee shall consist solely of Qualified Members, the number of
whom shall not be less than two, the fact that the Committee is not so
comprised will not invalidate any grant hereunder that otherwise satisfies the
terms of the Plan. A “Qualified Member” is both a “non-employee director”
within the meaning of Rule 16b-3 (“Rule 16b-3”) promulgated under the
Securities Exchange Act of 1934 (the “1934 Act”) and an “outside director”
within the meaning of section 162(m) of the Internal Revenue Code of 1986, as
amended (the “Code”). If the Committee does not exist, or for any other reason determined
by the Board, the Board may take any action under the Plan that would otherwise
be the responsibility of the Committee.

 

(b)                                 Committee’s Authority. The Committee shall have the authority to
(i) exercise all of the powers granted to it under the Plan, (ii) construe,
interpret and implement the Plan and any award certificates issued under the
Plan, (iii) prescribe, amend and rescind rules and regulations relating to the
Plan, including rules governing its own operations, (iv) make all determinations
necessary or advisable in administering the Plan, (v) correct any defect,
supply any omission and reconcile any inconsistency in the Plan, and (vi) amend
the Plan to reflect changes in applicable law.

 

(c)                                  Committee Action; Delegation. Actions of the Committee shall be taken by
the vote of a majority of its members. Except as otherwise required by
applicable law, any action may be taken by a written instrument signed by a
majority of the Committee members, and action so taken shall be fully as
effective as if it had been taken by a vote at a meeting. Notwithstanding the
foregoing or any other provision of the Plan, the Committee (or the Board
acting instead of the Committee), may delegate to one or more officers of the
Company the authority to designate the individuals (other than such
officer(s)), among those eligible to receive awards pursuant to the terms of
the Plan, who will receive rights or options under the Plan and the size of
each such grant, to the fullest extent permitted by Section 157 of the Delaware
General Corporation Law (or any successor provision thereto), provided that the
Committee shall itself grant awards to those individuals who could reasonably
be considered to be subject to the insider trading provisions of section 16 of
the 1934 Act or whose awards could reasonably be expected to be subject to the
deduction limitations of section 162(m) of the Code.

 

(d)                                 Determinations Final. The determination of the Committee on all
matters relating to the Plan or any award under the Plan shall be final,
binding and conclusive.

 

(e)                                  Limit on Committee Members’ Liability. No member of the Committee shall be liable
for any action or determination made in good faith with respect to the Plan or
any award thereunder.

 

 

1.3                               Persons
Eligible for Awards

 

The persons eligible to
receive awards under the Plan are those officers, directors (whether or not
they are employed by the Company), and executive, managerial, professional or
administrative employees of, and consultants to, the Company, its subsidiaries
and its joint ventures (collectively, “key persons”) as the Committee in its
sole discretion shall select.

 

1.4                               Types of
Awards Under Plan

 

Awards may be made under the
Plan in the form of (a) incentive stock options, (b) non-qualified stock
options, (c) stock appreciation rights, (d) restricted stock, (e) restricted
stock units, (f) unrestricted stock, and (g) performance shares, all as more
fully set forth in Article II. The term “award” means any of the foregoing. No
incentive stock option may be granted to a person who is not an employee of the
Company or one of its subsidiary corporations on the date of grant.

 

1.5                               Shares
Available for Awards;  Adjustments to
Awards

 

(a)                                  Aggregate Number Available; Certificate
Legends. Subject to
adjustment as provided under subparagraph (d)(i) below, the total number of
shares of common stock of the Company (“Common Stock”) with respect to which
awards may be granted pursuant to the Plan shall not exceed the sum of
2,600,000 shares. Shares issued pursuant to the Plan may be authorized but
unissued Common Stock, authorized and issued Common Stock held in the Company’s
treasury or Common Stock acquired by the Company for the purposes of the Plan. The
Committee may direct that any stock certificate evidencing shares issued
pursuant to the Plan shall bear a legend setting forth such restrictions on
transferability as may apply to such shares.

 

(b)                                 Individual Limits. Except as provided in this paragraph (b), no
provision of this Plan shall be deemed to limit the number or value of shares
otherwise available for awards under the Plan with respect to which the
Committee may make awards to any one eligible person. Subject to adjustment as
provided in subparagraph (d)(i) below, the total number of shares of Common
Stock with respect to which awards may be granted to any one employee of the
Company or a subsidiary during any one calendar year shall not exceed 750,000
shares. Stock options and stock appreciation rights granted and subsequently
canceled or deemed to be canceled in a calendar year shall count against this
limit even after their cancellation.

 

(c)                                  Certain Shares to Become Available Again. The following shares of Common Stock shall
again become available for awards under the Plan: (i) any shares that are
subject to an award under the Plan and that remain unissued upon the
cancellation or termination of such award for any reason whatsoever, and (ii)
any shares of restricted stock forfeited pursuant to the terms of the Plan or
the award, provided that any dividends paid on such shares are also forfeited.

 

(d)                                 Adjustments to Available Shares and Existing
Awards Upon Changes in  Common
Stock or Certain Other Events. Upon certain changes in Common Stock or
other corporate events, the number of shares of Common Stock available for
issuance with respect to awards that may be granted under the Plan, and that
are the subject of existing awards, shall be adjusted or shall be adjustable,
as follows:

 

(i)                                     Shares Available for Grants. In the event of any change in the number of
shares of Common Stock outstanding by reason of any stock dividend or split,
reverse stock split, recapitalization, merger, consolidation, combination or
exchange of shares or similar corporate change, the maximum number of shares of
Common Stock with respect to which the Committee may grant awards under
paragraph (a) above, and the individual annual limit described in paragraph (b)
above, shall be appropriately adjusted by the Committee. In the event of any
change in the number of shares of Common Stock outstanding by reason of any
other event or transaction, the Committee may, but need not, make such
adjustments in the maximum number and class of shares of Common Stock with
respect to which the Committee may grant awards under paragraph (a) above and
the annual individual limit described in paragraph (b) above, in each case as
the Committee may deem appropriate.

 

2

 

(ii)                                     Outstanding Restricted Stock, Restricted
Stock Units and Performance Shares. Unless the Committee in its absolute discretion otherwise determines,
any securities or other property (including dividends paid in cash) received by
a grantee with respect to a share of restricted stock, which has not yet
vested, as a result of any dividend, stock split, reverse stock split,
recapitalization, merger, consolidation, combination, exchange of shares or
otherwise, will not vest until such share of restricted stock vests, and shall
be promptly deposited with the Company.

 

The
Committee shall appropriately adjust outstanding grants of restricted stock
units or performance shares payable in shares of Common Stock to reflect any
dividend, stock split, reverse stock split, recapitalization, merger,
consolidation, combination, exchange of shares or similar corporate change in
order to prevent the enlargement or dilution of rights of grantees.

 

(iii)                                  Outstanding Options and Stock Appreciation
Rights — Increase or Decrease in Issued Shares Without Consideration. Subject to any required action by the
stockholders of the Company, in the event of any increase or decrease in the
number of issued shares of Common Stock resulting from a subdivision or
consolidation of shares of Common Stock or the payment of a stock dividend (but
only on the shares of Common Stock), or any other increase or decrease in the
number of such shares effected without receipt of consideration by the Company,
the Committee shall proportionally adjust the number of shares of Common Stock
subject to each outstanding option and stock appreciation right and the
exercise price-per-share of Common Stock of each such option and stock
appreciation right to the extent necessary to prevent the enlargement or
dilution of rights with respect to such options and stock appreciation rights.

 

(iv)                                 Outstanding Options and Stock Appreciation
Rights — Certain Mergers. Subject
to any required action by the stockholders of the Company, in the event that
the Company shall be the surviving corporation in any merger or consolidation
(except a merger or consolidation as a result of which the holders of shares of
Common Stock receive securities of another corporation), each option and stock
appreciation right outstanding on the date of such merger or consolidation
shall pertain to and apply to the securities which a holder of the number of
shares of Common Stock subject to such option or stock appreciation right would
have received in such merger or consolidation.

 

(v)                                    Outstanding Options and Stock Appreciation
Rights — Certain Other Transactions. In the event of (1) a dissolution or liquidation of the Company, (2)
a sale of all or substantially all of the Company’s assets, (3) a merger or
consolidation involving the Company in which the Company is not the surviving
corporation or (4) a merger or consolidation involving the Company in which the
Company is the surviving corporation but the holders of shares of Common Stock
receive securities of another corporation and/or other property, including
cash, the Committee shall, in its absolute discretion, either:

 

(A)                                 cancel, effective immediately prior to the
occurrence of such event, each option and stock appreciation right outstanding
immediately prior to such event (whether or not then exercisable), and, in full
consideration of such cancellation, pay to the grantee to whom such option or stock
appreciation right was granted an amount in cash, for each share of Common
Stock subject to such option or stock appreciation right, respectively, equal
to the excess of (x) the value, as determined by the Committee in its absolute
discretion, of the property (including cash) received by the holder of a share
of Common Stock as a result of such event over (y) the exercise price of such
option or stock appreciation right; or

 

 

(B)                                   provide for the exchange of each option and
stock appreciation right outstanding immediately prior to such event (whether
or not then exercisable) for an option on or stock appreciation right with
respect to, as appropriate, some or all of the property which a holder of the
number of shares of Common Stock subject to such option or stock appreciation
right would have received and, incident thereto, make an equitable 

 

3

 

adjustment as determined by
the Committee in its absolute discretion in the exercise price of the option or
stock appreciation right, or the number of shares or amount of property subject
to the option or stock appreciation right or, if appropriate, provide for a
cash payment to the grantee to whom such option or stock appreciation right was
granted in partial consideration for the exchange of the option or stock
appreciation right.

 

(vi)                              Outstanding Options and Stock Appreciation
Rights — Other Changes. In
the event of any change in the capitalization of the Company or a corporate
change other than those specifically referred to in subparagraphs (iii), (iv)
or (v) above, the Committee may, in its absolute discretion, make such
adjustments in the number and class of shares subject to options and stock
appreciation rights outstanding on the date on which such change occurs and in
the per-share exercise price of each such option and stock appreciation right
as the Committee may consider appropriate to prevent dilution or enlargement of
rights. In addition, if and to the extent the Committee determines it is
appropriate, the Committee may elect to cancel each option and stock
appreciation right outstanding immediately prior to such event (whether or not
then exercisable), and, in full consideration of such cancellation, pay to the
grantee to whom such option or stock appreciation right was granted an amount
in cash, for each share of Common Stock subject to such option or stock
appreciation right, respectively, equal to the excess of (x) the Fair Market
Value of Common Stock on the date of such cancellation over (y) the exercise
price of such option or stock appreciation right.

 

(vii)                           No Other Rights. Except as expressly provided in the Plan,
no grantee shall have any rights by reason of any subdivision or consolidation
of shares of stock of any class, the payment of any dividend, any increase or
decrease in the number of shares of stock of any class or any dissolution,
liquidation, merger or consolidation of the Company or any other corporation. Except
as expressly provided in the Plan, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number of shares of Common Stock subject to an award or the
exercise price of any option or stock appreciation right.

 

1.6                               Definitions
of Certain Terms

 

(a)                                  The “Fair Market Value” of a share of Common
Stock on any day shall be the closing price on the New York Stock Exchange,
American Stock Exchange or Nasdaq (whichever is applicable) as reported for
such day in The Wall Street Journal or, if no such price is reported for such
day, the average of the high bid and low asked price of Common Stock as
reported for such day. If no quotation is made for the applicable day, the Fair
Market Value of a share of Common Stock on such day shall be determined in the
manner set forth in the preceding sentence using quotations for the next
preceding day for which there were quotations, provided that such quotations
shall have been made within the ten (10) business days preceding the applicable
day. Notwithstanding the foregoing, if shares of Common Stock are not listed on
the New York Stock Exchange, American Stock Exchange or Nasdaq, or if otherwise
deemed necessary or appropriate by the Committee, the Fair Market Value of a
share of Common Stock on any day shall be determined by the Committee. In no
event shall the Fair Market Value of any share of Common Stock be less than its
par value.

 

(b)                                 The term “incentive stock option” means an
option that is intended to qualify for special federal income tax treatment
pursuant to sections 421 and 422 of the Code as now constituted or subsequently
amended, or pursuant to a successor provision of the Code, and which is so
designated in the applicable award certificate. Any option that is not
specifically designated as an incentive stock option shall under no
circumstances be considered an incentive stock option. Any option that is not
an incentive stock option is referred to herein as a “non-qualified stock
option.”

 

(c)                                  A grantee shall be deemed to have a “termination
of employment” upon (i) the date the grantee ceases to be employed by, or to
provide consulting services for, the Company, any Company subsidiary or Company
joint venture, or any corporation (or any of its subsidiaries) which assumes
the grantee’s award in a transaction to which section 424(a) of the Code
applies; or (ii) the date the grantee ceases to be a Board member, provided,
however, that in the case of a grantee (x) who is, at the time of reference,
both an employee or consultant

 

4

 

and a Board member, or (y)
who ceases to be engaged as an employee, consultant or Board member and
immediately is engaged in another of such relationships with the Company, any
Company subsidiary or Company joint venture, the grantee shall be deemed to
have a “termination of employment” upon the later of the dates determined
pursuant to clauses (i) and (ii) above. For purposes of clause (i) above, a
grantee who continues his or her employment or consulting relationship with:
(A) a Company subsidiary subsequent to its sale by the Company, or (B) a
Company joint venture subsequent to the Company’s sale of its interests in such
joint venture, shall have a termination of employment upon the date of such
sale. The Committee may in its discretion determine whether any leave of
absence constitutes a termination of employment for purposes of the Plan and
the impact, if any, of any such leave of absence on awards theretofore made
under the Plan.

 

(d)                                 In relation to the Company, the terms “parent
corporation” and “subsidiary corporation” shall be defined in accordance
with  sections 424(e) and (f) of the
Code, respectively.

 

(e)                                  The term “employment” shall be deemed to mean
an employee’s employment with, or a consultant’s provision of services to, the
Company, any Company subsidiary or any Company joint venture and each Board
member’s service as a Board member.

 

(f)                                    In connection with a termination of
employment by reason of a dismissal for “cause”:

 

(i)                                     The term “cause” shall mean:

 

(A)                              to the extent that there is an employment,
severance or other agreement governing the relationship between the grantee and
the Company, a Company subsidiary or a Company joint venture, which agreement
contains a definition of “cause,” cause shall consist of those acts or
omissions that would constitute “cause” under such agreement; and

 

(B)                                to the extent that there is no such agreement
as provided or in subsection (f)(i)(A) above, the grantee’s termination of
employment by the Company or an affiliate on account of any one or more of the
following:

 

(1)  grantee’s willful and intentional repeated
failure or refusal, continuing after notice that specifically identifies the
breach(es) complained of, to perform substantially his or her material duties,
responsibilities and obligations (other than a failure resulting from grantee’s
incapacity due to physical or mental illness or other reasons beyond the
control of grantee), and which failure or refusal results in demonstrable
direct and material injury to the Company;

 

(2)  any willful and intentional act or failure to
act involving fraud, misrepresentation, theft, embezzlement, dishonesty or
moral turpitude (collectively, “Fraud”) which results in demonstrable direct
and material injury to the Company; and

 

(3)  any unauthorized use or disclosure by the
grantee of confidential information or trade secrets of the Company (or any
affiliated entity);

 

(4)  any intentional wrongdoing by such person
whether by omission or commission, which materially adversely affects the
business or affairs of the Company (or any affiliated entity); and

 

(5)  conviction of (or a plea of nolo contendere
to) an offense which is a felony in the jurisdiction involved or which is a
misdemeanor in the jurisdiction involved but which involves Fraud.

 

5

(ii)                                  For purposes of determining whether cause
exists:

 

(A)                              to the extent that there is an employment,
severance or other agreement governing the relationship between the grantee and
the Company, a Company subsidiary or a Company joint venture, which agreement
contains a definition of “cause” and provides a procedure for the determination
of whether cause exists, the determination of whether a grantee’s employment is
(or is deemed to have been) terminated for cause for purposes of the Plan or
any award hereunder shall be made in accordance with such agreement; and

 

(B)                                to the extent that there is no such agreement
as provided for in subsection (f)(ii)(A) above:

 

(1)  the determination of whether a grantee’s
employment is (or is deemed to have been) terminated for cause for purposes of
the Plan or any award hereunder shall be made by the Committee in its
discretion;

 

(2)  any rights the Company may have hereunder in
respect of the events giving rise to cause shall be in addition to the rights
the Company may have under any other agreement with a grantee or at law or in
equity;

 

(3)  if, subsequent to a grantee’s voluntary
termination of employment or involuntary termination of employment without
cause, it is discovered that the grantee’s employment could have been
terminated for cause, the Committee may deem such grantee’s employment to have
been terminated for cause; and

 

(4)  a grantee’s termination of employment for
cause shall be effective as of the date of the occurrence of the event giving
rise to cause, regardless of when the determination of cause is made.

 

ARTICLE II

Awards Under the Plan

 

2.1                               Certificates
Evidencing Awards

 

Each award granted under the
Plan shall be evidenced by a written certificate (“award certificate”) which
shall contain such provisions as the Committee may in its sole discretion deem
necessary or desirable. By accepting an award pursuant to the Plan, a grantee
thereby agrees that the award shall be subject to all of the terms and
provisions of the Plan and the applicable award certificate.

 

2.2                               Terms of
Stock Options and Stock Appreciation Right Awards

 

(a)                                  Stock Option Grants. The Committee may grant incentive stock
options and non-qualified stock options (collectively, “options”) to purchase
shares of Common Stock from the Company, to such key persons, and in such
amounts and subject to such vesting and forfeiture provisions and other terms
and conditions, as the Committee shall determine in its sole discretion,
subject to the provisions of the Plan.

 

(b)                                 Stock Appreciation Right Grants; Types of
Stock Appreciation Rights. The
Committee may grant stock appreciation rights to such key persons, and in such
amounts and subject to such vesting and forfeiture provisions and other terms
and conditions, as the Committee shall determine in its sole discretion,
subject to the provisions of the Plan. The terms of a stock appreciation right
may provide that it shall be automatically exercised for a cash payment upon
the happening of a specified event that is outside the control of the grantee
and that it shall not be otherwise exercisable. Stock appreciation rights may
be granted in connection with all or any part

 

6

 

of, or independently of, any
option granted under the Plan. A stock appreciation right granted in connection
with a non-qualified stock option may be granted at or after the time of grant
of such option. A stock appreciation right granted in connection with an
incentive stock option may be granted only at the time of grant of such option.

 

(c)                                  Nature of Stock Appreciation Rights. The grantee of a stock appreciation right
shall have the right, subject to the terms of the Plan and the applicable award
certificate, to receive from the Company an amount equal to (i) the excess of
the Fair Market Value of a share of Common Stock on the date of exercise of the
stock appreciation right over the Fair Market Value of a share of Common Stock
on the date of grant (or over the option exercise price if the stock
appreciation right is granted in connection with an option), multiplied by (ii)
the number of shares with respect to which the stock appreciation right is
exercised. Payment upon exercise of a stock appreciation right shall be in cash
or in shares of Common Stock (valued at their Fair Market Value on the date of
exercise of the stock appreciation right) or both, all as the Committee shall
determine in its sole discretion. Upon the exercise of a stock appreciation
right granted in connection with an option, the number of shares subject to the
option shall be reduced by the number of shares with respect to which the stock
appreciation right is exercised. Upon the exercise of an option in connection
with which a stock appreciation right has been granted, the number of shares
subject to the stock appreciation right shall be reduced by the number of
shares with respect to which the option is exercised.

 

(d)                                 Option Exercise Price. Each award certificate with respect to an
option shall set forth the amount (the “option exercise price”) payable by the
grantee to the Company upon exercise of the option evidenced thereby. The
option exercise price per share shall be determined by the Committee in its sole
discretion; provided, however, that the option exercise price shall be at least
100% of the Fair Market Value of a share of Common Stock on the date the option
is granted, and provided further that in no event shall the option exercise
price be less than the par value of a share of Common Stock.

 

(e)                                  Exercise Period. Each award certificate with respect to an
option or stock appreciation right shall set forth the periods during which the
award evidenced thereby shall be exercisable, whether in whole or in part. Such
periods shall be determined by the Committee in its sole discretion, subject to
the following:

 

(i)                                     Ten-Year Limit. No stock option (or a stock appreciation
right granted in connection with an incentive stock option) shall be
exercisable more than 10 years after the date of grant.

 

(ii)                                  Beginning of Exercise Period.

 

(A)                              General. Unless the applicable award certificate otherwise provides, an option
or stock appreciation right shall become exercisable with respect to a number
of whole shares as close as possible to 25% of the shares subject to such
option or stock appreciation right on each of the first four anniversaries of
the date of grant.

 

(B)                                Early Exercise. The Committee may provide that all or part
of a stock option be exercisable for shares of Common Stock subject to
restrictions comparable to those set forth in Section 2.6(d) hereof and subject
to a repurchase option in favor of the Company. Such restrictions and
repurchase option shall lapse at such times as the Committee shall specify in
the award certificate.

 

(iii)                               End of Exercise Period. Unless the applicable award certificate
otherwise provides, once an installment becomes exercisable, it shall remain
exercisable until the earlier of (A) the tenth anniversary of the date of grant
of the award or (B) the expiration, cancellation or termination of the award.

 

(iv)                              Timing and Extent of Exercise. Unless the applicable award certificate
otherwise provides, (A) an option or stock appreciation right may be exercised
from time to time as to all or part of the shares as to which such award is
then exercisable and (B) a stock

 

7

 

appreciation right granted
in connection with an option may be exercised at any time when, and to the same
extent that, the related option may be exercised.

 

(v)                                 Termination of Employment — Generally. Except as otherwise provided below, a
grantee who incurs a termination of employment may exercise any outstanding
option or stock appreciation right on the following terms and conditions: (A)
exercise may be made only to the extent that the grantee was entitled to
exercise the award on the termination of employment date; and (B) exercise must
occur within three months after termination of employment but in no event after
the original expiration date of the award.

 

(vi)                              Dismissal for Cause. If a grantee incurs a termination of
employment as the result of a dismissal for cause, all options and stock
appreciation rights not theretofore exercised shall terminate upon the
commencement of business on the date of the grantee’s termination of
employment.

 

(vii)                           Disability. If a grantee incurs a termination of employment by reason of a
disability (as defined below), then any outstanding option or stock
appreciation right shall be exercisable on the following terms and conditions:
(A) exercise may be made only to the extent that the grantee was entitled to
exercise the award on the termination of employment date; and (B) exercise must
occur by the earlier of (I) the first anniversary of the grantee’s termination
of employment, or (II) the original expiration date of the award. For this
purpose “disability” shall mean any physical or mental condition that would
qualify a grantee for a disability benefit under the long-term disability plan
maintained by the Company or, if there is no such plan, the inability of a
grantee to perform all or a substantial part of his or her material duties, as
a result of mental or physical defect or illness for a period of 90 consecutive
days or 120 non-consecutive days during any 12 month period. The existence of a
disability shall be determined by the Committee in its absolute discretion.

 

(viii)                        Death.

 

(A)                              Termination of Employment as a Result of
Grantee’s Death. If a
grantee incurs a termination of employment as the result of death, then any
outstanding option or stock appreciation right shall be exercisable on the
following terms and conditions: (I) exercise may be made only to the extent
that the grantee was entitled to exercise the award on the date of death; and
(II) exercise must occur by the earlier of (1) the first anniversary of the
grantee’s termination of employment, or (2) the original expiration date of the
award.

 

(B)                                Death Subsequent to a Termination of
Employment. If a grantee
dies subsequent to incurring a termination of employment but prior to the
expiration of the exercise period with respect to a stock option or a stock
appreciation right, then the award shall remain exercisable until the earlier
to occur of (I) the first anniversary of the grantee’s date of death or (II)
the original expiration date of the award.

 

(C)                                Restrictions on Exercise Following Death. Any such exercise of an award following a
grantee’s death shall be made only by the grantee’s executor or administrator
or other duly appointed representative reasonably acceptable to the Committee,
unless the grantee’s will specifically disposes of such award, in which case
such exercise shall be made only by the recipient of such specific disposition.
If a grantee’s personal representative or the recipient of a specific
disposition under the grantee’s will shall be entitled to exercise any award
pursuant to the preceding sentence, such representative or recipient shall be
bound by all the terms and conditions of the Plan and the applicable award
certificate which would have applied to the grantee.

 

(ix)                                Special Rules for Incentive Stock Options. No option that remains exercisable for more
than three months following a grantee’s termination of employment for any
reason other

 

8

 

than death (including death
within three months after the termination of employment or within one year
after a termination due to disability) or disability, or for more than one year
following a grantee’s termination of employment as the result of disability,
may be treated as an incentive stock option.

 

(x)                                   Detrimental Activity. In the event that the Committee determines
that a grantee has engaged in any Detrimental Activity (as defined in Section
3.3) after his or her termination of employment, any outstanding stock options
shall terminate as of the date such Detrimental Activity occurred.

 

(xi)                                Committee Discretion. The Committee, in the applicable award
certificate, may waive or modify the application of one or more of the
provisions of subparagraphs (v) through (viii) of this Section 2.2(e).

 

(f)                                    Incentive Stock Options: $100,000 Limitation. To the extent that the aggregate Fair
Market Value (determined as of the time the option is granted) of the stock
with respect to which incentive stock options are first exercisable by any
employee during any calendar year shall exceed $100,000, or such higher amount
as may be permitted from time to time under section 422 of the Code, such
options shall be treated as non-qualified stock options.

 

(g)                                 Incentive Stock Options: 10% Owners. Notwithstanding the foregoing provisions of
this Section 2.2, an incentive stock option may not be granted under the Plan
to an individual who, at the time the option is granted, owns stock possessing
more than 10% of the total combined voting power of all classes of stock of his
or her employer or of its parent or subsidiary (as such ownership may be
determined for purposes of section 422(b)(6) of the Code) unless (i) at the
time such incentive stock option is granted the option exercise price is at
least 110% of the Fair Market Value of the shares subject thereto and (ii) the
incentive stock option by its terms is not exercisable after the expiration of
5 years from the date it is granted.

 

2.3                               Exercise
of Options and Stock Appreciation Rights

 

Subject to the other
provisions of this Article II, each option or stock appreciation right granted
under the Plan shall be exercisable as follows:

 

(a)                                  Notice of Exercise. An option or stock appreciation right shall
be exercised by the filing of a written notice with the Company or the Company’s
designated exchange agent (the “exchange agent”), on such form and in such
manner as the Committee shall in its sole discretion prescribe.

 

(b)                                 Payment of Exercise Price. Any written notice of exercise of an option
shall be accompanied by payment for the shares being purchased. Such payment
shall be made: (i) by certified or official bank check (or the equivalent
thereof acceptable to the Company or its exchange agent) for the full option
exercise price; or (ii) with the consent of the Committee, by delivery of
shares of Common Stock owned by the grantee (whether acquired by option
exercise or otherwise, provided that if such shares were acquired pursuant to
the exercise of a stock option, they were acquired at least six months prior to
the option exercise date or such other period as the Committee may from time to
time determine) having a Fair Market Value (determined as of the exercise date)
equal to all or part of the option exercise price and a certified or official
bank check (or the equivalent thereof acceptable to the Company or its exchange
agent) for any remaining portion of the full option exercise price; (iii) by
means of a brokered cashless exercise; or (iv) at the discretion of the
Committee and to the extent permitted by law, by such other provision,
consistent with the terms of the Plan, as the Committee may from time to time
prescribe.

 

(c)                                  Delivery of Certificates Upon Exercise. Promptly after receiving payment of the
full option exercise price, or after receiving notice of the exercise of a
stock appreciation right, the Company or its exchange agent shall deliver to
the grantee or to such other person as may then have the right to exercise the
award, certificate or certificates for the shares of Common Stock for which the
award has been exercised. If the method of

 

9

 

payment employed upon option
exercise so requires, and if applicable law permits, a grantee may direct the
Company, or its exchange agent, as the case may be, to deliver the stock
certificate(s) to the grantee’s stockbroker.

 

(d)                                 No Stockholder Rights. No grantee of an option or stock
appreciation right (or other person having the right to exercise such award)
shall have any of the rights of a stockholder of the Company with respect to
shares subject to such award until the issuance of a stock certificate to such
person for such shares. Except as otherwise provided in Section 1.5(d), no
adjustment shall be made for dividends, distributions or other rights (whether
ordinary or extraordinary, and whether in cash, securities or other property)
for which the record date is prior to the date such stock certificate is
issued.

 

2.4                               Compensation
in Lieu of Exercise of an Option

 

Upon written application of
the grantee of an option, the Committee in its sole discretion may determine to
substitute, for the exercise of such option, compensation to the grantee not in
excess of the difference between the option exercise price and the Fair Market
Value of the shares covered by such written application on the date of such
application. Such compensation shall be in shares of Common Stock, and the
payment thereof may be subject to conditions, all as the Committee shall
determine in its sole discretion. In the event compensation is substituted
pursuant to this Section 2.4 for the exercise, in whole or in part, of an
option, the number of shares subject to the option shall be reduced by the
number of shares for which such compensation is substituted.

 

2.5                               Transferability
of Options and Stock Appreciation Rights

 

Except as otherwise provided
in an applicable award certificate evidencing an option or stock appreciation
right, during the lifetime of a grantee, each option or stock appreciation
right granted to a grantee shall be exercisable only by the grantee and no
option or stock appreciation right shall be assignable or transferable
otherwise than by will or by the laws of descent and distribution. Any attempt
to transfer any option or stock appreciation right other than as permitted
herein shall be void and immediately cancelled, and no such option or stock
appreciation right shall in any manner be liable for or subject to the debts,
contracts, liabilities or torts of any person who shall be entitled to such
option or stock appreciation right, nor shall any option or stock appreciation
right be subject to attachment or legal process for or against such person. The
Committee may, in any applicable award certificate evidencing an option (other
than an incentive stock option to the extent inconsistent with the requirements
of section 422 of the Code applicable to incentive stock options), permit a
grantee to transfer all or some of the options to (A) the grantee’s spouse,
children or grandchildren (“immediate family members”), (B) a trust or trusts
for the exclusive benefit of such immediate family members, or (C) other
parties approved by the Committee in its absolute discretion. Following any
such transfer, any transferred options shall continue to be subject to the same
terms and conditions as were applicable immediately prior to the transfer, and
the transferee shall be subject to all obligations hereunder as if such person
were the grantee.

 

2.6                               Grant of
Restricted Stock

 

(a)                                  Restricted Stock Grants. The Committee may grant restricted shares
of Common Stock to such key persons, in such amounts, and subject to such
vesting and forfeiture provisions and other terms and conditions as the
Committee shall determine in its sole discretion, subject to the provisions of
the Plan. Restricted stock awards may be made independently of or in connection
with any other award under the Plan. A grantee of a restricted stock award
shall have no rights with respect to such award unless such grantee accepts the
award within such period as the Committee shall specify by accepting delivery
of an award certificate in such form as the Committee shall determine and, in
the event the restricted shares are newly issued by the Company, makes payment
to the Company or its exchange agent in an amount at least equal to the par
value of the shares as required by the Committee and in accordance with the
Delaware General Corporation Law.

 

(b)                                 Issuance of Stock Certificate(s). Promptly after a grantee accepts a
restricted stock award, the Company or its exchange agent shall issue to the
grantee a stock certificate or stock certificates for the shares of Common
Stock covered by the award or shall establish an account evidencing ownership
of the stock in uncertificated form. Upon the issuance of such stock
certificate(s) or establishment of such account, the grantee shall have the
rights of a stockholder with respect to the restricted stock, subject to: (i)
the nontransferability restrictions and forfeiture provision described in
paragraphs (d) and (e) of this Section 2.6; (ii) in the Committee’s

 

10

 

discretion, a requirement
that any dividends paid on such shares shall be held in escrow until all
restrictions on such shares have lapsed; and (iii) any other restrictions and
conditions contained in the applicable award certificate.

 

(c)                                  Custody of Stock Certificate(s). Unless the Committee shall otherwise
determine, any stock certificates issued evidencing shares of restricted stock
shall remain in the possession of the Company until such shares are free of any
restrictions specified in the applicable award certificate. The Committee may
direct that such stock certificate(s) bear a legend setting forth the
applicable restrictions on transferability.

 

(d)                                 Nontransferability. Shares of restricted stock may not be sold,
assigned, transferred, pledged or otherwise encumbered or disposed of except as
otherwise specifically provided in this Plan or the applicable award certificate.
The Committee at the time of grant shall specify the date or dates (which may
depend upon or be related to a period of continued employment with the Company,
the attainment of performance goals or other conditions or a combination of
such conditions) on which the nontransferability of the restricted stock shall
lapse.

 

(e)                                  Forfeiture Upon Termination of Employment. Except as may otherwise be provided by the
Committee at any time prior to a grantee’s termination of employment, a grantee’s
termination of employment for any reason (including death) shall cause the
immediate forfeiture of all shares of restricted stock that have not yet vested
as of the date of such termination of employment. Unless the Board or the
Committee determines otherwise, all dividends paid on such shares also shall be
forfeited, whether by termination of any escrow arrangement under which such
dividends are held, by the grantee’s repayment of dividends received directly,
or otherwise.

 

2.7                               Grant of
Restricted Stock Units

 

(a)                                  Restricted Stock Unit Grants. The Committee may grant awards of
restricted stock units to such key persons, in such amounts, and subject to
such terms and conditions as the Committee shall determine in its discretion,
subject to the provisions of the Plan. Restricted stock units may be awarded
independently of or in connection with any other award under the Plan. A
grantee of a restricted stock unit award shall have no rights with respect to
such award unless such grantee accepts the award within such period as the
Committee shall specify by accepting delivery of an award certificate in such
form as the Committee shall determine. A grant of a restricted stock unit
entitles the grantee to receive a share of Common Stock on the date that such
restricted stock unit vests.

 

(b)                                 Vesting. Restricted stock units may not be sold, assigned, transferred,
pledged or otherwise encumbered or disposed of except as otherwise specifically
provided in this Plan or the applicable award certificate. The Committee at the
time of grant shall specify the date or dates (which may depend upon or be
related to a period of continued employment with the Company, the attainment of
performance goals or other conditions or a combination of such conditions) on
which the restricted stock units shall vest.

 

(c)                                  Consequence of Termination of Employment. Except as may otherwise be provided by the
Committee at any time prior to a grantee’s termination of employment, a grantee’s
termination of employment for any reason (including death) shall cause the
immediate forfeiture of all restricted stock units that have not yet vested as
of the date of such termination of employment.

 

2.8                               Grant of
Unrestricted Stock

 

The Committee may grant (or
sell at a purchase price at least equal to par value) shares of Common Stock
free of restrictions under the Plan, to such key persons and in such amounts
and subject to such forfeiture provisions as the Committee shall determine in
its sole discretion. Shares may be thus granted or sold in respect of past
services or other valid consideration.

 

2.9                               Grant of
Performance Shares

 

(a)                                  Performance Share Grants. The Committee may grant performance share
awards to such key persons, and in such amounts and subject to such vesting and
forfeiture provisions and other terms and conditions, as the Committee shall in
its sole discretion determine, subject to the provisions of the Plan. Such an

 

11

 

award shall entitle the
grantee to acquire shares of Common Stock, or to be paid the value thereof in
cash, as the Committee shall determine, if specified performance goals are met.
Performance shares may be awarded independently of, or in connection with, any
other award under the Plan. A grantee shall have no rights with respect to a
performance share award unless such grantee accepts the award by accepting
delivery of an award certificate at such time and in such form as the Committee
shall determine.

 

(b)                                 Stockholder Rights. The grantee of a performance share award
will have the rights of a stockholder only as to shares for which a stock
certificate has been issued pursuant to the award or for which an account has
been established evidencing ownership of the stock in uncertificated form and
not with respect to any other shares subject to the award.

 

(c)                                  Consequence of Termination of Employment. Except as may otherwise be provided by the
Committee at any time prior to a grantee’s termination of employment, the
rights of a grantee of a performance share award shall automatically terminate
upon the grantee’s termination of employment by the Company and its
subsidiaries for any reason (including death).

 

(d)                                 Payment of Award. The grantee of a performance share award
shall receive the shares of Common Stock or cash payment subject to such award
as soon as practicable following the satisfaction of the applicable performance
goals, but in no event later than 2-1/2 months after the year in which the
performance goals are satisfied.

 

(e)                                  Tandem Grants; Effect on Exercise. Except as otherwise specified by the
Committee, (i) a performance share award granted in tandem with an option may
be exercised only while the option is exercisable, (ii) the exercise of a
performance share award granted in tandem with any other award shall reduce the
number of shares subject to such other award in the manner specified in the
applicable award certificate, and (iii) the exercise of any award granted in
tandem with a performance share award shall reduce the number of shares subject
to the performance share award in the manner specified in the applicable award
certificate.

 

(f)                                    Nontransferability. Performance shares may not be sold,
assigned, transferred, pledged or otherwise encumbered or disposed of except as
otherwise specifically provided in this Plan or the applicable award
certificate.

 

2.10                        Right of
Recapture

 

If at any time after the
date on which a grantee has been granted or become vested in an award pursuant
to the achievement of performance goals, the Committee determines that the
earlier determination as to the achievement of the performance goals was based
on incorrect data and that in fact the performance goals had not been achieved
or had been achieved to a lesser extent than originally determined, then (i)
any award or portion of an award granted based on such incorrect determination
shall be forfeited, (ii) any award or portion of an award that became vested
based on such incorrect determination shall be deemed to be not vested, and
(iii) any amounts paid to the grantee based on such incorrect determination shall
be paid by the grantee to the Company upon notice from the Company.

 

ARTICLE III

Miscellaneous

 

3.1                               Amendment
of the Plan; Modification of Awards

 

(a)                                  Amendment of the Plan. The Board may from time to time suspend,
discontinue, revise or amend the Plan in any respect whatsoever, except that no
such amendment shall materially impair any rights or materially increase any
obligations under any award theretofore made under the Plan without the consent
of the grantee (or, upon the grantee’s death, the person having the right to
exercise the award). For purposes of this Section 3.1, any action of the Board
or the Committee that in any way alters or affects the tax treatment of any
award or that in the sole discretion of the Board is necessary to prevent an
award from being subject to tax under Section 409A of the Code shall not be
considered to materially impair any rights of any grantee. The Board shall

 

12

 

determine, in its sole
discretion, whether to submit any amendment of the Plan to stockholders for
approval; in making such determination it is expected that the Board will take
into account the requirements of any exchange on which the Common Stock of the
Company is listed, the prerequisites for favorable tax treatment to the Company
and grantees of awards made under the Plan, and such other considerations as
the Board deems relevant.

 

(b)                                 Modification of Awards. The Committee may cancel any award under
the Plan. The Committee also may amend any outstanding award certificate,
including, without limitation, by amendment which would: (i) accelerate the
time or times at which the award becomes unrestricted or vested or may be
exercised; (ii) waive or amend any goals, restrictions or conditions set forth
in the award certificate; or (iii) waive or amend any applicable provision of
the Plan or award certificate with respect to the termination of the award upon
termination of employment, provided however, that no such amendment may lower
the exercise price of an outstanding option or stock appreciation right. However,
any such cancellation or amendment (other than an amendment pursuant to Section
1.5(d)) that materially impairs the rights or materially increases the
obligations of a grantee under an outstanding award shall be made only with the
consent of the grantee (or, upon the grantee’s death, the person having the
right to exercise the award).

 

3.2                               Consent
Requirement

 

(a)                                  No Plan Action without Required Consent. If the Committee shall at any time
determine that any Consent (as hereinafter defined) is necessary or desirable
as a condition of, or in connection with, the granting of any award under the
Plan, the issuance or purchase of shares or exercise of other rights
thereunder, or the taking of any other action thereunder (each such action
being hereinafter referred to as a “Plan action”), then such Plan action shall
not be taken or permitted, in whole or in part, unless and until such Consent
shall have been effected or obtained to the full satisfaction of the Committee.

 

(b)                                 Consent Defined. The term “Consent” as used herein with
respect to any Plan action means (i) any and all listings, registrations or
qualifications in respect thereof upon any securities exchange or under any
federal, state or local law, rule or regulation, (ii) any and all written
agreements and representations by the grantee with respect to the disposition
of shares, or with respect to any other matter, which the Committee shall deem
necessary or desirable to comply with the terms of any such listing,
registration or qualification or to obtain an exemption from the requirement
that any such listing, qualification or registration be made and (iii) any and
all consents, clearances and approvals in respect of a Plan action by any
governmental or other regulatory bodies.

 

(c)                                  Representations, Legend. The Committee may require as a condition to
the receipt of shares of Common Stock pursuant to an award under this Plan that
the grantee or any other person receiving shares pursuant to the award
represent that such person is not acquiring the shares with a view to
distribution thereof and to make such other securities law related
representations as the Committee shall request. In addition to any legend
required by this Plan, any certificate representing Common Stock acquired in
respect of an award may bear such legends as the Company deems advisable to
assure compliance with all applicable laws and regulations.

 

3.3                               Detrimental
Activity

 

The Committee may require
that a grantee certify at the time an award vests or is exercised that he or
she has not engaged in, and does not intend to engage in, any Detrimental
Activity. In the event that a grantee engages in Detrimental Activity during
the one-year period commencing on the date an award vests or is exercised, the
Company shall be entitled to recover from such grantee at any time, and such
grantee shall pay over to the Company, an amount equal to any gain realized as
a result of the vesting or exercise (whether at the time of exercise or
thereafter). For the purposes hereof, “Detrimental Activity” shall mean (a) the
disclosure to anyone outside the Company or its affiliates, or the use in any
manner other than in the furtherance of the Company’s or its affiliate’s
business, without written authorization from the Company, of any confidential
information or proprietary information relating to the business of the Company
or its affiliates that is acquired by a grantee prior to the grantee’s
termination of employment; (b) activity while employed or performing services
that results, or if known could result, in the grantee’s termination that is
classified by the Company as a termination for cause; (c) any attempt, directly
or indirectly, to solicit, induce or hire (or the identification for
solicitation, inducement or hire) any non-clerical employee of the Company or
its affiliates to be employed by, or to perform services for, the grantee or
any person with which the grantee is associated (including, but not limited to,
employers, creditors, persons for

 

13

 

whom the grantee performs
consulting work, and entities in which the grantee is a partner or equity
owner) or any person from which the grantee receives direct or indirect
compensation or fees as a result of such solicitation, inducement or hire (or
the identification for solicitation, inducement or hire) without, in all cases,
written authorization from the Company; (d) any attempt, directly or
indirectly, to solicit in a competitive manner any current or prospective
customer of the Company or its affiliates without, in all cases, written
authorization from the Company; (e) the grantee’s disparagement, or inducement
of others to do so, of the Company or its affiliates or their past and present
officers, directors, employees or products;  (f)
without written authorization from the Company, the rendering of services for
any organization, or engaging, directly or indirectly, in any business, which
is competitive with the Company or its affiliates, or the rendering of services
to such organization or business if such organization or business is otherwise
prejudicial to or in conflict with the interests of the Company or its
affiliates; or (g) breach of any agreement between the grantee and the Company
or an affiliate (including, without limitation, any employment agreement or
non-competition or non-solicitation agreement).

 

3.4                               Nonassignability

 

(a)                                  General. Except as expressly provided herein or by the terms of an award
certificate: (a) no award or right granted to any person under the Plan or
under any award certificate shall be assignable or transferable other than by
will or by the laws of descent and distribution; and (b) all rights granted
under the Plan or any award certificate shall be exercisable during the life of
the grantee only by the grantee or the grantee’s legal representative.

 

(b)                                 Payment to Minors, Etc. Any benefit payable to or for the benefit
of a minor, an incompetent person or other person incapable of receipt thereof
shall be deemed paid when paid to such person’s guardian or to the party
providing or reasonably appearing to provide for the care of such person, and
such payment shall fully discharge the Committee, the Board, the Company, its
affiliates and their employees, agents and representatives with respect
thereto.

 

3.5                               Requirement
of Notification of Election Under Section 83(b) of the Code

 

If any grantee shall, in
connection with the acquisition of shares of Common Stock under the Plan, make
the election permitted under section 83(b) of the Code (i.e., an election to
include in gross income in the year of transfer the amounts specified in
section 83(b)), such grantee shall notify the Company of such election within
10 days of filing notice of the election with the Internal Revenue Service, in
addition to any filing and notification required pursuant to regulations issued
under the authority of Code section 83(b).

 

3.6                               Requirement
of Notification Upon Disqualifying Disposition Under Section 421(b) of the Code

 

Each grantee of an incentive
stock option shall notify the Company of any disposition of shares of Common
Stock issued pursuant to the exercise of such option under the circumstances
described in section 421(b) of the Code (relating to certain disqualifying
dispositions), within 10 days of such disposition.

 

3.7                               Withholding
Taxes

 

(a)                                  With Respect to Cash Payments. Whenever cash is to be paid pursuant to an
award under the Plan, the Company shall be entitled to deduct therefrom an
amount sufficient in its opinion to satisfy all federal, state and other
governmental tax withholding requirements related to such payment.

 

(b)                                 With Respect to Delivery of Common Stock. Whenever shares of Common Stock are to be
delivered pursuant to an award under the Plan, the Company shall be entitled to
require as a condition of delivery that the grantee remit to the Company an
amount sufficient in the opinion of the Company to satisfy all federal, state
and other governmental tax withholding requirements related thereto. With the
approval of the Committee, which the Committee shall have sole discretion
whether or not to give, the grantee may satisfy the foregoing condition by
electing to have the Company withhold from delivery shares having a value equal
to the amount of tax to be withheld. Such shares shall be valued at their Fair
Market Value as of the date on which the amount of tax to be withheld is
determined. Fractional share amounts shall be settled in cash. Such a
withholding election may be made with respect to all or any portion of the
shares to be delivered pursuant to an award.

 

14

 

3.8                               Limitations
Imposed by Section 162(m)

 

Notwithstanding any other
provision hereunder, if and to the extent that the Committee reasonably
determines the Company’s federal tax deduction in respect of an award may be
limited as a result of section 162(m) of the Code, the Committee may take the
following actions:

 

(i)                                     With respect to options or stock appreciation
rights, the Committee may delay the exercise or payment, as the case may be, in
respect of such options or stock appreciation rights until the earlier to occur
of (A) 30 days following the grantee’s termination of employment, but in any
event during the same calendar year as such termination of employment and (B)
the date, as reasonably determined by the Company, that the Company’s federal
tax deduction in respect of the award will not be limited by reason of section
162(m), or such other date as may be specified under final regulations
promulgated pursuant to section 409A of the Code. In the event that a grantee
exercises an option or stock appreciation right at a time when the grantee is a
162(m) covered employee, and the Committee determines to delay the exercise or
payment, as the case may be, in respect of any such award, the Committee shall
credit cash or, in the case of an amount payable in Common Stock, the Fair
Market Value of the Common Stock, payable to the grantee to a book account. The
grantee shall have no rights in respect of such book account and the amount
credited thereto shall not be transferable by the grantee other than by will or
laws of descent and distribution. The Committee may credit additional amounts
to such book account as it may determine in its sole discretion. Any book
account created hereunder shall represent only an unfunded, unsecured promise
by the Company to pay the amount credited thereto to the grantee in the future.

 

(ii)                                  With respect to restricted stock, the
Committee may require the grantee to surrender to the Committee any award
certificates with respect to such awards, in order to cancel the awards of such
restricted stock. In exchange for such cancellation, the Committee shall credit
to a book account a cash amount equal to the Fair Market Value of the shares of
Common Stock subject to such awards. The amount credited to the book account
shall be paid to the grantee on the earlier to occur of (A) 30 days following
the grantee’s termination of employment, but in any event during the same
calendar year as such termination of employment and (B) the date, as reasonably
determined by the Company, that the Company’s federal tax deduction in respect
of the award will not be limited by reason of section 162(m), or such other
date as may be specified under final regulations promulgated pursuant to section
409A of the Code. The grantee shall have no rights in respect of such book
account and the amount credited thereto shall not be transferable by the
grantee other than by will or laws of descent and distribution. The Committee
may credit additional amounts to such book account as it may determine in its
sole discretion. Any book account created hereunder shall represent only an
unfunded, unsecured promise by the Company to pay the amount credited thereto
to the grantee in the future.

 

3.9                               Certain
Agreements

 

(a)                                  Stockholders Agreement. The Committee may require as a condition to
the receipt of shares of Common Stock pursuant to an award under this Plan that
the grantee or any other person receiving shares pursuant to the award execute
and become a party to the Second Amended and Restated Stockholders Agreement,
effective as of January 11, 2007, and the Amended and Restated Investor Rights
Agreement, effective as of January 11, 2007 ,or such other stockholders
agreements, investors rights agreements or other documentation which shall set
forth certain restrictions on transferability of the shares of Common Stock
acquired pursuant to such award and such other terms as the Board or Committee
shall from time to time establish.

 

(b)                                 Underwriting Agreement. Each grantee or other person receiving
shares in respect of an award, if requested by the Company and the lead
underwriter of any underwritten public offering of the Common Stock (the “Lead
Underwriter”), shall irrevocably agree not to sell, contract to sell, grant any
option to purchase, transfer the economic risk of ownership in, make any short
sale of, pledge or otherwise transfer or dispose of, any interest in any Common
Stock or any securities convertible into, derivative of, or exchangeable or
exercisable for, or any other rights to purchase or acquire Common Stock  (except Common Stock included in such public
offering or

 

15

 

acquired on the public
market after such offering) during such period of time following the effective
date of a registration statement of the Company filed under the Securities Act
of 1933 (the “Securities Act”), as amended, that the Lead Underwriter shall
specify (the “Lock-up Period”). The grantee or such other person shall further
agree to sign such documents as may be requested by the Lead Underwriter to
effect the foregoing and agree that the Company may impose stop-transfer
instructions with respect to Common Stock acquired in respect of an award until
the end of such Lock-up Period.

 

3.10                        Employment
Provisions

 

(a)                                  Right of Discharge Reserved. Nothing in the Plan or in any award
certificate shall confer upon any grantee the right to continue employment with
the Company or affect any right which the Company may have to terminate such
employment.

 

(b)                                 Confidentiality. The acceptance of an award by a grantee
shall be deemed to be a covenant by the grantee that he or she will not
disclose to anyone outside the Company or its affiliates, or use in any manner
other than in the furtherance of the Company’s or its affiliate’s business,
without written authorization from the Company, any confidential information or
proprietary information relating to the business of the Company or its
affiliates that is acquired by a grantee prior to the grantee’s termination of
employment.

 

3.11                        Nature of
Payments

 

(a)                                  Consideration for Services Performed. Any and all grants of awards and issuances
of shares of Common Stock under the Plan shall be in consideration of services
performed for the Company by the grantee.

 

(b)                                 Not Taken into Account for Benefits. All such grants and issuances shall
constitute a special incentive payment to the grantee and shall not be taken
into account in computing the amount of salary or compensation of the grantee
for the purpose of determining any benefits under any pension, retirement,
profit-sharing, bonus, life insurance or other benefit plan of the Company or
under any agreement between the Company and the grantee, unless such plan or
agreement specifically otherwise provides.

 

3.1                               Non-Uniform
Determinations

 

The Committee’s
determinations under the Plan need not be uniform and may be made by it
selectively among persons who receive, or who are eligible to receive, awards
under the Plan (whether or not such persons are similarly situated). Without
limiting the generality of the foregoing, the Committee shall be entitled,
among other things, to make non-uniform and selective determinations, and to
enter into non-uniform and selective award certificates, as to (a) the persons
to receive awards under the Plan, (b) the terms and provisions of awards under
the Plan, and (c) the treatment of leaves of absence pursuant to Section
1.6(c).

 

3.13                        Severability
of Provisions

 

If any provision of this
Plan shall be held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provisions hereof, and this Plan
shall be construed and enforced as if such provisions had not been included.

 

3.14                        Securities
Act Compliance

 

Except as the Company or
Committee shall otherwise determine, prior to the completion of an underwritten
public offering, this Plan is intended to comply with Section 4(2) or Rule 701
under the Securities Act, and any provisions inconsistent with such Section or
Rule of the Securities Act shall be inoperative and shall not affect the
validity of the Plan.

 

16

 

3.15                        Other
Payments or Awards

 

Nothing contained in the
Plan shall be deemed in any way to limit or restrict the Company from making
any award or payment to any person under any other plan, arrangement or
understanding, whether now existing or hereafter in effect.

 

3.16                        Headings

 

Any section, subsection,
paragraph or other subdivision headings contained herein are for the purpose of
convenience only and are not intended to expand, limit or otherwise define the
contents of such subdivisions.

 

3.17                        Effective
Date and Term of Plan

 

(a)                                  Adoption; Stockholder Approval. The Plan was adopted by the Board on
January 25, 2007, subject to approval by the Company’s stockholders. All awards
under the Plan prior to such stockholder approval are subject in their entirety
to such approval. If such approval is not obtained prior to the first
anniversary of the date of adoption of the Plan, the Plan and all awards thereunder
shall terminate on that date.

 

(b)                                 Termination of Plan. Unless sooner terminated by the Board or
pursuant to paragraph (a) above, the provisions of the Plan respecting the
grant of any award pursuant to which shares of Common Stock will be granted
shall terminate on June 14, 2009, and no such awards shall thereafter be made
under the Plan. All awards made under the Plan prior to the termination of the
Plan shall remain in effect until such awards have been satisfied or terminated
in accordance with the terms and provisions of the Plan and the applicable
award certificates.

 

3.18                        Restriction
on Issuance of Stock Pursuant to Awards

 

The Company shall not permit
any shares of Common Stock to be issued pursuant to awards granted under the
Plan unless such shares of Common Stock are fully paid and non-assessable,
within the meaning of Section 152 of the Delaware General Corporation Law,
except as otherwise permitted by Section 153(c) of the Delaware General
Corporation Law.

 

3.19                        Governing
Law

 

Except to the extent
preempted by any applicable federal law, the Plan will be construed and
administered in accordance with the laws of the State of Delaware, without
giving effect to principles of conflict of laws.

 

17

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