Document:

Exhibit 10.2

 

SECURITY AGREEMENT

 

dated as of

 

August 23, 2006

 

among

 

TDS INVESTOR CORPORATION,

as Borrower

 

TDS INVESTOR (BERMUDA) LTD.,

as Holdings

 

WALTONVILLE LIMITED,

as Intermediate Parent

 

CERTAIN SUBSIDIARIES OF HOLDINGS

IDENTIFIED HEREIN

 

and

 

UBS AG, STAMFORD BRANCH,

as Collateral Agent

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
   

  
	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 1.01

  	
  Credit
  Agreement

  	
  1

  
	
  SECTION 1.02

  	
  Other
  Defined Terms

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  
	
  Pledge of Securities

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.01

  	
  Pledge

  	
  3

  
	
  SECTION 2.02

  	
  Delivery of
  the Pledged Collateral

  	
  4

  
	
  SECTION 2.03

  	
  Representations,
  Warranties and Covenants

  	
  4

  
	
  SECTION 2.04

  	
  Certification
  of Limited Liability Company and Limited Partnership Interests

  	
  6

  
	
  SECTION 2.05

  	
  Registration
  in Nominee Name; Denominations

  	
  6

  
	
  SECTION 2.06

  	
  Voting
  Rights; Dividends and Interest

  	
  6

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  
	
  Security Interests in Personal
  Property

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.01

  	
  Security
  Interest

  	
  8

  
	
  SECTION 3.02

  	
  Representations
  and Warranties

  	
  10

  
	
  SECTION 3.03

  	
  Covenants

  	
  11

  
	
  SECTION 3.04

  	
  Other
  Actions

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  
	
  Remedies

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.01

  	
  Remedies
  Upon Default

  	
  13

  
	
  SECTION 4.02

  	
  Application
  of Proceeds.

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  
	
  Indemnity, Subrogation and
  Subordination

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.01

  	
  Indemnity

  	
  16

  
	
  SECTION 5.02

  	
  Contribution
  and Subrogation

  	
  16

  
	
  SECTION 5.03

  	
  Subordination.

  	
  16

  

 

i

 

	
  ARTICLE VI

  	
   

  
	
  Miscellaneous

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6.01

  	
  Notices

  	
  17

  
	
  SECTION 6.02

  	
  Waivers;
  Amendment

  	
  17

  
	
  SECTION 6.03

  	
  Collateral
  Agent’s Fees and Expenses;

  	
  18

  
	
  SECTION 6.04

  	
  Successors
  and Assigns

  	
  18

  
	
  SECTION 6.05

  	
  Survival of
  Agreement

  	
  18

  
	
  SECTION 6.06

  	
  Counterparts;
  Effectiveness; Several Agreement

  	
  19

  
	
  SECTION 6.07

  	
  Severability

  	
  19

  
	
  SECTION 6.08

  	
  Right of
  Set-Off

  	
  19

  
	
  SECTION 6.09

  	
  Governing
  Law; Jurisdiction; Consent to Service of Process

  	
  20

  
	
  SECTION 6.10

  	
  WAIVER OF
  JURY TRIAL

  	
  20

  
	
  SECTION 6.11

  	
  Headings

  	
  21

  
	
  SECTION 6.12

  	
  Security
  Interest Absolute

  	
  21

  
	
  SECTION 6.13

  	
  Termination
  or Release

  	
  21

  
	
  SECTION 6.14

  	
  Additional
  Restricted Subsidiaries

  	
  22

  
	
  SECTION 6.15

  	
  Collateral
  Agent Appointed Attorney-in-Fact

  	
  22

  
	
  SECTION 6.16

  	
  General
  Authority of the Collateral Agent

  	
  23

  
	
   

  	
   

  	
   

  
	
  Schedules

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule I

  	
  Subsidiary Parties

  	
   

  
	
  Schedule II

  	
  Pledged Equity; Pledged Debt

  	
   

  
	
  Schedule III

  	
  Commercial Tort Claims

  	
   

  
	
  Schedule IV

  	
  Permitted Subsidiary Dispositions

  	
   

  
	
  Schedule V

  	
  Permitted Subsidiary Liquidations

  	
   

  
	
  Schedule VI

  	
  Foreign Subsidiaries

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibits

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit I

  	
  Form of Security Agreement Supplement

  	
   

  
	
  Exhibit II

  	
  Form of Perfection Certificate

  	
   

  

 

ii

 

SECURITY
AGREEMENT dated as of August 23, 2006 among TDS INVESTOR (BERMUDA) LTD. (“Holdings”), TDS INVESTOR CORPORATION (the “Borrower”), WALTONVILLE LIMITED (“Intermediate
Parent”), the Subsidiaries of Holdings from time to time party
hereto and UBS AG, STAMFORD BRANCH, as Collateral Agent for the Secured Parties
(as defined below).

 

Reference is made to the Credit Agreement
dated as of August 23, 2006 (as amended, supplemented or otherwise
modified from time to time, the “Credit Agreement”),
among the Borrower, Holdings, Intermediate Parent, UBS AG, STAMFORD BRANCH, as
Administrative Agent and an L/C Issuer, UBS LOAN FINANCE LLC, as Swing Line
Lender, each lender from time to time party thereto (collectively, the “Lenders” and individually, a “Lender”),
CREDIT SUISSE SECURITIES (USA) LLC, as Syndication Agent, and LEHMAN BROTHERS
INC., CITIGROUP GLOBAL MARKETS INC. and DEUTSCHE BANK AG NEW YORK BRANCH, as
Co-Documentation Agents. The Lenders have agreed to extend credit to the
Borrower subject to the terms and conditions set forth in the Credit Agreement.
The obligations of the Lenders to extend such credit are conditioned upon,
among other things, the execution and delivery of this Agreement. Holdings and
the Subsidiary Parties are affiliates of the Borrower, will derive substantial
benefits from the extension of credit to the Borrower pursuant to the Credit
Agreement and are willing to execute and deliver this Agreement in order to
induce the Lenders to extend such credit. Accordingly, the parties hereto agree
as follows:

 

ARTICLE I

 

Definitions

 

SECTION 1.01       Credit
Agreement.

 

(a)           Capitalized terms
used in this Agreement and not otherwise defined herein have the meanings
specified in the Credit Agreement. All terms defined in the New York UCC (as
defined herein) and not defined in this Agreement have the meanings specified
therein; the term “instrument”
shall have the meaning specified in Article 9 of the New York UCC.

 

(b)           The rules of construction specified
in Article I of the Credit Agreement also apply to this Agreement.

 

SECTION 1.02       Other
Defined Terms. As used in this Agreement, the following terms have the
meanings specified below:

 

“Account Debtor” means any Person who is or who
may become obligated to any Grantor under, with respect to or on account of an
Account.

 

“Accounts” has
the meaning specified in Article 9 of the New York UCC.

 

“Agreement” means this Security Agreement.

 

1

 

“Article 9 Collateral”
has the meaning assigned to such term in Section 3.01(a).

 

“Claiming Party” has the meaning assigned to such term in
Section 5.02.

 

“Collateral” means the Article 9
Collateral and the Pledged Collateral.

 

“Contributing Party” has the meaning assigned to such term in
Section 5.02.

 

“Credit Agreement” has the meaning assigned to
such term in the preliminary statement of this Agreement.

 

“General Intangibles” has the meaning specified
in Article 9 of the New York UCC and includes corporate or other business
records, indemnification claims, contract rights (including rights under leases,
whether entered into as lessor or lessee, Swap Contracts and other agreements),
goodwill, registrations, franchises, tax refund claims and any letter of
credit, guarantee, claim, security interest or other security held by or
granted to any Grantor, as the case may be, to secure payment by an Account
Debtor of any of the Accounts, provided that
General Intangibles shall not include any intellectual property and related
assets subject to the Intellectual Property Security Agreement.

 

“Grantor” means each
of Holdings, the Borrower and each Subsidiary Party that is a Domestic
Subsidiary.

 

“New York UCC” means the Uniform Commercial
Code as from time to time in effect in the State of New York.

 

“Obligations”
has the meaning assigned to such term in the Credit Agreement.

 

“Perfection Certificate” means a certificate
substantially in the form of Exhibit II, completed and supplemented with
the schedules and attachments contemplated thereby, and duly executed by the
chief financial officer and the chief legal officer of the Borrower.

 

“Pledged Collateral”
has the meaning assigned to such term in Section 2.01.

 

“Pledged Debt”
has the meaning assigned to such term in Section 2.01.

 

“Pledged Equity”
has the meaning assigned to such term in Section 2.01.

 

“Pledged Securities” means any promissory
notes, stock certificates or other securities now or hereafter included in the
Pledged Collateral, including all certificates, instruments or other documents
representing or evidencing any Pledged Collateral.

 

“Secured Parties”
means, collectively, the Administrative Agent, the Collateral Agent, the
Lenders, the Hedge Banks, the Supplemental Administrative Agent and each
co-agent or sub-agent appointed by the Administrative Agent from time to time
pursuant to Section 9.01(c) of the Credit Agreement.

 

2

 

“Security Agreement
Supplement” means an instrument in the form of Exhibit I
hereto.

 

“Security Interest”
has the meaning assigned to such term in Section 3.01(a).

 

“Subsidiary Parties” means (a) the Restricted
Subsidiaries identified on Schedule I and (b) each other Restricted Subsidiary
that becomes a party to this Agreement as a Subsidiary Party after the Closing
Date.

 

ARTICLE II

 

Pledge of Securities

 

SECTION 2.01       Pledge.
As security for the payment or performance, as the case may be, in full of the
Obligations, including the Guaranties, each Grantor hereby assigns and pledges
to the Collateral Agent, its successors and assigns, for the benefit of the
Secured Parties, and hereby grants to the Collateral Agent, its successors and
assigns, for the benefit of the Secured Parties, a security interest in, all of
such Grantor’s right, title and interest in, to and under (i) all Equity
Interests held by it and listed on Schedule II and any other Equity
Interests obtained in the future by such Grantor and the certificates
representing all such Equity Interests (the “Pledged
Equity”); provided that
the Pledged Equity shall not include (A) more than 65% of the issued and
outstanding voting Equity Interests of any Foreign Subsidiary, (B) Equity
Interests of Unrestricted Subsidiaries, (C) Equity Interests of any
Subsidiary of a Foreign Subsidiary, (D) Equity Interests of any Subsidiary
acquired pursuant to a Permitted Acquisition financed with Indebtedness
incurred pursuant to Section 7.03(g) of the Credit Agreement if such
Equity Interests serve as security for such Indebtedness or if the terms of
such Indebtedness prohibit the creation of any other lien on such Equity
Interests, (E) Equity Interests of any Person that is not a direct or
indirect, wholly owned Subsidiary of the Borrower, (F) Equity Interests of
any Subsidiary with respect to which the Administrative Agent has confirmed in
writing to the Borrower its determination that the costs or other consequences
(including adverse tax consequences) of providing a pledge of its Equity Interests
is excessive in view of the benefits to be obtained by the Lenders; (G) Equity
Interests of the Subsidiaries listed on Schedule IV so long as such Equity
Interests are transferred to a wholly-owned Subsidiary that is not a Loan Party
within 60 days of the Closing Date and (H) Equity Interests of the Subsidiaries
listed on Schedule V so long as such Equity Interests are dissolved or
liquidated within 60 days of the Closing Date; (ii)(A) the debt securities
owned by it and listed opposite the name of such Grantor on Schedule II,
(B) any debt securities obtained in the future by such Grantor and
(C) the promissory notes and any other instruments evidencing such debt
securities (the “Pledged Debt”); (iii) all
other property that may be delivered to and held by the Collateral Agent pursuant
to the terms of this Section 2.01; (iv) subject to Section 2.06, all
payments of principal or interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of, in exchange for or upon the conversion of, and all other Proceeds received
in respect of, the securities referred to in clauses (i) and (ii) above;
(v) subject to Section 2.06, all rights and privileges of such
Grantor with respect to the securities and other property referred to in
clauses (i), (ii), (iii) and (iv) above; and (vi) all
Proceeds of

 

3

 

any of the foregoing (the items referred to
in clauses (i) through (vi) above being collectively referred to as
the “Pledged Collateral”).

 

TO HAVE AND TO HOLD the Pledged Collateral,
together with all right, title, interest, powers, privileges and preferences
pertaining or incidental thereto, unto the Collateral Agent, its successors and
assigns, for the benefit of the Secured Parties, forever, subject, however, to the terms, covenants and conditions hereinafter set
forth.

 

SECTION 2.02       Delivery
of the Pledged Collateral.

 

(a)           Each Grantor agrees promptly to
deliver or cause to be delivered to the Collateral Agent, for the benefit of
the Secured Parties, any and all Pledged Securities (other than (x) any uncertificated
securities, but only for so long as such securities remain uncertificated and
(y) share certificates for the Foreign Subsidiaries listed on Schedule VI
so long as such certificates are delivered within 30 days after the Closing
Date) to the extent such Pledged Securities, in the case of promissory notes or
other instruments evidencing Indebtedness, are required to be delivered pursuant
to paragraph (b) of this Section 2.02.

 

(b)           Each Grantor will cause any
Indebtedness for borrowed money having an aggregate principal amount in excess
of the Dollar Amount of $5,000,000 owed to such Grantor by any Person to be
evidenced by a duly executed promissory note that is pledged and delivered to
the Collateral Agent, for the benefit of the Secured Parties, pursuant to the
terms hereof.

 

(c)           Upon delivery to the Collateral
Agent, (i) any Pledged Securities shall be accompanied by stock powers duly executed
in blank or other instruments of transfer reasonably satisfactory to the
Collateral Agent and by such other instruments and documents as the Collateral
Agent may reasonably request and (ii) all other property comprising part
of the Pledged Collateral shall be accompanied by proper instruments of
assignment duly executed by the applicable Grantor and such other instruments
or documents as the Collateral Agent may reasonably request. Each delivery of
Pledged Securities shall be accompanied by a schedule describing the
securities, which schedule shall be attached hereto as Schedule II and
made a part hereof; provided that
failure to attach any such schedule hereto shall not affect the validity of
such pledge of such Pledged Securities. Each schedule so delivered shall supplement
any prior schedules so delivered.

 

SECTION 2.03       Representations,
Warranties and Covenants. Holdings and the Borrower jointly and severally
represent, warrant and covenant, as to themselves and the other Grantors, to
and with the Collateral Agent, for the benefit of the Secured Parties, that:

 

(a)           Schedule II
correctly sets forth the percentage of the issued and outstanding units of each
class of the Equity Interests of the issuer thereof represented by the Pledged
Equity and includes all Equity Interests, debt securities and promissory notes
required to be pledged hereunder in order to satisfy the Collateral and
Guaranty Requirement;

 

(b)           the Pledged Equity
and Pledged Debt (solely with respect to Pledged Debt issued by a Person other
than Holdings or a subsidiary of Holdings, to the best of Holdings’

 

4

 

and the Borrower’s knowledge) have been duly
and validly authorized and issued by the issuers thereof and (i) in the case of
Pledged Equity, are fully paid and nonassessable and (ii) in the case of
Pledged Debt (solely with respect to Pledged Debt issued by a Person other than
Holdings or a subsidiary of Holdings, to the best of Holdings’ and the Borrower’s
knowledge), are legal, valid and binding obligations of the issuers thereof;

 

(c)           except for the
security interests granted hereunder, each of the Grantors (i) is and,
subject to any transfers made in compliance with the Credit Agreement, will
continue to be the direct owner, beneficially and of record, of the Pledged
Securities indicated on Schedule II as owned by such Grantors, (ii) holds
the same free and clear of all Liens, other than (A) Liens created by the
Collateral Documents and (B) Liens expressly permitted pursuant to
Section 7.01 of the Credit Agreement, (iii) will make no assignment,
pledge, hypothecation or transfer of, or create or permit to exist any security
interest in or other Lien on, the Pledged Collateral, other than (A) Liens
created by the Collateral Documents and (B) Liens expressly permitted
pursuant to Section 7.01 of the Credit Agreement, and (iv) will defend its
title or interest thereto or therein against any and all Liens (other than the
Liens permitted pursuant to this Section 2.03(c)), however arising, of all
Persons whomsoever;

 

(d)           except for
restrictions and limitations imposed by the Loan Documents or securities laws
generally and except as described in the Perfection Certificate, the Pledged
Collateral is and will continue to be freely transferable and assignable, and
none of the Pledged Collateral is or will be subject to any option, right of
first refusal, shareholders agreement, charter or by-law provisions or
contractual restriction of any nature that might prohibit, impair, delay or
otherwise affect in any manner material and adverse to the Secured Parties the
pledge of such Pledged Collateral hereunder, the sale or disposition thereof
pursuant hereto or the exercise by the Collateral Agent of rights and remedies
hereunder;

 

(e)           each of the Grantors
has the power and authority to pledge the Pledged Collateral pledged by it
hereunder in the manner hereby done or contemplated;

 

(f)            no consent or
approval of any Governmental Authority, any securities exchange or any other
Person was or is necessary to the validity of the pledge effected hereby (other
than such as have been obtained and are in full force and effect);

 

(g)           by virtue of the
execution and delivery by the Grantors of this Agreement, when any Pledged
Securities are delivered to the Collateral Agent in accordance with this
Agreement, the Collateral Agent will obtain a legal, valid and perfected lien
upon and security interest in such Pledged Securities as security for the
payment and performance of the Obligations; and

 

(h)           the pledge effected
hereby is effective to vest in the Collateral Agent, for the benefit of the
Secured Parties, the rights of the Collateral Agent in the Pledged Collateral
as set forth herein.

 

5

 

SECTION 2.04       Certification
of Limited Liability Company and Limited Partnership Interests. Each
certificate representing an interest in any limited liability company or
limited partnership controlled by any Grantor and pledged under Section 2.01
shall be delivered to the Collateral Agent.

 

SECTION 2.05       Registration
in Nominee Name; Denominations. If an Event of Default shall occur and be
continuing and the Collateral Agent shall give the Borrower notice of its
intent to exercise such rights, (a) the Collateral Agent, on behalf of the
Secured Parties, shall have the right (in its sole and absolute discretion) to
hold the Pledged Securities in its own name as pledgee, the name of its nominee
(as pledgee or as sub-agent) or the name of the applicable Grantor, endorsed or
assigned in blank or in favor of the Collateral Agent, and each Grantor will
promptly give to the Collateral Agent copies of any notices or other
communications received by it with respect to Pledged Securities registered in
the name of such Grantor and (b) the Collateral Agent shall have the right
to exchange the certificates representing Pledged Securities for certificates
of smaller or larger denominations for any purpose consistent with this Agreement.

 

SECTION 2.06       Voting
Rights; Dividends and Interest.

 

(a)           Unless and until an Event of Default
shall have occurred and be continuing and the Collateral Agent shall have
notified the Borrower that the rights of the Grantors under this Section 2.06
are being suspended:

 

(i)       Each Grantor shall be entitled to
exercise any and all voting and/or other consensual rights and powers inuring
to an owner of Pledged Securities or any part thereof for any purpose
consistent with the terms of this Agreement, the Credit Agreement and the other
Loan Documents; provided that
such rights and powers shall not be exercised in any manner that could materially
and adversely affect the rights inuring to a holder of any Pledged Securities
or the rights and remedies of any of the Collateral Agent or the other Secured
Parties under this Agreement, the Credit Agreement or any other Loan Document
or the ability of the Secured Parties to exercise the same.

 

(ii)      The Collateral Agent shall execute and
deliver to each Grantor, or cause to be executed and delivered to each Grantor,
all such proxies, powers of attorney and other instruments as each Grantor may
reasonably request for the purpose of enabling such Grantor to exercise the
voting and/or consensual rights and powers it is entitled to exercise pursuant
to subparagraph (i) above.

 

(iii)     Each Grantor shall be entitled to receive
and retain any and all dividends, interest, principal and other distributions
paid on or distributed in respect of the Pledged Securities to the extent and
only to the extent that such dividends, interest, principal and other
distributions are permitted by, and otherwise paid or distributed in accordance
with, the terms and conditions of the Credit Agreement, the other Loan
Documents and applicable Laws; provided
that any noncash dividends, interest, principal or other distributions that
would constitute Pledged Equity or Pledged Debt, whether resulting from a
subdivision, combination or reclassification of the outstanding Equity Interests
of the issuer of any Pledged Securities or received in exchange for Pledged
Securities or any part thereof,

 

6

 

or in redemption thereof, or as a result of
any merger, consolidation, acquisition or other exchange of assets to which
such issuer may be a party or otherwise, shall be and become part of the
Pledged Collateral, and, if received by any Grantor, shall not be commingled by
such Grantor with any of its other funds or property but shall be held separate
and apart therefrom, shall be held in trust for the benefit of the Collateral
Agent and the Secured Parties and shall be forthwith delivered to the
Collateral Agent in the same form as so received (with any necessary
endorsement reasonably requested by the Collateral Agent).

 

(b)           Upon the occurrence and during the
continuance of an Event of Default, after the Collateral Agent shall have notified
the Borrower of the suspension of the rights of the Grantors under paragraph
(a)(iii) of this Section 2.06, then all rights of any Grantor to
dividends, interest, principal or other distributions that such Grantor is
authorized to receive pursuant to paragraph (a)(iii) of this Section 2.06
shall cease, and all such rights shall thereupon become vested in the Collateral
Agent, which shall have the sole and exclusive right and authority to receive
and retain such dividends, interest, principal or other distributions. All dividends,
interest, principal or other distributions received by any Grantor contrary to
the provisions of this Section 2.06 shall be held in trust for the benefit
of the Collateral Agent, shall be segregated from other property or funds of
such Grantor and shall be forthwith delivered to the Collateral Agent upon
demand in the same form as so received (with any necessary endorsement
reasonably requested by the Collateral Agent). Any and all money and other
property paid over to or received by the Collateral Agent pursuant to the provisions
of this paragraph (b) shall be retained by the Collateral Agent in an account
to be established by the Collateral Agent upon receipt of such money or other
property and shall be applied in accordance with the provisions of
Section 4.02. After all Events of Default have been cured or waived, the
Collateral Agent shall promptly repay to each Grantor (without interest) all
dividends, interest, principal or other distributions that such Grantor would
otherwise be permitted to retain pursuant to the terms of paragraph (a)(iii) of
this Section 2.06 and that remain in such account.

 

(c)           Upon the occurrence and during the
continuance of an Event of Default, after the Collateral Agent shall have notified
the Borrower of the suspension of the rights of the Grantors under paragraph
(a)(i) of this Section 2.06, then all rights of any Grantor to exercise
the voting and consensual rights and powers it is entitled to exercise pursuant
to paragraph (a)(i) of this Section 2.06, and the obligations of the
Collateral Agent under paragraph (a)(ii) of this Section 2.06, shall
cease, and all such rights shall thereupon become vested in the Collateral
Agent, which shall have the sole and exclusive right and authority to exercise
such voting and consensual rights and powers; provided
that, unless otherwise directed by the Required Lenders, the Collateral Agent
shall have the right from time to time following and during the continuance of
an Event of Default to permit the Grantors to exercise such rights. After all
Events of Default have been cured or waived, each Grantor shall have the exclusive
right to exercise the voting and/or consensual rights and powers that such
Grantor would otherwise be entitled to exercise pursuant to the terms of paragraph (a)(i)
of this Section 2.06.

 

(d)           Any notice given by the Collateral
Agent to the Borrower suspending the rights of the Grantors under paragraph (a)
of this Section 2.06 (i) shall be given in writing, (ii) may be given with
respect to one or more of the Grantors at the same or different times and (iii)

 

7

 

may suspend the rights of the
Grantors under paragraph (a)(i) or paragraph (a)(iii) of this Section 2.06 in
part without suspending all such rights (as specified by the Collateral Agent
in its sole and absolute discretion) and without waiving or otherwise affecting
the Collateral Agent’s rights to give additional notices from time to time
suspending other rights so long as an Event of Default has occurred and is continuing.

 

ARTICLE III

 

Security Interests in Personal Property

 

SECTION 3.01       Security
Interest.

 

(a)           As security for the payment or
performance, as the case may be, in full of the Obligations, including the
Guaranties, each Grantor hereby assigns and pledges to the Collateral Agent,
its successors and assigns, for the benefit of the Secured Parties, and hereby
grants to the Collateral Agent, its successors and assigns, for the benefit of
the Secured Parties, a security interest (the “Security
Interest”) in all right, title or interest in or to any and all of
the following assets and properties now owned or at any time hereafter acquired
by such Grantor or in which such Grantor now has or at any time in the future
may acquire any right, title or interest (collectively, the “Article 9 Collateral”):

 

(i)       all Property;

 

(ii)      all Accounts;

 

(iii)     all Chattel Paper;

 

(iv)     all Commercial Tort Claims listed on
Schedule III hereto;

 

(v)      all Deposit Accounts;

 

(vi)     all Documents;

 

(vii)    all Equipment;

 

(viii)   all General Intangibles;

 

(ix)     all Instruments;

 

(x)      all Inventory;

 

(xi)     all Investment Property;

 

(xii)    all books and records pertaining to the
Article 9 Collateral; and

 

(xiii)   to the extent not otherwise included, all
Proceeds and products of any and all of the foregoing and all supporting
obligations, collateral security and guarantees given by any Person with
respect to any of the foregoing;

 

8

 

provided
that notwithstanding anything to the contrary in this Agreement, this Agreement
shall not constitute a grant of a security interest in (A) motor vehicles
the perfection of a security interest in which is excluded from the Uniform
Commercial Code in the relevant jurisdiction, (B) any Equity Interests in
any Unrestricted Subsidiary or any Equity Interests of any Subsidiary acquired
pursuant to a Permitted Acquisition financed with Indebtedness incurred
pursuant to Section 7.03(g) of the Credit Agreement if such Equity
Interests serve as security for such Indebtedness or if the terms of such Indebtedness
prohibit the creation of any other lien on such Equity Interests, (C) more than
65% of the issued and outstanding voting Equity Interests of any Foreign
Subsidiary, (D) any asset with respect to which the Administrative Agent has
confirmed in writing to the Borrower its determination that the costs or other
consequences (including adverse tax consequences) of providing a security interest
in such asset is excessive in view of the benefits to be obtained by the
Lenders, or (E) any General Intangible, Investment Property or other
rights of a Grantor arising under any contract, lease, instrument, license or
other document if (but only to the extent that) the grant of a security
interest therein would (x) constitute a violation of a valid and
enforceable restriction in respect of such General Intangible, Investment
Property or other such rights in favor of a third party or under any law,
regulation, permit, order or decree of any Governmental Authority, unless and
until all required consents shall have been obtained (for the avoidance of
doubt, the restrictions described herein shall not include negative pledges or
similar undertakings in favor of a lender or other financial counterparty) or
(y) expressly give any other party in respect of any such contract, lease,
instrument, license or other document, the right to terminate its obligations
thereunder, provided, however,
that the limitation set forth in clause (E) above shall not affect, limit,
restrict or impair the grant by a Grantor of a security interest pursuant to
this Agreement in any such Collateral to the extent that an otherwise
applicable prohibition or restriction on such grant is rendered ineffective by
any applicable law, including the Uniform Commercial Code. Each Grantor shall,
if requested to do so by the Administrative Agent, use commercially reasonable
efforts to obtain any such required consent that is reasonably obtainable with
respect to Collateral which the Administrative Agent reasonably determines to
be material.

 

(b)           Each Grantor hereby irrevocably
authorizes the Collateral Agent for the benefit of the Secured Parties at any
time and from time to time to file in any relevant jurisdiction any initial financing
statements (including fixture filings) with respect to the Article 9
Collateral or any part thereof and amendments
thereto that (i) indicate the Collateral as all assets of such Grantor or
words of similar effect as being of an equal or lesser scope or with greater
detail, and (ii) contain the information required by Article 9 of the
Uniform Commercial Code or the analogous legislation of each applicable
jurisdiction for the filing of any financing statement or amendment, including
(A) whether such Grantor is an organization, the type of organization and any
organizational identification number issued to such Grantor and (B) in the case
of a financing statement filed as a fixture filing, a sufficient description of
the real property to which such Article 9 Collateral relates. Each Grantor
agrees to provide such information to the Collateral Agent promptly upon request.

 

(c)           The Security Interest is granted as
security only and shall not subject the Collateral Agent or any other Secured
Party to, or in any way alter or modify, any obligation or liability of any
Grantor with respect to or arising out of the Article 9 Collateral.

 

9

 

SECTION 3.02       Representations
and Warranties. Holdings and the Borrower jointly and severally represent
and warrant, as to themselves and the other Grantors, to the Collateral Agent
and the Secured Parties that:

 

(a)           Each Grantor has
good and valid rights in and title to the Article 9 Collateral with
respect to which it has purported to grant a Security Interest hereunder and
has full power and authority to grant to the Collateral Agent the Security
Interest in such Article 9 Collateral pursuant hereto and to execute,
deliver and perform its obligations in accordance with the terms of this Agreement,
without the consent or approval of any other Person other than any consent or
approval that has been obtained.

 

(b)           The Perfection
Certificate has been duly prepared, completed and executed and the information
set forth therein, including the exact legal name of each Grantor, is correct
and complete in all material respects as of the Closing Date. The UCC financing
statements (including fixture filings, as applicable) or other appropriate
filings, recordings or registrations prepared by the Collateral Agent based
upon the information provided to the Collateral Agent in the Perfection Certificate
for filing in each governmental, municipal or other office specified in
Schedule 2 to the Perfection Certificate (or specified by notice from the
applicable Borrower to the Collateral Agent after the Closing Date in the case
of filings, recordings or registrations required by Section 6.11 of the
Credit Agreement), are all the filings, recordings and registrations that are
necessary to establish a legal, valid and perfected security interest in favor
of the Collateral Agent (for the benefit of the Secured Parties) in respect of
all Article 9 Collateral in which the Security Interest may be perfected
by filing, recording or registration in the United States (or any political
subdivision thereof) and its territories and possessions, and no further or
subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary in any such jurisdiction, except as provided under
applicable law with respect to the filing of continuation statements.

 

(c)           The Security
Interest constitutes (i) a legal and valid security interest in all the
Article 9 Collateral securing the payment and performance of the
Obligations and (ii) subject to the filings described in
Section 3.02(b), a perfected security interest in all Article 9
Collateral in which a security interest may be perfected by filing, recording
or registering a financing statement or analogous document in the United States
(or any political subdivision thereof) and its territories and possessions
pursuant to the Uniform Commercial Code in the relevant jurisdiction. The Security
Interest is and shall be prior to any other Lien on any of the Article 9
Collateral, other than (i) any nonconsensual Lien that is expressly
permitted pursuant to Section 7.01 of the Credit Agreement and has priority
as a matter of law and (ii) Liens expressly permitted pursuant to Section 7.01
of the Credit Agreement.

 

(d)           The Article 9
Collateral is owned by the Grantors free and clear of any Lien, except for
Liens expressly permitted pursuant to Section 7.01 of the Credit Agreement.
None of the Grantors has filed or consented to the filing of (i) any
financing statement or analogous document under the New York UCC or any other
applicable laws covering any Article 9 Collateral or (ii) any assignment
in which any Grantor assigns any

 

10

 

Article 9 Collateral or any security
agreement or similar instrument covering any Article 9 Collateral with any
foreign governmental, municipal or other office, which financing statement or
analogous document, assignment, security agreement or similar instrument is
still in effect, except, in each case, for Liens expressly permitted pursuant
to Section 7.01 of the Credit Agreement.

 

SECTION 3.03       Covenants.

 

(a)           The Borrower agrees promptly to
notify the Collateral Agent in writing of any change (i) in legal name of
any Grantor, (ii) in the identity or type of organization or corporate
structure of any Grantor, or (iii) in the jurisdiction of organization of
any Grantor.

 

(b)           Each Grantor shall, at its own
expense, take any and all commercially reasonable actions necessary to defend
title to the Article 9 Collateral against all Persons and to defend the
Security Interest of the Collateral Agent in the Article 9 Collateral and
the priority thereof against any Lien not expressly permitted pursuant to
Section 7.01 of the Credit Agreement.

 

(c)           Each year, at the time of delivery of
annual financial statements with respect to the preceding fiscal year pursuant
to Section 6.01 of the Credit Agreement, the Borrower shall deliver to the
Collateral Agent a certificate executed by the chief financial officer and the
chief legal officer of the Borrower setting forth the information required pursuant
to Schedules 1(a), 1(c), 1(e), 1(f), 2(b), 8(a) and 8(b) of the Perfection
Certificate or confirming that there has been no change in such information
since the date of such certificate or the date of the most recent certificate
delivered pursuant to this Section 3.03(c) and certifying that all UCC financing statements and other appropriate
filings, recordings or registrations have been filed of record in each
governmental, municipal or other appropriate office in each jurisdiction
necessary to protect and perfect the Security Interests and Liens under this
Agreement and the Intellectual Property Security Agreement for a period of not
less than 18 months after the date of such certificate (except as noted therein
with respect to any continuation statements to be filed within such period).

 

(d)           The Borrower agrees, on its own
behalf and on behalf of each other Grantor, at its own expense, to execute, acknowledge,
deliver and cause to be duly filed all such further instruments and documents
and take all such actions as the Collateral Agent may from time to time
reasonably request to better assure, preserve, protect and perfect the Security
Interest and the rights and remedies created hereby, including the payment of
any fees and taxes required in connection with the execution and delivery of
this Agreement, the granting of the Security Interest and the filing of any
financing statements (including fixture filings) or other documents in
connection herewith or therewith. If any amount payable under or in connection
with any of the Article 9 Collateral that is in excess of $5,000,000 shall
be or become evidenced by any promissory note or other instrument, such note or
instrument shall be promptly pledged and delivered to the Collateral Agent, for
the benefit of the Secured Parties, duly endorsed in a manner reasonably
satisfactory to the Collateral Agent.

 

(e)           At its option, the Collateral Agent
may discharge past due taxes, assessments, charges, fees, Liens, security interests
or other encumbrances at any time levied or placed on the Article 9
Collateral and not permitted pursuant to Section 7.01 of the Credit
Agreement,

 

11

 

and may pay for the maintenance and
preservation of the Article 9 Collateral to the extent any Grantor fails
to do so as required by the Credit Agreement or this Agreement and within a reasonable
period of time after the Collateral Agent has requested that it do so, and each
Grantor jointly and severally agrees to reimburse the Collateral Agent within
10 days after demand for any payment made or any reasonable expense
incurred by the Collateral Agent pursuant to the foregoing authorization. Nothing
in this paragraph shall be interpreted as excusing any Grantor from the
performance of, or imposing any obligation on the Collateral Agent or any
Secured Party to cure or perform, any covenants or other promises of any
Grantor with respect to taxes, assessments, charges, fees, Liens, security interests
or other encumbrances and maintenance as set forth herein, in the other Loan
Documents.

 

(f)            If at any time any Grantor shall
take a security interest in any property of an Account Debtor or any other
Person, the value of which is in excess of $5,000,000, to secure payment and
performance of an Account, such Grantor shall promptly assign such security
interest to the Collateral Agent for the benefit of the Secured Parties. Such
assignment need not be filed of public record unless necessary to continue the
perfected status of the security interest against creditors of and transferees
from the Account Debtor or other Person granting the security interest.

 

(g)           Each Grantor (rather than the
Collateral Agent or any Secured Party) shall remain liable (as between itself
and any relevant counterparty) to observe and perform all the conditions and
obligations to be observed and performed by it under each contract, agreement
or instrument relating to the Article 9 Collateral, all in accordance with
the terms and conditions thereof, and each Grantor jointly and severally agrees
to indemnify and hold harmless the Collateral Agent and the Secured Parties
from and against any and all liability for such performance.

 

(h)           If any Grantor shall at any time hold
or acquire a Commercial Tort Claim with a value in excess of $5,000,000, such
Grantor shall promptly notify the Collateral Agent in writing signed by such
Grantor of the brief details thereof and grant to the Collateral Agent a
security interest therein and in the Proceeds thereof, all upon the terms of
this Agreement pursuant to a document in form and substance reasonably
satisfactory to the Collateral Agent.

 

(i)            The Borrower shall deliver to the
Collateral Agent, as soon as practicable and in any event within 30 days of the
Closing Date, share certificates for the Foreign Subsidiaries listed on Schedule
VI, together with stock powers duly executed in blank or other instruments
of transfer reasonably satisfactory to the Collateral Agent and such other
instruments and documents as the Collateral Agent may reasonably request.

 

SECTION 3.04       Other
Actions. In order to further insure the attachment, perfection and priority
of, and the ability of the Collateral Agent to enforce, the Security Interest,
each Grantor agrees, in each case at such Grantor’s own expense, to take the
following actions with respect to the following Article 9 Collateral:

 

(a)           Instruments.
If any Grantor shall at any time hold or acquire any Instruments constituting
Collateral and evidencing an amount in excess of $5,000,000, such Grantor shall
forthwith endorse, assign and deliver the same to the Collateral Agent for the
benefit of the Secured Parties, accompanied by such instruments of transfer or

 

12

 

assignment duly executed in blank as the
Collateral Agent may from time to time reasonably request.

 

(b)           Investment
Property. Except to the extent otherwise provided in
Article II, if any Grantor shall at any time hold or acquire any
certificated securities, such Grantor shall forthwith endorse, assign and
deliver the same to the Collateral Agent for the benefit of the Secured
Parties, accompanied by such instruments of transfer or assignment duly
executed in blank as the Collateral Agent may from time to time reasonably
request. If any securities now or hereafter acquired by any Grantor are
uncertificated and are issued to such Grantor or its nominee directly by the
issuer thereof, upon the Collateral Agent’s request and following the occurrence
of an Event of Default such Grantor shall promptly notify the Collateral Agent
thereof and, at the Collateral Agent’s reasonable request, pursuant to an
agreement in form and substance reasonably satisfactory to the Collateral
Agent, either (i) cause the issuer to agree to comply with instructions
from the Collateral Agent as to such securities, without further consent of any
Grantor or such nominee, or (ii) arrange for the Collateral Agent to
become the registered owner of the securities. If any securities, whether
certificated or uncertificated, or other investment property are held by any
Grantor or its nominee through a securities intermediary or commodity intermediary,
upon the Collateral Agent’s request and following the occurrence of an Event of
Default, such Grantor shall immediately notify the Collateral Agent thereof and
at the Collateral Agent’s request and option, pursuant to an agreement in form
and substance reasonably satisfactory to the Collateral Agent shall either
(i) cause such securities intermediary or (as the case may be) commodity
intermediary to agree to comply with entitlement orders or other instructions
from the Collateral Agent to such securities intermediary as to such security
entitlements, or (as the case may be) to apply any value distributed on account
of any commodity contract as directed by the Collateral Agent to such commodity
intermediary, in each case without further consent of any Grantor or such
nominee, or (ii) in the case of financial assets or other Investment
Property held through a securities intermediary, arrange for the Collateral
Agent to become the entitlement holder with respect to such Investment
Property, with the Grantor being permitted, only with the consent of the
Collateral Agent, to exercise rights to withdraw or otherwise deal with such
Investment Property. The Collateral Agent agrees with each of the Grantors that
the Collateral Agent shall not give any such entitlement orders or instructions
or directions to any such issuer, securities intermediary or commodity
intermediary, and shall not withhold its consent to the exercise of any
withdrawal or dealing rights by any Grantor, unless an Event of Default has
occurred and is continuing. The provisions of this paragraph shall not apply to
any financial assets credited to a securities account for which the Collateral
Agent is the securities intermediary.

 

ARTICLE IV

 

Remedies

 

SECTION 4.01       Remedies
Upon Default. Upon the occurrence and during the continuance of an Event of
Default, it is agreed that the Collateral Agent shall have the right to
exercise any and all rights afforded to a secured party with respect to the
Obligations under the

 

13

 

Uniform
Commercial Code or other applicable law and also may (i) require each
Grantor to, and each Grantor agrees that it will at its expense and upon
request of the Collateral Agent forthwith, assemble all or part of the Collateral
as directed by the Collateral Agent and make it available to the Collateral
Agent at a place and time to be designated by the Collateral Agent that is
reasonably convenient to both parties; (ii) occupy any premises owned or,
to the extent lawful and permitted, leased by any of the Grantors where the
Collateral or any part thereof is assembled or located for a reasonable period
in order to effectuate its rights and remedies hereunder or under law, without
obligation to such Grantor in respect of such occupation; provided
that the Collateral Agent shall provide the applicable Grantor with notice
thereof prior to or promptly after such occupancy; (iii) exercise any and
all rights and remedies of any of the Grantors under or in connection with the
Collateral, or otherwise in respect of the Collateral; provided
that the Collateral Agent shall provide the applicable Grantor with notice
thereof prior to or promptly after such exercise; and (iv) subject to the
mandatory requirements of applicable law and the notice requirements described
below, sell or otherwise dispose of all or any part of the Collateral securing
the Obligations at a public or private sale or at any broker’s board or on any
securities exchange, for cash, upon credit or for future delivery as the Collateral
Agent shall deem appropriate. The Collateral Agent shall be authorized at any
such sale of securities (if it deems it advisable to do so) to restrict the
prospective bidders or purchasers to Persons who will represent and agree that
they are purchasing the Collateral for their own account for investment and not
with a view to the distribution or sale thereof, and upon consummation of any
such sale the Collateral Agent shall have the right to assign, transfer and
deliver to the purchaser or purchasers thereof the Collateral so sold. Each
such purchaser at any sale of Collateral shall hold the property sold
absolutely, free from any claim or right on the part of any Grantor, and each
Grantor hereby waives (to the extent permitted by law) all rights of
redemption, stay and appraisal which such Grantor 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 give the
applicable Grantors 10 days’ written notice (which each Grantor agrees is
reasonable notice within the meaning of Section 9-611 of the New York
UCC or its equivalent in other jurisdictions) of the Collateral Agent’s
intention to make any sale of Collateral. Such notice, in the case of a public
sale, shall state the time and place for such sale and, in the case of a sale
at a broker’s board or on a securities exchange, shall state the board or
exchange at which such sale is to be made and the day on which the Collateral,
or portion thereof, will first be offered for sale at such board or exchange. Any
such public sale shall be held at such time or times within ordinary business
hours and at such place or places as the Collateral Agent may fix and state in
the notice (if any) of such sale. At any such sale, the Collateral, or portion
thereof, to be sold may be sold in one lot as an entirety or in separate parcels,
as the Collateral Agent may (in its sole and absolute discretion) determine. The
Collateral Agent shall not be obligated to make any sale of any Collateral if
it shall determine not to do so, regardless of the fact that notice of sale of
such Collateral shall have been given. The Collateral Agent may, without notice
or publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. In case any sale of all or any part of the
Collateral is made on credit or for future delivery, the Collateral so sold may
be retained by the Collateral Agent until the sale price is paid by the purchaser
or purchasers thereof, but the Collateral Agent shall not incur any liability
in case

 

14

 

any such
purchaser or purchasers shall fail to take up and pay for the Collateral so
sold and, in case of any such failure, such Collateral may be sold again upon
like notice. At any public (or, to the extent permitted by law, private) sale
made pursuant to this Agreement, any Secured Party may bid for or purchase,
free (to the extent permitted by law) from any right of redemption, stay,
valuation or appraisal on the part of any Grantor (all said rights being also
hereby waived and released to the extent permitted by law), the Collateral or
any part thereof offered for sale and may make payment on account thereof by
using any claim then due and payable to such Secured Party from any Grantor as
a credit against the purchase price, and such Secured Party may, upon
compliance with the terms of sale, hold, retain and dispose of such property
without further accountability to any Grantor therefor. For purposes hereof, a
written agreement to purchase the Collateral or any portion thereof shall be
treated as a sale thereof; the Collateral Agent shall be free to carry out such
sale pursuant to such agreement and no Grantor shall be entitled to the return
of the Collateral or any portion thereof subject thereto, notwithstanding the
fact that after the Collateral Agent shall have entered into such an agreement
all Events of Default shall have been remedied and the Obligations paid in full.
As an alternative to exercising the power of sale herein conferred upon it, the
Collateral Agent may proceed by a suit or suits at law or in equity to foreclose
this Agreement and to sell the Collateral or any portion thereof pursuant to a
judgment or decree of a court or courts having competent jurisdiction or
pursuant to a proceeding by a court-appointed receiver. Any sale pursuant to
the provisions of this Section 4.01 shall be deemed to conform to the
commercially reasonable standards as provided in Section 9-610(b) of the
New York UCC or its equivalent in other jurisdictions.

 

Each Grantor irrevocably makes, constitutes
and appoints the Collateral Agent (and all officers, employees or agents designated
by the Collateral Agent) as such Grantor’s true and lawful agent (and
attorney-in-fact) during the continuance of an Event of Default and after
notice to the Borrower of its intent to exercise such rights, for the purpose
of (i) making, settling and adjusting claims in respect of Article 9 Collateral
under policies of insurance, endorsing the name of such Grantor on any check,
draft, instrument or other item of payment for the proceeds of such policies of
insurance, (ii) making all determinations and decisions with respect thereto
and (iii) obtaining or maintaining the policies of insurance required by
Section 6.07 of the Credit Agreement or paying any premium in whole or in part
relating thereto. All sums disbursed by the Collateral Agent in connection with
this paragraph, including reasonable attorneys’ fees, court costs, expenses and
other charges relating thereto, shall be payable, within 10 days of demand, by
the Grantors to the Collateral Agent and shall be additional Obligations
secured hereby.

 

SECTION 4.02       Application of Proceeds.

 

(a)           The Collateral Agent shall apply the
proceeds of any collection or sale of Collateral, including any Collateral consisting
of cash, in accordance with Section 8.04 of the Credit Agreement as of the
Closing Date.

 

The Collateral
Agent shall have absolute discretion as to the time of application of any such
proceeds, moneys or balances in accordance with this Agreement. Upon any sale
of Collateral by the Collateral Agent (including pursuant to a power of sale
granted by statute or under a judicial proceeding), the receipt of the
Collateral Agent or of the officer making the sale shall be a sufficient

 

15

 

discharge to
the purchaser or purchasers of the Collateral so sold and such purchaser or
purchasers shall not be obligated to see to the application of any part of the
purchase money paid over to the Collateral Agent or such officer or be
answerable in any way for the misapplication thereof.

 

(b)           In making the determinations and
allocations required by this Section 4.02, the Collateral Agent may conclusively
rely upon information supplied by the Administrative Agent as to the amounts of
unpaid principal and interest and other amounts outstanding with respect to the
Obligations, and the Collateral Agent shall have no liability to any of the
Secured Parties for actions taken in reliance on such information, provided that nothing in this sentence shall prevent any
Grantor from contesting any amounts claimed by any Secured Party in any information
so supplied. All distributions made by the Collateral Agent pursuant to this
Section 4.02 shall be (subject to any decree of any court of competent
jurisdiction) final (absent manifest error), and the Collateral Agent shall
have no duty to inquire as to the application by the Administrative Agent of
any amounts distributed to it.

 

ARTICLE V

 

Indemnity, Subrogation and Subordination

 

SECTION 5.01       Indemnity.
In addition to all such rights of indemnity and subrogation as the Grantors may
have under applicable law (but subject to Section 5.03), each Borrower
agrees that, in the event any assets of any Grantor shall be sold pursuant to
this Agreement or any other Collateral Document to satisfy in whole or in part
an Obligation owed to any Secured Party, the relevant Borrower shall indemnify
such Grantor in an amount equal to the greater of the book value or the fair
market value of the assets so sold.

 

SECTION 5.02       Contribution
and Subrogation. Each Subsidiary Party (a “Contributing
Party”) agrees (subject to Section 5.03) that, in the event
assets of any other Subsidiary Party shall be sold pursuant to any Collateral
Document to satisfy any Obligation owed to any Secured Party, and such other
Subsidiary Party (the “Claiming Party”)
shall not have been fully indemnified by the relevant Borrower as provided in
Section 5.01, the Contributing Party shall indemnify the Claiming Party in
an amount equal to the greater of the book value or the fair market value of
such assets, in each case multiplied by a fraction of which the numerator shall
be the net worth of the Contributing Party on the date hereof and the
denominator shall be the aggregate net worth of all the Contributing Parties
together with the net worth of the Claiming Party on the date hereof (or, in
the case of any Grantor becoming a party hereto pursuant to Section 6.14,
the date of the Security Agreement Supplement hereto executed and delivered by
such Grantor). Any Contributing Party making any payment to a Claiming Party
pursuant to this Section 5.02 shall be subrogated to the rights of such
Claiming Party to the extent of such payment.

 

SECTION 5.03       Subordination.

 

(a)           Notwithstanding any provision of this
Agreement to the contrary, all rights of the Grantors under Sections 5.01
and 5.02 and all other rights of indemnity, contribution or subrogation under
applicable law or otherwise shall be fully subordinated to the indefeasible

 

16

 

payment in full in cash of the Obligations. No
failure on the part of any Borrower or any Grantor to make the payments
required by Sections 5.01 and 5.02 (or any other payments required under
applicable law or otherwise) shall in any respect limit the obligations and
liabilities of any Grantor with respect to its obligations hereunder, and each
Grantor shall remain liable for the full amount of the obligations of such Grantor
hereunder.

 

(b)           Each Grantor hereby agrees that upon
the occurrence and during the continuance of an Event of Default and after
notice from the Collateral Agent all Indebtedness owed by it to any Subsidiary
shall be fully subordinated to the indefeasible payment in full in cash of the
Obligations.

 

ARTICLE VI

 

Miscellaneous

 

SECTION 6.01       Notices.
All communications and notices hereunder shall (except as otherwise expressly
permitted herein) be in writing and given as provided in Section 10.02 of
the Credit Agreement. All communications and notices hereunder to any Subsidiary
Party shall be given to it in care of the Borrower as provided in
Section 10.02 of the Credit Agreement.

 

SECTION 6.02       Waivers;
Amendment.

 

(a)           No failure or delay by the Collateral
Agent, any L/C Issuer or any Lender in exercising any right or power hereunder
or under any other Loan Document shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right or power, or any abandonment
or discontinuance of steps to enforce such a right or power, preclude any other
or further exercise thereof or the exercise of any other right or power. The
rights and remedies of the Collateral Agent, the L/C Issuers and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver
of any provision of this Agreement or consent to any departure by any Loan
Party therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) of this Section 6.02, and then such waiver or
consent shall be effective only in the specific instance and for the purpose
for which given. Without limiting the generality of the foregoing, the making
of a Loan or issuance of a Letter of Credit shall not be construed as a waiver
of any Default, regardless of whether the Collateral Agent, any Lender or any
L/C Issuer may have had notice or knowledge of such Default at the time. No
notice or demand on any Loan Party in any case shall entitle any Loan Party to
any other or further notice or demand in similar or other circumstances.

 

(b)           Neither this Agreement nor any
provision hereof may be waived, amended or modified except pursuant to an
agreement or agreements in writing entered into by the Collateral Agent and the
Loan Party or Loan Parties with respect to which such waiver, amendment or
modification is to apply, subject to any consent required in accordance with
Section 10.01 of the Credit Agreement.

 

 

17

 

SECTION 6.03       Collateral
Agent’s Fees and Expenses.

 

(a)           The parties hereto agree that the
Collateral Agent shall be entitled to reimbursement of its expenses incurred
hereunder as provided in Section 10.04 of the Credit Agreement.

 

(b)           Without limitation of its
indemnification obligations under the other Loan Documents, the Borrower agrees
to indemnify the Collateral Agent and the other Indemnitees (as defined in
Section 10.05 of the Credit Agreement) against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including the reasonable fees, charges and disbursements of any
counsel for any Indemnitee, incurred by or asserted against any Indemnitee
arising out of, in connection with, or as a result of, the execution, delivery
or performance of this Agreement or any claim, litigation, investigation or proceeding
relating to any of the foregoing agreement or instrument contemplated hereby,
or to the Collateral, whether or not any Indemnitee is a party thereto; provided that such indemnity shall not, as
to any Indemnitee, be available to the extent that such liabilities,
obligations, losses, damages, penalties, claims, demands, actions, judgments,
suits, costs, expenses or disbursements resulted from the gross negligence or
willful misconduct of such Indemnitee or of any Affiliate, director, officer,
employee, counsel, agent or attorney-in-fact of such Indemnitee.

 

(c)           Any such amounts payable as provided
hereunder shall be additional Obligations secured hereby and by the other
Collateral Documents. The provisions of this Section 6.03 shall remain
operative and in full force and effect regardless of the termination of this
Agreement or any other Loan Document, the consummation of the transactions
contemplated hereby, the repayment of any of the Obligations, the invalidity or
unenforceability of any term or provision of this Agreement or any other Loan
Document, or any investigation made by or on behalf of the Collateral Agent or
any other Secured Party. All amounts due under this Section 6.03 shall be payable
within 10 days of written demand therefor.

 

SECTION 6.04       Successors
and Assigns. Whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the permitted successors
and assigns of such party; and all covenants, promises and agreements by or on
behalf of any Grantor or the Collateral Agent that are contained in this
Agreement shall bind and inure to the benefit of their respective successors
and assigns.

 

SECTION 6.05       Survival
of Agreement. All covenants, agreements, representations and warranties
made by the Loan Parties in the Loan Documents and in the certificates or other
instruments prepared or delivered in connection with or pursuant to this
Agreement or any other Loan Document shall be considered to have been relied
upon by the Lenders and shall survive the execution and delivery of the Loan
Documents and the making of any Loans and issuance of any Letters of Credit,
regardless of any investigation made by any Lender or on its behalf and notwithstanding
that the Collateral Agent, any L/C Issuer or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time
any credit is extended under the Credit Agreement, and shall continue in full
force and effect as long as the principal of or any accrued interest on any
Loan or any fee or any other amount payable under any Loan Document is
outstanding and unpaid or any Letter of Credit is outstanding and so long as
the Commitments have not expired or terminated.

 

18

 

SECTION 6.06       Counterparts;
Effectiveness; Several Agreement. This Agreement may be executed in counterparts,
each of which shall constitute an original but all of which when taken together
shall constitute a single contract. Delivery of an executed signature page to
this Agreement by facsimile transmission shall be as effective as delivery of a
manually signed counterpart of this Agreement. This Agreement shall become effective
as to any Loan Party when a counterpart hereof executed on behalf of such Loan
Party shall have been delivered to the Collateral Agent and a counterpart
hereof shall have been executed on behalf of the Collateral Agent, and
thereafter shall be binding upon such Loan Party and the Collateral Agent and
their respective permitted successors and assigns, and shall inure to the
benefit of such Loan Party, the Collateral Agent and the other Secured Parties
and their respective successors and assigns, except that no Loan Party shall
have the right to assign or transfer its rights or obligations hereunder or any
interest herein or in the Collateral (and any such assignment or transfer shall
be void) except as expressly contemplated by this Agreement or the Credit
Agreement. This Agreement shall be construed as a separate agreement with
respect to each Loan Party and may be amended, modified, supplemented, waived
or released with respect to any Loan Party without the approval of any other
Loan Party and without affecting the obligations of any other Loan Party hereunder.

 

SECTION 6.07       Severability.
Any provision of this Agreement held to be invalid, illegal or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such invalidity, illegality or unenforceability without affecting the
validity, legality and enforceability of the remaining provisions hereof; and
the invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction. The parties shall endeavor
in good-faith negotiations to replace the invalid, illegal or unenforceable provisions
with valid provisions the economic effect of which comes as close as possible
to that of the invalid, illegal or unenforceable provisions.

 

SECTION 6.08       Right
of Set-Off. In addition to any rights and remedies of the Lenders provided
by Law, upon the occurrence and during the continuance of any Event of Default,
each Lender and its Affiliates and each L/C Issuer and its Affiliates is
authorized at any time and from time to time, without prior notice to the
Borrower or any other Loan Party, any such notice being waived by the Borrower
(on its own behalf and on behalf of each Loan Party and its Subsidiaries) to
the fullest extent permitted by applicable Law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held by, and other Indebtedness at any time owing by, such Lender and its
Affiliates or such L/C Issuer and its Affiliates, as the case may be, to or for
the credit or the account of the respective Loan Parties and their Subsidiaries
against any and all Obligations owing to such Lender and its Affiliates or such
L/C Issuer and its Affiliates hereunder or under any other Loan Document, now
or hereafter existing, irrespective of whether or not such Agent or such Lender
or Affiliate shall have made demand under this Agreement or any other Loan
Document and although such Obligations may be contingent or unmatured or
denominated in a currency different from that of the applicable deposit or
Indebtedness. Each Lender and L/C Issuer agrees promptly to notify the Borrower
and the Administrative Agent after any such set off and application made by
such Lender or L/C Issuer, as the case may be; provided,
that the failure to give such notice shall not affect the validity of such
setoff and application. The rights of the Administrative Agent, each Lender and
each

 

19

 

L/C Issuer
under this Section 6.08 are in addition to other rights and remedies (including
other rights of setoff) that the Administrative Agent, such Lender and such L/C
Issuer may have.

 

SECTION 6.09       Governing
Law; Jurisdiction; Consent to Service of Process.

 

(a)           This Agreement shall be construed in
accordance with and governed by the law of the State of New York.

 

(b)           Each of the Loan Parties hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of the Supreme Court of the State of New York sitting
in New York City and of the United States District Court of the Southern
District of New York, and any appellate court from any thereof, in any action
or proceeding arising out of or relating to this Agreement or any other Loan
Document, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such
New York State or, to the extent permitted by law, in such Federal court. Each
of the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement or
any other Loan Document shall affect any right that the Collateral Agent, any
L/C Issuer or any Lender may otherwise have to bring any action or proceeding
relating to this Agreement or any other Loan Document against any Grantor or its
properties in the courts of any jurisdiction.

 

(c)           Each of the Loan Parties hereby
irrevocably and unconditionally waives, to the fullest extent it may legally
and effectively do so, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement or any other Loan Document in any court referred to in paragraph
(b) of this Section 6.09. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

 

(d)           Each party to this Agreement
irrevocably consents to service of process in the manner provided for notices
in Section 6.01. Nothing in this Agreement or any other Loan Document will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.

 

SECTION 6.10       WAIVER
OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY,

 

20

 

AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 6.10.

 

SECTION 6.11       Headings.
Article and Section headings and the Table of Contents used herein are for convenience
of reference only, are not part of this Agreement and are not to affect the
construction of, or to be taken into consideration in interpreting, this Agreement.

 

SECTION 6.12       Security
Interest Absolute. All rights of the Collateral Agent hereunder, the
Security Interest, the grant of a security interest in the Pledged Collateral
and all obligations of each Grantor hereunder shall be absolute and
unconditional irrespective of (a) any lack of validity or enforceability
of the Credit Agreement, any other Loan Document, any agreement with respect to
any of the Obligations or any other agreement or instrument relating to any of
the foregoing, (b) any change in the time, manner or place of payment of,
or in any other term of, all or any of the Obligations, or any other amendment
or waiver of or any consent to any departure from the Credit Agreement, any
other Loan Document or any other agreement or instrument, (c) any
exchange, release or non-perfection of any Lien on other collateral, or any
release or amendment or waiver of or consent under or departure from any
guarantee, securing or guaranteeing all or any of the Obligations or
(d) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, any Grantor in respect of the Obligations or
this Agreement.

 

SECTION 6.13       Termination or Release.

 

(a)           This Agreement, the Security Interest
and all other security interests granted hereby shall terminate with respect to
all Obligations (other than (x) obligations under Secured Hedge Agreements not
yet due and payable, (y) Cash Management Obligations not yet due and payable
and (z) contingent indemnification obligations not yet accrued and payable)
when all the outstanding Obligations have been indefeasibly paid in full and
the Lenders have no further commitment to lend under the Credit Agreement, the
L/C Obligations have been reduced to zero and the L/C Issuers have no
further obligations to issue Letters of Credit under the Credit Agreement.

 

(b)           A Subsidiary Party shall
automatically be released from its obligations hereunder and the Security
Interest in the Collateral of such Subsidiary Party shall be automatically
released upon the consummation of any transaction permitted by the Credit
Agreement as a result of which such Subsidiary Party ceases to be a Subsidiary
or is designated as an Unrestricted Subsidiary of the Borrower; provided that the Required Lenders shall
have consented to such transaction (to the extent required by the Credit
Agreement) and the terms of such consent did not provide otherwise.

 

(c)           Upon any sale or other transfer by
any Grantor of any Collateral (other than any transfer to another Guarantor)
that is permitted under the Credit Agreement, or upon the effectiveness of any
written consent to the release of the security interest granted hereby in any
Collateral pursuant to Section 10.01 of the Credit Agreement, the security
interest in such Collateral shall be automatically released.

 

21

 

(d)           In connection with any termination or
release pursuant to paragraph (a), (b) or (c) of this Section 6.13, the
Collateral Agent shall execute and deliver to any Grantor, at such Grantor’s
expense, all documents that such Grantor shall reasonably request to evidence
such termination or release. Any execution and delivery of documents pursuant
to this Section 6.13 shall be without recourse to or warranty by the
Collateral Agent.

 

SECTION 6.14       Additional
Restricted Subsidiaries. Pursuant to Section 6.11 of the Credit
Agreement, certain Restricted Subsidiaries of the Loan Parties that were not in
existence or not Restricted Subsidiaries on the date of the Credit Agreement
are required to enter in this Agreement as Subsidiary Parties upon becoming
Restricted Subsidiaries. Upon execution and delivery by the Collateral Agent
and a Restricted Subsidiary of a Security Agreement Supplement, such Restricted
Subsidiary shall become a Subsidiary Party hereunder with the same force and
effect as if originally named as a Subsidiary Party herein. The execution and
delivery of any such instrument shall not require the consent of any other Loan
Party hereunder. The rights and obligations of each Loan Party hereunder shall
remain in full force and effect notwithstanding the addition of any new Loan
Party as a party to this Agreement.

 

SECTION 6.15       Collateral
Agent Appointed Attorney-in-Fact. Each Grantor hereby appoints the
Collateral Agent the attorney-in-fact of such Grantor for the purpose of
carrying out the provisions of this Agreement and taking any action and executing
any instrument that the Collateral Agent may deem necessary or advisable to
accomplish the purposes hereof at any time after and during the continuance of
an Event of Default, which appointment is irrevocable and coupled with an
interest. Without limiting the generality of the foregoing, the Collateral
Agent shall have the right, upon the occurrence and during the continuance of
an Event of Default and notice by the Collateral Agent to the Borrower of its intent
to exercise such rights, with full power of substitution either in the
Collateral Agent’s name or in the name of such Grantor (a) to receive,
endorse, assign and/or deliver any and all notes, acceptances, checks, drafts,
money orders or other evidences of payment relating to the Collateral or any
part thereof; (b) to demand, collect, receive payment of, give receipt for
and give discharges and releases of all or any of the Collateral; (c) to
sign the name of any Grantor on any invoice or bill of lading relating to any
of the Collateral; (d) to send verifications of Accounts Receivable to any
Account Debtor; (e) to commence and prosecute any and all suits, actions
or proceedings at law or in equity in any court of competent jurisdiction to
collect or otherwise realize on all or any of the Collateral or to enforce any
rights in respect of any Collateral; (f) to settle, compromise, compound,
adjust or defend any actions, suits or proceedings relating to all or any of
the Collateral; (g) to notify, or to require any Grantor to notify,
Account Debtors to make payment directly to the Collateral Agent; and
(h) to use, sell, assign, transfer, pledge, make any agreement with
respect to or otherwise deal with all or any of the Collateral, and to do all
other acts and things necessary to carry out the purposes of this Agreement, as
fully and completely as though the Collateral Agent were the absolute owner of
the Collateral for all purposes; provided that
nothing herein contained shall be construed as requiring or obligating the
Collateral Agent to make any commitment or to make any inquiry as to the nature
or sufficiency of any payment received by the Collateral Agent, or to present
or file any claim or notice, or to take any action with respect to the Collateral
or any part thereof or the moneys due or to become due in respect thereof or
any property covered thereby. The Collateral Agent and the other Secured
Parties shall be accountable only for amounts actually received as a result of
the exercise of the powers granted to them herein, and neither they nor

 

22

 

their officers, directors, employees or
agents shall be responsible to any Grantor for any act or failure to act
hereunder, except for their own gross negligence or wilful misconduct or that
of any of their Affiliates, directors, officers, employees, counsel, agents or
attorneys-in-fact.

 

SECTION 6.16       General
Authority of the Collateral Agent. By acceptance of the benefits of this
Agreement and any other Collateral Documents, each Secured Party (whether or
not a signatory hereto) shall be deemed irrevocably (a) to consent to the appointment
of the Collateral Agent as its agent hereunder and under such other Collateral
Documents, (b) to confirm that the Collateral Agent shall have the authority to
act as the exclusive agent of such Secured Party for the enforcement of any
provisions of this Agreement and such other Collateral Documents against any
Grantor, the exercise of remedies hereunder or thereunder and the giving or
withholding of any consent or approval hereunder or thereunder relating to any
Collateral or any Grantor’s obligations with respect thereto, (c) to agree that
it shall not take any action to enforce any provisions of this Agreement or any
other Collateral Document against any Grantor, to exercise any remedy hereunder
or thereunder or to give any consents or approvals hereunder or thereunder
except as expressly provided in this Agreement or any other Collateral Document
and (d) to agree to be bound by the terms of this Agreement and any other
Collateral Documents.

 

23

 

IN WITNESS WHEREOF, the parties hereto have
duly executed this Agreement as of the day and year first above written.

 

 

	
   

  	
  TDS
  INVESTOR CORPORATION,

  	
   

  
	
   

  	
  as the
  Borrower

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric J. Bock

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Eric J. Bock

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President, General Counsel
  and

  
	
   

  	
   

  	
   

  	
  Corporate Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TDS
  INVESTOR (BERMUDA) LTD.,

  	
   

  
	
   

  	
  as Holdings

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric J. Bock

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Eric J. Bock

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President, General Counsel
  and

  
	
   

  	
   

  	
   

  	
  Corporate Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WALTONVILLE
  LIMITED,

  	
   

  
	
   

  	
  as
  Intermediate Parent

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric J. Bock

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Eric J. Bock

  
	
   

  	
   

  	
  Title:

  	
  Director, Executive Vice President,

  
	
   

  	
   

  	
   

  	
  General Counsel and Corporate Secretary

  
					

 

[Security Agreement – Travelport Sig Pages]

 

 

	
   

  	
  EACH OF
  THE SUBSIDIARIES

  	
   

  
	
   

  	
  LISTED
  ON SCHEDULE I HERETO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric J. Bock

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Eric J. Bock

  
	
   

  	
   

  	
  Title:

  	
  Authorized Signatory

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  APOLLO
  GALILEO USA PARTNERSHIP,

  
	
   

  	
  By:
  APOLLO GALILEO USA SUB I, INC.,

  
	
   

  	
  its
  General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric J. Bock

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Eric J. Bock

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President, General Counsel

  
	
   

  	
   

  	
   

  	
  and Corporate Secretary

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NATIONAL
  INTERNET TRAVEL AGENCY,

  
	
   

  	
  By:
  INTERNETWORK PUBLISHING

  
	
   

  	
  CORPORATION,
  its General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric J. Bock

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Eric J. Bock

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President, General

  
	
   

  	
   

  	
   

  	
  Counsel and Corporate Secretary

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ORBITZ
  AWAY LLC

  
	
   

  	
  By:
  ORBITZ, LLC, as Sole Member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric J. Bock

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Eric J. Bock

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President, General

  
	
   

  	
   

  	
   

  	
  Counsel and Corporate Secretary

  
	
   

  	
   

  	
   

  	
   

  
					

 

[Security
Agreement – Travelport Sig Pages]

 

 

	
   

  	
  TDS
  DEVELOPMENT, LLC

  	
   

  
	
   

  	
  By:
  TRAVELPORT INC., as Sole Member

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric J. Bock

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Eric J. Bock

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President, General

  
	
   

  	
   

  	
   

  	
  Counsel and Corporate Secretary

  
					

 

[Security Agreement – Travelport Sig Pages]

 

 

	
   

  	
  UBS AG,
  STAMFORD BRANCH, as

  
	
   

  	
  Collateral Agent

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Irja R. Otsa

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Irja R. Otsa

  
	
   

  	
   

  	
  Title:

  	
  Associate Director Banking

  
	
   

  	
   

  	
   

  	
  Products Services, US

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Toba Lumbantobing

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Toba Lumbantobing

  
	
   

  	
   

  	
  Title:

  	
  Associate Director Banking

  
	
   

  	
   

  	
   

  	
  Products Services, US

  
					

 

[Security
Agreement – Travelport Sig Pages]Filed by Automated Filing Services Inc. (604) 609-0244 - Banyan Corporation - Exhibit 4.15

SECURITIES PURCHASE AGREEMENT 

          SECURITIES
  PURCHASE AGREEMENT (this “Agreement”), dated as of _______,
  by and among Banyan Corporation, an Oregon corporation, with headquarters located
  at 1925 Century Park East, Suite 500, Los Angeles, California 90067 (the “Company”),
  and each of the purchasers set forth on the signature pages hereto (the “Buyers”).

WHEREAS:

          A.
  The Company and the Buyers are executing and delivering this Agreement in
  reliance upon the exemption from securities registration afforded by the rules
  and regulations as promulgated by the United States Securities and Exchange
  Commission (the “SEC”) under the Securities Act of 1933, as
  amended (the “1933 Act”); 

          B.
  Buyers desire to purchase and the Company desires to issue and sell, upon
  the terms and conditions set forth in this Agreement (i) 8% secured convertible
  notes of the Company, in the form attached hereto as Exhibit “A”,
  in the aggregate principal amount of Two Hundred Fifty Thousand Dollars ($250,000)
  (together with any note(s) issued in replacement thereof or as a dividend thereon
  or otherwise with respect thereto in accordance with the terms thereof, the
  “Notes”), convertible into shares of Common Stock, no par value
  per share, of the Company (the “Common Stock”), upon the terms
  and subject to the limitations and conditions set forth in such Notes and (ii)
  warrants, in the form attached hereto as Exhibit “B”, to purchase
  10,000,000 shares of Common Stock (the “Warrants”). 

     C. Each Buyer
wishes to purchase, upon the terms and conditions stated in this Agreement, such
principal amount of Notes and number of Warrants as is set forth immediately
below its name on the signature pages hereto; and 

     D. Contemporaneous
with the execution and delivery of this Agreement, the parties hereto are
executing and delivering a Registration Rights Agreement, in the form attached
hereto as Exhibit “C” (the “Registration Rights Agreement”),
pursuant to which the Company has agreed to provide certain registration rights
under the 1933 Act and the rules and regulations promulgated thereunder, and
applicable state securities laws. 

     NOW, THEREFORE, the
Company and each of the Buyers severally (and not jointly) hereby agree as
follows: 

                    1.
  PURCHASE AND SALE OF NOTES AND WARRANTS. 

                              a.
  Purchase of Notes and Warrants. On the Closing Date (as defined
  below), the Company shall issue and sell to each Buyer and each Buyer severally
  agrees to purchase from the Company such principal amount of Notes and number
  of Warrants as is set forth immediately below such Buyer’s name on the
  signature pages hereto. 

                              b.
  Form of Payment. On the Closing Date (as defined below), (i)
  each Buyer shall pay the purchase price for the Notes and the Warrants to be
  issued and sold to it at the Closing (as defined below) (the “Purchase
  Price”) by wire transfer of immediately available funds to the Company,
  in accordance with the Company’s written wiring instructions, against delivery
  of the Notes in the principal amount equal to the Purchase Price and the number
  of Warrants as is set forth immediately below such Buyer’s name on the
  signature pages hereto, and (ii) the Company shall deliver such Notes and Warrants
  duly executed on behalf of the Company, to such Buyer, against delivery of such
  Purchase Price.

                              c.
  Closing Date. Subject to the satisfaction (or written waiver)
  of the conditions thereto set forth in Section 6 and Section 7 below, the date
  and time of the issuance and sale of the Notes and the Warrants pursuant to
  this Agreement (the “Closing Date”) shall be 12:00 noon, Eastern
  Standard Time on March 13, 2007, or such other mutually agreed upon time. The
  closing of the transactions contemplated by this Agreement (the “Closing”)
  shall occur on the Closing Date at such location as may be agreed to by the
  parties. 

                    2.
  BUYERS’ REPRESENTATIONS AND WARRANTIES. Each Buyer severally
  (and not jointly) represents and warrants to the Company solely as to such Buyer
  that: 

                              a.
  Investment Purpose. As of the date hereof, the Buyer is purchasing
  the Notes and the shares of Common Stock issuable upon conversion of or otherwise
  pursuant to the Notes (including, without limitation, such additional shares
  of Common Stock, if any, as are issuable (i) on account of interest on the Notes,
  (ii) as a result of the events described in Sections 1.3 and 1.4(g) of the Notes
  and Section 2(c) of the Registration Rights Agreement or (iii) in payment of
  the Standard Liquidated Damages Amount (as defined in Section 2(f) below) pursuant
  to this Agreement, such shares of Common Stock being collectively referred to
  herein as the “Conversion Shares”) and the Warrants and the
  shares of Common Stock issuable upon exercise thereof (the “Warrant
  Shares” and, collectively with the Notes, Warrants and Conversion Shares,
  the “Securities”) for its own account and not with a present
  view towards the public sale or distribution thereof, except pursuant to sales
  registered or exempted from registration under the 1933 Act; provided,
  however, that by making the representations herein, the Buyer does not
  agree to hold any of the Securities for any minimum or other specific term and
  reserves the right to dispose of the Securities at any time in accordance with
  or pursuant to a registration statement or an exemption under the 1933 Act.

                              b.
  Accredited Investor Status. The Buyer is an “accredited
  investor” as that term is defined in Rule 501(a) of Regulation D (an “Accredited
  Investor”). 

                              c.
  Reliance on Exemptions. The Buyer understands that the Securities
  are being offered and sold to it in reliance upon specific exemptions from the
  registration requirements of United States federal and state securities laws
  and that the Company is relying upon the truth and accuracy of, and the Buyer’s
  compliance with, the representations, warranties, agreements, acknowledgments
  and understandings of the Buyer set forth herein in order to determine the availability
  of such exemptions and the eligibility of the Buyer to acquire the Securities.

2 

                              d.
  Information. The Buyer and its advisors, if any, have been,
  and for so long as the Notes and Warrants remain outstanding will continue to
  be, furnished with all materials relating to the business, finances and operations
  of the Company and materials relating to the offer and sale of the Securities
  which have been requested by the Buyer or its advisors. The Buyer and its advisors,
  if any, have been, and for so long as the Notes and Warrants remain outstanding
  will continue to be, afforded the opportunity to ask questions of the Company.
  Notwithstanding the foregoing, the Company has not disclosed to the Buyer any
  material nonpublic information and will not disclose such information unless
  such information is disclosed to the public prior to or promptly following such
  disclosure to the Buyer. Neither such inquiries nor any other due diligence
  investigation conducted by Buyer or any of its advisors or representatives shall
  modify, amend or affect Buyer’s right to rely on the Company’s representations
  and warranties contained in Section 3 below. The Buyer understands that its
  investment in the Securities involves a significant degree of risk. 

                              e.
  Governmental Review. The Buyer understands that no United
  States federal or state agency or any other government or governmental agency
  has passed upon or made any recommendation or endorsement of the Securities.

                              f.
  Transfer or Re-sale. The Buyer understands that (i) except
  as provided in the Registration Rights Agreement, the sale or re-sale of the
  Securities has not been and is not being registered under the 1933 Act or any
  applicable state securities laws, and the Securities may not be transferred
  unless (a) the Securities are sold pursuant to an effective registration statement
  under the 1933 Act, (b) the Buyer shall have delivered to the Company an opinion
  of counsel that shall be in form, substance and scope customary for opinions
  of counsel in comparable transactions to the effect that the Securities to be
  sold or transferred may be sold or transferred pursuant to an exemption from
  such registration, which opinion shall be accepted by the Company, (c) the Securities
  are sold or transferred to an “affiliate” (as defined in Rule 144
  promulgated under the 1933 Act (or a successor rule) (“Rule 144”))
  of the Buyer who agrees to sell or otherwise transfer the Securities only in
  accordance with this Section 2(f) and who is an Accredited Investor, (d) the
  Securities are sold pursuant to Rule 144, or (e) the Securities are sold pursuant
  to Regulation S under the 1933 Act (or a successor rule) (“Regulation
  S”), and the Buyer shall have delivered to the Company an opinion of
  counsel that shall be in form, substance and scope customary for opinions of
  counsel in corporate transactions, which opinion shall be accepted by the Company;
  (ii) any sale of such Securities made in reliance on Rule 144 may be made only
  in accordance with the terms of said Rule and further, if said Rule is not applicable,
  any re-sale of such Securities under circumstances in which the seller (or the
  person through whom the sale is made) may be deemed to be an underwriter (as
  that term is defined in the 1933 Act) may require compliance with some other
  exemption under the 1933 Act or the rules and regulations of the SEC thereunder;
  and (iii) neither the Company nor any other person is under any obligation to
  register such Securities under the 1933 Act or any state securities laws or
  to comply with the terms and conditions of any exemption thereunder (in each
  case, other than pursuant to the Registration Rights Agreement). Notwithstanding
  the foregoing or anything else contained herein to the contrary, the Securities
  may be pledged as collateral in connection with a bona fide margin
  account or other lending arrangement. In the event that the Company does not
  accept the opinion of counsel provided by the Buyer with respect to the transfer
  of Securities pursuant to an exemption from registration, such as Rule 144 or
  Regulation S, within three (3) business days of delivery of the opinion to the
  Company, the Company shall pay to the Buyer 

3 

liquidated damages of three percent (3%) of the outstanding
amount of the Notes per month plus accrued and unpaid interest on the Notes,
prorated for partial months, in cash or shares at the option of the Company
(“Standard Liquidated Damages Amount”). If the Company elects to pay the
Standard Liquidated Damages Amount in shares of Common Stock, such shares shall
be issued at the Conversion Price at the time of payment. 

                              g.
  Legends. The Buyer understands that the Notes and the Warrants
  and, until such time as the Conversion Shares and Warrant Shares have been registered
  under the 1933 Act as contemplated by the Registration Rights Agreement or otherwise
  may be sold pursuant to Rule 144 or Regulation S without any restriction as
  to the number of securities as of a particular date that can then be immediately
  sold, the Conversion Shares and Warrant Shares may bear a restrictive legend
  in substantially the following form (and a stop-transfer order may be placed
  against transfer of the certificates for such Securities): 

	 	
      “The securities represented by this certificate have not
      been registered under the Securities Act of 1933, as amended. The
      securities may not be sold, transferred or assigned in the absence of an
      effective registration statement for the securities under said Act, or an
      opinion of counsel, in form, substance and scope customary for opinions of
      counsel in comparable transactions, that registration is not required
      under said Act or unless sold pursuant to Rule 144 or Regulation S under
      said Act.” 
	 

          The
  legend set forth above shall be removed and the Company shall issue a certificate
  without such legend to the holder of any Security upon which it is stamped,
  if, unless otherwise required by applicable state securities laws, (a) such
  Security is registered for sale under an effective registration statement filed
  under the 1933 Act or otherwise may be sold pursuant to Rule 144 or Regulation
  S without any restriction as to the number of securities as of a particular
  date that can then be immediately sold, or (b) such holder provides the Company
  with an opinion of counsel, in form, substance and scope customary for opinions
  of counsel in comparable transactions, to the effect that a public sale or transfer
  of such Security may be made without registration under the 1933 Act, which
  opinion shall be accepted by the Company so that the sale or transfer is effected
  or (c) such holder provides the Company with reasonable assurances that such
  Security can be sold pursuant to Rule 144 or Regulation S. The Buyer agrees
  to sell all Securities, including those represented by a certificate(s) from
  which the legend has been removed, in compliance with applicable prospectus
  delivery requirements, if any. 

                              h.
  Authorization; Enforcement. This Agreement and the Registration
  Rights Agreement have been duly and validly authorized. This Agreement has been
  duly executed and delivered on behalf of the Buyer, and this Agreement constitutes,
  and upon execution and delivery by the Buyer of the Registration Rights Agreement,
  such agreement will constitute, valid and binding agreements of the Buyer enforceable
  in accordance with their terms. 

                              i.
  Residency. The Buyer is a resident of the jurisdiction set
  forth immediately below such Buyer’s name on the signature pages hereto.

4 

                    3.
  REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
  represents and warrants to each Buyer that: 

                              a.
  Organization and Qualification. The Company and each of its
  Subsidiaries (as defined below), if any, is a corporation duly organized, validly
  existing and in good standing under the laws of the jurisdiction in which it
  is incorporated, with full power and authority (corporate and other) to own,
  lease, use and operate its properties and to carry on its business as and where
  now owned, leased, used, operated and conducted. Schedule 3(a) sets forth
  a list of all of the Subsidiaries of the Company and the jurisdiction in which
  each is incorporated. The Company and each of its Subsidiaries is duly qualified
  as a foreign corporation to do business and is in good standing in every jurisdiction
  in which its ownership or use of property or the nature of the business conducted
  by it makes such qualification necessary except where the failure to be so qualified
  or in good standing would not have a Material Adverse Effect. “Material
  Adverse Effect” means any material adverse effect on the business,
  operations, assets, financial condition or prospects of the Company or its Subsidiaries,
  if any, taken as a whole, or on the transactions contemplated hereby or by the
  agreements or instruments to be entered into in connection herewith. “Subsidiaries”
  means any corporation or other organization, whether incorporated or unincorporated,
  in which the Company owns, directly or indirectly, any equity or other ownership
  interest. 

                              b.
  Authorization; Enforcement. (i) The Company has all requisite
  corporate power and authority to enter into and perform this Agreement, the
  Registration Rights Agreement, the Notes and the Warrants and to consummate
  the transactions contemplated hereby and thereby and to issue the Securities,
  in accordance with the terms hereof and thereof, (ii) the execution and delivery
  of this Agreement, the Registration Rights Agreement, the Notes and the Warrants
  by the Company and the consummation by it of the transactions contemplated hereby
  and thereby (including without limitation, the issuance of the Notes and the
  Warrants and the issuance and reservation for issuance of the Conversion Shares
  and Warrant Shares issuable upon conversion or exercise thereof) have been duly
  authorized by the Company’s Board of Directors and no further consent or
  authorization of the Company, its Board of Directors, or its shareholders is
  required, (iii) this Agreement has been duly executed and delivered by the Company
  by its authorized representative, and such authorized representative is the
  true and official representative with authority to sign this Agreement and the
  other documents executed in connection herewith and bind the Company accordingly,
  and (iv) this Agreement constitutes, and upon execution and delivery by the
  Company of the Registration Rights Agreement, the Notes and the Warrants, each
  of such instruments will constitute, a legal, valid and binding obligation of
  the Company enforceable against the Company in accordance with its terms. 

                              c.
  Capitalization. As of the date hereof, the authorized capital
  stock of the Company consists of (i) 500,000,000 shares of Common Stock, of
  which 167,031,898 shares are issued and outstanding, no shares are reserved
  for issuance pursuant to securities (other than the Notes and the Warrants)
  exercisable for, or convertible into or exchangeable for shares of Common Stock
  and 332,968,102 shares are reserved for issuance upon conversion of the Notes
  and exercise of the Warrants (subject to adjustment pursuant to the Company’s
  covenant set forth in Section 4(h) below); and (ii) 10,000,000 shares of Class
  A Preferred Stock, of which 187,500 shares of Series A Convertible Preferred
  Stock are issued and outstanding. All of such outstanding shares of capital
  stock are, or upon issuance will be, duly authorized, validly 

5 

issued, fully paid and nonassessable. No shares of capital
stock of the Company are subject to preemptive rights or any other similar
rights of the shareholders of the Company or any liens or encumbrances imposed
through the actions or failure to act of the Company. Except as disclosed in
Schedule 3(c), as of the effective date of this Agreement, (i) there are
no outstanding options, warrants, scrip, rights to subscribe for, puts, calls,
rights of first refusal, agreements, understandings, claims or other commitments
or rights of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for any shares of capital stock of the Company
or any of its Subsidiaries, or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its Subsidiaries, (ii) there are no agreements or
arrangements under which the Company or any of its Subsidiaries is obligated to
register the sale of any of its or their securities under the 1933 Act (except
the Registration Rights Agreement) and (iii) there are no anti-dilution or price
adjustment provisions contained in any security issued by the Company (or in any
agreement providing rights to security holders) that will be triggered by the
issuance of the Notes, the Warrants, the Conversion Shares or Warrant Shares.
The Company has furnished to the Buyer true and correct copies of the Company’s
Articles of Incorporation as in effect on the date hereof (“Articles of
Incorporation”), the Company’s By-laws, as in effect on the date hereof (the
“Bylaws”), and the terms of all securities convertible into or
exercisable for Common Stock of the Company and the material rights of the
holders thereof in respect thereto. The Company shall provide the Buyer with a
written update of this representation signed by the Company’s Chief Executive or
Chief Financial Officer on behalf of the Company as of the Closing Date. 

                              d.
  Issuance of Shares. Subject to the Stockholder Approval (as
  defined in Section 4(n)), the Conversion Shares and Warrant Shares are duly
  authorized and reserved for issuance and, upon conversion of the Notes and exercise
  of the Warrants in accordance with their respective terms, will be validly issued,
  fully paid and non-assessable, and free from all taxes, liens, claims and encumbrances
  with respect to the issue thereof and shall not be subject to preemptive rights
  or other similar rights of shareholders of the Company and will not impose personal
  liability upon the holder thereof. 

                              e.
  Acknowledgment of Dilution. The Company understands and acknowledges
  the potentially dilutive effect to the Common Stock upon the issuance of the
  Conversion Shares and Warrant Shares upon conversion of the Note or exercise
  of the Warrants. The Company further acknowledges that its obligation to issue
  Conversion Shares and Warrant Shares upon conversion of the Notes or exercise
  of the Warrants in accordance with this Agreement, the Notes and the Warrants
  is absolute and unconditional regardless of the dilutive effect that such issuance
  may have on the ownership interests of other shareholders of the Company. 

                              f.
  No Conflicts. The execution, delivery and performance of this
  Agreement, the Registration Rights Agreement, the Notes and the Warrants by
  the Company and the consummation by the Company of the transactions contemplated
  hereby and thereby (including, without limitation, the issuance and reservation
  for issuance of the Conversion Shares and Warrant Shares) will not (i) conflict
  with or result in a violation of any provision of the Articles of Incorporation
  or By-laws or (ii) violate or conflict with, or result in a breach of any provision
  of, or constitute a default (or an event which with notice or lapse of time
  or both could become a default) under, or give to others any rights of termination,
  amendment, acceleration or 

6 

cancellation of, any agreement, indenture, patent, patent
license or instrument to which the Company or any of its Subsidiaries is a
party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and regulations
and regulations of any self-regulatory organizations to which the Company or its
securities are subject) applicable to the Company or any of its Subsidiaries or
by which any property or asset of the Company or any of its Subsidiaries is
bound or affected (except for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect). Neither the
Company nor any of its Subsidiaries is in violation of its Articles of
Incorporation, By-laws or other organizational documents and neither the Company
nor any of its Subsidiaries is in default (and no event has occurred which with
notice or lapse of time or both could put the Company or any of its Subsidiaries
in default) under, and neither the Company nor any of its Subsidiaries has taken
any action or failed to take any action that would give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is a
party or by which any property or assets of the Company or any of its
Subsidiaries is bound or affected, except for possible defaults as would not,
individually or in the aggregate, have a Material Adverse Effect. The businesses
of the Company and its Subsidiaries, if any, are not being conducted, and shall
not be conducted so long as a Buyer owns any of the Securities, in violation of
any law, ordinance or regulation of any governmental entity. Except as
specifically contemplated by this Agreement and as required under the 1933 Act
and any applicable state securities laws, the Company is not required to obtain
any consent, authorization or order of, or make any filing or registration with,
any court, governmental agency, regulatory agency, self regulatory organization
or stock market or any third party in order for it to execute, deliver or
perform any of its obligations under this Agreement, the Registration Rights
Agreement, the Notes or the Warrants in accordance with the terms hereof or
thereof or to issue and sell the Notes and Warrants in accordance with the terms
hereof and to issue the Conversion Shares upon conversion of the Notes and the
Warrant Shares upon exercise of the Warrants. Except as disclosed in Schedule
3(f), all consents, authorizations, orders, filings and registrations which
the Company is required to obtain pursuant to the preceding sentence have been
obtained or effected on or prior to the date hereof. The Company is not in
violation of the listing requirements of the Over-the-Counter Bulletin Board
(the “OTCBB”) and does not reasonably anticipate that the Common Stock
will be delisted by the OTCBB in the foreseeable future. The Company and its
Subsidiaries are unaware of any facts or circumstances which might give rise to
any of the foregoing.

                              g.
  SEC Documents; Financial Statements. Except as disclosed in
  Schedule 3(g), the Company has timely filed all reports, schedules, forms,
  statements and other documents required to be filed by it with the SEC pursuant
  to the reporting requirements of the Securities Exchange Act of 1934, as amended
  (the “1934 Act”) (all of the foregoing filed prior to the date
  hereof and all exhibits included therein and financial statements and schedules
  thereto and documents (other than exhibits to such documents) incorporated by
  reference therein, being hereinafter referred to herein as the “SEC
  Documents”). The Company has delivered to each Buyer true and complete
  copies of the SEC Documents, except for such exhibits and incorporated documents.
  As of their respective dates, the SEC Documents complied in all material respects
  with the requirements of the 1934 Act and the rules and regulations of the SEC
  promulgated thereunder applicable to the SEC Documents, and none of the SEC
  Documents, at the time they were filed with the SEC, contained any untrue statement
  of a material fact or 

7 

omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. None of the statements
made in any such SEC Documents is, or has been, required to be amended or
updated under applicable law (except for such statements as have been amended or
updated in subsequent filings prior the date hereof). As of their respective
dates, the financial statements of the Company included in the SEC Documents
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto. Such financial statements have been prepared in accordance with United
States generally accepted accounting principles, consistently applied, during
the periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed or
summary statements) and fairly present in all material respects the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments). Except as set forth in the financial
statements of the Company included in the SEC Documents, the Company has no
liabilities, contingent or otherwise, other than (i) liabilities incurred in the
ordinary course of business subsequent to December 31, 2004 and (ii) obligations
under contracts and commitments incurred in the ordinary course of business and
not required under generally accepted accounting principles to be reflected in
such financial statements, which, individually or in the aggregate, are not
material to the financial condition or operating results of the Company. 

                              h.
  Absence of Certain Changes. Since December 31, 2004, there
  has been no material adverse change and no material adverse development in the
  assets, liabilities, business, properties, operations, financial condition,
  results of operations or prospects of the Company or any of its Subsidiaries.

                              i.
  Absence of Litigation. There is no action, suit, claim, proceeding,
  inquiry or investigation before or by any court, public board, government agency,
  self-regulatory organization or body pending or, to the knowledge of the Company
  or any of its Subsidiaries, threatened against or affecting the Company or any
  of its Subsidiaries, or their officers or directors in their capacity as such,
  that could have a Material Adverse Effect. Schedule 3(i) contains a complete
  list and summary description of any pending or threatened proceeding against
  or affecting the Company or any of its Subsidiaries, without regard to whether
  it would have a Material Adverse Effect. The Company and its Subsidiaries are
  unaware of any facts or circumstances which might give rise to any of the foregoing.

                              j.
  Patents, Copyrights, etc.

                                        (i)
  The Company and each of its Subsidiaries owns or possesses the requisite
  licenses or rights to use all patents, patent applications, patent rights, inventions,
  know-how, trade secrets, trademarks, trademark applications, service marks,
  service names, trade names and copyrights (“Intellectual Property”)
  necessary to enable it to conduct its business as now operated (and, except
  as set forth in Schedule 3(j) hereof, to the best of the Company’s
  knowledge, as presently contemplated to be operated in the future); there is
  no claim or action by any person pertaining to, or proceeding pending, or to
  the Company’s knowledge 

8 

threatened, which challenges the right of the Company or of a
Subsidiary with respect to any Intellectual Property necessary to enable it to
conduct its business as now operated (and, except as set forth in Schedule
3(j) hereof, to the best of the Company’s knowledge, as presently
contemplated to be operated in the future); to the best of the Company’s
knowledge, the Company’s or its Subsidiaries’ current and intended products,
services and processes do not infringe on any Intellectual Property or other
rights held by any person; and the Company is unaware of any facts or
circumstances which might give rise to any of the foregoing. The Company and
each of its Subsidiaries have taken reasonable security measures to protect the
secrecy, confidentiality and value of their Intellectual Property. 

                                        (ii)
  All of the Company’s computer software and computer hardware, and other
  similar or related items of automated, computerized or software systems that
  are used or relied on by the Company in the conduct of its business or that
  were, or currently are being, sold or licensed by the Company to customers (collectively,
  “Information Technology”), are Year 2000 Compliant. For purposes
  of this Agreement, the term “Year 2000 Compliant” means, with
  respect to the Company’s Information Technology, that the Information Technology
  is designed to be used prior to, during and after the calendar Year 2000, and
  the Information Technology used during each such time period will accurately
  receive, provide and process date and time data (including, but not limited
  to, calculating, comparing and sequencing) from, into and between the 20th
  and 21st centuries, including the years 1999 and 2000, and leap-year
  calculations, and will not malfunction, cease to function, or provide invalid
  or incorrect results as a result of the date or time data, to the extent that
  other information technology, used in combination with the Information Technology,
  properly exchanges date and time data with it. The Company has delivered to
  the Buyers true and correct copies of all analyses, reports, studies and similar
  written information, whether prepared by the Company or another party, relating
  to whether the Information Technology is Year 2000 Compliant, if any. 

                              k.
  No Materially Adverse Contracts, Etc. Neither the Company
  nor any of its Subsidiaries is subject to any charter, corporate or other legal
  restriction, or any judgment, decree, order, rule or regulation which in the
  judgment of the Company’s officers has or is expected in the future to
  have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries
  is a party to any contract or agreement which in the judgment of the Company’s
  officers has or is expected to have a Material Adverse Effect. 

                              l.
  Tax Status. Except as set forth on Schedule 3(l), the
  Company and each of its Subsidiaries has made or filed all federal, state and
  foreign income and all other tax returns, reports and declarations required
  by any jurisdiction to which it is subject (unless and only to the extent that
  the Company and each of its Subsidiaries has set aside on its books provisions
  reasonably adequate for the payment of all unpaid and unreported taxes) and
  has paid all taxes and other governmental assessments and charges that are material
  in amount, shown or determined to be due on such returns, reports and declarations,
  except those being contested in good faith and has set aside on its books provisions
  reasonably adequate for the payment of all taxes for periods subsequent to the
  periods to which such returns, reports or declarations apply. There are no unpaid
  taxes in any material amount claimed to be due by the taxing authority of any
  jurisdiction, and the officers of the Company know of no basis for any such
  claim. The Company has not executed a waiver with respect to the statute of
  limitations relating to the assessment or collection of any foreign, federal,
  state or local tax. Except as set forth on 

9 

Schedule 3(l), none of the Company’s tax returns is
presently being audited by any taxing authority. 

                              m.
  Certain Transactions. Except as set forth on Schedule 3(m)
  and except for arm’s length transactions pursuant to which the Company
  or any of its Subsidiaries makes payments in the ordinary course of business
  upon terms no less favorable than the Company or any of its Subsidiaries could
  obtain from third parties and other than the grant of stock options disclosed
  on Schedule 3(c), none of the officers, directors, or employees of the
  Company is presently a party to any transaction with the Company or any of its
  Subsidiaries (other than for services as employees, officers and directors),
  including any contract, agreement or other arrangement providing for the furnishing
  of services to or by, providing for rental of real or personal property to or
  from, or otherwise requiring payments to or from any officer, director or such
  employee or, to the knowledge of the Company, any corporation, partnership,
  trust or other entity in which any officer, director, or any such employee has
  a substantial interest or is an officer, director, trustee or partner. 

                              n.
  Disclosure. All information relating to or concerning the
  Company or any of its Subsidiaries set forth in this Agreement and provided
  to the Buyers pursuant to Section 2(d) hereof and otherwise in connection with
  the transactions contemplated hereby is true and correct in all material respects
  and the Company has not omitted to state any material fact necessary in order
  to make the statements made herein or therein, in light of the circumstances
  under which they were made, not misleading. No event or circumstance has occurred
  or exists with respect to the Company or any of its Subsidiaries or its or their
  business, properties, prospects, operations or financial conditions, which,
  under applicable law, rule or regulation, requires public disclosure or announcement
  by the Company but which has not been so publicly announced or disclosed (assuming
  for this purpose that the Company’s reports filed under the 1934 Act are
  being incorporated into an effective registration statement filed by the Company
  under the 1933 Act). 

                              o.
  Acknowledgment Regarding Buyers’ Purchase of Securities.
  The Company acknowledges and agrees that the Buyers are acting solely in the
  capacity of arm’s length purchasers with respect to this Agreement and
  the transactions contemplated hereby. The Company further acknowledges that
  no Buyer is acting as a financial advisor or fiduciary of the Company (or in
  any similar capacity) with respect to this Agreement and the transactions contemplated
  hereby and any statement made by any Buyer or any of their respective representatives
  or agents in connection with this Agreement and the transactions contemplated
  hereby is not advice or a recommendation and is merely incidental to the Buyers’
  purchase of the Securities. The Company further represents to each Buyer that
  the Company’s decision to enter into this Agreement has been based solely
  on the independent evaluation of the Company and its representatives. 

                              p.
  No Integrated Offering. Neither the Company, nor any of its
  affiliates, nor any person acting on its or their behalf, has directly or indirectly
  made any offers or sales in any security or solicited any offers to buy any
  security under circumstances that would require registration under the 1933
  Act of the issuance of the Securities to the Buyers. The issuance of the Securities
  to the Buyers will not be integrated with any other issuance of the 

10 

Company’s securities (past, current or future) for purposes of
any shareholder approval provisions applicable to the Company or its securities.

                              q.
  No Brokers. The Company has taken no action which would give
  rise to any claim by any person for brokerage commissions, transaction fees
  or similar payments relating to this Agreement or the transactions contemplated
  hereby.

                              r.
  Permits; Compliance. The Company and each of its Subsidiaries
  is in possession of all franchises, grants, authorizations, licenses, permits,
  easements, variances, exemptions, consents, certificates, approvals and orders
  necessary to own, lease and operate its properties and to carry on its business
  as it is now being conducted (collectively, the “Company Permits”),
  and there is no action pending or, to the knowledge of the Company, threatened
  regarding suspension or cancellation of any of the Company Permits. Neither
  the Company nor any of its Subsidiaries is in conflict with, or in default or
  violation of, any of the Company Permits, except for any such conflicts, defaults
  or violations which, individually or in the aggregate, would not reasonably
  be expected to have a Material Adverse Effect. Since December 31, 2004, neither
  the Company nor any of its Subsidiaries has received any notification with respect
  to possible conflicts, defaults or violations of applicable laws, except for
  notices relating to possible conflicts, defaults or violations, which conflicts,
  defaults or violations would not have a Material Adverse Effect. 

                              s.
  Environmental Matters. 

                                        (i)
  Except as set forth in Schedule 3(s), there are, to the Company’s
  knowledge, with respect to the Company or any of its Subsidiaries or any predecessor
  of the Company, no past or present violations of Environmental Laws (as defined
  below), releases of any material into the environment, actions, activities,
  circumstances, conditions, events, incidents, or contractual obligations which
  may give rise to any common law environmental liability or any liability under
  the Comprehensive Environmental Response, Compensation and Liability Act of
  1980 or similar federal, state, local or foreign laws and neither the Company
  nor any of its Subsidiaries has received any notice with respect to any of the
  foregoing, nor is any action pending or, to the Company’s knowledge, threatened
  in connection with any of the foregoing. The term “Environmental Laws”
  means all federal, state, local or foreign laws relating to pollution or protection
  of human health or the environment (including, without limitation, ambient air,
  surface water, groundwater, land surface or subsurface strata), including, without
  limitation, laws relating to emissions, discharges, releases or threatened releases
  of chemicals, pollutants contaminants, or toxic or hazardous substances or wastes
  (collectively, “Hazardous Materials”) into the environment,
  or otherwise relating to the manufacture, processing, distribution, use, treatment,
  storage, disposal, transport or handling of Hazardous Materials, as well as
  all authorizations, codes, decrees, demands or demand letters, injunctions,
  judgments, licenses, notices or notice letters, orders, permits, plans or regulations
  issued, entered, promulgated or approved thereunder. 

                                        (ii)
  Other than those that are or were stored, used or disposed of in compliance
  with applicable law, no Hazardous Materials are contained on or about any real
  property currently owned, leased or used by the Company or any of its Subsidiaries,
  and no Hazardous Materials were released on or about any real property previously
  owned, leased or 

11 

used by the Company or any of its Subsidiaries during the
period the property was owned, leased or used by the Company or any of its
Subsidiaries, except in the normal course of the Company’s or any of its
Subsidiaries’ business. 

                                        (iii)
  Except as set forth in Schedule 3(s), there are no underground storage
  tanks on or under any real property owned, leased or used by the Company or
  any of its Subsidiaries that are not in compliance with applicable law.

                              t.
  Title to Property. The Company and its Subsidiaries have good
  and marketable title in fee simple to all real property and good and marketable
  title to all personal property owned by them which is material to the business
  of the Company and its Subsidiaries, in each case free and clear of all liens,
  encumbrances and defects except such as are described in Schedule 3(t)
  or such as would not have a Material Adverse Effect. Any real property and facilities
  held under lease by the Company and its Subsidiaries are held by them under
  valid, subsisting and enforceable leases with such exceptions as would not have
  a Material Adverse Effect. 

                              u.
  Insurance. The Company and each of its Subsidiaries are insured
  by insurers of recognized financial responsibility against such losses and risks
  and in such amounts as management of the Company believes to be prudent and
  customary in the businesses in which the Company and its Subsidiaries are engaged.
  Neither the Company nor any such Subsidiary has any reason to believe that it
  will not be able to renew its existing insurance coverage as and when such coverage
  expires or to obtain similar coverage from similar insurers as may be necessary
  to continue its business at a cost that would not have a Material Adverse Effect.
  The Company has provided to Buyer true and correct copies of all policies relating
  to directors’ and officers’ liability coverage, errors and omissions
  coverage, and commercial general liability coverage. 

                              v.
  Internal Accounting Controls. The Company and each of its
  Subsidiaries maintain a system of internal accounting controls sufficient, in
  the judgment of the Company’s board of directors, to provide reasonable
  assurance that (i) transactions are executed in accordance with management’s
  general or specific authorizations, (ii) transactions are recorded as necessary
  to permit preparation of financial statements in conformity with generally accepted
  accounting principles and to maintain asset accountability, (iii) access to
  assets is permitted only in accordance with management’s general or specific
  authorization and (iv) the recorded accountability for assets is compared with
  the existing assets at reasonable intervals and appropriate action is taken
  with respect to any differences. 

                              w.
  Foreign Corrupt Practices. Neither the Company, nor any of
  its Subsidiaries, nor any director, officer, agent, employee or other person
  acting on behalf of the Company or any Subsidiary has, in the course of his
  actions for, or on behalf of, the Company, used any corporate funds for any
  unlawful contribution, gift, entertainment or other unlawful expenses relating
  to political activity; made any direct or indirect unlawful payment to any foreign
  or domestic government official or employee from corporate funds; violated or
  is in violation of any provision of the U.S. Foreign Corrupt Practices Act of
  1977, as amended, or made any bribe, rebate, payoff, influence payment, kickback
  or other unlawful payment to any foreign or domestic government official or
  employee. 

12 

                              x.
  Solvency. Except as set forth in Schedule 3(x),
  the Company (after giving effect to the transactions contemplated by this Agreement)
  is solvent (i.e., its assets have a fair market value in excess of the
  amount required to pay its probable liabilities on its existing debts as they
  become absolute and matured) and currently the Company has no information that
  would lead it to reasonably conclude that the Company would not, after giving
  effect to the transaction contemplated by this Agreement, have the ability to,
  nor does it intend to take any action that would impair its ability to, pay
  its debts from time to time incurred in connection therewith as such debts mature.
  Except as set forth in Schedule 3(x), the Company did not receive
  a qualified opinion from its auditors with respect to its most recent fiscal
  year end and, after giving effect to the transactions contemplated by this Agreement,
  does not anticipate or know of any basis upon which its auditors might issue
  a qualified opinion in respect of its current fiscal year. 

                              y.
  No Investment Company. The Company is not, and upon the issuance
  and sale of the Securities as contemplated by this Agreement will not be an
  “investment company” required to be registered under the Investment
  Company Act of 1940 (an “Investment Company”). The Company
  is not controlled by an Investment Company. 

                              z.
  Breach of Representations and Warranties by the Company. If
  the Company breaches any of the representations or warranties set forth in this
  Section 3, and in addition to any other remedies available to the Buyers pursuant
  to this Agreement, the Company shall pay to the Buyer the Standard Liquidated
  Damages Amount in cash or in shares of Common Stock at the option of the Company,
  until such breach is cured. If the Company elects to pay the Standard Liquidated
  Damages Amounts in shares of Common Stock, such shares shall be issued at the
  Conversion Price at the time of payment. 

                    4.
  COVENANTS. 

                              a.
  Best Efforts. The parties shall use their best efforts to
  satisfy timely each of the conditions described in Section 6 and 7 of this Agreement.

                              b.
  Form D; Blue Sky Laws. The Company agrees to file a Form D
  with respect to the Securities as required under Regulation D and to provide
  a copy thereof to each Buyer promptly after such filing. The Company shall,
  on or before the Closing Date, take such action as the Company shall reasonably
  determine is necessary to qualify the Securities for sale to the Buyers at the
  applicable closing pursuant to this Agreement under applicable securities or
  “blue sky” laws of the states of the United States (or to obtain an
  exemption from such qualification), and shall provide evidence of any such action
  so taken to each Buyer on or prior to the Closing Date. 

                              c.
  Reporting Status; Eligibility to Use Form S-3, SB-2 or Form S-1.
  The Company’s Common Stock is registered under Section 12(g) of the 1934
  Act. The Company represents and warrants that it meets the requirements for
  the use of Form S-3 (or if the Company is not eligible for the use of Form S-3
  as of the Filing Date (as defined in the Registration Rights Agreement), the
  Company may use the form of registration for which it is eligible at that time)
  for registration of the sale by the Buyer of the Registrable Securities (as
  defined in the Registration Rights Agreement). So long as the Buyer beneficially
  owns any of the 

13 

Securities, the Company shall timely file all reports required
to be filed with the SEC pursuant to the 1934 Act, and the Company shall not
terminate its status as an issuer required to file reports under the 1934 Act
even if the 1934 Act or the rules and regulations thereunder would permit such
termination. The Company further agrees to file all reports required to be filed
by the Company with the SEC in a timely manner so as to become eligible, and
thereafter to maintain its eligibility, for the use of Form S-3. The Company
shall issue a press release describing the materials terms of the transaction
contemplated hereby as soon as practicable following the Closing Date but in no
event more than two (2) business days of the Closing Date, which press release
shall be subject to prior review by the Buyers. The Company agrees that such
press release shall not disclose the name of the Buyers unless expressly
consented to in writing by the Buyers or unless required by applicable law or
regulation, and then only to the extent of such requirement. 

                              d.
  Use of Proceeds. The Company shall use the proceeds from the
  sale of the Notes and the Warrants in the manner set forth in Schedule 4(d)
  attached hereto and made a part hereof and shall not, directly or indirectly,
  use such proceeds for any loan to or investment in any other corporation, partnership,
  enterprise or other person (except in connection with its currently existing
  direct or indirect Subsidiaries) 

                              e.
  Future Offerings. Subject to the exceptions described below,
  the Company will not, without the prior written consent of a majority-in-interest
  of the Buyers, not to be unreasonably withheld, negotiate or contract with any
  party to obtain additional equity financing (including debt financing with an
  equity component) that involves (A) the issuance of Common Stock at a discount
  to the market price of the Common Stock on the date of issuance (taking into
  account the value of any warrants or options to acquire Common Stock issued
  in connection therewith) or (B) the issuance of convertible securities that
  are convertible into an indeterminate number of shares of Common Stock or (C)
  the issuance of warrants during the period (the “Lock-up Period”)
  beginning on the Closing Date and ending on the later of (i) two hundred seventy
  (270) days from the Closing Date and (ii) one hundred eighty (180) days from
  the date the Registration Statement (as defined in the Registration Rights Agreement)
  is declared effective (plus any days in which sales cannot be made thereunder).
  In addition, subject to the exceptions described below, the Company will not
  conduct any equity financing (including debt with an equity component) (“Future
  Offerings”) during the period beginning on the Closing Date and ending
  two (2) years after the end of the Lock-up Period unless it shall have first
  delivered to each Buyer, at least twenty (20) business days prior to the closing
  of such Future Offering, written notice describing the proposed Future Offering,
  including the terms and conditions thereof and proposed definitive documentation
  to be entered into in connection therewith, and providing each Buyer an option
  during the fifteen (15) day period following delivery of such notice to purchase
  its pro rata share (based on the ratio that the aggregate principal amount of
  Notes purchased by it hereunder bears to the aggregate principal amount of Notes
  purchased hereunder) of the securities being offered in the Future Offering
  on the same terms as contemplated by such Future Offering (the limitations referred
  to in this sentence and the preceding sentence are collectively referred to
  as the “Capital Raising Limitations”). In the event
  the terms and conditions of a proposed Future Offering are amended in any respect
  after delivery of the notice to the Buyers concerning the proposed Future Offering,
  the Company shall deliver a new notice to each Buyer describing the amended
  terms and conditions of the proposed Future Offering and each Buyer thereafter
  shall have an option during the fifteen (15) day period 

14 

following delivery of such new notice to purchase its pro rata
share of the securities being offered on the same terms as contemplated by such
proposed Future Offering, as amended. The foregoing sentence shall apply to
successive amendments to the terms and conditions of any proposed Future
Offering. The Capital Raising Limitations shall not apply to any transaction
involving (i) issuances of securities in a firm commitment underwritten public
offering (excluding a continuous offering pursuant to Rule 415 under the 1933
Act) or (ii) issuances of securities as consideration for a merger,
consolidation or purchase of assets, or in connection with any strategic
partnership or joint venture (the primary purpose of which is not to raise
equity capital), or in connection with the disposition or acquisition of a
business, product or license by the Company. The Capital Raising Limitations
also shall not apply to the issuance of securities upon exercise or conversion
of the Company’s options, warrants or other convertible securities outstanding
as of the date hereof or to the grant of additional options or warrants, or the
issuance of additional securities, under any Company stock option or restricted
stock plan approved by the shareholders of the Company.

                              f.
  Expenses. At the Closing, the Company shall reimburse Buyers
  for expenses incurred by them in connection with the negotiation, preparation,
  execution, delivery and performance of this Agreement and the other agreements
  to be executed in connection herewith (“Documents”), including, without
  limitation, attorneys’ and consultants’ fees and expenses, transfer
  agent fees, fees for stock quotation services, fees relating to any amendments
  or modifications of the Documents or any consents or waivers of provisions in
  the Documents, fees for the preparation of opinions of counsel, escrow fees,
  and costs of restructuring the transactions contemplated by the Documents. When
  possible, the Company must pay these fees directly, otherwise the Company must
  make immediate payment for reimbursement to the Buyers for all fees and expenses
  immediately upon written notice by the Buyer or the submission of an invoice
  by the Buyer If the Company fails to reimburse the Buyer in full within three
  (3) business days of the written notice or submission of invoice by the Buyer,
  the Company shall pay interest on the total amount of fees to be reimbursed
  at a rate of 15% per annum. 

                              g.
  Financial Information. The Company agrees to send the following
  reports to each Buyer until such Buyer transfers, assigns, or sells all of the
  Securities: (i) within ten (10) days after the filing with the SEC, a copy of
  its Annual Report on Form 10-KSB its Quarterly Reports on Form 10-QSB and any
  Current Reports on Form 8-K; (ii) within one (1) day after release, copies of
  all press releases issued by the Company or any of its Subsidiaries; and (iii)
  contemporaneously with the making available or giving to the shareholders of
  the Company, copies of any notices or other information the Company makes available
  or gives to such shareholders. 

                              h.
  Authorization and Reservation of Shares. Subject to the Stockholder
  Approval (as defined in Section 4(n)), the Company shall at all times have authorized,
  and reserved for the purpose of issuance, a sufficient number of shares of Common
  Stock to provide for the full conversion or exercise of the outstanding Notes
  and Warrants and issuance of the Conversion Shares and Warrant Shares in connection
  therewith (based on the Conversion Price of the Notes or Exercise Price of the
  Warrants in effect from time to time) and as otherwise required by the Notes.
  The Company shall not reduce the number of shares of Common Stock reserved for
  issuance upon conversion of Notes and exercise of the Warrants 

15 

without the consent of each Buyer. Subject to the Stockholder
Approval (as defined in Section 4(o)), the Company shall at all times maintain
the number of shares of Common Stock so reserved for issuance at an amount
(“Reserved Amount”) equal to no less than two (2) times the number that
is then actually issuable upon full conversion of the Notes and Additional Notes
and upon exercise of the Warrants and the Additional Warrants (based on the
Conversion Price of the Notes or the Exercise Price of the Warrants in effect
from time to time). If at any time the number of shares of Common Stock
authorized and reserved for issuance (“Authorized and Reserved Shares”)
is below the Reserved Amount, the Company will promptly take all corporate
action necessary to authorize and reserve a sufficient number of shares,
including, without limitation, calling a special meeting of shareholders to
authorize additional shares to meet the Company’s obligations under this Section
4(h), in the case of an insufficient number of authorized shares, obtain
shareholder approval of an increase in such authorized number of shares, and
voting the management shares of the Company in favor of an increase in the
authorized shares of the Company to ensure that the number of authorized shares
is sufficient to meet the Reserved Amount. If the Company fails to obtain such
shareholder approval within thirty (30) days following the date on which the
number of Reserved Amount exceeds the Authorized and Reserved Shares, the
Company shall pay to the Borrower the Standard Liquidated Damages Amount, in
cash or in shares of Common Stock at the option of the Buyer. If the Buyer
elects to be paid the Standard Liquidated Damages Amount in shares of Common
Stock, such shares shall be issued at the Conversion Price at the time of
payment. In order to ensure that the Company has authorized a sufficient amount
of shares to meet the Reserved Amount at all times, the Company must deliver to
the Buyer at the end of every month a list detailing (1) the current amount of
shares authorized by the Company and reserved for the Buyer; and (2) amount of
shares issuable upon conversion of the Notes and upon exercise of the Warrants
and as payment of interest accrued on the Notes for one year. If the Company
fails to provide such list within five (5) business days of the end of each
month, the Company shall pay the Standard Liquidated Damages Amount, in cash or
in shares of Common Stock at the option of the Buyer, until the list is
delivered. If the Buyer elects to be paid the Standard Liquidated Damages Amount
in shares of Common Stock, such shares shall be issued at the Conversion Price
at the time of payment. 

                              i.
  Listing. The Company shall promptly secure the listing of
  the Conversion Shares and Warrant Shares upon each national securities exchange
  or automated quotation system, if any, upon which shares of Common Stock are
  then listed (subject to official notice of issuance) and, so long as any Buyer
  owns any of the Securities, shall maintain, so long as any other shares of Common
  Stock shall be so listed, such listing of all Conversion Shares and Warrant
  Shares from time to time issuable upon conversion of the Notes or exercise of
  the Warrants. The Company will obtain and, so long as any Buyer owns any of
  the Securities, maintain the listing and trading of its Common Stock on the
  OTCBB or any equivalent replacement exchange, the Nasdaq National Market (“Nasdaq”),
  the Nasdaq SmallCap Market (“Nasdaq SmallCap”), the New York
  Stock Exchange (“NYSE”), or the American Stock Exchange (“AMEX”)
  and will comply in all respects with the Company’s reporting, filing and
  other obligations under the bylaws or rules of the National Association of Securities
  Dealers (“NASD”) and such exchanges, as applicable. The Company
  shall promptly provide to each Buyer copies of any notices it receives from
  the OTCBB and any other exchanges or quotation systems on which the Common Stock
  is then listed regarding the continued eligibility of the Common Stock for listing
  on such exchanges and quotation systems. 

16 

                              j.
  Corporate Existence. So long as a Buyer beneficially owns
  any Notes or Warrants, the Company shall maintain its corporate existence and
  shall not sell all or substantially all of the Company’s assets, except
  in the event of a merger or consolidation or sale of all or substantially all
  of the Company’s assets, where the surviving or successor entity in such
  transaction (i) assumes the Company’s obligations hereunder and under the
  agreements and instruments entered into in connection herewith and (ii) is a
  publicly traded corporation whose Common Stock is listed for trading on the
  OTCBB, Nasdaq, Nasdaq SmallCap, NYSE or AMEX. 

                              k.
  No Integration. The Company shall not make any offers or sales
  of any security (other than the Securities) under circumstances that would require
  registration of the Securities being offered or sold hereunder under the 1933
  Act or cause the offering of the Securities to be integrated with any other
  offering of securities by the Company for the purpose of any stockholder approval
  provision applicable to the Company or its securities. 

                              l.
   Key Man Insurance. The Company shall use its best
  efforts to obtain, on or before five (5) business days from the date hereof,
  key man life insurance on all of the Company’s officers and division heads.

                              m.
  Sarbanes-Oxley; Internal Accounting Controls. The Company
  shall use its best efforts to become in material compliance with all provisions
  of the Sarbanes-Oxley Act of 2002 which are applicable to it as of the Closing
  Date and to maintain a system of internal accounting controls sufficient to
  provide reasonable assurance that (i) transactions are executed in accordance
  with management’s general or specific authorizations, (ii) transactions
  are recorded as necessary to permit preparation of financial statements in accordance
  with GAAP and to maintain asset accountability, (iii) access to assets is permitted
  only in accordance with management’s general or specific authorization,
  and (iv) the recorded accountability for assets is compared with the existing
  assets at reasonable intervals and appropriate action is taken with respect
  to any differences. 

                              n.
  Stockholder Approval. The Company shall file a proxy
  statement or information statement with the SEC no later than April 28, 2006
  and use its best efforts to obtain, on or before May 31, 2006 such approvals
  of the Company’s stockholders as may be required to issue all of the shares
  of Common Stock issuable upon conversion or exercise of, or otherwise with respect
  to, the Notes and the Warrants in accordance with Oregon law and any applicable
  rules or regulations of the OTCBB and Nasdaq, either through a reverse stock
  split of the Common Stock or an increase in authorized capital (the “Stockholder
  Approval”). The Company shall furnish to each Buyer and its legal counsel
  promptly (but in no event less than two (2) business days) before the same is
  filed with the SEC, one copy of the proxy statement or information statement
  and any amendment thereto, and shall deliver to each Buyer promptly each letter
  written by or on behalf of the Company to the SEC or the staff of the SEC, and
  each item of correspondence from the SEC or the staff of the SEC, in each case
  relating to such proxy statement or information statement (other than any portion
  thereof which contains information for which the Company has sought confidential
  treatment). The Company will promptly (but in no event more than three (3) business
  days) respond to any and all comments received from the SEC (which comments
  shall promptly be made available to each Buyer). The Company shall comply with
  the filing and disclosure requirements of Section 14 under the 1934 Act in 

17 

connection with the Stockholder Approval. The Company
represents and warrants that its Board of Directors has approved the proposal
contemplated by this Section 4(n) and shall indicate such approval in the proxy
statement or information statement used in connection with the Stockholder
Approval. 

                              o.
  Breach of Covenants. If the Company breaches any of
  the covenants set forth in this Section 4, and in addition to any other remedies
  available to the Buyers pursuant to this Agreement, the Company shall pay to
  the Buyers the Standard Liquidated Damages Amount, in cash or in shares of Common
  Stock at the option of the Company, until such breach is cured. If the Company
  elects to pay the Standard Liquidated Damages Amount in shares, such shares
  shall be issued at the Conversion Price at the time of payment. 

                    5.
  TRANSFER AGENT INSTRUCTIONS. The Company shall issue irrevocable
  instructions to its transfer agent to issue certificates, registered in the
  name of each Buyer or its nominee, for the Conversion Shares and Warrant Shares
  in such amounts as specified from time to time by each Buyer to the Company
  upon conversion of the Notes or exercise of the Warrants in accordance with
  the terms thereof (the “Irrevocable Transfer Agent Instructions”).
  Prior to registration of the Conversion Shares and Warrant Shares under the
  1933 Act or the date on which the Conversion Shares and Warrant Shares may be
  sold pursuant to Rule 144 without any restriction as to the number of Securities
  as of a particular date that can then be immediately sold, all such certificates
  shall bear the restrictive legend specified in Section 2(g) of this Agreement.
  The Company warrants that no instruction other than the Irrevocable Transfer
  Agent Instructions referred to in this Section 5, and stop transfer instructions
  to give effect to Section 2(f) hereof (in the case of the Conversion Shares
  and Warrant Shares, prior to registration of the Conversion Shares and Warrant
  Shares under the 1933 Act or the date on which the Conversion Shares and Warrant
  Shares may be sold pursuant to Rule 144 without any restriction as to the number
  of Securities as of a particular date that can then be immediately sold), will
  be given by the Company to its transfer agent and that the Securities shall
  otherwise be freely transferable on the books and records of the Company as
  and to the extent provided in this Agreement and the Registration Rights Agreement.
  Nothing in this Section shall affect in any way the Buyer’s obligations
  and agreement set forth in Section 2(g) hereof to comply with all applicable
  prospectus delivery requirements, if any, upon re-sale of the Securities. If
  a Buyer provides the Company with (i) an opinion of counsel in form, substance
  and scope customary for opinions in comparable transactions, to the effect that
  a public sale or transfer of such Securities may be made without registration
  under the 1933 Act and such sale or transfer is effected or (ii) the Buyer provides
  reasonable assurances that the Securities can be sold pursuant to Rule 144,
  the Company shall permit the transfer, and, in the case of the Conversion Shares
  and Warrant Shares, promptly instruct its transfer agent to issue one or more
  certificates, free from restrictive legend, in such name and in such denominations
  as specified by such Buyer. The Company acknowledges that a breach by it of
  its obligations hereunder will cause irreparable harm to the Buyers, by vitiating
  the intent and purpose of the transactions contemplated hereby. Accordingly,
  the Company acknowledges that the remedy at law for a breach of its obligations
  under this Section 5 may be inadequate and agrees, in the event of a breach
  or threatened breach by the Company of the provisions of this Section, that
  the Buyers shall be entitled, in addition to all other available remedies, to
  an injunction restraining any 

18 

breach and requiring immediate transfer, without the necessity
of showing economic loss and without any bond or other security being required.

                    6.
  CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL. The obligation
  of the Company hereunder to issue and sell the Notes and Warrants to a Buyer
  at the Closing is subject to the satisfaction, at or before the Closing Date
  of each of the following conditions thereto, provided that these conditions
  are for the Company’s sole benefit and may be waived by the Company at
  any time in its sole discretion: 

                              a.
  The applicable Buyer shall have executed this Agreement and the Registration
  Rights Agreement, and delivered the same to the Company. 

                              b.
  The applicable Buyer shall have delivered the Purchase Price in accordance
  with Section 1(b) above. 

                              c.
  The representations and warranties of the applicable Buyer shall be true
  and correct in all material respects as of the date when made and as of the
  Closing Date as though made at that time (except for representations and warranties
  that speak as of a specific date), and the applicable Buyer shall have performed,
  satisfied and complied in all material respects with the covenants, agreements
  and conditions required by this Agreement to be performed, satisfied or complied
  with by the applicable Buyer at or prior to the Closing Date.

                              d.
  No litigation, statute, rule, regulation, executive order, decree, ruling
  or injunction shall have been enacted, entered, promulgated or endorsed by or
  in any court or governmental authority of competent jurisdiction or any self-regulatory
  organization having authority over the matters contemplated hereby which prohibits
  the consummation of any of the transactions contemplated by this Agreement.

                    7.
  CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.
  The obligation of each Buyer hereunder to purchase the Notes and Warrants at
  the Closing is subject to the satisfaction, at or before the Closing Date of
  each of the following conditions, provided that these conditions are for such
  Buyer’s sole benefit and may be waived by such Buyer at any time in its
  sole discretion: 

                              a.
  The Company shall have executed this Agreement and the Registration Rights
  Agreement, and delivered the same to the Buyer. 

                              b.
  The Company shall have delivered to such Buyer duly executed Notes (in such
  denominations as the Buyer shall request) and Warrants in accordance with Section
  1(b) above. 

                              c.
  The Irrevocable Transfer Agent Instructions, in form and substance satisfactory
  to a majority-in-interest of the Buyers, shall have been delivered to and acknowledged
  in writing by the Company’s Transfer Agent. 

                              d.
  The representations and warranties of the Company shall be true and correct
  in all material respects as of the date when made and as of the Closing Date
  as though made at such time (except for representations and warranties that
  speak as of a specific 

19 

date) and the Company shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Company at or prior to the Closing Date. The Buyer shall have received a
certificate or certificates, executed by the chief executive officer of the
Company, dated as of the Closing Date, to the foregoing effect and as to such
other matters as may be reasonably requested by such Buyer including, but not
limited to certificates with respect to the Company’s Articles of Incorporation,
By-laws and Board of Directors’ resolutions relating to the transactions
contemplated hereby. 

                              e.
  No litigation, statute, rule, regulation, executive order, decree, ruling
  or injunction shall have been enacted, entered, promulgated or endorsed by or
  in any court or governmental authority of competent jurisdiction or any self-regulatory
  organization having authority over the matters contemplated hereby which prohibits
  the consummation of any of the transactions contemplated by this Agreement.

                              f.
  No event shall have occurred which could reasonably be expected to have
  a Material Adverse Effect on the Company. 

                              g.
  The Conversion Shares and Warrant Shares shall have been authorized for
  quotation on the OTCBB and trading in the Common Stock on the OTCBB shall not
  have been suspended by the SEC or the OTCBB. 

                              h.
  The Buyer shall have received an opinion of the Company’s counsel,
  dated as of the Closing Date, in form, scope and substance reasonably satisfactory
  to the Buyer and in substantially the same form as Exhibit “D”
  attached hereto. 

                              i.
  The Buyer shall have received an officer’s certificate described in
  Section 3(c) above, dated as of the Closing Date. 

                    8.
  GOVERNING LAW; MISCELLANEOUS.

                              a.
  Governing Law. THIS AGREEMENT SHALL BE ENFORCED, GOVERNED
  BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
  TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD
  TO THE PRINCIPLES OF CONFLICT OF LAWS. THE PARTIES HERETO HEREBY SUBMIT TO THE
  EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED IN NEW YORK,
  NEW YORK WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS AGREEMENT, THE AGREEMENTS
  ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY
  OR THEREBY. 

BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING. BOTH PARTIES FURTHER AGREE
THAT SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED
IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR
PROCEEDING. NOTHING HEREIN SHALL AFFECT EITHER PARTY’S RIGHT TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW. BOTH PARTIES AGREE THAT A FINAL 

20 

NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT
OR IN ANY OTHER LAWFUL MANNER. THE PARTY WHICH DOES NOT PREVAIL IN ANY DISPUTE
ARISING UNDER THIS AGREEMENT SHALL BE RESPONSIBLE FOR ALL FEES AND EXPENSES,
INCLUDING ATTORNEYS’ FEES, INCURRED BY THE PREVAILING PARTY IN CONNECTION WITH
SUCH DISPUTE. 

                              b.
  Counterparts; Signatures by Facsimile. This Agreement may
  be executed in one or more counterparts, each of which shall be deemed an original
  but all of which shall constitute one and the same agreement and shall become
  effective when counterparts have been signed by each party and delivered to
  the other party. This Agreement, once executed by a party, may be delivered
  to the other party hereto by facsimile transmission of a copy of this Agreement
  bearing the signature of the party so delivering this Agreement. 

                              c.
  Headings. The headings of this Agreement are for convenience
  of reference only and shall not form part of, or affect the interpretation of,
  this Agreement.

                              d.
  Severability. In the event that any provision of this Agreement
  is invalid or unenforceable under any applicable statute or rule of law, then
  such provision shall be deemed inoperative to the extent that it may conflict
  therewith and shall be deemed modified to conform with such statute or rule
  of law. Any provision hereof which may prove invalid or unenforceable under
  any law shall not affect the validity or enforceability of any other provision
  hereof. 

                              e.
  Entire Agreement; Amendments. This Agreement and the instruments
  referenced herein contain the entire understanding of the parties with respect
  to the matters covered herein and therein and, except as specifically set forth
  herein or therein, neither the Company nor the Buyer makes any representation,
  warranty, covenant or undertaking with respect to such matters. No provision
  of this Agreement may be waived or amended other than by an instrument in writing
  signed by the party to be charged with enforcement.

                              f.
  Notices. Any notices required or permitted to be given under
  the terms of this Agreement shall be sent by certified or registered mail (return
  receipt requested) or delivered personally or by courier (including a recognized
  overnight delivery service) or by facsimile and shall be effective five days
  after being placed in the mail, if mailed by regular United States mail, or
  upon receipt, if delivered personally or by courier (including a recognized
  overnight delivery service) or by facsimile, in each case addressed to a party.
  The addresses for such communications shall be: 

21 

	 	If to the Company: 
	 	  
	 	           
             Banyan Corporation 
	 	           
             1925 Century Park East, Suite 500 
	 	           
             Los Angeles, California 90067 
	 	           
             Attention: Chief Executive Officer 
	 	                  
      Telephone: 800-808-0899 
	 	           
             Facsimile: 403-287-8804 
	 	  
	 	With a copy to: 
	 	  
	 	           
             Noel E. Guardi, Esq. 
	 	           
             P. O. Box 381 
	 	                  
      Pinecliffe, Colorado 80471 
	 	                  
      Telephone: 303-969-8886 
	 	           
             Facsimile: 303-969-8887 

          If
  to a Buyer: To the address set forth immediately below such Buyer’s name
  on the signature pages hereto. 

	 	With copy to: 
	 	  
	 	           
             Ballard Spahr Andrews & Ingersoll, LLP
  
	 	           
             1735 Market Street 
	 	           
             51st Floor 
	 	                  
      Philadelphia, Pennsylvania 19103 
	 	                  
      Attention: Gerald J. Guarcini, Esq. 
	 	           
             Telephone: 215-864-8625 
	 	           
             Facsimile: 215-864-8999 

          Each
  party shall provide notice to the other party of any change in address. 

                              g.
  Successors and Assigns. This Agreement shall be binding upon
  and inure to the benefit of the parties and their successors and assigns. Neither
  the Company nor any Buyer shall assign this Agreement or any rights or obligations
  hereunder without the prior written consent of the other. Notwithstanding the
  foregoing, subject to Section 2(f), any Buyer may assign its rights hereunder
  to any person that purchases Securities in a private transaction from a Buyer
  or to any of its “affiliates,” as that term is defined under the 1934
  Act, without the consent of the Company. 

                              h.
  Third Party Beneficiaries. This Agreement is intended for
  the benefit of the parties hereto and their respective permitted successors
  and assigns, and is not for the benefit of, nor may any provision hereof be
  enforced by, any other person. 

                              i.
  Survival. The representations and warranties of the Company
  and the agreements and covenants set forth in Sections 3, 4, 5 and 8 shall survive
  the closing 

22 

hereunder notwithstanding any due diligence investigation
conducted by or on behalf of the Buyers. The Company agrees to indemnify and
hold harmless each of the Buyers and all their officers, directors, employees
and agents for loss or damage arising as a result of or related to any breach or
alleged breach by the Company of any of its representations, warranties and
covenants set forth in Sections 3 and 4 hereof or any of its covenants and
obligations under this Agreement or the Registration Rights Agreement, including
advancement of expenses as they are incurred. 

                              j.
  Publicity. The Company and each of the Buyers shall have the
  right to review a reasonable period of time before issuance of any press releases,
  SEC, OTCBB or NASD filings, or any other public statements with respect to the
  transactions contemplated hereby; provided, however, that the
  Company shall be entitled, without the prior approval of each of the Buyers,
  to make any press release or SEC, OTCBB (or other applicable trading market)
  or NASD filings with respect to such transactions as is required by applicable
  law and regulations (although each of the Buyers shall be consulted by the Company
  in connection with any such press release prior to its release and shall be
  provided with a copy thereof and be given an opportunity to comment thereon).

                              k.
  Further Assurances. Each party shall do and perform, or cause
  to be done and performed, all such further acts and things, and shall execute
  and deliver all such other agreements, certificates, instruments and documents,
  as the other party may reasonably request in order to carry out the intent and
  accomplish the purposes of this Agreement and the consummation of the transactions
  contemplated hereby. 

                              l.
  No Strict Construction. The language used in this Agreement
  will be deemed to be the language chosen by the parties to express their mutual
  intent, and no rules of strict construction will be applied against any party.

                              m.
  Remedies. The Company acknowledges that a breach by it of
  its obligations hereunder will cause irreparable harm to the Buyers by vitiating
  the intent and purpose of the transaction contemplated hereby. Accordingly,
  the Company acknowledges that the remedy at law for a breach of its obligations
  under this Agreement will be inadequate and agrees, in the event of a breach
  or threatened breach by the Company of the provisions of this Agreement, that
  the Buyers shall be entitled, in addition to all other available remedies at
  law or in equity, and in addition to the penalties assessable herein, to an
  injunction or injunctions restraining, preventing or curing any breach of this
  Agreement and to enforce specifically the terms and provisions hereof, without
  the necessity of showing economic loss and without any bond or other security
  being required. 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 

23 

          IN
  WITNESS WHEREOF, the undersigned Buyers and the Company have caused this
  Agreement to be duly executed as of the date first above written. 

BANYAN CORPORATION 

________________________________

  Michael J. Gelmon

  Chief Executive Officer 

AJW PARTNERS, LLC

  By: SMS Group, LLC 

______________________________________

  Corey S. Ribotsky 

  Manager 

	RESIDENCE: Delaware 	  
	 	  
	ADDRESS: 1044 Northern Boulevard 	  
	                    
      Suite 302 	  
	                     Roslyn,
      New York 11576 	  
	                    
      Facsimile: (516) 739-7115 	  
	                    
      Telephone: (516) 739-7110 	  
	 	  
	AGGREGATE SUBSCRIPTION AMOUNT: 	  
	 	  
	               
         Aggregate Principal Amount of Notes: 	$_________ 
	               
         Number of Warrants: 	  _________
	               
         Aggregate Purchase Price: 	  _________

24

	AJW OFFSHORE, LTD. 	 
	By: First Street Manager II, LLC	  	 
	  	  	 
	  	  	 
	 	 	 
	Corey S. Ribotsky 	 	 
	Manager 	  	 
	  	  	 
	  	  	 
	RESIDENCE: 	Cayman Islands	 
	  	  	 
	ADDRESS: 	AJW Offshore, Ltd. 	 
	  	P.O. Box 32021 SMB 	 
	  	Grand Cayman, Cayman Island, B.W.I. 	 

	AGGREGATE SUBSCRIPTION AMOUNT: 	 	  	 
	  	 	  	 
	               
         Aggregate Principal Amount of Notes: 	$	_________	 
	               
         Number of Warrants: 	 	_________	 
	               
         Aggregate Purchase Price: 	$	_________	 

25 

	AJW QUALIFIED PARTNERS, LLC 
	By: AJW Manager, LLC 
	  
	  
	 	 	 
	 	 	 
	Corey S. Ribotsky 
	Manager 

	RESIDENCE: 	New York 	  
	  	  	  
	ADDRESS: 	1044 Northern Boulevard 
	  	Suite 302 	  
	  	Roslyn, New York 11576 
	  	Facsimile: 	(516) 739-7115 
	  	Telephone: 	(516) 739-7110 

	AGGREGATE SUBSCRIPTION AMOUNT: 	 	  	 
	  	 	  	 
	               
         Aggregate Principal Amount of Notes: 	$	_________	 
	               
         Number of Warrants: 	 	_________	 
	               
         Aggregate Purchase Price: 	$	_________	 

26 

	NEW MILLENNIUM CAPITAL PARTNERS II, LLC
  
	By: First Street Manager II, LLP
	  
	  
	 	 
	Corey S. Ribotsky 
	Manager 

	RESIDENCE: 	New York 	  
	  	  	  
	ADDRESS: 	1044 Northern Boulevard 
	  	Suite 302 	  
	  	Roslyn, New York 11576 
	  	Facsimile: 	(516) 739-7115 
	  	Telephone: 	(516) 739-7110 

	AGGREGATE SUBSCRIPTION AMOUNT: 	 	  	 
	  	 	  	 
	               
         Aggregate Principal Amount of Notes: 	$	_________	 
	               
         Number of Warrants: 	 	_________	 
	               
         Aggregate Purchase Price: 	$	_________	 

27

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