Document:

exv10w72

 

EXHIBIT 10.72

 

SECURITY AGREEMENT

by

HERBALIFE INTERNATIONAL, INC.,

HERBALIFE LTD.,

WH INTERMEDIATE HOLDINGS LTD.,

HBL LTD.,

WH LUXEMBOURG HOLDINGS S.à.R.L.,

HLF LUXEMBOURG HOLDINGS S.à R.L.,

WH CAPITAL CORPORATION,

WH LUXEMBOURG INTERMEDIATE HOLDINGS S.à.R.L.,

HERBALIFE INTERNATIONAL LUXEMBOURG S.à.R.L.,

HV HOLDINGS LTD.,

HERBALIFE DISTRIBUTION LTD.,

HERBALIFE LUXEMBOURG DISTRIBUTION S.à.R.L.,

THE SUBSIDIARY GUARANTORS PARTY HERETO,

as Pledgors

in favor of

MERRILL LYNCH CAPITAL CORPORATION,

as Collateral Agent

Dated as of July 21, 2006

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	ARTICLE I Definitions and Interpretation; Perfection Certificate
	 	 	2	 
	SECTION 1.01. Definitions
	 	 	2	 
	SECTION 1.02. Interpretation
	 	 	7	 
	SECTION 1.03. Perfection Certificate
	 	 	7	 
	 
	 	 	 	 
	ARTICLE II Grant of Security and Secured Obligations
	 	 	7	 
	SECTION 2.01. Pledge
	 	 	7	 
	SECTION 2.02. Certain Limited Exclusions
	 	 	9	 
	SECTION 2.03. Secured Obligations; Continuing Liability
	 	 	9	 
	 
	 	 	 	 
	ARTICLE III Perfection; Supplements; Further Assurances; Use of Security Agreement Collateral
	 	 	10	 
	SECTION 3.01. Delivery of Certificated Securities Collateral
	 	 	10	 
	SECTION 3.02. Perfection of Uncertificated Securities Collateral
	 	 	10	 
	SECTION 3.03. Financing Statements and Other Filings
	 	 	10	 
	SECTION 3.04. Other Actions
	 	 	11	 
	SECTION 3.05. Supplements; Further Assurances
	 	 	14	 
	 
	 	 	 	 
	ARTICLE IV Representations, Warranties and Covenants
	 	 	15	 
	SECTION 4.01. Title
	 	 	15	 
	SECTION 4.02. Organization; Authority; Enforceability
	 	 	15	 
	SECTION 4.03. Authorizations and Approvals
	 	 	15	 
	SECTION 4.04. Reserved
	 	 	16	 
	SECTION 4.05. Limitation on Liens
	 	 	16	 
	SECTION 4.06. Other Financing Statements
	 	 	16	 
	SECTION 4.07. Chief Executive Office; Change of Name; Jurisdiction of Organization
	 	 	16	 
	SECTION 4.08. Certain Provisions Concerning Securities Collateral
	 	 	17	 
	SECTION 4.09. Certain Provisions Concerning Intellectual Property
	 	 	18	 
	SECTION 4.10. Inspection and Verification
	 	 	20	 
	SECTION 4.11. Payment of Taxes; Contesting Liens; Claims
	 	 	21	 
	SECTION 4.12. Transfers and Other Liens
	 	 	21	 
	SECTION 4.13. Insurance
	 	 	21	 
	 
	 	 	 	 
	ARTICLE V Remedies
	 	 	21	 
	SECTION 5.01. Remedies
	 	 	21	 
	SECTION 5.02. Notice of Sale
	 	 	23	 
	SECTION 5.03. Waiver of Notice and Claims
	 	 	23	 
	SECTION 5.04. Certain Sales of Security Agreement Collateral
	 	 	24	 
	SECTION 5.05. No Waiver; Cumulative Remedies
	 	 	24	 
	 
	 	 	 	 
	ARTICLE VI Obligations Absolute; Waivers
	 	 	24	 
	SECTION 6.01. Liability of the Pledgors Absolute
	 	 	24	 
	SECTION 6.02. General Waivers
	 	 	26	 
	SECTION 6.03. California Waivers
	 	 	26	 
	 
	 	 	 	 
	ARTICLE VII Miscellaneous
	 	 	27	 
	SECTION 7.01. Concerning Collateral Agent
	 	 	27	 
	SECTION 7.02. Collateral Agent May Perform; Collateral Agent Appointed Attorney-in-Fact
	 	 	28	 

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	SECTION 7.03. Expenses
	 	 	28	 
	SECTION 7.04. Indemnity
	 	 	29	 
	SECTION 7.05. Continuing Security Interest; Assignment
	 	 	29	 
	SECTION 7.06. Termination; Release
	 	 	30	 
	SECTION 7.07. Modification in Writing
	 	 	30	 
	SECTION 7.08. Notices
	 	 	30	 
	SECTION 7.09. Governing Law; Jurisdiction; Consent to Service of Process
	 	 	31	 
	SECTION 7.10. WAIVER OF JURY TRIAL
	 	 	31	 
	SECTION 7.11. Severability of Provisions
	 	 	32	 
	SECTION 7.12. Execution in Counterparts
	 	 	32	 
	SECTION 7.13. Business Days
	 	 	32	 
	SECTION 7.14. No Credit for Payment of Taxes or Imposition
	 	 	32	 
	SECTION 7.15. No Claims Against Collateral Agent
	 	 	32	 
	SECTION 7.16. No Release Under Agreements; No Liability of Collateral Agent or Secured Parties
	 	 	32	 
	SECTION 7.17. Obligations Absolute
	 	 	33	 
	SECTION 7.18. Marshaling; Payments Set Aside
	 	 	33	 
	SECTION 7.19. Release of Pledgors
	 	 	33	 
	 
	 	 	 	 
	EXHIBITS
	 	 	 	 
	Exhibit A Form of Issuer Acknowledgment
	 	 	 	 

- ii -

 

SECURITY AGREEMENT

          This SECURITY AGREEMENT (as amended, restated, supplemented or otherwise modified from time to
time, this “Agreement”), dated as of July 21, 2006, is made by HERBALIFE INTERNATIONAL, INC., a
Nevada corporation (“Borrower”); HERBALIFE LTD., a Cayman Islands exempted company with limited
liability (“Holdings”); WH INTERMEDIATE HOLDINGS LTD., a Cayman Islands exempted company with
limited liability and a direct wholly-owned subsidiary of Holdings (“Parent”); HBL LTD., a Cayman
Islands exempted company with limited liability and a direct wholly-owned subsidiary of Parent
(“Cayman III”); WH LUXEMBOURG HOLDINGS S.à.R.L., a Luxembourg corporation and a direct wholly-owned
subsidiary of Parent (“Luxembourg Holdings”); HERBALIFE INTERNATIONAL LUXEMBOURG S.à.R.L., a
Luxembourg corporation and a direct wholly-owned subsidiary of Luxembourg Holdings (“HIL”); HLF
LUXEMBOURG HOLDINGS, S.à.R.L., a Luxembourg corporation and a direct wholly-owned subsidiary of
Luxembourg Holdings (“New Lux”); WH CAPITAL CORPORATION, a Nevada corporation and a direct
wholly-owned subsidiary of New Lux (“WH Capital”); WH LUXEMBOURG INTERMEDIATE HOLDINGS S.à.R.L., a
Luxembourg corporation and a direct wholly-owned subsidiary of WH Capital (“Luxembourg Intermediate
Holdings”); HV HOLDINGS LTD., a Cayman Islands exempted company with limited liability and a direct
wholly-owned subsidiary of Parent ( “HV”); HERBALIFE DISTRIBUTION LTD., a Cayman Islands exempted
company with limited liability and a direct wholly-owned subsidiary of HV ( “Cayman Distribution”);
HERBALIFE LUXEMBOURG DISTRIBUTION S.à.R.L., a Luxembourg corporation and a direct wholly-owned
subsidiary of HIL (“Luxembourg Distribution”); EACH OF THE SUBSIDIARY GUARANTORS LISTED ON THE
SIGNATURE PAGES HERETO OR FROM TIME TO TIME BECOMING A PARTY HERETO BY EXECUTION OF A JOINDER
AGREEMENT (together with Holdings, Parent, Cayman III, Luxembourg Holdings, HIL, HIL Swiss, New
Lux, WH Capital, Luxembourg Intermediate Holdings, HV, Cayman Distribution, Luxembourg Distribution
and each other Subsidiary Guarantor from time to time executing a Guarantee (defined herein) as
required hereunder, the “Guarantors”), as pledgors and collateral assignors (Borrower, together
with the Guarantors, in such capacities and together with any successors in such capacities, the
“Pledgors”), in favor of MERRILL LYNCH CAPITAL CORPORATION (“Merrill Lynch”), in its capacity as
collateral agent for the lending institutions from time to time party to the Credit Agreement
(defined below) (such lending institutions, collectively, the “Lenders”), as pledgee, collateral
assignee and secured party (in such capacities and together with any successors in such capacities,
“Collateral Agent”).

WITNESSETH:

          WHEREAS, simultaneously herewith, Borrower, certain of the Guarantors, the Lenders and Merrill
Lynch, as Administrative Agent, have entered into that certain Credit Agreement, dated as of the
date hereof (as amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”), whereby the Lenders have agreed to make certain Loans and to issue certain
Credit Agreement L/Cs (defined below) to or for the account of Borrower;

          WHEREAS, in accordance with the Credit Agreement, it is contemplated that one or more of the
Pledgors may enter into one or more Hedging Agreements with one or more of the Lenders or their
respective Affiliates;

 

 

           WHEREAS, in accordance with the Credit Agreement, each Guarantor has, among other things,
guaranteed the obligations of Borrower under the Credit Agreement and the other Loan Documents (the
“Guarantees”);

          WHEREAS, each Guarantor will receive substantial benefits from the execution, delivery and
performance of the Loan Documents and each is, therefore, willing to enter into this Agreement;

          WHEREAS, each Pledgor is or will be the legal or beneficial owner of the rights in the
Security Agreement Collateral (defined below) to be pledged by it hereunder;

          WHEREAS, it is a condition precedent to the obligations of the Lenders to make Loans under the
Credit Agreement or to enter into Hedging Agreements, and of the Issuing Bank to issue Credit
Agreement L/Cs thereunder, that each Pledgor execute and deliver the applicable Loan Documents,
including this Agreement; and

          WHEREAS, this Agreement is given by each Pledgor in favor of Collateral Agent for its benefit
and the benefit of the Lenders and any of their respective Affiliates party to any Hedging
Agreement (collectively, the “Secured Parties”) to secure the payment and performance of all of the
Secured Obligations (defined below).

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

ARTICLE I

Definitions and Interpretation; Perfection Certificate

          SECTION 1.01. Definitions.

               (a) The following capitalized terms have the meanings assigned to them in the UCC:

          “Account,” “Bank,” “Certificate of Title,” “Chattel Paper,” “Commercial Tort Claim,”
“Commodity Account,” “Commodity Contract,” “Commodity Intermediary,” “Contract,” “Document,”
“Electronic Chattel Paper,” “Entitlement Holder,” “Entitlement Order,” “Equipment,” “Financial
Asset,” “Fixtures,” “General Intangible,” “Goods,” “Inventory,” “Investment Property,”
“Letter-of-Credit Right,” “Letter of Credit,” “Money,” “Proceeds,” “Record,” “Securities
Entitlement,” “Securities Intermediary,” “Supporting Obligation,” and “Tangible Chattel Paper.”

               (b) Capitalized terms used in this Agreement (including the preamble and recitals hereof) but
not otherwise defined herein have the meanings assigned to such terms in the Credit Agreement. In
this Agreement:

          “Agreement” has the meaning assigned to such term in the preamble hereof.

          “Borrower” has the meaning assigned to such term in the preamble hereof.

2

 

          “Charges” mean any and all property and other taxes, assessments and special assessments,
levies, fees and all governmental charges imposed on or assessed against, and all claims (including
landlords’, carriers’, mechanics’, workmen’s, repairmen’s, laborers’, materialmen’s, suppliers’ and
warehousemen’s Liens and other claims arising by operation of law) against, all or any portion of
the Security Agreement Collateral.

          “Collateral Account” shall mean any account established and maintained in accordance with
Article IX of the Credit Agreement, and all funds from time to time on deposit in such account,
including all Cash Equivalents, and all certificates and instruments from time to time representing
or evidencing such Cash Equivalents.

          “Collateral Agent” has the meaning assigned to such term in the preamble hereof.

          “Collateral Records” means books, records, ledger cards, files, correspondence, customer
lists, blueprints, technical specifications, manuals, computer software, computer printouts, tapes,
disks and related data processing software and similar items that at any time evidence or contain
information relating to any of the Security Agreement Collateral or are otherwise necessary or
helpful in the collection thereof or realization thereupon.

          “Collateral Support” means all property (real or personal) assigned, hypothecated or otherwise
securing any Security Agreement Collateral, including any security agreement or other agreement
granting a lien or security interest in such real or personal property.

          “Control Agreement” means an agreement in form and substance satisfactory to Collateral Agent
sufficient to establish control over any applicable Investment Property (including any Securities
Account or Commodity Account) or Deposit Account.

          “Copyrights” mean, collectively, with respect to each Pledgor, all copyrights (whether
statutory or common law and whether established or registered in the United States or any other
country) now owned or hereafter created or acquired by or assigned to such Pledgor, whether
published or unpublished, and all copyright registrations and applications made by such Pledgor,
including the copyrights, registrations and applications listed in Section II.H of the Perfection
Certificate, together with any and all (a) rights and privileges arising under applicable law with
respect to such Pledgor’s use of any copyrights, (b) reissues, renewals, continuations and
extensions thereof, (c) income, fees, royalties, damages, claims and payments now or hereafter due
or payable with respect thereto, including damages and payments for past, present or future
infringements thereof, (d) rights corresponding thereto throughout the world and (e) rights to sue
for past, present or future infringements thereof.

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

          “Credit Agreement L/C” has the meaning assigned to the term “Letter of Credit” in the Credit
Agreement.

          “Deposit Account” means, collectively, with respect to each Pledgor, (a) all “deposit
accounts” as such term is defined in the UCC and in any event shall include the L/C Sub-Account and
all accounts and sub-accounts relating to any of the foregoing accounts, and (b) all cash, funds,
checks, notes and any instruments from time to time on deposit in any of the accounts or
sub-accounts described in clause (a) of this definition.

3

 

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

          “Documents Evidencing Goods” means all Documents evidencing, representing or issued in
connection with Goods.

          “Guarantee” has the meaning assigned to such term in the recitals hereof.

          “Guarantor” has the meaning assigned to such term in the preamble hereof.

          “Indemnified Liabilities” has the meaning assigned to such term in Section 7.04(a).

          “Indemnitees” has the meaning assigned to such term in Section 7.04(a).

          “Instruments” mean, collectively, with respect to each Pledgor, all “instruments,” as such
term is defined in Article 9, rather than Article 3, of the UCC to the extent such instruments
evidence any amounts payable under or in connection with any item of Security Agreement Collateral
or such instruments constitute Proceeds of any item of Security Agreement Collateral, and in any
event shall include all promissory notes, drafts, bills of exchange or acceptances.

          “Insurance” means all insurance policies covering any or all of the Security Agreement
Collateral (regardless of whether Collateral Agent is the loss payee thereof), and all key-man life
insurance policies.

          “Intellectual Property” means, collectively, with respect to each Pledgor, (a) all Patents,
(b) all Trademarks, (c) all Copyrights, (d) all Licenses and (e) the goodwill connected with such
Pledgor’s business including (i) all goodwill connected with the use of and symbolized by any of
the Intellectual Property in which such Pledgor has any interest and (ii) all know-how, trade
secrets, customer and supplier lists, proprietary information, inventions, methods, procedures,
formulae, descriptions, compositions, technical data, drawings, specifications, name plates,
catalogs, confidential information and the right to limit the use or disclosure thereof by any
person or entity, pricing and cost information, business and marketing plans and proposals,
consulting agreements, engineering contracts and such other assets that relate to such goodwill.

          “Intercompany Indebtedness” means Indebtedness (whether or not evidenced by a writing) of any
Company (including any Pledgor) payable to a Pledgor.

          “Issuer” means any issuer of any Pledged Equity Interests.

          “Lenders” has the meaning assigned to such term in the preamble hereof.

          “Licenses” mean, collectively, with respect to each Pledgor, all license and distribution
agreements, covenants not to sue or any other agreement with any other party with respect to any
Patent, Trademark or Copyright, whether such Pledgor is a licensor or licensee, distributor or
distributee under any such license or distribution agreement, together with any and

4

 

all (a) renewals, extensions, supplements and continuations thereof; (b) income, fees,
royalties, damages, claims and payments now and hereafter due or payable thereunder and with
respect thereto, including damages and payments for past, present or future infringements or
violations thereof; (c) rights to sue for past, present and future infringements or violations
thereof; and (d) any other rights to use, exploit or practice any or all of the Patents, Trademarks
or Copyrights.

          “Material Contract” means any Contract or other arrangement that any Pledgor is a party to and
for which breach, nonperformance, cancellation or failure to renew could reasonably be expected to
have a Material Adverse Effect. Notwithstanding the foregoing, each agreement set forth in
Schedule 3.08 of the Credit Agreement shall constitute a Material Contract.

          “Non-payment Contract” means any Contract or agreement to which any Pledgor is a party other
than a contract whereby the account debtor’s principal obligation is a monetary obligation;
provided that, Non-payment Contracts shall not include Receivables.

          “Operative Agreement” means (a) in the case of any limited liability company or partnership or
other noncorporate entity, any membership or partnership agreement or other organizational
agreement or document thereof and (b) in the case of any corporation, any charter or certificate of
incorporation and bylaws thereof.

          “Patents” mean, collectively, with respect to each Pledgor, all patents issued or assigned to
and all patent applications made by such Pledgor (whether established or registered or recorded in
the United States or any other country), including the patents, patent applications and recordings
listed in Section II.H of the Perfection Certificate, together with any and all (a) rights and
privileges arising under applicable law with respect to such Pledgor’s use of any patents; (b)
inventions and improvements described and claimed therein; (c) reissues, divisions, continuations,
renewals, extensions and continuations-in-part thereof; (d) income, fees, royalties, damages,
claims and payments now or hereafter due or payable thereunder and with respect thereto including
damages and payments for past, present or future infringements thereof; (e) rights corresponding
thereto throughout the world; and (f) rights to sue for past, present or future infringements
thereof.

          “Pledged Equity Interests” mean, collectively, with respect to each Pledgor, (a) the issued
and outstanding Equity Interests of each person; and (b) all rights, privileges, authority and
powers of such Pledgor in and to each such person or under the Operative Agreements of each such
person, and the certificates, instruments and agreements representing the Pledged Equity Interests
and any and all interest of such Pledgor in the entries on the books of any financial intermediary
pertaining to the Pledged Equity Interests, it being understood that, subject to Section 5.11 of
the Credit Agreement, Pledged Equity Interests do not include any Equity Interests in excess of
66.0% of the Equity Interests of any Non-Guarantor Subsidiary, provided that, such Non-Guarantor
Subsidiary is also a Foreign Subsidiary.

          “Pledged Intercompany Debt” means, with respect to each Pledgor, all Intercompany Indebtedness
payable to such Pledgor by any Company (and each other intercompany note hereafter acquired by such
Pledgor) and all Intercompany Notes, certificates, Instruments or agreements evidencing such
Intercompany Indebtedness, and all assignments, amendments, restatements, supplements, extensions,
renewals, replacements or modifications thereof.

          “Pledgor” has the meaning assigned to such term in the preamble hereof.

5

 

          “Receivables” means all rights to payment, whether or not earned by performance, for Goods or
other property sold, leased, licensed, assigned or otherwise disposed of, or services rendered or
to be rendered, including all such rights constituting or evidenced by any Account, Chattel Paper,
Instrument, General Intangible or Investment Related Property, together with all rights, if any, in
any Goods or other property giving rise to such right to payment and all Collateral Support and
Supporting Obligations related thereto and all Accounts, Chattel Paper, General Intangibles,
Instruments and Receivables Records.

          “Receivables Records” means (a) all original copies of all documents, instruments or other
writings or electronic records or other Records evidencing the Receivables; (b) all books,
correspondence, credit or other files, Records, ledger sheets or cards, invoices, and other papers
relating to Receivables, including all tapes, cards, computer tapes, computer discs, computer runs,
record keeping systems and other papers and documents relating to the Receivables, whether in the
possession or under the control of the Company or any computer bureau or agent from time to time
acting for the Company or otherwise; (c) all evidences of the filing of financing statements and
the registration of other instruments in connection therewith, and amendments, supplements or other
modifications thereto, notices to other creditors or secured parties, and certificates,
acknowledgments, or other writings, including lien-search reports, from filing or other
registration officers; (d) all credit information, reports and memoranda relating thereto; and (e)
all other written or nonwritten forms of information related in any way to the foregoing.

          “Secured Obligations” mean all obligations (whether or not constituting future advances,
obligatory or otherwise) of Borrower and all of the Guarantors from time to time arising under or
in respect of this Agreement, the Credit Agreement, the Notes (if any), the Guarantee, the Credit
Agreement L/Cs, the other Loan Documents and all Hedging Agreements entered into with any Lender
(including the obligations to pay principal, interest and all other charges, fees, expenses,
commissions, reimbursements, premiums, indemnities and other payments related to or in respect of
the obligations contained in this Agreement, the Credit Agreement, the Notes (if any), the
Guarantee, the Credit Agreement L/Cs, the other Loan Documents and all Hedging Agreements entered
into with any Lender), in each case whether (a) such obligations are direct or indirect, secured or
unsecured, joint or several, absolute or contingent, reduced to judgment or not, liquidated or
unliquidated, disputed or undisputed, legal or equitable, due or to become due whether at stated
maturity, by acceleration or otherwise; (b) arising in the regular course of business or otherwise;
(c) for payment or performance; (d) discharged, stayed or otherwise affected by any bankruptcy,
insolvency, reorganization or similar proceeding with respect to any Loan Party or any other
person; or (e) now existing or hereafter arising (including interest and other obligations arising
or accruing after the commencement of any bankruptcy, insolvency, reorganization or similar
proceeding with respect to any Loan Party or any other person, or that would have arisen or accrued
but for the commencement of such proceeding, even if such obligation or the claim therefor is not
enforceable or allowable in such proceeding).

          “Secured Parties” has the meaning assigned to such term in the recitals hereof.

          “Securities Account” has the meaning assigned to such term in the UCC; provided that, the
Collateral Account shall be treated as a Securities Account.

          “Securities Collateral” means, collectively, the Pledged Equity Interests, the Pledged
Intercompany Debt and the Distributions.

6

 

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

          “Software Embedded in Goods” means, with respect to any Goods, any computer program embedded
in such Goods and any supporting information provided in connection with a transaction relating to
such program if (a) the program is customarily considered part of such Goods or (b) by becoming the
owner of such Goods a person acquires a right to use such program in connection therewith.

          “Trademarks” mean, collectively, with respect to each Pledgor, all trademarks (including
service marks), slogans, logos, certification marks, domain names, trade dress, corporate names and
trade names, whether registered or unregistered, owned by or assigned to such Pledgor and all
registrations and applications for the foregoing (whether statutory or common law and whether
established or registered in the United States or any other country) including the registrations
and applications listed in Section II.H of the Perfection Certificate, together with any and all
(a) rights and privileges arising under applicable law with respect to such Pledgor’s use of any
trademarks; (b) reissues, continuations, extensions and renewals thereof; (c) income, fees,
royalties, damages and payments now and hereafter due or payable thereunder and with respect
thereto, including damages, claims and payments for past, present or future infringements thereof;
(d) rights corresponding thereto throughout the world; and (e) rights to sue for past, present and
future infringements thereof.

          “UCC” means the Uniform Commercial Code as in effect from time to time in the State of New
York; provided that, if by reason of mandatory provisions of law, the perfection or the effect of
perfection or nonperfection of the security interest in any item or portion of the Security
Agreement Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction
other than the State of New York, “UCC” also means the Uniform Commercial Code as in effect in such
other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of
perfection or nonperfection.

          SECTION 1.02. Interpretation. The rules of interpretation specified in the Credit Agreement, including Sections 1.03 and
11.11 thereof, shall be applicable to this Agreement. If any conflict or inconsistency exists
between this Agreement and the Credit Agreement, the Credit Agreement shall govern.

          SECTION 1.03. Perfection Certificate. Collateral Agent and each Loan Party agree that the Perfection Certificate and all
descriptions of Security Agreement Collateral, schedules, amendments and supplements thereto are
and shall at all times remain a part of this Agreement.

ARTICLE II

Grant of Security and Secured Obligations

          SECTION 2.01. Pledge. As collateral security for the payment and performance in full of all the Secured
Obligations, each Pledgor hereby grants to Collateral Agent, for its benefit and for the benefit of
the Secured Parties, a security interest in and continuing lien on all personal property of such
Pledgor, including all of such Pledgor’s right, title and interest in, to and under all of the
following property, wherever located, whether now

7

 

owned or existing, or hereafter arising or
acquired from time to time (collectively, the “Security Agreement Collateral”):

                    (i) all Accounts;

                    (ii) all Chattel Paper;

                    (iii) all Commercial Tort Claims;

                    (iv) all Deposit Accounts;

                    (v) all Documents;

                    (vi) all General Intangibles;

                    (vii) all Goods (including, in any event, Equipment, Fixtures, Inventory,
Documents Evidencing Goods and Software Embedded in Goods);

                    (viii) all Instruments;

                    (ix) all Insurance;

                    (x) all Intellectual Property;

                    (xi) all Investment Property and Financial Assets;

                    (xii) all Letters of Credit and Letter-of-Credit Rights;

                    (xiii) all Material Contracts and Non-payment Contracts;

                    (xiv) all Money;
(xv) all Receivables;
(xvi) all Securities Collateral;

                    (xvii) all books and Records relating to any and/or all of the foregoing;

                    (xviii) to the extent not otherwise included above, all Collateral Records,
Collateral Support and Supporting Obligations relating to any and/or all of the
foregoing; and

                    (xix) to the extent not otherwise included above, all other personal property
and all Proceeds and products of, accessions
and
additions to, profits and rents from, and replacements for or in respect
of any of the foregoing;

it being understood that, subject to the other provisions hereof and of the Credit
Agreement, the foregoing grant of a security interest shall not diminish any Pledgor’s

8

 

exclusive right and license to use, or grant to other persons license or sublicenses in,
the Intellectual Property.

          SECTION 2.02. Certain Limited Exclusions. Notwithstanding anything herein to the contrary, in no event shall the security interest
granted under Section 2.01(a) attach to, and the Security Agreement Collateral shall not
include:

               (a) any agreement to which any Pledgor is a party to the extent that the collateral assignment
thereof or the creation of a security interest therein would constitute a breach of the terms of
such agreement, or would permit any party to such agreement to terminate such agreement, in each
case as entered into by the applicable Pledgor; provided that, any of the agreements excluded in
accordance with the foregoing shall cease to be so excluded (x) to the extent such term is, or
would be (in the case of after-acquired property or changes to applicable law), rendered
ineffective under Sections 9-406, 9-407, 9-408 or 9-409 of the UCC of any relevant jurisdiction (or
any successor provision) or any other applicable law (including the Bankruptcy Code) or principles
of equity; or (y) if the applicable Pledgor has obtained all of the consents of the other parties
to such agreement necessary for the collateral assignment of, or creation of a security interest
in, such agreement;

               (b) any property or asset hereafter acquired by any Pledgor that is subject to a Lien
permitted to be incurred pursuant to Sections 6.02(g), (h), (i) and (k) of the Credit Agreement,
solely to the extent that the documents evidencing such Lien prohibit the grant of a security
interest in or Lien on such property or asset; provided that, upon such property or asset no longer
being subject to such Lien or prohibition, such property or asset shall (without any act or
delivery by any person) constitute Security Agreement Collateral hereunder;

               (c) subject to Section 5.11 of the Credit Agreement, no more than 66.0% of the Equity
Interests of Parent, Cayman III, Luxembourg Holdings, HIL, HV or any Non-Guarantor Subsidiary,
provided that, such Non-Guarantor Subsidiary is also a Foreign Subsidiary; or

               (d) the Equity Interests of the Designated Subsidiaries.

Collateral Agent agrees that, at any Pledgor’s reasonable request and expense, it will provide such
Pledgor confirmation that the assets described in this Section 2.02 are in fact excluded
from the Security Agreement Collateral.

          SECTION 2.03. Secured Obligations; Continuing Liability.

               (a) Security for Obligations. This Agreement secures, and the Security Agreement
Collateral is collateral security for, the payment and performance in full when due of all the
Secured Obligations.

               (b) Continuing Liability under Security Agreement Collateral. Notwithstanding
anything herein to the contrary, (i) each Pledgor shall remain liable under each of the obligations
and agreements included in the Security Agreement Collateral, including any obligations or
agreements relating to any Pledged Equity Interests, to perform all of the obligations undertaken
by it thereunder, all in accordance with the terms and provisions thereof, and neither Collateral
Agent nor any Secured Party shall have any obligation or liability (x) under any of such agreements
by reason of this Agreement or any other document relating hereto, or (y) to make any inquiry
regarding the nature or sufficiency of any payment received by it, or have

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any obligation to take
any action to collect or enforce any rights under any agreement included in the Security Agreement
Collateral, including any agreements relating to any Pledged Equity Interests; (ii) the exercise by
Collateral Agent of any of its rights hereunder shall not release any Pledgor from any of its
duties or obligations under the contracts and agreements included in the Security Agreement
Collateral; and (iii) nothing herein is intended to or shall be a delegation of duties to
Collateral Agent or any other Secured Party.

ARTICLE III

Perfection; Supplements; Further Assurances; Use of Security Agreement Collateral

          SECTION 3.01. Delivery of Certificated Securities Collateral. All certificates, agreements or instruments representing or evidencing the Securities
Collateral, to the extent not previously delivered to Collateral Agent, shall promptly upon receipt
thereof by any Pledgor be delivered to and held by or on behalf of Collateral Agent pursuant
hereto. All certificated Securities Collateral shall be in suitable form for transfer by delivery
or shall be accompanied by duly executed instruments of transfer or assignment in blank, all in
form and substance satisfactory to Collateral Agent. Collateral Agent shall have the right, at any
time upon the occurrence and during the continuance of any Event of Default, to endorse, assign or
otherwise transfer to or to register in the name of Collateral Agent or any of its nominees or
endorse for negotiation any or all of the Securities Collateral, without any indication that such
Securities Collateral is subject to the security interest hereunder. In addition, Collateral Agent
shall have the right, at any time upon the occurrence and during the continuance of any Event of
Default, to exchange certificates representing or evidencing Securities Collateral for certificates
of smaller or larger denominations.

          SECTION 3.02. Perfection of Uncertificated Securities Collateral. If any Issuer of Pledged Equity Interests is organized in a jurisdiction that does not
permit the use of certificates to evidence equity ownership, or if any of the Pledged Equity
Interests are at any time not evidenced by certificates of ownership, then each applicable Pledgor
shall, to the extent permitted by applicable law, record such pledge on the equityholder register
or the books of the Issuer, cause the Issuer to execute and deliver to Collateral Agent an
acknowledgment of the pledge of such Pledged Equity Interests substantially in the form of
Exhibit A annexed hereto and, upon Collateral Agent’s request therefor, execute any
customary pledge forms or other documents necessary or appropriate to complete the pledge and give
Collateral Agent the right to transfer such Pledged Equity Interests under the terms hereof and
provide to Collateral Agent an opinion of counsel, in form and substance satisfactory to Collateral
Agent, confirming such pledge and perfection thereof; provided that there shall be no obligation to
deliver, or cause to be delivered, any such documentation (other than an acknowledgment of the
pledge) to the extent the Issuer is organized in a jurisdiction other than the United States,
Cayman Islands, Luxembourg, England and Wales, Japan, Mexico, Switzerland or any political
subdivision of any thereof).

          SECTION 3.03. Financing Statements and Other Filings. Each Pledgor agrees that at any time and from time to time, at the sole cost and expense of
the Pledgors, it will execute and file and refile (in accordance with Section 3.04), or
permit Collateral Agent to file and refile, such financing statements, continuation statements and
other documents (including this Agreement), in form acceptable to Collateral Agent, in such offices
(including the United States Patent and Trademark Office and the United States Copyright Office) as
Collateral Agent may deem necessary or appropriate, wherever required by law to perfect, continue
and

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maintain a valid, enforceable, first-priority security interest in the Security Agreement
Collateral as provided herein and to preserve the other rights and interests granted to Collateral
Agent hereunder, as against third parties, with respect to any Security Agreement Collateral.

          SECTION 3.04. Other Actions. To further ensure the attachment, perfection and priority of, and the ability of Collateral
Agent to enforce, Collateral Agent’s security interest in the Security Agreement Collateral, each
Pledgor acknowledges and agrees as follows:

               (a) UCC Financing Statements. Each Pledgor hereby irrevocably authorizes Collateral
Agent at any time and from time to time to file in any relevant jurisdiction any financing
statements (including fixture filings), continuation statements, and amendments thereto that
contain the information required by Article 9 of the UCC of each applicable jurisdiction for the
filing of any financing statement or amendment, including (i) whether the Pledgor is an
organization, the type of organization and any organizational identification number issued to such
Pledgor and (ii) in the case of a financing statement filed as a fixture filing, a sufficient
description of the real property to which such Security Agreement Collateral relates. The Pledgor
agrees to provide such information to Collateral Agent promptly upon request. Such financing
statements or amendments may describe the Security Agreement Collateral as “all assets” or “all
personal property, whether now owned or hereafter acquired,” or in any other manner that Collateral
Agent, in its sole discretion, deems necessary, advisable or prudent to ensure the perfection of
the security interests granted hereunder. Each Pledgor hereby ratifies its authorization for
Collateral Agent to file in any relevant jurisdiction any financing statements or amendments
thereto if filed prior to the date hereof.

               (b) Intellectual Property Filings. Each Pledgor hereby irrevocably authorizes
Collateral Agent to file documents with the United States Patent and Trademark Office or United
States Copyright Office (or any successor office or any similar office in any other country) for
the purpose of perfecting, confirming, continuing, enforcing or protecting the security interest
granted by each Pledgor hereunder and naming any Pledgor or the Pledgors as debtors and Collateral
Agent for its benefit and the benefit of the Lenders as secured party.

               (c) Instruments and Tangible Chattel Paper. If any amount payable under or in
connection with any of the Security Agreement Collateral shall be evidenced by any Instrument or
Tangible Chattel Paper, the Pledgor acquiring such Instrument or Tangible Chattel Paper shall
contemporaneously with the delivery of financial statements in accordance with Section 5.01(a) or
(b) of the Credit Agreement endorse, assign and deliver the same to
Collateral Agent, accompanied by such instruments of transfer or assignment duly executed in
blank as Collateral Agent may from time to time specify.

               (d) Deposit Accounts. Each Pledgor shall notify Collateral Agent of any new Deposit
Account such Pledgor has opened contemporaneously with the delivery of financial statements in
accordance with Section 5.01(a) or (b) of the Credit Agreement and solely in the case of Deposit
Accounts maintained in the United States of America (unless waived in writing by Collateral Agent
in its sole discretion) either (i) pursuant to a Control Agreement cause the depository Bank to
agree to comply at any time with instructions from Collateral Agent to such depository Bank
directing the disposition of funds from time to time credited to such Deposit Account, without
further consent of such Pledgor or any other person, or (ii) arrange for Collateral Agent to become
the customer of the Bank with respect to the Deposit Account, with the Pledgor being permitted, so
long as no Default or Event of Default exists and is continuing, to exercise rights to withdraw
funds from such Deposit Account pursuant to an agreement in form

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and substance satisfactory to
Collateral Agent. The preceding sentence shall not apply to Deposit Accounts for which Collateral
Agent is the depository. Each Pledgor represents and warrants to Collateral Agent that, as of the
date hereof, it maintains no Deposit Accounts other than (i) those set forth in the Perfection
Certificate or (ii) those for which the applicable Pledgor has provided notice thereof to
Collateral Agent pursuant to the preceding sentence.

               (e) Investment Property.

                    (i) If any Pledgor shall at any time hold or acquire any certificated
securities constituting Investment Property, such Pledgor shall contemporaneously
with the delivery of financial statements in accordance with Section 5.01(a) or
(b) of the Credit Agreement endorse, assign and deliver the same to Collateral
Agent, accompanied by such instruments of transfer or assignment duly executed in
blank, all in form and substance satisfactory to Collateral Agent. If any
securities now or hereafter acquired by any Pledgor constituting Investment
Property are uncertificated and are issued to such Pledgor or its nominee directly
by the issuer thereof, such Pledgor shall contemporaneously with the delivery of
financial statements in accordance with Section 5.01(a) or (b) of the Credit
Agreement notify Collateral Agent thereof and such Pledgor shall either (A)
pursuant to a Control Agreement cause the issuer to agree to comply with
instructions from Collateral Agent as to such securities, without further consent
of any Pledgor, such nominee or any other person, or (B) arrange for Collateral
Agent to become the registered owner of the securities. If any securities
constituting Investment Property, whether certificated or uncertificated, or other
Investment Property now or hereafter acquired by any Pledgor is held by such
Pledgor or its nominee through a Securities Intermediary or Commodity
Intermediary, such Pledgor shall contemporaneously with the delivery of financial
statements in accordance with Section 5.01(a) or (b) of the Credit Agreement
notify Collateral Agent thereof and, unless waived in writing by Collateral Agent
in its sole discretion, either (A) pursuant to a Control Agreement cause such
Securities Intermediary or Commodity Intermediary, as the case may be, to agree to
comply with Entitlement Orders or other instructions from Collateral Agent to such
Securities Intermediary as to such securities or other Investment Property, or to
apply any value distributed on account of any Commodity Contract as directed by
Collateral Agent to such Commodity Intermediary, as the case may be, in each case
without further consent of any Pledgor, such nominee or any other person,
or (B) in the case of Financial Assets constituting Investment Property or
other Investment Property held through a Securities Intermediary, arrange for
Collateral Agent to become the Entitlement Holder with respect to such Investment
Property, with the Pledgor being permitted, so long as no Default or Event of
Default has occurred and is continuing, to exercise rights to withdraw or
otherwise deal with such Investment Property pursuant to an agreement in form and
substance satisfactory to Collateral Agent. The preceding sentence shall not
apply to any Financial Assets credited to a Securities Account for which
Collateral Agent is the Securities Intermediary. Each Pledgor represents and
warrants to Collateral Agent that, as of the date hereof, such Pledgor maintains
no Securities Accounts or Commodity Accounts with any Securities Intermediary or
Commodity Intermediary other than (i) as set forth in Section II.E of the
Perfection Certificate or (ii) those for which the applicable Pledgor has provided
notice thereof to Collateral Agent pursuant to the preceding sentence.

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                    (ii) As between Collateral Agent and the Pledgors, the Pledgors shall bear
the investment risk with respect to the Investment Property, and the risk of loss
of, damage to, or the destruction of the Investment Property, whether in the
possession of, or maintained as a Security Entitlement by, or subject to the
control of, Collateral Agent, a Securities Intermediary, Commodities Intermediary,
the Pledgor or any other person; provided that, nothing contained in this
Section 3.04(e)(ii) shall release or relieve any Securities Intermediary
or Commodities Intermediary of its duties and obligations to the Pledgors or any
other person under any Control Agreement or under applicable law. Each Pledgor
shall promptly pay all Charges and fees of whatever kind or nature with respect to
the Investment Property pledged by it or this Agreement. In the event any Pledgor
shall fail to make such payment contemplated in the immediately preceding
sentence, Collateral Agent may do so for the account of such Pledgor and the
Pledgors shall promptly reimburse and indemnify Collateral Agent from all costs
and expenses incurred by Collateral Agent under this Section 3.04(e)(ii)
in accordance with Section 7.03.

               (f) Electronic Chattel Paper and Transferable Records. If any amount payable under or
in connection with any of the Security Agreement Collateral shall be evidenced by any Electronic
Chattel Paper or any “transferable record,” as that term is defined in Section 201 of the Federal
Electronic Signatures in Global and National Commerce Act, or in Section 16 of the Uniform
Electronic Transactions Act as in effect in any relevant jurisdiction, the Pledgor acquiring such
Electronic Chattel Paper or transferable record shall promptly notify Collateral Agent thereof and,
at the request of Collateral Agent, shall take such action as Collateral Agent may request to vest
in Collateral Agent control under UCC Section 9-105 of such Electronic Chattel Paper or control
under Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or, as
the case may be, Section 16 of the Uniform Electronic Transactions Act, as so in effect in such
jurisdiction, of such transferable record. Collateral Agent agrees with such Pledgor that
Collateral Agent will arrange, pursuant to procedures satisfactory to Collateral Agent and so long
as such procedures will not result in Collateral Agent’s loss of control, for the Pledgor to make
alterations to the Electronic Chattel Paper or transferable record permitted under UCC Section
9-105 or, as the case may be, Section 201 of the Federal Electronic Signatures in Global and
National Commerce Act of Section 16 of the Uniform Electronic Transactions Act for a party in
control to allow without loss of control, unless an Event of Default has occurred and is continuing
or would occur after taking into account any action by such Pledgor with respect to such Electronic
Chattel Paper or transferable record.

               (g) Letter-of-Credit Rights. If any Pledgor is at any time a beneficiary under a
Letter of Credit in excess of $1.0 million now or hereafter issued in favor of such Pledgor, such
Pledgor shall contemporaneously with the delivery of financial statements in accordance with
Section 5.01(a) or (b) of the Credit Agreement notify Collateral Agent thereof and, at the request
of Collateral Agent, such Pledgor shall, pursuant to an agreement in form and substance
satisfactory to Collateral Agent, either (i) arrange for the issuer and any confirmer of such
Letter of Credit to consent to an assignment to Collateral Agent of the proceeds of any drawing
under the Letter of Credit or (ii) arrange for Collateral Agent to become the transferee
beneficiary of the Letter of Credit.

               (h) Commercial Tort Claims. If any Pledgor shall at any time hold or acquire a
Commercial Tort Claim relating to any of the Security Agreement Collateral and such Pledgor, in the
exercise of its reasonable business judgment, elects to pursue such commercial tort claim, such
Pledgor shall contemporaneously with the delivery of financial

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statements in accordance with
Section 5.01(a) or (b) of the Credit Agreement notify Collateral Agent in writing signed by such
Pledgor of the brief details thereof and grant to Collateral Agent in such writing a security
interest therein and in the Proceeds thereof, all in accordance with this Agreement, with such
writing to be in form and substance satisfactory to Collateral Agent.

          SECTION 3.05. Supplements; Further Assurances.

               (a) The Pledgors shall cause each person that, from time to time after the date hereof, shall
be required to pledge any assets to Collateral Agent for the benefit of the Secured Parties
pursuant to the provisions of the Credit Agreement, to execute and deliver to Collateral Agent a
Joinder Agreement and, upon such execution and delivery, such person shall constitute a “Guarantor”
and a “Pledgor” for all purposes hereunder with the same force and effect as if originally named as
a Guarantor and Pledgor herein. The execution and delivery of such Joinder Agreement shall not
require the consent of any Pledgor hereunder. The rights and obligations of each Pledgor hereunder
shall remain in full force and effect notwithstanding the addition of any new Guarantor and Pledgor
as a party to this Agreement.

               (b) Upon obtaining any Pledged Equity Interests or Pledged Intercompany Debt of any person,
each Pledgor shall accept the same in trust for the benefit of Collateral Agent and
contemporaneously with the delivery of financial statements in accordance with Section 5.01(a) or
(b) of the Credit Agreement deliver to Collateral Agent the certificates and other documents
required under this Article III in respect of the additional Pledged Equity Interests,
Pledged Intercompany Debt or other possessory Security Agreement Collateral that is to be pledged
pursuant to this Agreement, and confirming the attachment of the Lien hereby created on and in
respect of such additional Pledged Equity Interests or Pledged Intercompany Debt.

               (c) Each Pledgor agrees to take such further actions, and to execute and deliver to Collateral
Agent such additional assignments, agreements, supplements, powers and instruments, as Collateral
Agent may in its reasonable judgment deem necessary or appropriate, to perfect, preserve and
protect the security interest in the Security Agreement Collateral as provided herein and the
rights and interests granted to Collateral Agent hereunder, to carry into effect the purposes
hereof or to better assure and confirm unto Collateral Agent or permit Collateral Agent to exercise
and enforce its rights, powers and remedies hereunder with respect to any Security Agreement
Collateral. By way of example, such actions may include appearing in and defending any action or
proceeding, at Collateral Agent’s request, that may affect such Pledgor’s title to or Collateral
Agent’s security interest in all or any part of the Security Agreement Collateral. Upon the
reasonable request of Collateral Agent, each Pledgor
shall further make, execute, endorse, acknowledge, file or refile or deliver to Collateral
Agent from time to time such lists, descriptions and designations of the Security Agreement
Collateral, copies of warehouse receipts, receipts in the nature of warehouse receipts, bills of
lading, documents of title, vouchers, invoices, schedules, confirmatory assignments, supplements,
additional security agreements, conveyances, financing statements, transfer endorsements, powers of
attorney, certificates, reports and other assurances or instruments. If an Event of Default has
occurred and is continuing, Collateral Agent may institute and maintain, in its own name or in the
name of any Pledgor, such suits and proceedings as Collateral Agent deems necessary or expedient to
prevent any impairment of the security interest in or the perfection thereof in the Security
Agreement Collateral. All of the foregoing shall be at the sole cost and expense of the Pledgors.

               (d) For the avoidance of doubt, the Pledgors and Collateral Agent acknowledge that this
Agreement is intended to grant to Collateral Agent, for the benefit of the

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Secured Parties, a
security interest in and continuing Lien on the Security Agreement Collateral, and does not
constitute a present assignment of ownership rights, a transfer of ownership or title to any
Security Agreement Collateral, except as otherwise provided herein following the occurrence and
during the continuance of an Event of Default. Unless an Event of Default shall have occurred and
be continuing, Collateral Agent agrees from time to time to deliver, upon written request of any
Pledgor and at such Pledgor’s sole cost and expense (including reasonable expenses of counsel to,
among other things, review the effect thereof on Collateral Agent’s security interest granted
hereunder), any and all instruments, certificates or other documents, in a form reasonably
requested by such Pledgor, necessary or appropriate in the reasonable judgment of such Pledgor to
enable such Pledgor to continue to exploit, license, use and protect the Security Agreement
Collateral in accordance with the terms hereof and of the Credit Agreement.

ARTICLE IV

Representations, Warranties and Covenants

          Each Pledgor represents, warrants and covenants as follows:

          SECTION 4.01. Title. Except for the security interest granted to Collateral Agent for its benefit and for the
benefit of the Secured Parties pursuant to this Agreement and Permitted Liens, such Pledgor owns
the rights in each item of Security Agreement Collateral pledged by it hereunder, and with regard
to each item of Security Agreement Collateral now existing or hereafter acquired, will continue to
own or have such rights, in each case free and clear of any and all Liens or claims of others. No
effective financing statement or other public notice with respect to all or any part of the
Security Agreement Collateral is on file or of record in any public office, except such as have
been filed in favor of Collateral Agent pursuant to this Agreement, are permitted by the Credit
Agreement, or for which proper termination statements or other release documentation have been (or,
in the case of financing statements or other public notices filed in connection with the Existing
Credit Agreement, will be) delivered to Collateral Agent for filing. No person other than
Collateral Agent has control or possession of all or any part of the Security Agreement Collateral,
except as permitted hereby or by the Credit Agreement.

          SECTION 4.02. Organization; Authority; Enforceability. Such Pledgor (a) is duly organized or incorporated and validly existing under the laws of
the jurisdiction of its organization or incorporation, (b) has all requisite power and authority
enter into this Agreement and to carry out the obligations hereunder, and (c) has duly executed and
delivered this Agreement. This Agreement and each other document, statement, or instrument
relating hereto, when executed and delivered by such Pledgor, will constitute, a legal, valid and
binding obligation of such Pledgor, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights
generally and subject to general principles of equity, regardless of whether considered in a
proceeding in equity or at law.

          SECTION 4.03. Authorizations and Approvals. No authorization, approval or other action by, and no notice to or filing with, any
Governmental Authority is required for either (i) the pledge or grant by such Pledgor of the Liens
purported to be created in favor of Collateral Agent hereunder, or (ii) the exercise by Collateral
Agent of any rights or remedies in respect of any Security Agreement Collateral, in each case
except for the filings and registrations contemplated under the Security Documents and as may be
required in connection

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with the disposition of any Securities Collateral (by laws generally
affecting the offering and sale of securities) or by laws pertaining to Intellectual Property.

          SECTION 4.04. Reserved.

          SECTION
4.05. Limitation on Liens. Such Pledgor shall, at its own cost and expense, defend title to the Security Agreement
Collateral pledged by it hereunder and the security interest therein and Lien thereon granted to
Collateral Agent and the priority thereof against all claims and demands of all persons, at its own
cost and expense, at any time claiming (except to the extent related to a Permitted Lien) any
interest therein adverse to Collateral Agent or any other Secured Party.

          SECTION 4.06. Other Financing Statements. So long as any of the Secured Obligations remain unpaid, or the Commitments of the Lenders
to make any Loan or to issue any Credit Agreement L/Cs shall not have expired or been sooner
terminated, such Pledgor shall not execute, authorize or permit to be filed in any public office
any financing statement (or similar statement or instrument of registration under the law of any
jurisdiction) or statements relating to any Security Agreement Collateral, except, in each case,
financing statements filed or to be filed in respect of and covering the security interests granted
by such Pledgor to the holder of Permitted Liens.

          SECTION 4.07. Chief Executive Office; Change of Name; Jurisdiction of Organization.

               (a) Such Pledgor’s exact legal name, type and jurisdiction of organization or incorporation,
federal taxpayer and organizational identification numbers of such Pledgor (if applicable) is set
forth in the Perfection Certificate, and its chief executive office is set forth in the Perfection
Certificate. Such Pledgor shall not (a) change its corporate name, (b) change its identity or type
of organization or corporate structure, or (c) change its federal taxpayer
identification number or organizational identification number (including by merging with or
into any other entity, reorganizing, dissolving, liquidating, reincorporating or incorporating in
any other jurisdiction) unless (A) it shall have given Collateral Agent not less than 30 days’
prior written notice of its intention so to do, clearly describing such change and providing such
other information in connection therewith as Collateral Agent may request, and (B) with respect to
such change, such Pledgor shall have taken all action that Collateral Agent deems necessary or
desirable to maintain the perfection and priority of the security interest of Collateral Agent for
the benefit of the Secured Parties in the Security Agreement Collateral intended to be granted
hereby. Each Pledgor agrees to promptly provide Collateral Agent with certified organizational
documents reflecting any of the changes described in the preceding sentence.

               (b) Such Pledgor agrees to maintain, at its own cost and expense, such complete and accurate
records with respect to the Security Agreement Collateral owned by it as is consistent with its
current practices and in accordance with such prudent and standard practices used in industries
that are the same as or similar to those in which such Pledgor is engaged, but in any event to
include complete accounting records as required by the Credit Agreement, and, at such time or times
as Collateral Agent may request, promptly to prepare and deliver to Collateral Agent a duly
certified schedule or schedules in form and detail satisfactory to Collateral Agent showing in
summary form the identity, amount and location of any and all Security Agreement Collateral (except
Security Agreement Collateral in the possession or control of Collateral Agent).

16

 

               (c) Contemporaneously with the delivery of financial statements in accordance with Section
5.01(a) or (b) of the Credit Agreement, the Pledgors shall notify Collateral Agent in writing
(certified by an officer of the applicable Pledgor) of each location where Security Agreement
Collateral is maintained, which notification may take the form of supplementing or restating prior
notifications.

          SECTION 4.08. Certain Provisions Concerning Securities Collateral.

               (a) Such Pledgor has delivered to Collateral Agent true, correct and complete copies of the
Operative Agreements, which are in full force and effect and have not as of the date hereof been
amended or modified except as permitted by the Credit Agreement. Such Pledgor shall deliver to
Collateral Agent a copy of any notice of default given or received by it under any Operative
Agreement within ten days after such Pledgor gives or receives such notice.

               (b) Such Pledgor is not in default in the payment of any portion of any mandatory capital
contribution, if any, required to be made under any agreement to which such Pledgor is a party
relating to the Pledged Equity Interests pledged by it, and such Pledgor is not in violation of any
other provisions of any such agreement to which such Pledgor is a party, or otherwise in default or
violation thereunder, except where such default or noncompliance, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect. No Securities Collateral
pledged by such Pledgor is subject to any defense, offset or counterclaim, nor have any of the
foregoing been asserted or alleged against such Pledgor by any person with respect thereto, and as
of the date hereof, there are no certificates, instruments, documents or other writings (other than
the Operative Agreements and certificates, if any, delivered to Collateral Agent) that evidence any
Pledged Equity Interests of such Pledgor.

               (c) So long as no Event of Default shall have occurred and be continuing (and Borrower or such
Pledgor has not received written notice relating to such Event of Default from Collateral Agent):

                    (i) Such Pledgor shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Securities Collateral or any part thereof for
any purpose not inconsistent with the terms or purposes hereof, the Credit
Agreement, or any other Loan Document evidencing the Secured Obligations; provided
that, such Pledgor shall not in any event exercise such rights in any manner that
would reasonably be expected to have a material adverse effect on the value of the
Security Agreement Collateral or the Lien and security interest intended to be
granted to Collateral Agent hereunder;

                    (ii) Such Pledgor shall be entitled to receive and retain, and to utilize
free and clear of the Lien hereof, any and all Distributions, but only if and to
the extent made in accordance with the provisions of the Credit Agreement;
provided that, any and all such Distributions consisting of rights or interests in
the form of certificated securities shall be delivered to Collateral Agent to hold
as Security Agreement Collateral and shall, if received by such Pledgor, be
received in trust for the benefit of Collateral Agent, be segregated from the
other property or funds of such Pledgor and be delivered to Collateral Agent as
Security Agreement Collateral in the same form as so received (with any necessary
endorsement), in each case as and when required pursuant to Article III
hereof; and

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                    (iii) Without further action or formality, Collateral Agent shall be deemed
to have granted to such Pledgor all necessary consents relating to voting rights
and shall, if necessary, upon written request of such Pledgor and at the sole cost
and expense of the Pledgors, from time to time execute and deliver (or cause to be
executed and delivered) to such Pledgor all such instruments as such Pledgor may
reasonably request to permit such Pledgor to exercise the voting and other rights
that it is entitled to exercise pursuant to Section 4.08(c)(i) and to
receive the Distributions that it is authorized to receive and retain pursuant to
Section 4.08(c)(ii).

               (d) Upon the occurrence and during the continuance of any Event of Default (and once Borrower
or any Pledgor has received written notice relating to such Event of Default from Collateral
Agent):

                    (i) All rights of such Pledgor to exercise the voting and other consensual
rights it would otherwise be entitled to exercise pursuant to Section
4.08(c)(i) without any action or the giving of any notice shall cease, and all
such rights shall thereupon become vested in Collateral Agent, which shall
thereupon have the sole right to exercise such voting and other consensual rights;
and

                    (ii) All rights of such Pledgor to receive Distributions that it would
otherwise be authorized to receive and retain pursuant to Section
4.08(c)(ii) shall cease and all such rights shall thereupon become vested in
Collateral Agent, who shall thereupon have the sole right to receive and hold as
Security Agreement Collateral such Distributions;

provided that, the rights described in clauses (i) and (ii) above shall revert back to such Pledgor
following the cure or waiver of such Event of Default.

               (e) Such Pledgor shall, at its sole cost and expense, from time to time execute and deliver to
Collateral Agent appropriate instruments as Collateral Agent may request to permit Collateral Agent
to exercise the voting and other rights that it may be entitled to exercise pursuant to Section
4.08(d)(i) and to receive all Distributions that it may be entitled to receive under
Section 4.08(d)(ii).

               (f) All Distributions that are received by such Pledgor contrary to the provisions of
Section 4.08(d)(ii) shall be received in trust for the benefit of Collateral Agent, shall
be segregated from other funds of such Pledgor and shall promptly be paid over to Collateral Agent
as Security Agreement Collateral in the same form as so received (with any necessary endorsement).

          SECTION 4.09. Certain Provisions Concerning Intellectual Property.

               (a) Such Pledgor agrees that it will not, nor will it knowingly permit or authorize any of its
licensees to, do any act, or omit to do any act, whereby any issued Patent may become invalidated,
dedicated to the public, or unenforceable, and agrees that it shall continue to mark any products
covered by a Patent with the relevant Patent Number or indication that such product is subject to a
pending Patent application as necessary and sufficient to establish and preserve its maximum rights
under applicable patent laws, except where the failure to so mark would not be reasonably likely to
result in a Material Adverse Effect.

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               (b) Such Pledgor (either itself or through its licensees or its sublicensees) will, for each
material Trademark, (i) maintain such Trademark in full force free from any claim of abandonment or
invalidity for nonuse, (ii) not materially diminish the value of such Trademark or the goodwill
associated therewith, (iii) display such Trademark with notice of federal or foreign registration
to the extent necessary and sufficient to establish and preserve its maximum rights under
applicable law, except where the failure to display with such notice would not be reasonably likely
to result in a Material Adverse Effect, and (iv) not knowingly use or knowingly permit the use of
such Trademark in violation of any third party rights.

               (c) Such Pledgor (either itself or through licensees) will, for each work covered by a
material Copyright, continue to publish, reproduce, display, adopt and distribute the work with
appropriate copyright notice as necessary and sufficient to establish and preserve its maximum
rights under applicable copyright laws, except where the failure to include notice would not be
reasonably likely to result in a Material Adverse Effect.

               (d) Such Pledgor shall notify Collateral Agent promptly if it knows or has reason to know that
any Intellectual Property material to such Pledgor’s business (whether individually or in the
aggregate) may become, or knows of circumstances that would cause any such Intellectual Property to
become: (i) abandoned, lost or dedicated to the public; (ii) invalid or unenforceable; or (iii)
subject to any adverse determination or development regarding such Pledgor’s ownership of any
Intellectual Property, its right to register the same, or to keep and maintain the same.

               (e) Such Pledgor will take all reasonable steps in the United States Patent and Trademark
Office, United States Copyright Office or any office or agency in any political subdivision of the
United States, Canada or in any other country, to maintain and pursue each application relating to
the Intellectual Property (and to obtain the relevant grant or registration) and to maintain each
issued Patent and each registration of the Trademarks and Copyrights, including timely filings of
applications for renewal, affidavits of use, affidavits of
incontestability and payment of maintenance fees, and to initiate opposition, interference and
cancellation proceedings against third parties, in each case where necessary for the operation of
such Pledgor’s business as presently conducted and as contemplated by the Credit Agreement.

               (f) In the event that such Pledgor knows that any Security Agreement Collateral consisting of
Intellectual Property material to the conduct of such Pledgor’s business has been or is about to be
infringed, misappropriated or diluted by a third party, such Pledgor promptly shall notify
Collateral Agent and shall promptly sue for infringement, misappropriation or dilution and to
recover any and all damages for such infringement, misappropriation or dilution, or take such other
actions as are appropriate under the circumstances to protect such Security Agreement Collateral,
except where the failure to so notify or take such actions would not be reasonably likely to result
in a Material Adverse Effect.

               (g) Upon the occurrence and during the continuance of an Event of Default, such Pledgor shall
use its commercially reasonable efforts to obtain all requisite consents or approvals by the
licensor of each License to effect the assignment of all of such Pledgor’s right, title and
interest thereunder to the Security Agreement Collateral Agent or its designee.

               (h) Solely for the purpose of enabling Collateral Agent to exercise its rights and remedies
upon the occurrence of an Event of Default, such Pledgor hereby grants to Collateral Agent, to the
extent assignable, an irrevocable, nonexclusive license (exercisable without payment of royalty or
other compensation to such Pledgor) to use, license or sublicense

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any of the Intellectual Property
now owned or hereafter acquired by such Pledgor, wherever the same may be located, including in
such license access to all media in which any of the licensed items may be recorded or stored and
to all computer programs used for the compilation or printout thereof.

               (i) It shall contemporaneously with the delivery of financial statements in accordance with
Section 5.01(a) or (b) of the Credit Agreement report to Collateral Agent (i) the filing of any
application to register any Intellectual Property with the United States Patent and Trademark
Office, the United States Copyright Office, or any state registry or foreign counterpart of the
foregoing (whether such application is filed by such Pledgor or through any agent, employee,
licensee, or designee thereof); and (ii) the registration of any Intellectual Property by any such
office.

               (j) It shall, promptly upon the reasonable request of Collateral Agent, execute and deliver to
Collateral Agent any document required to acknowledge, confirm, register, record, or perfect
Collateral Agent’s security interest granted hereunder in any part of the Intellectual Property,
whether now owned or hereafter acquired.

               (k) Except with the prior consent of Collateral Agent or as permitted under the Credit
Agreement, such Pledgor shall not execute any financing statement or other document or instrument,
and there will not be on file in any public office any effective financing statement or other
document or instruments, except financing statements or other documents or instruments filed or to
be filed in favor of Collateral Agent or in respect of Permitted Liens, and such Pledgor shall not
sell, assign, transfer, license, grant any option in, or create any Lien, claim, security interest
or other encumbrance on or with respect to the Intellectual Property, or suffer to exist any
effective Lien, claim, security interest or other encumbrance on or with respect to the
Intellectual Property, except for the security interest created by and under this Security
Agreement and Permitted Liens as otherwise permitted by the Credit Agreement.

               (l) It shall hereafter use commercially reasonable efforts so as not to permit the inclusion
in any contract to which it hereafter becomes a party of any provision that would materially impair
or prevent the creation of a security interest in, or the assignment of, such Pledgor’s rights and
interests in any property included within the definitions of any Intellectual Property acquired
under such contracts.

          SECTION 4.10. Inspection and Verification. Collateral Agent or any representative designated by Collateral Agent shall have the same
access and inspection rights as granted to the Administrative Agent by the Companies pursuant to
Section 5.07 of the Credit Agreement; provided that, upon the occurrence and during the continuance
of an Event of Default, Collateral Agent and its representatives shall at all times have the right
to enter any premises of such Pledgor and inspect any property of such Pledgor where any of the
Security Agreement Collateral of such Pledgor is located for the purpose of inspecting the same,
observing its use, protecting its interests therein, or otherwise exercising the remedies provided
under Article V. For the avoidance of doubt, in respect of Accounts or Security Agreement
Collateral in the possession of any third person, upon the occurrence and during the continuance of
an Event of Default, Collateral Agent or any designated representative shall have the right to
contact such account debtors or third persons in possession of such Security Agreement Collateral
for verification purposes. Collateral Agent shall have the absolute right to share any information
it gains from such inspection or verification with any other Secured Party.

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          SECTION 4.11. Payment of Taxes; Contesting Liens; Claims. Such Pledgor represents and warrants that all Charges imposed on or assessed against the
Security Agreement Collateral have been paid and discharged except to the extent such Charges (a)
constitute a Permitted Lien or a Lien not yet due and payable or (b) are being contested in good
faith by appropriate proceedings and for which such Pledgor shall have set aside on its books
adequate reserves in accordance with GAAP. Notwithstanding the foregoing, such Pledgor may at its
own expense contest the validity, amount or applicability of any Charges so long as the contest
thereof shall satisfy the Contested Collateral Lien Conditions. Notwithstanding the foregoing
provisions of this Section 4.11, no contest of any such obligation may be pursued by such
Pledgor if such contest would expose Collateral Agent or any other Secured Party to any possible
criminal liability.

          SECTION 4.12. Transfers and Other Liens. Such Pledgor shall not sell, convey, assign or otherwise dispose of, or grant any option
with respect to, any of the Security Agreement Collateral pledged by it hereunder except as
permitted by the Credit Agreement. Such Pledgor shall not make or permit to be made an assignment
for security, pledge or hypothecation of the Security Agreement Collateral or shall grant any other
Lien in respect of the Security Agreement Collateral, except as permitted by Section 6.02 of the
Credit Agreement.

          SECTION 4.13. Insurance. Such Pledgor, at its own expense, shall maintain or cause to be maintained, insurance
covering physical loss or damage to the Inventory and Equipment in accordance with Section 5.04 of
the Credit Agreement. Such Pledgor irrevocably makes, constitutes and appoints Collateral Agent
(and all officers, employees or agents designated by Collateral Agent) as such
Pledgor’s true and lawful agent (and attorney-in-fact) for the purposes, during the
continuance of an Event of Default, of making, settling and adjusting claims in respect of Security
Agreement Collateral under policies of insurance, endorsing the name of such Pledgor on any check,
draft, instrument or other item of payment for the proceeds of such policies of insurance and for
making all determinations and decisions with respect thereto. In the event that such Pledgor at
any time or times fails to obtain or maintain any of the policies of insurance required hereby or
to pay any premium in whole or in part relating thereto, Collateral Agent may, without waiving or
releasing any obligation or liability of any Pledgor hereunder or any Event of Default, in its sole
discretion, obtain and maintain such policies of insurance and pay such premium and take any other
actions with respect thereto as Collateral Agent deems advisable. All sums disbursed by Collateral
Agent in connection with this Section 4.13, including reasonable attorneys’ fees, court
costs, expenses and other charges relating thereto, shall be payable, upon demand, by the Pledgors
to Collateral Agent and shall be additional Secured Obligations.

ARTICLE V

Remedies

          SECTION 5.01. Remedies. Upon the occurrence and during the continuance of any Event of Default, Collateral Agent
may from time to time exercise in respect of the Security Agreement Collateral, in addition to the
other rights and remedies provided for herein or otherwise available to it:

               (a) Personally, or by agents or attorneys, immediately take possession of the Security
Agreement Collateral or any part thereof, from any Pledgor or any other person who then has
possession of any part thereof with or without notice or process of law, and for that

21

 

purpose may
enter on any Pledgor’s premises where any of the Security Agreement Collateral is located, remove
such Security Agreement Collateral, remain present at such premises to receive copies of all
communications and remittances relating to the Security Agreement Collateral and use in connection
with such removal and possession any and all services, supplies, aids and other facilities of any
Pledgor;

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

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

               (d) Take possession of the Security Agreement Collateral or any part thereof by directing any
Pledgor in writing to deliver the same to Collateral Agent at any place or places so designated by
Collateral Agent, in which event such Pledgor shall at its own expense: (i) forthwith cause the
same to be moved to the place or places designated by Collateral Agent and there delivered to
Collateral Agent, (ii) store and keep any Security Agreement Collateral so delivered to Collateral
Agent at such place or places pending further action by Collateral Agent and (iii) while the
Security Agreement Collateral shall be so stored and kept, provide such security and maintenance
services as shall be necessary to protect the same and to preserve and maintain them in good
condition. Each Pledgor’s obligation to deliver the Security Agreement Collateral as contemplated
in this Section 5.01(d) is of the essence hereof. Upon application to a court of equity
having jurisdiction, Collateral Agent shall be entitled to a decree requiring specific performance
by any Pledgor of such obligation;

               (e) Withdraw all moneys, instruments, securities and other property in any bank, financial
securities, deposit or other account of any Pledgor constituting Security Agreement Collateral for
application to the Secured Obligations as provided in Article IX of the Credit Agreement;

               (f) Retain and apply the Distributions to the Secured Obligations as provided in the Credit
Agreement;

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

               (h) All the rights and remedies of a secured party on default under the UCC, and Collateral
Agent may also in its sole discretion, without notice except as specified in

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Section 5.02,
sell, assign or grant a license to use the Security Agreement Collateral or any part thereof in one
or more parcels at public or private sale, at any exchange, broker’s board or at any of Collateral
Agent’s offices or elsewhere, for cash, on credit or for future delivery, and at such price or
prices and on such other terms as Collateral Agent deems commercially reasonable. Collateral Agent
or any other Secured Party or any of their respective Affiliates may be the purchaser, licensee,
assignee or recipient of any or all of the Security Agreement Collateral at any such sale and shall
be entitled, for the purpose of bidding and making settlement or payment of the purchase price for
all or any portion of the Security Agreement Collateral sold, assigned or licensed at such sale, to
use and apply any of the Secured Obligations owed to such person as a credit on account of the
purchase price of any Security Agreement Collateral payable by such person at such sale. Each
purchaser, assignee, licensee or recipient at any such sale shall acquire the property sold,
assigned or licensed absolutely free from any claim or right on the part of any Pledgor, and each
Pledgor hereby waives, to the fullest extent permitted by law, all rights of redemption, stay and
appraisal that it now has or may at any time in the future have under any rule of law or statute
now existing or hereafter enacted. Collateral Agent shall not be obligated to make any sale of
Security Agreement Collateral regardless of notice of sale having been given. Collateral Agent may
adjourn any public or private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and place to which it was
so adjourned. Each Pledgor hereby waives, to the fullest extent permitted by law, any claims
against Collateral Agent arising by reason of the fact that the price at which any Security
Agreement Collateral may have been sold, assigned or licensed at such a private sale was less than
the price that might have been obtained at a public sale, even if
Collateral Agent accepts the first offer received and does not offer such Security Agreement
Collateral to more than one offeree.

               (i) Upon the written demand of Collateral Agent, each Pledgor shall execute and deliver to
Collateral Agent an assignment or assignments of the registered Intellectual Property and such
other documents as are necessary or appropriate to carry out the intent and purposes hereof.

          SECTION 5.02. Notice of Sale. Each Pledgor acknowledges and agrees that, to the extent notice of sale shall be required
by law, ten days’ notice to such Pledgor of the time and place of any public sale or of the time
after which any private sale or other intended disposition is to take place shall be commercially
reasonable notification of such matters. No notification need be given to any Pledgor if it has
signed, during the occurrence of an Event of Default, a statement renouncing or modifying any right
to notification of sale or other intended disposition.

          SECTION 5.03. Waiver of Notice and Claims. Each Pledgor hereby waives, to the fullest extent permitted by applicable law, notice or
judicial hearing in connection with Collateral Agent’s taking possession or Collateral Agent’s
disposition of any of the Security Agreement Collateral, including any and all prior notice and
hearing for any prejudgment remedy or remedies and any such right that such Pledgor would otherwise
have under law, and each Pledgor hereby further waives, to the fullest extent permitted by
applicable law: (a) all damages occasioned by such taking of possession, (b) all other
requirements as to the time, place and terms of sale or other requirements with respect to the
enforcement of Collateral Agent’s rights hereunder and (c) all rights of redemption, appraisal,
valuation, stay, extension and moratorium now or hereafter in force under any applicable law.
Collateral Agent shall not be liable for any incorrect or improper payment made pursuant to this
Article V in the absence of gross negligence or willful misconduct. Any sale of, or the
grant of options to purchase, or any other realization on, any Security Agreement Collateral shall
operate to divest all right, title, interest, claim and

23

 

demand, either at law or in equity, of the
applicable Pledgor therein and thereto, and shall be a perpetual bar both at law and in equity
against such Pledgor and against any and all persons claiming or attempting to claim the Security
Agreement Collateral so sold, optioned or realized on, or any part thereof, from, through or under
such Pledgor.

          SECTION 5.04. Certain Sales of Security Agreement Collateral. Each Pledgor recognizes that, by reason of certain prohibitions contained in the Securities
Act, and applicable state securities laws, Collateral Agent may be compelled, with respect to any
sale of all or any part of the Securities Collateral, to limit purchasers to persons who will
agree, among other things, to acquire such Securities Collateral for their own account, for
investment and not with a view to the distribution or resale thereof. Each Pledgor acknowledges
that any such private sales may be at prices and on terms less favorable to Collateral Agent than
those obtainable through a public sale without such restrictions (including a public offering made
pursuant to a registration statement under the Securities Act), and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been made in a
commercially reasonable manner and that Collateral Agent shall have no obligation to engage in
public sales and no obligation to delay the sale of any Securities Collateral for the period of
time necessary to permit the issuer thereof to register it for a form of public sale
requiring registration under the Securities Act or under applicable state securities laws,
even if such issuer would agree to do so.

          SECTION 5.05. No Waiver; Cumulative Remedies.

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

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

ARTICLE VI

Obligations Absolute; Waivers

          SECTION 6.01. Liability of the Pledgors Absolute. Each Pledgor agrees that its obligations hereunder are irrevocable, absolute, independent,
unconditional, and shall not be affected by any circumstance that constitutes a legal or equitable
discharge of a pledgor or surety, except for payment in full of the Secured Obligations. In
furtherance of the foregoing and without limiting the generality thereof, each Pledgor agrees as
follows:

24

 

               (a) the obligations of each Pledgor hereunder are independent of the obligations of each other
Pledgor and each guarantor of the obligations of the Loan Parties, and separate actions may be
brought and prosecuted against such Pledgor whether or not any action is brought against any other
Pledgor or guarantor, and whether or not such other Pledgor or guarantor is joined in any such
actions;

               (b) payment by any Loan Party of a portion of the Secured Obligations shall in no way limit,
affect, modify or abridge such Pledgor’s grant hereunder securing any portion of the Secured
Obligations that has not been paid. By way of example and without limiting the generality of the
foregoing, if Collateral Agent is awarded a judgment in any suit brought to enforce any Loan
Party’s covenant to pay a portion of the Secured Obligations, such judgment shall not be deemed to
release such Pledgor from its grant hereunder securing the portion of the Secured Obligations that
is not the subject of such suit, and such judgment shall not, except to the extent satisfied by
such Pledgor, limit, affect, modify or abridge any other Pledgor’s grant hereunder securing the
Secured Obligations;

               (c) upon such terms as Collateral Agent deems appropriate, without obligation to give notice
or demand, without affecting the validity or enforceability hereof, and without giving rise to any
reduction, limitation, impairment, discharge or termination of the security interests granted
hereunder or such Pledgor’s liability hereunder, Collateral Agent may, from time to time, (i)
renew, extend, accelerate, increase the rate of interest on, or otherwise change the time, place
and manner or terms of payment of any of the Secured Obligations in accordance with the terms of
the other Loan Documents; (ii) settle, compromise, release or discharge, or accept or refuse any
offer of performance with respect to, or substitutions for, any of the Secured Obligations or any
agreement relating thereto, or subordinate the payment of the same to the payment of any other
obligations; (iii) request and accept other pledges as security for any of the Secured Obligations,
and take and hold security for the payment hereof or any of the Secured Obligations; (iv) release,
surrender, exchange, substitute, compromise, settle, rescind, waive, alter, subordinate or modify,
with or without consideration, any security for payment of any of the Secured Obligations, any
guarantees of any of the Secured Obligations, or any other obligation of any person (including any
other Pledgor) with respect to any of the Secured Obligations; (v) enforce and apply any security
now or hereafter held by it in respect hereof or any of the Secured Obligations, and direct the
order or manner of sale thereof, or exercise any other right or remedy that it may have against any
such security, including foreclosure on any such security in accordance with one or more judicial
or nonjudicial sales, whether or not every aspect of any such sale is economically reasonable, and
even though such action operates to impair or extinguish any right of reimbursement or subrogation
or other right or remedy of any Pledgor against any other Loan Party, or any security for any of
the Secured Obligations; and (vi) exercise any other rights available to it under the Loan
Documents; and

               (d) this Agreement and such Pledgor’s obligations hereunder shall be valid and enforceable,
and shall not be subject to any reduction, limitation, impairment, discharge or termination for any
reason (other than payment in full of all the Secured Obligations), including the occurrence of any
of the following (whether or not such Pledgor shall have had notice or knowledge of any of them):
(i) any failure or omission to assert or enforce, any agreement or election not to assert or
enforce, or any stay or enjoining by order of any court, by operation of law or otherwise, of the
exercise or enforcement of any claim or demand, or any right, power or remedy (whether arising
under the Loan Documents, at law, in equity, or otherwise) with respect to the Secured Obligations
or any agreement related thereto, or with respect to any other guarantee of or security for the
payment of the Secured Obligations; (ii) any rescission, waiver, amendment or modification of, or
any consent to departure from, any of the

25

 

terms or provisions (including provisions relating to
events of default) hereof, any of the other Loan Documents, any agreement or instrument executed
pursuant thereto, or any guarantee or other security for the Secured Obligations or any agreement
relating thereto at any time being found to be illegal, invalid or unenforceable in any respect;
(iv) the application of payments received form any source (other than payments received pursuant to
the other Loan Documents or from the proceeds of any security for the Secured Obligations, except
to the extent such security also serves as collateral for Indebtedness other than the Secured
Obligations); (v) consent of Collateral Agent or any other Secured Party to the change,
reorganization or termination of the corporate structure or existence of any Loan Party or any
Subsidiary thereof, and to any corresponding restructuring of the Secured Obligations; (vi) any
failure to perfect or continue perfection of a security interest in any collateral that secures any
of the Secured Obligations; (vii) any defenses, set-offs or counterclaims that any Loan Party may
allege or assert against Collateral Agent or any other Secured Party in respect of the Secured
Obligations, including failure of consideration, breach of warranty, payment, statute of frauds,
statute of limitations, accord and satisfaction, and usury; and (viii) any other act, thing or
omission, or delay to do any other act or
thing, that in any manner and to any extent may vary such Pledgor’s risk as a grantor of
security securing the Secured Obligations.

          SECTION 6.02. General Waivers. Each Pledgor hereby waives, for the benefit of Collateral Agent and the Secured Parties:
(a) all rights to require Collateral Agent or any other Secured Party, as a condition to exercising
Collateral Agent’s rights hereunder against the Security Agreement Collateral, to (i) proceed
against any other Loan Party, any other pledgor (including any other Pledgor) of security securing
any of the Secured Obligations, or any other person, (ii) proceed against or exhaust any security
held from any other Loan Party, any such other pledgor or any other person, (iii) proceed against
or have resort to any balance of any Deposit Account or credit on the books of Collateral Agent or
any other Secured Party in favor of any other Loan Party or any other person, or (iv) pursue any
other remedy whatsoever in the capacity of secured party; (b) any defense arising by reason of
incapacity, lack of authority, or any disability or other defenses of any other Loan Party,
including any defense based on or arising from the lack of validity or enforceability of any of the
Secured Obligations or any agreement or instrument relating thereto, or by reason of the cessation
of the liability of any other Loan Party from any cause other than the payment in full of all the
Secured Obligations; (c) any defense based on any statute or rule of law that provides that the
obligation of a surety must be neither larger in amount nor in other respects more burdensome than
that of the principal; (d) any defense based on errors or omissions by Collateral Agent or any
other Secured Party in the administration of any of the Secured Obligations, except behavior that
amounts to bad faith, gross negligence or willful misconduct; (e) any principles or provisions of
law, statutory or otherwise, that are or may be in conflict with the terms hereof, and any legal or
equitable discharge of such Pledgor’s obligations hereunder; (f) the benefit of any statute of
limitations affecting such Pledgor’s counterclaims; (g) promptness, diligence and any requirement
that Collateral Agent or any other Secured Party protect, secure, perfect or insure any security
interest or Lien or any property subject thereto; (h) notices, demands, presentments, protests,
notices of protest, notices of dishonor and notices of any action or inaction, including acceptance
hereof, notices of default hereunder, notices of any renewal, extension or modification of any of
the Secured Obligations or any agreement related thereto, notices of any extension of credit to any
other Loan party and notices of any of the matters referred to in Section 6.01, and any
right to consent to any thereof; and (i) any defenses or benefits that may be derived from or
afforded by law that limit the liability of or exonerate pledgors or sureties, or that may conflict
with the terms hereof.

          SECTION 6.03. California Waivers. For purposes of this Section 6.03 only, references to the “principal” include each
Loan Party and references to the “creditor”

26

 

include each Secured Party. In accordance with Section
2856 of the California Civil Code, each Pledgor waives all rights and defenses (i) available to
such Pledgor by reason of Sections 2787 through 2855, 2899, and 3433 of the California Civil Code,
including all rights or defenses such Pledgor may have by reason of protection afforded to the
principal with respect to any of the Secured Obligations, or to any other person liable for any of
the Secured Obligations, in either case in accordance with the antideficiency or other laws of the
State of California limiting or discharging the principal’s Indebtedness or such person’s
obligations, including Sections 580a, 580b, 580d and 726 of the California Code of Civil Procedure;
and (ii) arising out of an election of remedies by the creditor, even though such election, such as
a nonjudicial foreclosure with respect to security for any Secured Obligation (or any obligation of
any other person of any of the Secured Obligations), has destroyed such Pledgor’s right of
subrogation and reimbursement against the principal (or such
other person), by operation of Section 580d of the California Code of Civil Procedure or
otherwise. No other provision of this Agreement shall be construed as limiting the generality of
any of the covenants and waivers set forth in this Section 6.03. As provided below, this
Agreement shall be governed by, and shall be construed and enforced in accordance with the laws of
the State of New York. This Section 6.03 is included solely out of an abundance of
caution, and shall not be construed to mean that any of the above-referenced provisions of
California law are in any way applicable to this Agreement or to any of the Secured Obligations.

ARTICLE VII

Miscellaneous

          SECTION 7.01. Concerning Collateral Agent.

               (a) Collateral Agent has been appointed as Collateral Agent pursuant to Article X of the
Credit Agreement. The actions of Collateral Agent hereunder are subject to the provisions of the
Credit Agreement. Collateral Agent shall have the right hereunder to make demands, to give
notices, to exercise or refrain from exercising any rights, and to take or refrain from taking
action (including the release or substitution of the Security Agreement Collateral), in accordance
with this Agreement and the Credit Agreement. Collateral Agent may employ agents and
attorneys-in-fact in connection herewith. Collateral Agent may resign and a successor Collateral
Agent may be appointed in the manner provided in the Credit Agreement. Upon the acceptance of any
appointment as Collateral Agent by a successor Collateral Agent, that successor Collateral Agent
shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of
the retiring Collateral Agent under this Agreement, and the retiring Collateral Agent shall
thereupon be discharged from its duties and obligations under this Agreement. After any retiring
Collateral Agent’s resignation, the provisions hereof shall inure to its benefit as to any actions
taken or omitted to be taken by it under this Agreement while it was Collateral Agent.

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

27

 

of such matters, or
(ii) taking any necessary steps to preserve rights against any person with respect to any Security
Agreement Collateral.

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

               (d) With respect to any of its rights and obligations as a Lender, Collateral Agent shall have
and may exercise the same rights and powers hereunder. The term “Lenders,” “Lender” or any similar
terms shall, unless the context clearly otherwise indicates,
include Collateral Agent in its individual capacity as a Lender. Collateral Agent may accept
deposits from, lend money to, and generally engage in any kind of banking, trust or other business
with such Pledgor or any Affiliate of such Pledgor to the same extent as if Collateral Agent were
not acting as Collateral Agent.

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

          SECTION 7.02. Collateral Agent May Perform; Collateral Agent Appointed Attorney-in-Fact. If an Event of Default shall have occurred and be continuing, Collateral Agent may (but
shall not be obligated to) remedy or cause to be remedied any such breach, and may expend funds for
such purpose; provided that, Collateral Agent shall in no event be bound to inquire into the
validity of any tax, lien, imposition or other obligation that such Pledgor fails to pay or perform
as and when required hereby and that such Pledgor does not contest in accordance with the provision
of Section 6.02 of the Credit Agreement. Any and all amounts so expended by Collateral Agent shall
be paid by the Pledgors in accordance with the provisions of Section 7.03. Neither the
provisions of this Section 7.02 nor any action taken by Collateral Agent pursuant to the
provisions of this Section 7.02 shall prevent any such failure by any Pledgor to observe
any covenant contained in this Agreement nor any breach of warranty from constituting an Event of
Default. Each Pledgor hereby appoints Collateral Agent its attorney-in-fact, with full authority
in the place and stead of such Pledgor and in the name of such Pledgor, or otherwise, from time to
time during the continuance of an Event of Default in Collateral Agent’s discretion to take any
action and to execute any instrument consistent with the terms hereof and the other Loan Documents
that Collateral Agent may deem necessary or advisable to accomplish the purposes hereof. The
foregoing grant of authority is an irrevocable power of attorney coupled with an interest and such
appointment shall be irrevocable for the term hereof. Each Pledgor hereby ratifies all that such
attorney shall lawfully do or cause to be done by virtue hereof.

          SECTION 7.03. Expenses. Each Pledgor will promptly pay to Collateral Agent the amount of any and all costs and
expenses, including the reasonable fees and expenses of its counsel and the fees and expenses of
any experts and agents, that Collateral Agent may incur in connection with this Agreement,
including all costs and expenses relating to (a) any and all filings and other actions taken to
ensure the attachment, perfection and priority of, and the ability of Collateral Agent to enforce,
Collateral Agent’s security interest in the Security

28

 

Agreement Collateral; (b) any action, suit or
other proceeding affecting the Security Agreement Collateral or any part thereof commenced, in
which action, suit or proceeding Collateral Agent is made a party or participates or in which the
right to use the Security Agreement Collateral or any part thereof is threatened, or in which it
becomes necessary in the judgment of Collateral Agent to defend or uphold the Lien hereof
(including any action, suit or proceeding to establish or uphold the compliance of the Security
Agreement Collateral with any requirements of any Governmental Authority or law); (c) the
collection of the Secured Obligations; (d) the enforcement and administration hereof; (e) the
custody or preservation of, or the sale of, collection from, or other realization on, any of the
Security Agreement Collateral; (f) the exercise or enforcement of any of the rights of Collateral
Agent or any Secured Party hereunder; or (g) the failure by any Pledgor to perform or observe
any of the provisions hereof. All amounts expended by Collateral Agent and payable by any Pledgor
under this Section 7.03 shall be due upon demand therefor (together with interest thereon
accruing at the default rate during the period from and including the date on which such funds were
so expended to the date of repayment) and shall be part of the Secured Obligations. Each Pledgor’s
obligations under this Section 7.03 shall survive the termination hereof and the discharge
of such Pledgor’s other obligations under this Agreement, the Credit Agreement and the other Loan
Documents.

          SECTION 7.04. Indemnity.

               (a) Indemnity. Each Pledgor agrees to indemnify, defend and hold harmless Collateral
Agent and each of the other Secured Parties, and the officers, directors, employees, agents and
Affiliates of Collateral Agent and each of the other Secured Parties (collectively, the
“Indemnitees”) from and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs (including settlement costs), expenses or disbursements of
any kind or nature whatsoever (including the fees and disbursements of counsel for such Indemnitees
in connection with any investigative, administrative or judicial proceeding, commenced or
threatened, whether or not such Indemnitee shall be designated a party thereto) that may be imposed
on, incurred by, or asserted against that Indemnitee, in any manner relating to or arising out of
this Agreement or any other Loan Document (including any misrepresentation by any Pledgor in this
Agreement or any other Loan Document) (the “Indemnified Liabilities”); provided that, no Pledgor
shall have any obligation to an Indemnitee hereunder with respect to Indemnified Liabilities if it
has been determined by a final decision of a court of competent jurisdiction that such Indemnified
Liabilities arose from the gross negligence or willful misconduct of that Indemnitee. To the
extent that the undertaking to indemnify, pay and hold harmless set forth in the preceding sentence
may be unenforceable because it is violative of any law or public policy, each Pledgor shall
contribute the maximum portion that it is permitted to pay and satisfy under applicable law to the
payment and satisfaction of all Indemnified Liabilities incurred by the Indemnitees or any of them.

               (b) Survival. The obligations of the Pledgors contained in this Section 7.04
shall survive the termination hereof and the discharge of the Pledgors’ other obligations under
this Agreement, any Hedging Agreement and under the other Loan Documents.

               (c) Reimbursement. Any amounts paid by any Indemnitee as to which such Indemnitee has
the right to reimbursement shall constitute Secured Obligations secured by the Security Agreement
Collateral.

          SECTION 7.05. Continuing Security Interest; Assignment. This Agreement shall create a continuing security interest in the Security Agreement
Collateral and shall (a) remain in full force and effect until the payment in full of all Secured
Obligations, (b) be

29

 

binding on the Pledgors, their respective successors and assigns, and (b)
inure, together with the rights and remedies of the Lender hereunder, to the benefit of Collateral
Agent and the other Secured Parties and each of their respective permitted successors, transferees
and assigns. No other persons (including any other creditor of any Pledgor) shall have any
interest herein or any right or benefit with respect hereto. Without limiting the generality of
the foregoing clause (b), any Secured Party may assign or otherwise transfer any Indebtedness held
by it that is secured by this Agreement to any other person, and such other person shall thereupon
become vested with all the benefits in respect thereof granted to such Secured Party,
herein or otherwise, subject however, to the provisions of the other Loan Documents and any
Hedging Agreement to which such Secured Party is a party.

          SECTION 7.06. Termination; Release. Upon payment in full of all the Secured Obligations, or upon any partial release of
Security Agreement Collateral in accordance with the other Loan Documents, the security interests
granted hereby shall terminate hereunder and of record, and all rights to the Security Agreement
Collateral shall revert to the Pledgors, it being understood that in the case any such partial
release, the security interests granted hereby shall terminate hereunder and of record only with
respect to such Security Agreement Collateral subject to such partial release. Upon any such
termination, Collateral Agent shall, at the Pledgors’ expense, execute and deliver to the Pledgors
such documents, and take such other actions, as the Pledgors reasonably request to evidence such
termination.

Notwithstanding anything to the contrary contained herein, the Collateral Agent and the other
Secured Parties agree to cooperate with each Pledgor with respect to any sale of Security Agreement
Collateral permitted by Section 6.04 of the Credit Agreement and promptly take such action and
execute and deliver such instruments and documents necessary to release the Liens and security
interests created hereby relating to any of the assets or property affected by any sale of Security
Agreement Collateral permitted by Section 6.04 of the Credit Agreement (including, without
limitation, any necessary Uniform Commercial Code amendment, termination or partial termination
statement).

          SECTION 7.07. Modification in Writing. No amendment, modification, supplement, termination or waiver of or to any provision
hereof, nor consent to any departure by any Pledgor therefrom, shall be effective unless the same
shall be made in accordance with the terms of the Credit Agreement and unless in writing and signed
by Collateral Agent. Any amendment, modification or supplement of or to any provision hereof, any
waiver of any provision hereof and any consent to any departure by any Pledgor from the terms of
any provision hereof shall be effective only in the specific instance and for the specific purpose
for which made or given. Except where notice is specifically required by this Agreement or any
other document evidencing the Secured Obligations, no notice to or demand on any Pledgor in any
case shall entitle any Pledgor to any other or further notice or demand in similar or other
circumstances.

          SECTION 7.08. Notices. Unless otherwise provided herein or in the Credit Agreement, any notice or other
communication herein required or permitted to be given shall be given in the manner and become
effective as set forth in the Credit Agreement, if to any Pledgor, addressed to it at the address
of Borrower set forth in the Credit Agreement, and if to Collateral Agent, addressed to it at the
address set forth in the Credit Agreement, or in each case at such other address as shall be
designated by such party in a written notice to the other party complying as to delivery with the
terms of this Section 7.08.

30

 

          SECTION 7.09. 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 (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK), EXCEPT TO THE EXTENT, IN ACCORDANCE WITH CHOICE-OF-LAW PRINCIPLES, THAT THE PERFECTION
OF THE SECURITY INTERESTS GRANTED HEREUNDER, OR REMEDIES HEREUNDER IN RESPECT OF ANY ITEM OR TYPE
OF SECURITY AGREEMENT COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK.

               (b) Each Pledgor 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
County 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 any
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 Collateral Agent or any other Secured Party may otherwise have
to bring any action or proceeding relating to this Agreement or any other Loan Document against any
Pledgor or its properties in the courts of any jurisdiction.

               (c) Each Pledgor hereby irrevocably and unconditionally waives, to the fullest extent it may
legally and effectively do so, any objection that 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 in any court
referred to in Section 7.09(b). 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 7.08. Nothing in this Agreement will affect the right of
any party to this Agreement to serve process in any other manner permitted by law.

          SECTION 7.10. 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, OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.10.

31

 

          SECTION 7.11. Severability of Provisions. Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.

          SECTION 7.12. Execution in Counterparts. This Agreement and any amendments, waivers, consents or supplements hereto may be executed
in any number of counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original, but all such counterparts
together shall constitute one and the same agreement.

          SECTION 7.13. Business Days. In the event any time period or any date provided in this Agreement ends or falls on a day
other than a Business Day, then such time period shall be deemed to end and such date shall be
deemed to fall on the next succeeding Business Day, and performance herein may be made on such
Business Day, with the same force and effect as if made on such other day.

          SECTION 7.14. No Credit for Payment of Taxes or Imposition. Each Pledgor shall not be entitled to any credit against the principal, premium (if any),
or interest payable under the Credit Agreement, and such Pledgor shall not be entitled to any
credit against any other sums that may become payable under the terms thereof or hereof, by reason
of the payment of any Tax on the Security Agreement Collateral or any part thereof.

          SECTION 7.15. No Claims Against Collateral Agent. Nothing contained in this Agreement shall constitute any consent or request by Collateral
Agent, express or implied, for the performance of any labor or services or the furnishing of any
materials or other property in respect of the Security Agreement Collateral or any part thereof,
nor as giving any Pledgor any right, power or authority to contract for or permit the performance
of any labor or services or the furnishing of any materials or other property in such fashion as
would permit the making of any claim against Collateral Agent in respect thereof or any claim that
any Lien based on the performance of such labor or services or the furnishing of any such materials
or other property is prior to the Lien hereof.

          SECTION 7.16. No Release Under Agreements; No Liability of Collateral Agent or Secured Parties. Nothing set forth in this Agreement shall relieve the Pledgor from the performance of any
term, covenant, condition or agreement on the Pledgor’s part to be performed or observed under or
in respect of any of the Security Agreement Collateral, or from any liability to any person under
or in respect of any of the Security Agreement Collateral, or shall impose any obligation on
Collateral Agent or any other Secured Party to perform or observe any such term, covenant,
condition or agreement on the Pledgor’s part to be so performed or observed, or shall
impose any liability on Collateral Agent or any other Secured Party for any act or omission on
the part of the Pledgor relating thereto or for any breach of any Hedging Agreement, any
representation or warranty on the part of the Pledgor contained in this Agreement, Credit Agreement
or the other Security Documents, or under or in respect of the Security Agreement Collateral or
made in connection herewith or therewith. The obligations of the Pledgor contained in this
Section 7.16 shall survive the termination hereof and the discharge of the Pledgor’s other
obligations under this Agreement, the Credit Agreement, any Hedging Agreement and the other
Security Documents.

32

 

          SECTION 7.17. Obligations Absolute. Subject to Section 7.09 of the Credit Agreement, all obligations of each Pledgor hereunder
shall be absolute and unconditional irrespective of:

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

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

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

               (d) any pledge, exchange, release or nonperfection of any other collateral, or any release or
amendment or waiver of or consent to any departure from any guarantee, for all or any of the
Secured Obligations, except to the extent that any such amendment, waiver or consent expressly
relieves such Pledgor of any obligations;

               (e) any exercise, nonexercise or waiver of any right, remedy, power or privilege under or in
respect hereof, the Credit Agreement, any Hedging Agreement or any other Loan Document except as
specifically set forth in a waiver granted pursuant to the provisions of Section 5.03; or

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

          SECTION 7.18. Marshaling; Payments Set Aside. Collateral Agent shall not be under any obligation to marshal any assets in favor of any
Pledgor or any other person or against or in payment of ay or all of the Secured Obligations.

          SECTION 7.19. Release of Pledgors. If any Pledgor is released from its Guarantee in accordance with the provisions of the
Credit Agreement, then Collateral Agent shall (at the expense of Borrower) take all action
necessary to release its security interest in that portion of the Security Agreement Collateral
owned by such Pledgor, and shall release such Pledgor from its obligations hereunder (other than
obligations intended to survive the termination hereof), in each case subject to and in
accordance with Section 7.09 of the Credit Agreement.

[Signature Pages Follow]

33

 

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

	 	 	 	 	 
	 	HERBALIFE INTERNATIONAL, INC.,

a Nevada corporation, as a Pledgor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	WH CAPITAL CORPORATION,

a Nevada corporation, as a Pledgor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	HERBALIFE INTERNATIONAL OF AMERICA, INC.,

a Nevada corporation, as a Pledgor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	HERBALIFE INTERNATIONAL OF EUROPE, INC.,

a California corporation, as a Pledgor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	HERBALIFE INTERNATIONAL COMMUNICATIONS, INC.,

a California corporation, as a Pledgor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Security Agreement

 

 

	 	 	 	 	 
	 	HERBALIFE INTERNATIONAL DISTRIBUTION, INC.,

a California corporation, as a Pledgor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	HERBALIFE TAIWAN, INC.,

a California corporation, as a Pledgor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	HERBALIFE INTERNATIONAL (THAILAND), LTD.,

a California corporation, as a Pledgor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	HERBALIFE INTERNATIONAL DO BRASIL LTDA.,

a corporation dually organized in Brazil and Delaware,

as a Pledgor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Security Agreement

 

 

	 	 	 	 	 
	 	HERBALIFE LTD.,

a Cayman Islands exempted company with limited liability,

as a Pledgor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	WH INTERMEDIATE HOLDINGS LTD.,

a Cayman Islands exempted company with limited liability,

as a Pledgor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	HBL LTD.,

a Cayman Islands exempted company with limited liability,

as a Pledgor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	HV HOLDINGS LTD.,

a Cayman Islands exempted company with limited liability,

as a Pledgor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	HERBALIFE DISTRIBUTION LTD.,

a Cayman Islands exempted company with limited liability,

as a Pledgor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Security Agreement

 

 

	 	 	 	 	 
	 	WH LUXEMBOURG HOLDINGS S.à.R.L.,

a Luxembourg corporation, as a Pledgor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	HLF LUXEMBOURG HOLDINGS S.à R.L.,

a Luxembourg corporation, as a Pledgor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	WH LUXEMBOURG INTERMEDIATE HOLDINGS S.à.R.L.,

a Luxembourg corporation, as a Pledgor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	HERBALIFE INTERNATIONAL
LUXEMBOURG S.À.R.L.,

a Luxembourg corporation, as a Pledgor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	HERBALIFE LUXEMBOURG DISTRIBUTION S.à.R.L.,

a Luxembourg corporation, as a Pledgor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Security Agreement

 

 

	 	 	 	 	 
	 	MERRILL LYNCH CAPITAL CORPORATION,

as Collateral Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Security Agreement

 

 

EXHIBIT A

Form of

ISSUER ACKNOWLEDGMENT

          The undersigned hereby (a) acknowledges receipt of a copy of that certain security agreement
(as amended, amended and restated, supplemented or otherwise modified from time to time, the
“Security Agreement”; capitalized terms used but not otherwise defined herein shall have the
meanings assigned to such terms in the Security Agreement), dated as of July 21, 2006, among
Herbalife International, Inc., a Nevada corporation (“Borrower”), the Guarantors (defined therein),
and Merrill Lynch Capital Corporation, as collateral agent (in such capacity and together with any
successors in such capacity, “Collateral Agent”); (b) agrees promptly to note on its books the
security interests granted to Collateral Agent and confirmed under the Security Agreement; (c)
agrees that it will comply with Collateral Agent’s instructions with respect to the applicable
Securities Collateral without further consent by the applicable Pledgor; (d) agrees to notify
Collateral Agent upon obtaining knowledge of any interest in favor of any person in the applicable
Securities Collateral that is adverse to the interest of Collateral Agent therein; and (e) waives
any right or requirement at any time hereafter to receive a copy of the Security Agreement in
connection with the registration of any Securities Collateral thereunder in the name of Collateral
Agent or its nominee or the exercise of voting rights by Collateral Agent or its nominee.

	 	 	 	 	 
	 	[NAME OF ISSUER]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 A-1exv10w73

 

EXHIBIT 10.73

HERBALIFE LTD.

AMENDED AND RESTATED

INDEPENDENT DIRECTORS DEFERRED COMPENSATION AND STOCK UNIT PLAN

1. Establishment of Plan; Purpose

     The Herbalife Ltd. (the “Company”) the Independent Directors Deferred Compensation and
Stock Unit Plan (the “Independent Directors Plan”) was initially adopted on January 15,
2006. The Independent Directors Plan is hereby amended and restated in its entirety effective as
of August 29, 2006. The Independent Directors Plan provides for the award of Stock Units under
Section 9 of the Herbalife Ltd. 2005 Stock Incentive Plan (the “Plan”). The Independent
Directors Plan is intended to be a part of the Plan and the terms of the Plan are incorporated
herein by reference.

     The purpose of the Plan is to facilitate equity ownership in the Company by its Independent
Directors through the award of Stock Units and to allow for deferral by the Independent Directors
of compensation realized in connection with such Stock Units.

2. Definitions

     Unless otherwise specifically provided for herein, all capitalized terms used herein shall
have the same meanings as the meanings ascribed to such terms in the Plan. In addition, the
following words have the following meanings unless a different meaning plainly is required by the
context:

     (a) “Deferral Account” means the accounting entry made with respect to each
Participant for the purpose of maintaining a record of each Participant’s benefit under the
Independent Directors Plan.

     (b) “Effective Date” means January 15, 2006.

     (c) “Grant Date” means a date on which Stock Units are granted pursuant to Section 5
of this Independent Directors Plan.

     (d) “Independent Director” means a member of the Board who, at all relevant times, has
been determined by the Board to be independent.

     (e) “Participant” means an Independent Director who has received a Stock Unit award
hereunder.

     (f) “Plan Year” means January 15 of each calendar year to January 14 of the next
following calendar year. The first Plan Year shall commence on the Effective Date and end on
January 14, 2007.

 

 

3. Administration.

     The Independent Directors Plan shall be administered the Committee. Consistent with Section
18 of the Plan, any question concerning the interpretation of the Independent Directors Plan, any
adjustments required to be made under the Independent Directors Plan, and any controversy that may
arise under the Independent Directors Plan or any award agreement issued hereunder shall be
determined by the Committee in its sole and absolute discretion. All such decisions by the
Committee shall be final and binding.

4. Eligibility and Participation.

     All Independent Directors shall be eligible to participate in this Independent Directors Plan
and defer compensation and receive awards of Stock Units hereunder from time to time.

5. Stock Unit Awards.

     (a) First Plan Year Grant. On the Effective Date of the Independent Directors Plan, the
Committee shall grant to each Independent Director, pursuant to Section 9 of the Plan, a number of
Stock Units equal to the quotient of One Hundred Thousand Dollars ($100,000) divided by the Fair
Market Value of one Common Share on such date, rounded to the nearest whole number.

     (b) Grants Upon Initial Election to Board. Unless otherwise determined by the Committee, with
respect to each Independent Director who commences service on the Board after the Effective Date,
upon such Independent Director’s commencement of service as a member of the Board the Committee
shall grant to such Independent Director, pursuant to Section 9 of the Plan, a number of Stock
Units equal to (i) the quotient of One Hundred Thousand Dollars ($100,000) divided by the Fair
Market Value of one Common Share on such date, rounded to the nearest whole number, multiplied by
(ii) a fraction, the numerator of which equals (A) 365 minus (B) the number of days during the Plan
Year that have elapsed prior to the date on which the Independent Director commenced service as a
member of the Board and the denominator of which equals 365

     (c) Annual Grants. Unless otherwise determined by the Committee, on January 15 of each Plan
Year beginning after Effective Date of the Independent Directors Plan, the Committee shall grant,
pursuant to Section 9 of the Plan, to each Independent Director who is serving as a member of the
Board as of the Grant Date, a number of Stock Units equal to the quotient of One Hundred Thousand
Dollars ($100,000) divided by the Fair Market Value of one Common Share on such date, rounded to
the nearest whole number.

     (d) Award Agreement. Each award of Stock Units shall be evidenced by an award
agreement entered into between the Company and the applicable Participant and shall be
subject to all of the terms and conditions set forth herein and in the Plan.

 

 

     (e) Terms and Conditions of Stock Units. Stock Unit awards made pursuant to this Section 5
shall be subject to the following terms and conditions:

           (i) Unless otherwise determined by the Committee at the time of grant the value of each Stock
Unit shall be equal to one Common Share (as adjusted pursuant to Section 12 of the Plan).

           (ii) Subject to the provisions of this Independent Directors Plan, neither Stock Units awarded
pursuant to this Independent Directors Plan nor the Common Shares subject thereto may be sold,
assigned, transferred, pledged, or otherwise encumbered prior to the date on which such Common
Shares are delivered to the Participant or the Participant’s beneficiary designated pursuant to
Section 6(c)(iii) of this Independent Directors Plan.

           (iii) Unless otherwise provided in an award agreement, the recipient of an award under this
Section 5 shall not be entitled to receive dividends or dividend equivalents with respect to the
number of Common Shares represented by the Stock Unit award until such time as the Common Shares
subject to the award have been issued pursuant to the terms of this Independent Directors Plan.

           (iv) Unless determined otherwise by the Committee at the time of grant and set forth in an
award agreement, subject to the applicable Participant’s continuous service as a member of the
Board, awards of Stock Units pursuant to Section 5(a) or Section 5(c) shall become vested with
respect to twenty-five percent (25%) of the number of Stock Units subject to the award on each of
April 15, July 15 and October 15 of the calendar year in which the award is granted and January 15
of the calendar year following the year in which the award is granted (each such date is referred
to herein as a “Vesting Date”).

           (v) Unless determined otherwise by the Committee at the time of grant and set forth in an
award agreement, subject to the applicable Participant’s continuous service as a member of the
Board, awards of Stock Units pursuant to Section 5(b) shall become vested in equal installments on
each of the Vesting Dates that occur after the Grant Date and on or prior to the next following
January 15th. 1

           (vi) In the event that a Participant ceases to serve as a member of the Board for any reason,
all Stock Units held by such Participant at the time of such cessation that have not yet become
vested shall be immediately forfeited; provided, however, that in the event of the Participant’s
disability (as such term if defined in Section 22(e) of the Code) or death, the Committee may, in
its sole discretion, accelerate the vesting of any unvested Stock Units then held by such
Participant.

           (vii) Notwithstanding anything herein to the contrary, in the event of a Change of Control all
unvested Stock Units shall be deemed fully vested immediately prior to the consummation of the
Change of Control.

 

			
	1	 	For example: with respect to an award of Stock
Units pursuant to Section 5(b) on April 22, 2006, the award would become vested
with respect to 33 1/3% of the Stock Units subject thereto on each of July 15,
2006, October 15, 2006 and January 15, 2007.

 

 

     (f) Payment/Deferral of Stock Unit Awards.

          (i) On each Grant Date the Stock Units awarded to a Participant pursuant to this Section 5
shall be credited to the Participant’s Deferral Account.

          (ii) Subject to the applicable Participant’s continuous service as a member of the Board, on
the second anniversary of the final Vesting Date of an award of Stock Units pursuant to this
Section 5, there shall be credited to Participant’s Deferral Account one Common Share in exchange
for each such Stock Unit then held in Participant’s Deferral Account.

          (iii) In the event that a Participant ceases to serve as a member of the Board for any reason
prior to the second anniversary of the final Vesting Date of an award of Stock Units pursuant to
this Section 5, the Company shall, within thirty (30) days following such cessation, subject to
Section 16 of the Plan, issue to the Participant a number of Common Shares equal to the number of
vested Stock Units subject to each such award held in the Participant’s Deferral Account at the
time of such cessation.

6. Deferred Compensation

     (a) Contributions to Deferral Accounts.

          (i) Subject to Sections 6(a)(ii) and 6(a)(iii) of this Independent Directors Plan, an
Independent Director may elect to defer and have credited to his or her Deferral Account for any
calendar year up to one hundred percent (100%) of his or her Director’s Compensation (as defined
below). In addition, pursuant to Section 5(f)(i) of this Independent Directors Plan, on each Grant
Date the Stock Units awarded to an Independent Director pursuant to Section 5 of this Independent
Directors Plan shall be automatically credited to the applicable Independent Director’s Deferral
Account. For purposes of this Independent Directors Plan, the term “Director’s
Compensation” means the amounts payable in cash to an Independent Director for a calendar year
for the Independent Director’s service on the Board for such calendar year including, without
limitation, annual retainer and meeting fees.

          (ii) Independent Directors shall make their elections to defer all or a portion of their
Director’s Compensation for a calendar year by December 1, but no later than December 31,
immediately prior to the beginning of the calendar year in which the Director’s Compensation is to
be earned, or within thirty (30) calendar days of eligibility to participate for a partial calendar
year (with respect to Director’s Compensation not yet earned). Any election pursuant to Section
6(a)(i) of this Independent Directors Plan shall be made by the Independent Director by completing
and delivering to the Company an election form provided by the Company (a “Deferral Election
Form”) for such calendar year no later than the last day of the next preceding calendar year,
except with respect to a person who first becomes eligible to participate in this Independent
Directors Plan during a calendar year, which Independent Director may make such elections within 30
days after first becoming eligible to participate in this Independent Directors Plan, and which
elections shall apply only to amounts of Director’s Compensation paid for services to be performed
after the date of such election.

          (iii) All deferral elections shall be irrevocable for the calendar year in which they are in
effect. Once made, an Independent Director’s deferral election shall remain in effect

 

 

for all subsequent calendar years for which the Independent Director is an Independent
Director unless and until the Independent Director increases, decreases, or terminates such
election by submitting a new Deferral Election Form to the Company. Deferral election changes must
be submitted to the Company no later than the last day of the calendar year next preceding the
calendar year for which the change is to be effective.

     (b) Distributions.

          (i) Distribution Elections. Other than with respect to Stock Units awarded on the
Effective Date, no later than the December 31 of each calendar year, each Independent Director who
is then eligible to receive an award of Stock Units pursuant to Section 5 of this Independent
Directors Plan shall be required to complete and submit to the Committee an election on a form
provided by the Company (a “Distribution Election Form”) as to the timing and form of
distributions from his or her Deferral Account with respect to amounts attributable to (i) the
Stock Units awarded on the next following Grant Date and (ii) any Director’s Compensation deferred
pursuant to Section 6(a) of this Independent Directors Plan with respect to the next following
calendar year. If no valid distribution election is made with respect to an award of Stock Units,
the portion of the Participant’s Deferral Account that is attributable to such award shall be
distributed, subject to Section 5(e)(iii) of this Independent Directors Plan, in the form of a lump
sum payment on the second anniversary of the final Vesting Date of such award. If no valid
distribution election is made with respect to Director’s Compensation deferred pursuant to Section
6(a) of this Independent Directors Plan, the portion of the Participant’s Deferral Account that is
attributable to such amounts shall be distributed in the form of a lump sum payment upon
termination of the Independent Director’s service as a member of the Board.

      
    (ii) Scheduled In-Service Distributions.

                    (1) Lump Sum or Installment Payments. A Participant may elect on a Distribution
Election Form to receive distributions from the vested portion of his or her Deferral Account while
he or she is still a member of the Board (an “In-Service Distribution”) in (A) a single
lump sum payment, or (B) annual installment payments over a period of five (5) or ten (10) years,
with the amount of each payment determined as set forth in Section 6(b)(viii) of this Independent
Directors Plan. If the amount a Participant elects to receive pursuant to an In-Service
Distribution is less than $100,000, payment shall be made in a single lump sum. If a Participant
elects to receive installment payments under (B) above, the amount of each installment payment
shall be equal to the balance remaining in the portion of the Participant’s Deferral Account that
is subject to such installment election (as determined immediately prior to each such payment),
multiplied by a fraction, the numerator of which is one (1), and the denominator of which is the
total number of remaining installment payments. The installment amount shall be adjusted annually
to reflect gains and losses, if any, allocated to such Participant’s Deferral Account pursuant to
Section 6(c)(ii).

                    (2) Time of Distributions. A Participant’s election under this Section 6(b)(ii) must
specify the future year in which the payment of the deferred amounts shall commence, provided that
the year in which an In-Service Distribution of amounts attributable to an award of Stock Units is
to commence must be at least two (2) years after the final Vesting Date of such award.

 

 

                    (3) Separate Annual Elections. Any desired In-Service Distribution must be separately
elected for each Stock Unit award and for any Director’s Compensation deferred in any one calendar
year. Thus, to elect a scheduled In-Service Distribution with respect to a specific year’s Stock
Units and Director’s Compensation, a new Distribution Election Form must be submitted during the
applicable election period. Once the applicable election period has passed, an In-Service
Distribution may not be elected for that the portion of the Participant’s Deferral Account
attributable to Stock Units awarded and Director’s Compensation earned in that year.

                    (4) Amendment of Election. A Participant may delay the commencement of an In-Service
Distribution or amend his or her election as to the form of the distribution at any time provided
that (A) such amendment must be made in the manner specified by the Committee at least one (1)
calendar year prior to the date the distribution would otherwise commence, (B) the amendment will
not take effect until at least one (1) calendar year after the amendment is submitted, and (C) the
amendment provides for the deferral of the date of payments commence for a minimum of five (5)
additional years. For purposes of the limitation set forth clause (C) of the preceding sentence,
distributions that are to be paid in installments (as opposed to in a lump sum) shall be treated as
a single payment payable on the date the installments are due to commence. Any change in the form
or timing of payment may not accelerate distributions to the Participant, except to the extent
permitted under Section 409A of the Code without the imposition of the additional tax set forth in
Section 409A(a)(1)(B) of the Code.

                    (5) Termination of Board Service Prior to Completion of In-Service Distribution. If a
Participant’s Board service with the Company terminates for any reason prior to receiving full
payment of an In-Service Distribution or while he or she is receiving scheduled installment
payments pursuant to this Section 6(b)(ii), the unpaid portion of the Participant’s elected
distribution shall be paid in accordance with Section 6(b)(iii) below.

             (iii) Distributions upon Termination of Board Service for Reasons Other Than Death.

                    (1) Lump Sum or Installment Payments. As an alternative to electing an In-Service
Distribution under Section 6(b)(ii) of this Independent Directors Plan, a Participant may elect on
a Distribution Election Form to receive the vested balance credited to his or her Deferral Account
following termination of Board service for any reason other than death in (A) a single lump sum
payment, or (B) annual installment payments over a period of five (5) or ten (10) years, with the
amount of each payment determined as set forth in Section 6(b)(viii) of this Independent Directors
Plan. If the amount a Participant elects to receive pursuant to an In-Service Distribution is less
than $100,000, payment shall be made in a single lump sum. If a Participant elects to receive
installment payments under (B) above, the amount of each installment payment shall be equal to the
balance remaining in the portion of the Participant’s Deferral Account that is subject to such
installment election (as determined immediately prior to each such payment), multiplied by a
fraction, the numerator of which is one (1), and the denominator of which is the total number of
remaining installment payments. The installment amount shall be adjusted annually to reflect gains
and losses, if any, allocated to such Participant’s Deferral Account pursuant to Section 6(c)(ii).

 

 

          (2) Death of Participant. If a Participant dies prior to receiving full payment his
or her Deferral Account as elected under this Section 6(b)(iii), the balance of the vested portion
of such Participant’s Deferral Account shall be paid to the Participant’s designated beneficiary in
the form of a lump sum as soon as administratively practicable following the Participant’s death.
The amount of any such lump sum payment shall be determined as set forth in Section 6(b)(viii).

     (iv) Stock Units Awarded on Effective Date. Notwithstanding anything herein to the
contrary, that portion of a Participant’s Deferral Account that is attributable the award of Stock
Units pursuant to Section 5 of this Independent Directors Plan on the Effective Date shall be
distributed, subject to Section 5(e)(iii) of this Independent Directors Plan, in the form of a lump
sum payment on the third anniversary of the Effective Date.

     (v) Form of Distribution. That portion of a Participant’s Deferral Account that
remains notionally invested, at the time of distribution, in Stock Units and/or Common Shares shall
be distributed in the form of Common Shares. That portion of a Participant’s Deferral Account that
is notionally invested, at the time of distribution, in any investment alternative other than Stock
Units or Common Shares shall be distributed in cash.

     (vi) Financial Hardship. The Committee shall have the authority to alter the timing
or manner of payment of amounts credited to a Participant’s Deferral Account in the event that the
Participant establishes, to the satisfaction of the Committee, “severe financial hardship” (as
defined herein). For purposes of this Section 6(b)(vi), “severe financial hardship” shall mean any
financial hardship resulting from the illness or injury of a Participant or dependent (as
determined by the Committee), the casualty loss of a Participant’s real or personal property, or
other similar extraordinary and unforeseeable circumstances arising as a result of events beyond
the control of the Participant. In any event, payment under this Section 6(b)(vi) may not be made
to the extent such emergency is or may be relieved: (A) through reimbursement or compensation by
insurance or otherwise; or (B) by liquidation of the Participant’s assets, to the extent the
liquidation of such assets would not itself cause severe financial hardship. Withdrawals of
amounts because of a severe financial hardship may only be permitted to the extent reasonably
necessary to satisfy the hardship, plus to pay taxes on the withdrawal. The Participant’s Deferral
Account will be credited with earnings in accordance with this Section 6 up to the date of
distribution.

     (vii) Incompetence of Distributee. In the event that it shall be found that a person
entitled to receive payment under the Plan (including a designated beneficiary) is a minor or is
physically or mentally incapable of personally receiving and giving a valid receipt for any payment
due (unless prior claim therefor shall have been made by a duly qualified committee or other legal
representative), such payment may be made to any person whom the Committee in its sole discretion
determines is entitled to receive it, and any such payment shall fully discharge the Company, the
Company, the Committee and the Plan from any further liability to the person otherwise entitled to
payment hereunder, to the extent of such payment.

     (viii) Value of Stock Units on Distribution. In the event of a distribution
hereunder, the amount payable to the Participant receiving such distribution shall be as follows:

 

 

          (A) In the event Participant has selected an investment other than Stock Units or Common
Shares, and such Participant has elected to take payment of the Deferral Account in a lump sum
payout, or a lump sum payout is otherwise required hereunder, the Company shall pay the Participant
an amount in cash equal to the balance in such Participant’s Deferral Account as of the date
elected by the Participant, or as of the date of the event requiring such lump sum payout, as the
case may be.

          (B) In the event Participant has selected investment an investment other than Stock Units or
Common Shares, and such Participant has elected to take payment of the Deferral Account in
installments, the Company shall pay the Participant annually installment payments, with each
payment equal to the balance of the Deferral Account on the applicable anniversary date selected by
Participant, divided by the number of installments remaining.

          (C) In the event Participant has selected investment in Stock Units and/or Common Shares, and
such Participant has elected to take payment of the Deferral Account in a lump sum payout, or a
lump sum payout is otherwise required hereunder, the Company shall, subject to Section 16 of the
Plan, issue to the Participant a number of Common Shares equal to the number of Stock Units and
Common Shares in such Participant’s Deferral Account.

          (D) If Participant has selected investment in Stock Units and/or Common Shares, and such
Participant has elected to take payment of the Deferral Account in installment payouts, such
Participant shall receive on each installment payment date, subject to Section 16 of the Plan, a
number of Common Shares equal to the total number of Stock Units and Common Shares in such
Participant’s Deferral Account, divided by the number of installments elected.

          (E) Any distributions due by the Company under this Section 6 shall be made as soon as
administratively feasible, but, subject to Section 16 of the Plan, in no event later than the
thirtieth (30th) day after the day the amount of such payment is determined pursuant to this
Section 6(b)(viii).

     (c) Deferral Accounts.

          (i) Participants’ Accounts. The Company shall establish and maintain an individual
bookkeeping Deferral Account for each Participant. Each Deferral Account shall be credited with
Stock Units in accordance with Section 6(a) of this Independent Directors Plan, generally within
five (5) business days of the applicable Grant Date, and as provided in Section 6(c)(ii). Each
Deferral Account shall be credited with the value of any Director’s Compensation deferred in
accordance with Section 6(a) of this Independent Directors Plan, generally within five (5) business
days of the date on which such amounts would have otherwise been paid to the applicable Independent
Director, and as provided in Section 6(c)(ii). Except as set forth in Section 5(e), each
Participant shall be fully vested in his or her Deferral Account at all times.

 

 

     (ii) Earnings on Deferred Amounts.

          (1) A Participant’s Deferral Account shall be credited with earnings (or losses) based on a
deemed investment of the Participant’s Deferral Account, as directed by each Participant, which
deemed investment shall be Stock Units/Common Shares or one or more hypothetical investment
alternatives made available by the Committee from time to time; provided, however, that amounts
credited to a Participant’s Deferral Account in respect of an award Stock Units under this
Independent Directors Plan must remain invested Stock Units and/or Common Shares. A Participant
shall have no voting rights or any other rights as a holder of Common Shares with respect to any
Stock Units or Common Shares allocated to his or her Deferral Account; provided,
however, that notwithstanding the foregoing, to the extent a Participant has had Common
Shares credited to such Participant’s Deferral Account and the Company pays cash dividends with
respect to the Common Shares, such Participant’s Deferral Account will be credited with an
additional number of Common Shares equal to (A) the dividend per Common Share multiplied by (B) the
number of Common Shares in such Participant’s Deferral Account divided by (C) the Fair Market Value
of one Common Share on the date such dividend is paid to the holders of Common Shares.

          (2) Deemed earnings (and losses) on a Participant’s Deferral Account shall be credited to a
Participant’s Deferral Account on a daily basis. Any portion of a Participant’s Deferral Account
which is subject to distribution in installments shall continue to be credited with deemed earnings
(or losses) until fully paid out to the Participant.

          (3) The Committee reserves the right to change the options available for deemed investments
under the Plan from time to time, or to eliminate any such option at any time. A Participant may
specify a separate investment allocation with respect any portion of his or her Deferral Account,
subject to limitations imposed by the Committee. Participants may modify their deemed investment
instructions each business day with respect to any portion (whole percentages only) of their
Deferral Account; provided they notify the Committee or its designee within the time and in the
manner specified by the Committee. Elections and amendments thereto pursuant to this Section
6(c)(ii) shall be made in the manner prescribed by the Committee.

     (iii) Designation of Beneficiary. Each Participant may designate a beneficiary or
beneficiaries (each a “Beneficiary”) who, upon the Participant’s death, or physical or
mental incapacity will receive the amounts that otherwise would have been paid to the Participant
under this Independent Directors Plan. All designations shall be signed by the Participant, and
shall be in such form as prescribed by the Committee. Each designation shall be effective as of
the date delivered to the Committee or its designee by the Participant. Participants may change
their beneficiary designations on such form as prescribed by the Committee. The payment of amounts
credited to a Participant’s Deferral Account shall be in accordance with the last unrevoked written
beneficiary designation that has been signed by the Participant and delivered to the Committee or
its designee prior to the Participant’s death. In the event that all the beneficiaries named by a
Participant pursuant to this Section 6(c)(iii) predecease the Participant, the deferred amounts
that would have been paid to the Participant or the Participant’s beneficiaries shall be paid to
the Participant’s estate. In the event a Participant does not designate a beneficiary, or for any
reason such designation is ineffective, in whole or in part, the amounts that otherwise would

 

 

have been paid to the Participant or the Participant’s beneficiaries under the Plan shall be
paid to the Participant’s estate.

     (d) Trust. Nothing contained in this Independent Directors Plan shall create a trust of any
kind or a fiduciary relationship between the Company and any Participant. Nevertheless, the
Company may establish one or more trusts, with such trustee(s) as the Committee may approve, for
the purpose of providing for the payment of deferred amounts and earnings thereon. Such trust or
trusts may be irrevocable, but the assets thereof shall be subject to the claims of the Company’s
general creditors upon the bankruptcy or insolvency of the Company.

     (e) Nontransferability. Participants’ rights to deferred amounts and earnings credited
thereon under the Independent Directors Plan may not be sold, transferred, assigned, or otherwise
alienated or hypothecated, other than by will or by the laws of descent and distribution, or
pursuant to a domestic relations order, nor shall the Company make any payment under the
Independent Directors Plan to any assignee or creditor of a Participant.

7. Rights of Participants.

     (a) Contractual Obligation. The Independent Directors Plan shall create an unfunded,
unsecured contractual obligation on the part of the Company to make payments due under Stock Unit
awards, and to make payments from the Participants’ Deferral Accounts when due. Payments under the
Independent Directors Plan shall be made out of the general assets of the Company or from the trust
or trusts referred to in Section 6(d) above.

     (b) Unsecured Interest. No Participant or party claiming an interest in benefits of a
Participant hereunder shall have any interest whatsoever in any specific asset of the Company. To
the extent that any party acquires a right to receive payments under the Independent Directors
Plan, such right shall be equivalent to that of an unsecured general creditor of the Company. Each
Participant, by participating hereunder, agrees to waive any priority creditor status with respect
to any amounts due hereunder. The Company shall have no duty to set aside or invest any amounts
credited to Participants’ Deferral Accounts or Stock Unit awards under this Independent Directors
Plan. Accounts established hereunder are solely for bookkeeping purposes and the Company shall not
be required to segregate any funds based on such accounts.

8. Miscellaneous.

     (a) Notice. Any notice or filing required or permitted to be given to the Company under the
Independent Directors Plan shall be sufficient if in writing and hand delivered, or sent by
registered or certified mail to the Committee, and if mailed, shall be addressed to the principal
executive offices of the Company. Notice mailed to a Participant shall be at such address as is
given in the records of the Company. Notices to the Company shall be deemed given as of the date
of delivery. Notice to a Participant or beneficiary shall be deemed given as of the date of hand
delivery, or if delivery is made by mail, three (3) days following the postmark date.

     (b) Costs of the Independent Directors Plan. All costs of implementing and administering the
Independent Directors Plan shall be borne by the Company.

 

 

9. Amendments and Termination

     The Company reserves the right to amend, modify, or terminate the Independent Directors Plan
(in whole or in part) at any time by action of the Board or the Committee, with or without prior
notice. Except as described below in this Section 9, no such amendment or termination shall in any
material manner adversely affect any Participant’s rights to any amounts already deferred or
credited hereunder or deemed earnings thereon, up to the point of amendment or termination, without
the consent of the Participant. Termination of the Independent Directors Plan shall not be a
permitted distribution event, except to the extent permitted under Section 409A of the Code without
the imposition of any additional taxes or other penalties under Section 409A of the Code. If
payout is commenced pursuant to the operation of this Section 9, the payment of deferred amounts
and earnings thereon shall be made in the manner selected by each Participant under Section
6(b)(iii) herein (other than the commencement date).

     Subject to the above provisions, the Board shall have broad authority to amend the Independent
Directors Plan to take in to account changes in applicable securities and tax laws and accounting
rules.

10. General Provisions

     (a) Additional Compensation Arrangements. Nothing contained in this Independent Directors
Plan shall prevent the Board from adopting other or additional compensation arrangements, subject
to stockholder approval if such approval is required, and such arrangements may be either generally
applicable or applicable only in specific cases.

     (b) No Right to Continued Service. Neither the adoption of the Independent Directors Plan nor
the award of Stock Units hereunder shall confer upon any individual any right to continued service
as a member of the Board, nor shall it interfere in any way with the right of the Company to
terminate the service of an individual at any time.

     (c) Arbitration. Any individual making a claim for benefits under this Independent Directors
Plan may contest the Committee’s decision to deny such claim or appeal therefrom only by submitting
the matter to binding arbitration before a single arbitrator. Any arbitration shall be held in Los
Angeles, California, unless otherwise agreed to by the Committee. The arbitration shall be
conducted pursuant to the Commercial Arbitration Rules of the American Arbitration Association.
The arbitrator’s authority shall be limited to the affirmation or reversal of the Committee’s
denial of the claim or appeal, based solely on whether or not the Committee’s decision was
arbitrary or capricious, and the arbitrator shall have no power to alter, add to, or subtract from
any provision of this Independent Directors Plan. Except as otherwise required by applicable law,
the arbitrator’s decision shall be final and binding on all parties, if warranted on the record and
reasonably based on applicable law and the provisions of this Independent Directors Plan. The
arbitrator shall have no power to award any punitive, exemplary, consequential or special damages,
and under no circumstances shall an award contain any amount that in any way reflects any of such
types of damages. Each party shall bear its own attorney’s fees and costs of arbitration.
Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction
thereof.

 

 

11. Governing Law.

     The Independent Directors Plan and all awards made and actions taken thereunder shall be
governed by and construed in accordance with the internal laws of the State of California.

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