Document:

Exhibit 10.11

 

PLEDGE AGREEMENT

 

dated as of June
30, 2004

 

among

 

THE LOAN PARTIES
FROM TIME TO TIME PARTY HERETO,

 

and

 

BANK OF AMERICA,
N.A.,

as Senior Collateral Agent

 

 

TABLE OF CONTENTS*

 

	
  ARTICLE I

  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  1.01

  	
  Terms
  Defined in the Credit Agreement

  	
   

  
	
  Section
  1.02

  	
  Terms
  Defined in the UCC

  	
   

  
	
  Section
  1.03

  	
  Additional
  Definitions

  	
   

  
	
  Section
  1.04

  	
  Terms
  Generally

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  THE SECURITY INTERESTS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  2.01

  	
  Grant
  of Security Interests

  	
   

  
	
  Section
  2.02

  	
  Collateral

  	
   

  
	
  Section
  2.03

  	
  Security
  Interests Absolute

  	
   

  
	
  Section
  2.04

  	
  Continuing
  Liability of the Loan Parties

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  3.01

  	
  Title
  to Collateral

  	
   

  
	
  Section
  3.02

  	
  Validity,
  Perfection and Priority of Security Interests

  	
   

  
	
  Section
  3.03

  	
  Collateral

  	
   

  
	
  Section
  3.04

  	
  No
  Consents

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  4.01

  	
  Delivery
  of Collateral

  	
   

  
	
  Section
  4.02

  	
  Delivery
  of Perfection Certificate; Filing of Financing Statements and Delivery of
  Search Reports

  	
   

  
	
  Section
  4.03

  	
  Change
  of Name, Organizational Structure or Location; Subjection to Other Security
  Agreements

  	
   

  
	
  Section
  4.04

  	
  Further
  Actions

  	
   

  
	
  Section
  4.05

  	
  Disposition
  of Collateral

  	
   

  
	
  Section
  4.06

  	
  Additional
  Collateral

  	
   

  
	
  Section
  4.07

  	
  Information
  Regarding Collateral

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  DISTRIBUTIONS ON COLLATERAL; VOTING

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  5.01

  	
  Right
  to Receive Distributions on Collateral; Voting

  	
   

  

 

*              The Table of Contents is not a part of the Pledge
Agreement.

 

 

	
  ARTICLE VI

  GENERAL AUTHORITY; REMEDIES

  	
   

  
	
   

  	
   

  
	
  Section
  6.01

  	
  General
  Authority

  	
   

  
	
  Section
  6.02

  	
  Authority
  of Senior Collateral Agent

  	
   

  
	
  Section
  6.03

  	
  Remedies
  upon Event of Default

  	
   

  
	
  Section
  6.04

  	
  Securities
  Act; Registration Rights

  	
   

  
	
  Section
  6.05

  	
  Other Rights of the Senior Collateral Agent

  	
   

  
	
  Section
  6.06

  	
  Limitation on Duty of the Senior Collateral
  Agent in Respect of Collateral

  	
   

  
	
  Section
  6.07

  	
  Waiver and Estoppel

  	
   

  
	
  Section
  6.08

  	
  Application of Proceeds

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  THE SENIOR COLLATERAL AGENT

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  7.01

  	
  Concerning the Senior Collateral Agent

  	
   

  
	
  Section
  7.02

  	
  Appointment of Co-Collateral Agent

  	
   

  
	
  Section
  7.03

  	
  Appointment of Sub-Agents

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  8.01

  	
  Notices

  	
   

  
	
  Section
  8.02

  	
  No Waivers; Non-Exclusive Remedies

  	
   

  
	
  Section
  8.03

  	
  Compensation and Expenses of the Senior
  Collateral Agent; Indemnification

  	
   

  
	
  Section
  8.04

  	
  Enforcement

  	
   

  
	
  Section
  8.05

  	
  Amendments and Waivers

  	
   

  
	
  Section
  8.06

  	
  Successors and Assigns

  	
   

  
	
  Section
  8.07

  	
  Governing Law

  	
   

  
	
  Section
  8.08

  	
  Limitation of Law; Severability

  	
   

  
	
  Section
  8.09

  	
  Counterparts; Effectiveness

  	
   

  
	
  Section
  8.10

  	
  Additional Loan Parties

  	
   

  
	
  Section
  8.11

  	
  Termination; Release of Loan Parties

  	
   

  
	
  Section
  8.12

  	
  Entire Agreement

  	
   

  

 

	
  Schedules:

  	
   

  	
   

  
	
  Schedule I

  	
  -

  	
  List of Pledged Shares

  
	
  Schedule II

  	
  -

  	
  List of Pledged Notes

  
	
  Schedule III

  	
  -

  	
  List of Pledged LLC Interests

  
	
  Schedule IV

  	
  -

  	
  List of Pledged Partnership Interests

  
	
   

  	
   

  	
   

  
	
  Exhibits:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  -

  	
  Form of Issuer Control Agreement

  
	
  Exhibit B

  	
  -

  	
  Form of Securities Account Control Agreement

  

 

ii

 

PLEDGE
AGREEMENT dated as of June 30, 2004 (as amended,
modified or supplemented from time to time, this “Agreement”) among the
LOAN PARTIES from time to time party hereto and BANK OF AMERICA, N.A., as
Senior Collateral Agent for the benefit of the Senior Finance Parties referred
to herein.

 

VeriFone, Inc, a Delaware
corporation (together with its successors and permitted assigns, the “Borrower”),
proposes to enter into a Credit Agreement dated as of June 30, 2004 (as
amended, restated, modified or supplemented from time to time and including any
agreement extending the maturity of, refinancing or otherwise restructuring all
or any portion of the obligations of the Borrower under such agreement or any
successor agreement, the “Credit Agreement”) among VeriFone Intermediate
Holdings, Inc., a Delaware corporation (together with its successors and
permitted assigns, “Holdings”), the Borrower, the banks and other
lending institutions from time to time party thereto (each a “Lender”
and, collectively, the “Lenders”), the Collateral Agents (as defined
below), Bank of America, N.A., as L/C Issuer, Swing Line Lender and
Administrative Agent (together with its successor or successors in each such
capacity, an “L/C Issuer”, the “Swing Line Lender” and the “Administrative
Agent”, respectively), and Credit Suisse First Boston, Cayman Islands
Branch, as Syndication Agent (together with its successor or successors in such
capacity, the “Syndication Agent”).

 

Certain Lenders and their
affiliates (acting as “Swap Creditors”) (as defined in the Credit
Agreement) may from time to time provide forward rate agreements, options,
swaps, caps, floors and other Swap Agreements (as defined in the Credit
Agreement) to the Loan Parties (as defined below).  To induce the Lenders to enter into the
Credit Agreement and the other Loan Documents (as defined in the Credit
Agreement) and the Swap Creditors to enter into the Swap Agreements, and as a
condition precedent to the obligations of the Senior Lenders under the Credit
Agreement, VeriFone Holdings, Inc., a Delaware corporation (together with its
successors and permitted assigns, “Parent Holdings”), Holdings and
certain of the Subsidiaries of Holdings (each a “Guarantor” and,
collectively, the “Guarantors”) have agreed, jointly and severally, to
provide a guaranty of all obligations of the Borrower and the other Loan
Parties under or in respect of the Finance Documents.

 

As a further condition
precedent to the obligations of the Lenders under the Loan Documents, the
Borrower and each Guarantor (each a “Loan Party” and, together with each
other person that becomes a party hereto pursuant to Section 8.10 hereof
and the respective successors and permitted assigns of each of the foregoing,
the “Loan Parties”) has agreed or will agree to grant a continuing
security interest in favor of the Senior Collateral Agent in and to the
Collateral (as hereinafter defined) to secure the Senior Obligations (as
hereinafter defined).  Accordingly, the
parties hereto agree as follows:

 

ARTICLE
I

DEFINITIONS

 

Section
1.01         Terms
Defined in the Credit Agreement. 
Capitalized terms defined in the Credit Agreement and not otherwise
defined herein have, as used herein, the respective meanings provided for
therein.

 

Section
1.02         Terms
Defined in the UCC. 
Unless otherwise defined herein or in the Credit Agreement or the
context otherwise requires, the following terms, together with any
uncapitalized terms used herein which are defined in the UCC (as defined
below), have the respective meanings provided in the UCC: (i) Certificated
Security; (ii) Financial Asset; (iii) Investment Property; (iv) Payment
Intangibles; (v) Proceeds; (vi) Securities Account; (vii) Securities
Intermediary; (viii) Security; (ix) Security Certificate; (x) Uncertificated
Security; and (xi) Security Entitlement.

 

 

Section
1.03         Additional
Definitions.  Terms
defined in the introductory section hereof have the respective meanings set
forth therein.  The following additional
terms, as used herein, have the following respective meanings:

 

“Account Control
Agreement” means (i) with respect to a Deposit Account, a deposit account
control agreement, substantially in the form of Exhibit C to the Senior
Security Agreement or otherwise containing substantially similar terms and
reasonably acceptable in form and substance to the Senior Collateral Agent
(which approval shall be deemed given by execution of such agreement), among
one or more Loan Parties, the Senior Collateral Agent, the Second Lien
Collateral Agent and the bank which maintains such Deposit Account and (ii)
with respect to a Securities Account, a securities account control agreement,
substantially in the form of Exhibit B hereto or otherwise containing
substantially similar terms and reasonably acceptable in form and substance to
the Senior Collateral Agent (which approval shall be deemed given by execution
of such agreement), among one or more Loan Parties, the Senior Collateral
Agent, the Second Lien Collateral Agent and the Securities Intermediary which
maintains such Securities Account, in each case as the same may be amended,
modified or supplemented from time to time.

 

“Cash Management
Obligation” means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of such Person in respect of cash
management services (including treasury, depository, overdraft, credit or debit
card, electronic funds transfer and other cash management arrangements)
provided by any Lender or its Affiliates in connection with any Loan Document,
including obligations for the payment of agreed interest and fees, charges,
expenses, Attorney Costs and disbursements in connection therewith.

 

“Collateral” has
the meaning set forth in Section 2.02 of this Agreement.

 

“Collateral Agents”
means the Senior Collateral Agent and the Second Lien Collateral Agent,
collectively.

 

“Delivery” and the
corresponding term “Delivered” when used with respect to Collateral
means:

 

(i)            in the case of Collateral
constituting Certificated Securities, transfer thereof to the Senior Collateral
Agent or its nominee or custodian by physical delivery to the Senior Collateral
Agent or its nominee or custodian, such Collateral to be in suitable form for
transfer by delivery, or accompanied by undated stock or note transfer powers
duly executed in blank;

 

(ii)           in the case of Collateral
constituting Uncertificated Securities, (A) registration thereof on the
books and records of the issuer thereof in the name of the Senior Collateral
Agent or its nominee or custodian (who may not be a Securities Intermediary) or
(B) the execution and delivery by the issuer thereof of an effective
agreement, substantially in the form of Exhibit A hereto (each an “Issuer
Control Agreement”), pursuant to which such issuer agrees that it will
comply with instructions originated by the Senior Collateral Agent or such
nominee or custodian without further consent of the registered owner of such
Collateral or any other Person;

 

(iii)          in the case of Collateral constituting
Security Entitlements or other Financial Assets deposited in or credited to a
Securities Account at the option of the applicable Loan Parties, (A) completion
of all actions necessary to constitute the Senior Collateral Agent or its
nominee or custodian the entitlement holder with respect to each such Security
Entitlement or

 

2

 

(B) the execution and delivery by the
relevant Securities Intermediary of an effective Account Control Agreement
pursuant to which such Securities Intermediary agrees to comply with all
entitlement orders originated by the Senior Collateral Agent or such nominee or
custodian without further consent by the relevant entitlement holder or any
other Person;

 

(iv)          in the case of LLC Interests and
Partnership Interests which do not constitute Securities, (A) compliance with
the provisions of clause (i) above for each such item of Collateral which
is represented by a certificate and (B) compliance with the provisions of
clause (ii) above for each such item of Collateral which is not evidenced by a
certificate;

 

(v)           in the case of Collateral which
constitute Instruments, transfer thereof to the Senior Collateral Agent or its
nominee or custodian by physical delivery to the Senior Collateral Agent or its
nominee or custodian indorsed to, or registered in the name of, the Senior
Collateral Agent or its nominee or custodian or indorsed in blank;

 

(vi)          in the case of cash, transfer thereof
to the Senior Collateral Agent or its nominee or custodian by physical delivery
to the Senior Collateral Agent or its nominee or custodian; and

 

(vii)         in each case such additional or
alternative procedures as may hereafter become reasonably appropriate to grant
control of, or otherwise perfect a security interest in, any Collateral in
favor of the Senior Collateral Agent or their nominee or custodian, consistent
with changes in applicable Law or regulations or the interpretation thereof.

 

“Domestic Subsidiary”
means with respect to any Person each Subsidiary of such Person which is
organized under the Laws of the United States or any political subdivision or
territory thereof, and “Domestic Subsidiaries” means any two or more of
them.

 

“Event of Default”
means one or more Events of Default, as such term is defined in the Credit
Agreement.

 

“Federal Securities
Laws” has the meaning set forth in Section 6.03(a) of this
Agreement.

 

“Finance Obligations”
means:

 

(i)            all Senior Credit Obligations;

 

(ii)           all Second Lien Obligations;

 

(iii)          all Cash Management Obligations owed
to a Senior Lender or one or more of its Affiliates; and

 

(iv)          all Swap Obligations permitted under
the Credit Agreement owed or owing to any Swap Creditor;

 

in each case whether now or hereafter due, owing or incurred in any
manner, whether actual or contingent, whether incurred solely or jointly with
any other Person and whether as principal or surety (and including all
liabilities in connection with any notes, bills or other instruments accepted
by any Finance Party in connection therewith), together in each case with all
renewals, modifications, consolidations or extensions thereof.

 

3

 

“Foreign Subsidiary”
means, with respect to any Person, any Subsidiary of such Person that is not a
Domestic Subsidiary of such Person.

 

“General Intangibles”
means all “general intangibles” (as defined in the UCC), including, without
limitation, (i) all Payment Intangibles and other obligations and indebtedness
owing to any Loan Party in respect of Collateral and (ii) all interests in
limited liability companies and/or partnerships which interests do not
constitute Securities.

 

“Intercreditor
Agreement” means the Intercreditor Agreement, substantially in the form of Exhibit
M to the Credit Agreement, dated as of the date hereof among the
Administrative Agent, the Senior Collateral Agent, the Second Lien Collateral
Agent, Holdings, Parent Holdings and the Borrower, as the same may be amended,
modified or supplemented from time to time.

 

“Instruments”
means:

 

(i)            the promissory notes described on Schedule
II hereto, as such Schedule may be amended, supplemented or modified from
time to time (the “Pledged Notes”), and all interest, distributions,
cash, instruments and other property, income, profits and proceeds from time to
time received or receivable or otherwise made upon or distributed in respect of
or in exchange for any or all of the Pledged Notes;

 

(ii)           all additional or substitute
promissory notes from time to time issued to or otherwise acquired by any Loan
Party in any manner in respect of Pledged Notes or otherwise, and all interest,
distributions, cash, instruments and other property, income, profits and
proceeds from time to time received or receivable or otherwise made upon or
distributed in respect of such additional or substitute notes; and

 

(iii)          all promissory notes, bankers’
acceptances, commercial paper, negotiable certificates of deposit and other
obligations constituting “instruments” within the meaning of the UCC; and

 

to the extent not otherwise included in the foregoing, all cash and
non-cash Proceeds thereof.

 

“LLC Interests”
means:

 

(i)            the limited liability company
membership interests described on Schedule III hereto, as such Schedule
may be amended, supplemented or modified from time to time (the “Pledged LLC
Interests”), and all dividends, distributions, cash, instruments and other
property, income, profits and proceeds from time to time received or receivable
or otherwise made upon or distributed in respect of or in exchange for any or
all of the Pledged LLC Interests;

 

(ii)           all additional or substitute limited
liability company membership interests from time to time issued to or otherwise
acquired by any Loan Party in any manner in respect of Pledged LLC Interests or
otherwise, and all dividends, distributions, cash, instruments and other
property, income, profits and proceeds from time to time received or receivable
or otherwise made upon or distributed in respect of such additional or
substitute membership interests;

 

(iii)          all right, title and interest of any
Loan Party in each limited liability company to which any Pledged LLC Interest
relates, including, without limitation:

 

4

 

(A)          all
interests of such Loan Party in the capital of such limited liability company
and in all profits, losses and assets, whether tangible or intangible and
whether real, personal or mixed, of such limited liability company, and all
other distributions to which such Loan Party shall at any time be entitled in
respect of such Pledged LLC Interests;

 

(B)           all
other payments due or to become due to such Loan Party in respect of Pledged
LLC Interests, whether under any limited liability company agreement or
operating agreement or otherwise and whether as contractual obligations,
damages, insurance proceeds or otherwise;

 

(C)           all
of such Loan Party’s claims, rights, powers, privileges, authority, options,
security interests, liens and remedies, if any, under any limited liability
company agreement or operating agreement, or at Law or otherwise in respect of
such Pledged LLC Interests;

 

(D)          all
present and future claims, if any, of such Loan Party against any such limited
liability company for moneys loaned or advanced, for services rendered or
otherwise; and

 

(E)           all
of such Loan Party’s rights under any limited liability company agreement or
operating agreement or at Law to exercise and enforce every right, power,
remedy, authority, option and privilege of such Loan Party relating to such
Pledged LLC Interests, including any power to terminate, cancel or modify any
limited liability company agreement or operating agreement, to execute any
instruments and to take any and all other action on behalf of and in the name
of such Loan Party in respect of such Pledged LLC Interests and any such
limited liability company, to make determinations, to exercise any election
(including, without limitation, election of remedies) or option to give or receive
any notice, consent, amendment, waiver or approval, together with full power
and authority to demand, receive, enforce, collect or give receipt for any of
the foregoing or for any assets of any such limited liability company, to
enforce or execute any checks or other instruments or orders, to file any
claims and to take any other action in connection with any of the foregoing;
and

 

to the extent not otherwise included in the foregoing, all cash and
non-cash Proceeds thereof.

 

“Loan Party” means
Holdings, Parent Holdings, the Borrower or any Subsidiary Guarantor, and “Loan
Parties” means any combination of the forgoing.

 

“paid in full” and
“payment in full” means, with respect to any Finance Obligation, the
occurrence of all of the foregoing:  (i)
with respect to such Finance Obligations other than (A) contingent
indemnification obligations, Swap Obligations and Cash Management Obligations
not then due and payable and (B) to the extent covered by clause (ii) below,
obligations with respect to undrawn Letters of Credit, payment in full thereof
in cash (or otherwise to the written satisfaction of the Finance Parties owed
such Finance Obligations), (ii) with respect to any undrawn Letter of Credit,
the obligations under which are included in such Finance Obligations, (A) the
cancellation thereof and payment in full of all resulting Finance Obligations
pursuant to clause (i) above or (B) the receipt of cash collateral (or a
backstop letter of credit in respect thereof on terms acceptable to the
applicable L/C Issuer and the Administrative Agent) in an amount at least equal
to 102% of the L/C Obligations for such Letter of Credit and (iii) if such
Finance Obligations consist of all the Credit Obligations under or in respect
of the Revolving Commitments, the Term B Commitments or the Second Lien
Commitments, termination of all

 

5

 

Commitments and all other
obligations of the Lenders in respect of such Commitments under the Loan
Documents.

 

“Partnership Interests”
means:

 

(i)            the partnership interests described
on Schedule IV hereto, as such Schedule may be amended, supplemented or
modified from time to time (the “Pledged Partnership Interests”), and
all dividends, distributions, cash, instruments and other property, income,
profits and proceeds from time to time received or receivable or otherwise made
upon or distributed in respect of or in exchange for any or all of the Pledged
Partnership Interests;

 

(ii)           all additional or substitute
partnership interests from time to time issued to or otherwise acquired by any
Loan Party in any manner in respect of Pledged Partnership Interests or
otherwise, and all dividends, distributions, cash, instruments and other
property, income, profits and proceeds from time to time received or receivable
or otherwise made upon or distributed in respect of such additional or
substitute partnership interests;

 

(iii)          all right, title and interest of any
Loan Party in each partnership to which any Pledged Partnership Interest
relates, including, without limitation:

 

(A)          all
interests of such Loan Party in the capital of such partnership and in all
profits, losses and assets, whether tangible or intangible and whether real,
personal or mixed, of such partnership, and all other distributions to which
such Loan Party shall at any time be entitled in respect of such Pledged
Partnership Interests;

 

(B)           all
other payments due or to become due to such Loan Party in respect of Pledged
Partnership Interests, whether under any partnership agreement or otherwise and
whether as contractual obligations, damages, insurance proceeds or otherwise;

 

(C)           all
of such Loan Party’s claims, rights, powers, privileges, authority, options,
security interests, liens and remedies, if any, under any partnership
agreement, or at Law or otherwise in respect of such Pledged Partnership
Interests;

 

(D)          all
present and future claims, if any, of such Loan Party against any such
partnership for moneys loaned or advanced, for services rendered or otherwise;
and

 

(E)           all
of such Loan Party’s rights under any partnership agreement or at Law to
exercise and enforce every right, power, remedy, authority, option and
privilege of such Loan Party relating to such Pledged Partnership Interests,
including any power to terminate, cancel or modify any partnership agreement,
to execute any instruments and to take any and all other action on behalf of
and in the name of such Loan Party in respect of such Pledged Partnership
Interests and any such partnership, to make determinations, to exercise any
election (including, without limitation, election of remedies) or option to
give or receive any notice, consent, amendment, waiver or approval, together
with full power and authority to demand, receive, enforce, collect or give
receipt for any of the foregoing or for any 
assets of any such partnership, to enforce or execute any checks or
other instruments or orders, to file any claims and to take any other action in
connection with any of the foregoing; and

 

6

 

to the extent
not otherwise included in the foregoing, all cash and non-cash Proceeds
thereof.

 

“Perfection
Certificate” means with respect to each Loan Party a certificate,
substantially in the form of Exhibit G-3 to the Credit Agreement,
completed and supplemented with the schedules and attachments contemplated
thereby.

 

“Permitted Liens”
means the Lien in favor of the Second Lien Collateral Agent securing the
payment and performance of the Second Lien Obligations and any other Lien
referred to in, and permitted by, Section 7.02 of the Credit Agreement.

 

“Pledge Agreement”
means this Agreement, as the same may be amended, supplemented or modified from
time to time.

 

“Pledged LLC Interests”
has the meaning set forth in clause (i) of the definition of “LLC
Interests”.

 

“Pledged Notes”
has the meaning set forth in clause (i) of the definition of
“Instruments”.

 

“Pledged Partnership
Interests” has the meaning set forth in clause (i) of the definition
of “Partnership Interests”.

 

“Pledged Shares”
has the meaning set forth in clause (i) of the definition of “Stock”.

 

“Requisite Priority
Lien” means a valid and perfected first priority security interest in favor
of the Senior Collateral Agent for the benefit of the Senior Finance Parties
and securing the Senior Obligations.

 

“Second Lien
Collateral Agent” means Bank of America, N.A., in its capacity as
collateral agent for the Second Lien Lenders under the Credit Agreement and the
Collateral Documents, and its permitted successor or successors in such
capacity and, if there is no acting Second Lien Collateral Agent under the
Credit Agreement and the Collateral Documents, the Required Second Lien
Lenders.

 

“Second Lien Credit
Party” means each Second Lien Lender, the Second Lien Collateral Agent and
each Indemnitee in respect of Second Lien Loans and their respective successors
and assigns, and “Second Lien Credit Parties” means any two or more of
them, collectively.

 

“Second Lien Lenders”
means each bank or other lending institution identified on Schedule 2.01
to the Credit Agreement as having a Second Lien Commitment and each Eligible
Assignee which acquires a Second Lien Loan pursuant to Section 10.07(b)
of the Credit Agreement and their respective successors.

 

“Second Lien
Obligations” means, with respect to each Loan Party, without duplication:

 

(i)            in the case of the Borrower, all
principal of and interest (including, without limitation, any interest which
accrues after the commencement of any proceeding under any Debtor Relief Law
with respect to the Borrower to the extent allowed or allowable as a claim in
any such proceeding) on any Second Lien Loan under, or any Second Lien Note
issued pursuant to, the Credit Agreement or any other Loan Document;

 

(ii)           all fees, expenses, indemnification
obligations and other amounts of whatever nature now or hereafter payable by
such Loan Party in respect of any Second Lien Loan

 

7

 

(including,
without limitation, any amounts which accrue after the commencement of any
proceeding under any Debtor Relief Law with respect to such Loan Party to the
extent allowed or allowable as a claim in any such proceeding) pursuant to the
Credit Agreement, this Agreement or any other Loan Document;

 

(iii)          all expenses of the Second Lien
Collateral Agent as to which the Second Lien Collateral Agent has a right to
reimbursement by such Loan Party under Section 10.04 of the Credit
Agreement or under any other similar provision of any other Loan Document,
including, without limitation, any and all sums advanced by the Second Lien
Collateral Agent to preserve the Collateral or preserve its security interests
in the Collateral to the extent permitted under any Loan Document or applicable
Law;

 

(iv)          all amounts paid by any Indemnitee in
respect of any Second Lien Loan as to which such Indemnitee has the right to
reimbursement by such Loan Party under Section 10.05 of the Credit
Agreement or under any other similar provision of any other Loan Document; and

 

(v)           in the case of Holdings, Parent
Holdings, and each Subsidiary Guarantor, all amounts now or hereafter payable
by Holdings, Parent Holdings or such Subsidiary Guarantor and all other
obligations or liabilities now existing or hereafter arising or incurred
(including, without limitation, any amounts which accrue after the commencement
of any proceeding under any Debtor Relief Law with respect to the Borrower,
Holdings, Parent Holdings or such Subsidiary Guarantor to the extent allowed or
allowable as a claim in any such proceeding) on the part of Holdings, Parent
Holdings or such Subsidiary Guarantor under or in respect of the Second Lien
Loans pursuant to the Credit Agreement, the Guaranty or any other Loan
Document;

 

together in each case with all renewals, modifications, consolidations
or extensions thereof.

 

“Second Lien Pledge
Agreement” means the Pledge Agreement, substantially in the form of Exhibit
G-2B to the Credit Agreement, dated as of the date hereof among Holdings,
Parent Holdings, the Borrower, the Subsidiary Guarantors and the Second Lien
Collateral Agent, as the same may be amended, modified or supplemented from
time to time.

 

“Second Lien Security
Agreement” means the Security Agreement, substantially in the form of Exhibit
G-1B to the Credit Agreement, dated as of the date hereof among Holdings,
Parent Holdings, the Borrower, the Subsidiary Guarantors and the Second Lien
Collateral Agent, as the same may be amended, modified or supplemented from
time to time.

 

“Security Interest”
means the security interest granted in favor of the Senior Collateral Agent
pursuant to Section 2.01 hereof for the benefit of the Senior Finance
Parties securing the Senior Obligations.

 

“Senior Collateral
Agent” means Bank of America, N.A., in its capacity as collateral agent for
the Senior Finance Parties under the Senior Finance Documents, and its
permitted successor or successors in such capacity and, if there is no acting
Senior Collateral Agent under the Senior Finance Documents, the Required Senior
Lenders.

 

“Senior Credit
Obligations” means:

 

(i)            in the case of the Borrower, all
principal of and interest (including, without limitation, any interest which
accrues after the commencement of any proceeding under

 

8

 

any Debtor
Relief Law with respect to the Borrower, whether or not allowed or allowable as
a claim in any such proceeding) on any Revolving Loan, Term B Loan or L/C
Obligation under, or any Revolving Note, Term B Note or Swingline Note issued
pursuant to, the Credit Agreement or any other Loan Document;

 

(ii)           all fees, expenses, indemnification
obligations and other amounts of whatever nature now or hereafter payable by
such Loan Party in respect of any Revolving Loan, Term B Loan or L/C Obligation
under, or any Revolving Note, Term B Note or Swingline Note issued pursuant to,
the Credit Agreement or any other Loan Document (including, without limitation,
any amounts which accrue after the commencement of any proceeding under any
Debtor Relief Law with respect to such Loan Party, whether or not allowed or
allowable as a claim in any such proceeding) pursuant to the Credit Agreement,
this Agreement or any other Loan Document;

 

(iii)          all expenses of the Administrative
Agent or the Senior Collateral Agent as to which it has a right to
reimbursement under Section 8.03(a) or (b) of this Agreement or under
any other similar provision of any other Loan Document, including, without
limitation, any and all sums advanced by the Senior Collateral Agent to
preserve any Collateral or preserve its security interests in any Collateral;

 

(iv)          all amounts paid by any Indemnitee in
respect of any Revolving Loan, Term B Loan or L/C Obligation under, or any
Revolving Note, Term B Note or Swingline Note issued pursuant to, the Credit
Agreement or any other Loan Document as to which such Indemnitee has the right
to reimbursement by such Loan Party under as to which such Indemnitee has the
right to reimbursement under Section 10.05 of the Credit Agreement or
under any other similar provision of any other Loan Document; and

 

(v)           in the case of Holdings, Parent
Holdings and each Subsidiary Guarantor, all amounts now or hereafter payable by
Holdings, Parent Holdings or such Subsidiary Guarantor and all other
obligations or liabilities now existing or hereafter arising or incurred (including,
without limitation, any amounts which accrue after the commencement of any
proceeding under any Debtor Relief Law with respect to the Borrower, Holdings,
Parent Holdings or such Subsidiary Guarantor under or in respect of any
Revolving Loan, Swing Line Loan, Term B Loan or L/C Obligation under, or any
Revolving Note, Swing Line Note or Term B Note issued pursuant to, the Credit
Agreement or any other Loan Document, whether or not allowed or allowable as a
claim in any such proceeding) on the part of Holdings, Parent Holdings or such
Subsidiary Guarantor pursuant to the Credit Agreement, the Guaranty or any
other Loan Document;

 

together in each case with all renewals, modifications, consolidations
or extensions thereof (including by virtue of any Facilities Increase under the
Credit Agreement).

 

“Senior Credit Party”
means each Senior Lender (including any Affiliate in respect of any Cash
Management Obligations), each L/C Issuer, the Administrative Agent, the Senior
Collateral Agent and each Indemnitee in respect of Senior Loans and their
respective successors and assigns, and “Senior Finance Parties” means
any two or more of them, collectively.

 

“Senior Finance
Documents” means (i) each Loan Document, (ii) each Swap Agreement permitted
under the Credit Agreement with one or more Swap Creditors and (iii) each
agreement or instrument governing Cash Management Obligations between any Loan
Party and a Senior Lender.

 

9

 

“Senior Finance Party”
means each Finance Party other than a Second Lien Credit Party.

 

“Senior Obligations”
means, at any date, all Finance Obligations, other than Second Lien
Obligations.

 

“Senior Security
Agreement” means the Security Agreement, substantially in the form of Exhibit
G-1A to the Credit Agreement, dated as of the date hereof among Holdings,
Parent Holdings, the Borrower, the Subsidiary Guarantors and the Senior
Collateral Agent, as the same may be amended, modified or supplemented from
time to time.

 

“Stock” means:

 

(i)            the shares of capital stock and
other Securities described on Schedule I hereto, as such Schedule may be
amended, supplemented or modified from time to time (the “Pledged Shares”),
and all dividends, interest, distributions, cash, instruments and other
property, income, profits and proceeds from time to time received, receivable
or otherwise made upon or distributed in respect of or in exchange for any or
all of the Pledged Shares; and

 

(ii)           all additional or substitute shares
of capital stock or other equity interests of any class of any issuer from time
to time issued to or otherwise acquired by any Loan Party in any manner in
respect of Pledged Shares or otherwise, the certificates representing such
additional or substitute shares, and all dividends, interest, distributions,
cash, instruments and other property, income, profits and proceeds from time to
time received, receivable or otherwise made upon or distributed in respect of
or in exchange for any or all of such additional or substitute shares; and

 

to the extent not otherwise included in the foregoing, all cash and
non-cash proceeds thereof.

 

“Supporting Obligation”
means a letter-of-credit right, Guarantee or other secondary obligation
supporting or any Lien securing the payment or performance of one or more
Instruments, Investment Property or other item of Collateral.

 

“Swap Agreement”
means (i) any and all rate swap transactions, basis swaps, credit derivative
transactions, forward rate transactions, commodity swaps, commodity options,
forward commodity contracts, equity or equity index swaps or options, bond
price or bond index swaps or options or forward bond or forward bond price or
forward bond index transactions, interest rate options, forward foreign
exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement and (ii) any and all
transactions of any kind, and the related confirmations, which are subject to
the terms and conditions of, or governed by, any form of master agreement
published by the International Swaps and Derivatives Association, Inc., any
International Foreign Exchange Master Agreement or any other master agreement.

 

“Swap Creditor”
means any Lender or any Affiliate of any Lender from time to time party to one
or more Swap Agreements permitted under the Credit Agreement with a Loan Party
(even if any such Lender for any reason ceases after the execution of such
agreement to be a Lender thereunder), and its successors and assigns, and “Swap
Creditors” means any two or more of such Swap Creditors.

 

10

 

“Swap Obligations”
of any Person means all obligations (including, without limitation, any amounts
which accrue after the commencement of any bankruptcy or insolvency proceeding
with respect to such Person, whether or not allowed or allowable as a claim
under any proceeding under any Debtor Relief Law) of such Person in respect of
any Swap Agreement, excluding any amounts which such Person is entitled to
set-off against its obligations under applicable Law.

 

“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, the effect of perfection or non-perfection or the priority of the
Security Interest in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than New York, “UCC” means the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof relating to such perfection, effect of perfection or
non-perfection or priority.

 

Section
1.04         Terms
Generally.  The
definitions in Sections 1.02 and 1.03 shall apply equally to both
the singular and plural forms of the terms defined, except for terms defined in
both the singular and the plural form. 
Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and
“including” shall be deemed to be followed by the phrase “without
limitation”.  All references herein to
Articles, Sections, Exhibits and Schedules shall be deemed references to
Articles and Sections of, and Exhibits and Schedules to, this Agreement unless
the context, shall otherwise require. 
Unless otherwise expressly provided herein, the word “day” means a
calendar day.

 

ARTICLE II

THE SECURITY INTERESTS

 

Section
2.01         Grant of
Security Interests.  To secure the due and punctual
payment of the Senior Obligations, howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent, now or hereafter existing
or due or to become due, in accordance with the terms thereof and to secure the
performance of all of the obligations of each Loan Party hereunder and under the
other Finance Documents in respect of the Senior Obligations, each Loan Party
hereby grants to the Senior Collateral Agent for the benefit of the Senior
Finance Parties a security interest in, and each Loan Party hereby pledges and
collaterally assigns to the Senior Collateral Agent for the benefit of the
Senior Finance Parties, all of such Loan Party’s right, title and interest in,
to and under the Collateral.

 

Section
2.02         Collateral.  All
right, title and interest of each Loan Party in, to and under the following
property, whether now owned or existing or hereafter acquired by a Loan Party,
created or arising, whether tangible or intangible, and regardless of where
located, are herein collectively called the “Collateral”:

 

(i)            Stock;

 

(ii)           Instruments;

 

(iii)          LLC Interests;

 

(iv)          Partnership Interests;

 

(v)           Investment Property;

 

(vi)          Financial Assets;

 

11

 

(vii)         all General Intangibles; and

 

(viii)        to the extent not otherwise included,
all Proceeds of all or any of the Collateral described in clauses (i)
through (vi) hereof;

 

provided, however, that the Collateral
shall not include (x) cash or other distributions in respect of federal, state
and/or local income taxes payable by any Loan Party or any direct or indirect
equity holder of any Loan Party in respect of the income and profits of any
limited liability company, partnership or other entity which is not a
corporation for United States federal income tax purposes or (y) except as
otherwise required by Section 6.12(d) of the Credit Agreement, shares of
capital stock having voting power in excess of 65% of the voting power of all
classes of capital stock of a Foreign Subsidiary of any Loan Party if, and
solely to the extent that, the inclusion of such shares of capital stock
hereunder would cause the undistributed earnings of such Foreign Subsidiary as
determined for United States federal income tax purposes to be treated as a
deemed repatriation of the earnings of such Foreign Subsidiary to such Foreign
Subsidiary’s United States parent for Untied States federal income tax
purposes.

 

Section
2.03         Security
Interests Absolute.  All
rights of the Senior Collateral Agent, all security interests hereunder and all
obligations of each Loan Party hereunder are unconditional and absolute and
independent and separate from any other security for or guaranty of the Senior
Obligations, whether executed by such Loan Party, any other Loan Party or any
other Person.  Without limiting the
generality of the foregoing, the obligations of each Loan Party hereunder shall
not be released, discharged or otherwise affected or impaired by:

 

(i)            any extension, renewal, settlement,
compromise, acceleration, waiver or release in respect of any obligation of any
other Loan Party under any Finance Document or any other agreement or
instrument evidencing or securing any Finance Obligation, by operation of Law
or otherwise;

 

(ii)           any change in the manner, place, time
or terms of payment of any Finance Obligation or any other amendment, supplement
or modification to any Finance Document or any other agreement or instrument
evidencing or securing any Finance Obligation;

 

(iii)          any release, non-perfection or
invalidity of any direct or indirect security for any Finance Obligation, any
sale, exchange, surrender, realization upon, offset against or other action in
respect of any direct or indirect security for any Finance Obligation or any
release of any other obligor or Loan Parties in respect of any Finance
Obligation;

 

(iv)          any change in the existence, structure
or ownership of any Loan Party, or any insolvency, bankruptcy, reorganization,
arrangement, readjustment, composition, liquidation or other similar proceeding
affecting any Loan Party or its assets or any resulting disallowance, release or
discharge of all or any portion of any Finance Obligation;

 

(v)           the existence of any claim, set-off
or other right which any Loan Party may have at any time against the Borrower,
any other Loan Party, any Agent, any other Finance Party or any other Person,
whether in connection herewith or any unrelated transaction; provided
that nothing herein shall prevent the assertion of any such claim by separate
suit or compulsory counterclaim;

 

(vi)          any invalidity or unenforceability
relating to or against the Borrower or any other Loan Party for any reason of
any Finance Document or any other agreement or instrument evidencing or
securing any Finance Obligation or any provision of applicable Law or

 

12

 

regulation
purporting to prohibit the payment by the Borrower or any other Loan Party of
any Finance Obligation;

 

(vii)         any failure by any Finance Party:  (A) to file or enforce a claim against any
Loan Party or its estate (in a bankruptcy or other proceeding); (B) to give
notice of the existence, creation or incurrence by any Loan Party of any new or
additional indebtedness or obligation under or with respect to the Finance
Obligations; (C) to commence any action against any Loan Party; (D) to disclose
to any Loan Party any facts which such Finance Party may now or hereafter know
with regard to any Loan Party; or (E) to proceed with due diligence in the
collection, protection or realization upon any collateral securing the Finance
Obligations;

 

(viii)        any direction as to application of
payment by the Borrower, any other Loan Party or any other Person;

 

(ix)           any subordination by any Finance
Party of the payment of any Finance Obligation to the payment of any other
liability (whether matured or unmatured) of any Loan Party to its creditors;

 

(x)            any act or failure to act by any
Collateral Agent or any other Finance Party under this Agreement or otherwise
which may deprive any Loan Party of any right to subrogation, contribution or
reimbursement against any other Loan Party or any right to recover full
indemnity for any payments made by such Loan Party in respect of the Finance
Obligations; or

 

(xi)           any other act or omission to act or
delay of any kind by any Loan Party or any Finance Party or any other Person or
any other circumstance whatsoever which might, but for the provisions of this
clause, constitute a legal or equitable discharge of any Loan Party’s
obligations hereunder, except that a Loan Party may assert the defense of final
payment in full of the Senior Obligations.

 

Each Loan Party has
irrevocably and unconditionally delivered this Agreement to the Senior
Collateral Agent, for the benefit of the Senior Finance Parties, and the
failure by any other Person to sign this Agreement or a pledge agreement
similar to this Agreement or otherwise shall not discharge the obligations of
any Loan Party hereunder.

 

This Agreement shall
remain fully enforceable against each Loan Party irrespective of any defenses
that any other Loan Party may have or assert in respect of the Finance
Obligations, including, without limitation, failure of consideration, breach of
warranty, payment, statute of frauds, statute of limitations, accord and
satisfaction and usury, except that a Loan Party may assert the defense of
final payment in full of the Senior Obligations.

 

Section
2.04         Continuing
Liability of the Loan Parties. 
The Security Interest is granted as security only and shall not subject
the Senior Collateral Agent or any Senior Finance Party to, or transfer or in
any way affect or modify, any obligation or liability of any Loan Party with
respect to any of the Collateral or any transaction in connection therewith.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES

 

Each Loan Party
represents and warrants that:

 

 

13

 

Section
3.01         Title to
Collateral.  Such Loan
Party is the legal, record and beneficial owner of, and has good and sufficient
legal title to, all of the Collateral pledged by it hereunder, free and clear
of any Liens other than Permitted Liens and Liens securing indebtedness to be
repaid with the proceeds of the initial Loans under the Credit Agreement and in
respect of which the Administrative Agent has received pay-off letters and
instruments appropriate under local Law to effect the termination of such
Liens.  Other than financing statements
or other similar or equivalent documents or instruments with respect to the
Security Interest and Permitted Liens, no financing statement, mortgage,
security agreement or similar or equivalent document or instrument covering all
or any part of the Collateral is on file or of record in any jurisdiction in
which such filing or recording would be effective to perfect a Lien on such
Collateral.  No Collateral is in the
possession or control of any Person asserting any claim thereto or security
interest therein, except that the Senior Collateral Agent or its nominee,
custodian or a Securities Intermediary acting on its behalf, and the Senior
Collateral Agent acting as bailee for the Second Lien Collateral Agent pursuant
to the Intercreditor Agreement, may have possession and/or control of
Collateral as contemplated hereby and by the other Loan Documents.

 

Section
3.02         Validity,
Perfection and Priority of Security Interests.  The Security Interest constitutes a valid
security interest under the UCC securing the Senior Obligations.  Upon Delivery of all Collateral to the Senior
Collateral Agent in accordance with the provisions hereof and the timely and
proper filing of Uniform Commercial Code financing statements stating that the
same covers “all assets of the Debtor”, “all personal property of the Debtor”
or words of similar import in the offices specified on Schedule 4.01 of
the Senior Security Agreement, the Security Interest shall constitute a
Requisite Priority Lien in all right, title and interest of such Loan Party in
the Collateral (subject to the requirements of Section 9-315 of the UCC with
respect to any proceeds of Collateral and to the further requirement that
additional steps may be necessary to perfect the Security Interest in dividends
or other distributions in kind), and, to the extent control of such Collateral
may be obtained pursuant to Article 8 and/or 9 of the UCC, the Senior
Collateral Agent will have control of the Collateral subject to no adverse
claims of any Person.  Except as set
forth on Schedule 4.01 of the Senior Security Agreement, on and as of
the date hereof no registration, recordation or filing with any Governmental
Authority is required in connection with the execution or delivery of this
Agreement, or necessary for the validity or enforceability hereof or for the
perfection of the Security Interest.  The
security interest created hereunder in favor of the Senior Collateral Agent for
the benefit of the Senior Finance Parties shall be prior to all other Liens on
the Collateral except for Permitted Liens (exclusive of those in favor of the
Second Lien Collateral Agent) having priority over the Senior Collateral
Agent’s Lien by operation of Law or otherwise as permitted under the Credit
Agreement.

 

Section
3.03         Collateral.

 

(a)           Schedules
I, II, III and IV hereto (as such schedules may be amended, supplemented or
modified from time to time) set forth (i) the name and jurisdiction of
organization of, and the ownership interest (including percentage owned and
number of shares, units or other equity interests) of such Loan Party in the
Shares, LLC Interests and Partnership Interests issued by each of such Loan
Party’s direct Subsidiaries which are required to be included in the Collateral
and pledged hereunder, (ii) all other Shares, LLC Interests and Partnership
Interests directly owned by such Loan Party that are required to be included in
the Collateral and pledged hereunder and (iii) the issuer, date of issuance and
amount of all promissory notes having a face value in excess of $500,000
directly owned or held by such Loan Party that are required to be included in
the Collateral and pledged hereunder. 
Such Loan Party holds all such Collateral directly (i.e., not through a
Subsidiary, Securities Intermediary or any other Person).

 

(b)           All
Collateral consisting of Pledged Shares, Pledged LLC Interests and Pledged
Partnership Interests has been duly authorized and validly issued, is fully
paid and with respect to capital

 

14

 

stock of a corporation,
non-assessable and is subject to no options to purchase or similar rights of
any Person.  Except as set forth on Schedules
I, III and IV hereto, (i) such Collateral constitutes 100% of
the issued and outstanding shares of capital stock or other equity interests of
the respective issuers thereof, (ii) no issuer of Collateral has outstanding
any security convertible into or exchangeable for any shares of its capital
stock or other equity interests or any warrant, option, convertible security,
instrument or other interest entitling the holder thereof to acquire any such
shares or any security convertible into or exchangeable for such shares, (iii)
there are no voting trusts, stockholder agreements, proxies or other agreements
in effect with respect to the voting or transfer of such shares of its capital
stock and (iv) there are no Liens or agreements, arrangements or obligations to
create or give any Lien relating to any such shares of capital stock.  No Loan Party is now and or will become a
party to or otherwise bound by any agreement, other than this Agreement or the
Loan Documents, which restricts in any adverse manner the rights of the Senior
Collateral Agent or any other present or future holder of any Collateral with
respect thereto.

 

Section
3.04         No
Consents.  Except for
filings necessary to perfect the Security Interest, no consent of any other
Person (including, without limitation, any stockholder or creditor of such Loan
Party or any of its Subsidiaries) and no order, material consent, approval,
license, authorization or validation of, or filing, recording or registration
with, or exemption by any Governmental Authority is required to be obtained by
such Loan Party in connection with the execution, delivery or performance of
this Agreement, or in connection with the exercise of the rights and remedies
of the Senior Collateral Agent pursuant to this Agreement, except as may be
required by the Intercreditor Agreement or in connection with the disposition
of the Collateral by Laws affecting the offering and sale of securities
generally.

 

ARTICLE
IV

COVENANTS

 

Each Loan Party covenants
and agrees that until the payment in full of all Senior Obligations (other than
contingent indemnification obligations) and until there is no commitment by any
Senior Finance Party to make further advances, incur obligations or otherwise
give value, such Loan Party will comply with the following:

 

Section
4.01         Delivery
of Collateral.  All
Collateral (other than “Excepted Instruments” as defined in Section 4.06
of the Senior Security Agreement) shall be Delivered to and held by or on
behalf of the Senior Collateral Agent pursuant hereto; provided that so
long as no Event of Default shall have occurred and be continuing, and except
as required by the Senior Security Agreement or any other Loan Document, each
Loan Party may retain any Collateral (unless otherwise provided in Section
2.05(b) of the Senior Security Agreement) (i) consisting of checks, drafts and
other Instruments (other than Pledged Notes and any additional or substitute
promissory notes issued to or otherwise acquired by such Loan Party in respect
of Pledged Notes) received by it in the ordinary course of business or (ii)
which it is otherwise entitled to receive and retain pursuant to Section
5.01 hereof, and the Senior Collateral Agent shall, promptly upon request
of any Loan Party, make appropriate arrangements for making any Collateral
consisting of an Instrument or a Certificated Security pledged by such Loan Party
available to it for purposes of presentation, collection or renewal (any such
arrangement to be effected, to the extent deemed appropriate by the Senior
Collateral Agent, against trust receipt or like document).  All Collateral Delivered hereunder shall be
accompanied by any required transfer tax stamps.  The Senior Collateral Agent shall have the
right at any time upon the occurrence and during the continuance of an Event of
Default, and upon notice to any Loan Party, to cause any or all of the Collateral
to be transferred of record into the name of the Senior Collateral Agent or its
nominee.  Each Loan Party will promptly
give the Senior Collateral Agent copies of any material notices or other
material communications received by it with respect to Collateral registered in
the name of such Loan Party, and the Senior Collateral Agent

 

15

 

will promptly give each Loan
Party copies of any material notices and material communications received by
the Senior Collateral Agent with respect to Collateral registered in the name
of the Senior Collateral Agent or its nominee or custodian.

 

Section
4.02         Delivery
of Perfection Certificate; Filing of Financing Statements and Delivery of
Search Reports.  On or
prior to the Closing Date, such Loan Party shall deliver its Perfection
Certificate to the Senior Collateral Agent and shall authorize all filings and
recordings and other actions specified on Schedule 4.01 to the Senior
Security Agreement to be completed.  The
information set forth in the Perfection Certificate shall be correct and
complete as of the Closing Date.

 

Section
4.03         Change of
Name, Organizational Structure or Location; Subjection to Other Security
Agreements.  Such Loan
Party will not change the location of any Collateral or its name,
organizational structure or location (determined as provided in Section 9-307
of the UCC) in any manner, and shall not become bound, as provided in Section
9-203(d) of the UCC, by a security agreement entered into by another Person, in
each case unless it shall have given the Senior Collateral Agent not less than
20 days’ prior notice thereof.  Such Loan
Party shall not in any event change the location of any Collateral or its name,
organizational structure or location (determined as provided in Section 9-307
of the UCC), or become bound, as provided in Section 9-203(d) of the UCC, by a
security agreement entered into by another Person, if such change would cause
the Security Interest in any Collateral to lapse or cease to be perfected
unless such Loan Party has taken on or before the date of lapse all actions
necessary to ensure that the Security Interest in the Collateral do not lapse
or cease to be perfected.

 

Section
4.04         Further
Actions.  Such Loan Party
will, from time to time at its expense and in such manner and form as the
Senior Collateral Agent may reasonably request, execute, deliver, file and
record or authorize the recording of any financing statement, specific
assignment, instrument, document, agreement or other paper and take any other
action (including, without limitation, any filings of financing or continuation
statements under the Uniform Commercial Code) that from time to time may be
necessary or advisable, or that the Senior Collateral Agent may request, in order
to create, preserve, perfect or maintain the Security Interest or to enable the
Senior Collateral Agent and the Senior Finance Parties to exercise and enforce
any of its rights, powers and remedies created hereunder or under applicable
Law with respect to any of the Collateral. 
Such Loan Party shall maintain the Security Interest as a Requisite
Priority Lien (subject to Permitted Liens (exclusive of those in favor of the
Second Lien Collateral Agent) having priority by operation of Law over the
Senior Collateral Agent’s Lien) and shall defend such security interests and
such priority against the claims and demands of all Persons to the extent
adverse to such Loan Party’s ownership rights or otherwise inconsistent with
this Agreement or the other Loan Documents. 
To the extent permitted by applicable Law, such Loan Party hereby
authorizes the Senior Collateral Agent to execute and file, in the name of such
Loan Party or otherwise and without separate authorization or authentication of
such Loan Party appearing thereon, such Uniform Commercial Code financing
statements or continuation statements as the Senior Collateral Agent in its
sole discretion may deem necessary or reasonably appropriate to further perfect
or maintain the perfection of the Security Interest.  Such Loan Party agrees that, except to the
extent that any filing office requires otherwise, a carbon, photographic,
photostatic or other reproduction of this Agreement or of a financing statement
is sufficient as a financing statement. 
The Loan Parties shall pay the costs of, or incidental to, any recording
or filing of any financing or continuation statements concerning the
Collateral.

 

Section
4.05         Disposition
of Collateral.  Such Loan
Party will not sell, exchange, assign or otherwise dispose of, or grant any
option with respect to, any Collateral or create or suffer to exist any Lien
(other than the Security Interest, the security interest in favor of the Second
Lien Collateral Agent securing the Second Lien Obligations and other Permitted
Liens) on any Collateral except that, subject to the rights of the Senior
Collateral Agent hereunder and, if so provided in the Intercreditor

 

16

 

Agreement, to the rights of the
Second Lien Collateral Agent under the Second Lien Security Agreement if an
Event of Default shall have occurred and be continuing, such Loan Party may
sell, exchange, assign or otherwise dispose of, or grant options with respect
to, Collateral to the extent expressly permitted by the Credit Agreement,
whereupon, in the case of any such disposition, the Security Interest created
hereby in such item (but not in any Proceeds arising from such disposition)
shall cease immediately without any further action on the part of the Senior
Collateral Agent.

 

Section
4.06         Additional
Collateral.  Such Loan
Party will cause each issuer of the Collateral that is a Subsidiary of such
Loan Party not to issue any stock, other securities, limited liability company
membership interests, partnership interests, promissory notes or other
instruments in addition to or in substitution for the Pledged Shares, Pledged
LLC Interests, Pledged Partnership Interests and Pledged Notes issued by such
issuer (in each case, to the extent that any of such instruments constitute
Collateral), except to such Loan Party or pursuant to a Qualifying IPO or
ratably to all then existing holders of Equity Interests of such issuer and, in
the event that any issuer of Collateral at any time issues any additional or
substitute stock, other securities, limited liability company membership
interests, partnership interests, promissory notes or other instruments to such
Loan Party, such Loan Party will promptly Deliver all such items (in each case,
to the extent that such items constitute Collateral) to the Senior Collateral
Agent to hold as Collateral hereunder and will within 30 days thereafter
deliver to the Senior Collateral Agent a certificate executed by an authorized
officer of such Loan Party describing such Pledged Shares, Pledged LLC Interests,
Pledged Partnership Interests and/or Pledged Notes, attaching such supplements
to Schedules I through V hereto as are necessary to cause such Schedules
to be complete and accurate at such time and certifying that such Pledged
Shares, Pledged LLC Interests, Pledged Partnership Interests and/or Pledged
Notes have been duly pledged with the Senior Collateral Agent hereunder.

 

Section
4.07         Information
Regarding Collateral. 
Such Loan Party will, upon request, provide to the Senior Collateral
Agent all information and evidence it may reasonably request concerning the
Collateral to enable the Senior Collateral Agent to enforce the provisions of
this Agreement.

 

ARTICLE V

DISTRIBUTIONS ON COLLATERAL; VOTING

 

Section
5.01         Right to
Receive Distributions on Collateral; Voting.

 

(a)           Unless
and until (i) an Event of Default shall have occurred and be continuing and
(ii) written notice thereof shall have been given by the Senior Collateral
Agent to the relevant Loan Party (provided that if an Event of Default
specified in Section 8.01(f) of the Credit Agreement shall occur, no
such notice shall be required):

 

(i)            Each Loan Party shall be entitled to
exercise any and all voting, management, administration and other consensual
rights pertaining to the Collateral or any part thereof for any purpose not
inconsistent with the terms of this Agreement and the other Loan Documents; provided,
however, that each Loan Party shall give the Senior Collateral Agent at
least three days’ written notice of the manner in which it intends to exercise,
or the reasons for refraining from exercising, any such right, and no Loan
Party shall exercise or refrain from exercising any such right if, in the
Senior Collateral Agent’s judgment, such action would violate or be
inconsistent with any of the terms of this Agreement, any other Loan Document,
or would have the effect of impairing the position or interest of the Senior
Collateral Agent hereunder or thereunder.

 

17

 

(ii)           Each Loan Party shall be entitled to
receive and retain any and all dividends, interest, distributions, cash,
instruments and other payments and distributions made upon or in respect of the
Collateral; provided, however, that any and all:

 

(A)          dividends,
interest and other payments and distributions paid other than in cash or Cash
Equivalents in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in exchange for, any
Collateral, except as expressly permitted by Section 7.07 of the Credit
Agreement;

 

(B)           dividends
and other payments and distributions paid in cash or Cash Equivalents in
respect of any Collateral in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital, capital surplus or
paid-in-surplus (it being understood that the Equity Distribution shall not
constitute a dividend, payment or distribution under this clause (B));

 

(C)           additional
stock, other securities, limited liability company membership interests, partnership
interests, promissory notes or other instruments or property paid or
distributed in respect of any Pledged Shares, Pledged LLC Interests or Pledged
Partnership Interests by way of share-split, spin-off, split-up,
reclassification, combination of shares or similar rearrangement (it being
understood that common stock of Parent Holdings or Holdings issued in a
Qualifying IPO shall not be subject to this clause (C));

 

(D)          all
other or additional stock, other securities, limited liability company membership
interests, partnership interests, promissory notes or other instruments or
property which may be paid in respect of the Collateral by reason of any
consolidation, merger, exchange of shares, conveyance of assets, liquidation or
similar reorganization; and

 

(E)           cash
paid, payable or otherwise distributed in respect of principal of, in
redemption of, or in exchange for, any Collateral;

 

shall be
forthwith (i) Delivered to the Senior Collateral Agent or its nominee or
custodian to hold as Collateral hereunder or (ii) in the case of any amount
referred to in this Section 5.01(a)(ii) paid or distributed in cash,
forthwith deposited in a Deposit Account maintained with the Senior Collateral
Agent or with respect to which an effective Account Control Agreement as
contemplated by Section 4.12 of the Senior Security Agreement has been
delivered to the Senior Collateral Agent and shall, if received by any Loan
Party, be received in trust for the benefit of the Senior Collateral Agent, be
segregated from the other property or funds of such Loan Party and be forthwith
Delivered, in the same form as so received, to the Senior Collateral Agent or
its nominee or custodian to hold as Collateral or deposited in a Deposit
Account as contemplated by clause (ii) above.

 

(iii)          The Senior Collateral Agent shall,
upon receiving a written request from any Loan Party accompanied by a
certificate signed by an authorized officer of such Loan Party stating that no
Event of Default has occurred and is continuing, execute and deliver (or cause
to be executed and delivered) to such Loan Party or as specified in such
request all proxies, powers of attorney, consents, ratifications and waivers
and other instruments as such Loan Party may reasonably request for the purpose
of enabling such Loan Party to exercise the voting and other rights which it is
entitled to exercise pursuant to paragraph (i) above and to receive the
dividends, interest, distributions, cash, instruments or other payments or
distributions which it is authorized

 

18

 

to receive and
retain pursuant to paragraph (ii) above in respect of any of the
Collateral which is registered in the name of the Senior Collateral Agent or
its nominee.

 

(b)           Upon
the occurrence and during the continuance of an Event of Default under Section
8.01(f) of the Credit Agreement or any other Event of Default in respect of
which the Senior Collateral Agent has given the Loan Parties notice as required
by Section 5.01(a) and notice to such Loan Party hereof:

 

(i)            All rights of each Loan Party to
receive the dividends, interest, distributions, cash, instruments and other
payments and distributions which it would otherwise be authorized to receive
and retain pursuant to Section 5.01(a)(ii) shall cease, and all such
rights shall thereupon become vested in the Senior Collateral Agent, which
shall thereupon have the sole right to receive and hold as Collateral such
dividends, interest, distributions, cash, instruments and other payments and
distributions; provided that all cash dividends and other cash
distributions in respect of federal, state and/or local income taxes payable by
any Loan Party or any direct or indirect equity holder of any Loan Party in
respect of income and profits of any limited liability company, partnership or
other entity which is not a corporation for United States federal income tax
purposes shall be paid to the respective Loan Party free and clear of any Liens
created hereby regardless of whether an Event of Default shall have occurred
and be continuing.

 

(ii)           All dividends, interest,
distributions, cash, instruments and other payments and distributions which are
received by any Loan Party contrary to the provisions of paragraph (i) of this Section
5.01(b) shall be received in trust for the benefit of the Senior Collateral
Agent, shall be segregated from other property or funds of such Loan Party and
shall be forthwith Delivered, in the same form as so received to the Senior
Collateral Agent or its nominee or custodian to hold as Collateral.

 

(c)           Upon
the occurrence and during the continuance of an Event of Default and upon
reasonable notice by the Senior Collateral Agent to a Loan Party, all rights of
such Loan Party to exercise the voting, management, administration and other
consensual rights which it would otherwise be entitled to exercise pursuant to Section
5.01(a)(i) shall cease, all such rights shall thereupon become vested in
the Senior Collateral Agent, who shall thereupon have the sole right to
exercise such voting and other consensual rights, and such Loan Party shall
take all actions as may be necessary or appropriate to effect such right of the
Senior Collateral Agent.

 

ARTICLE VI

GENERAL AUTHORITY; REMEDIES

 

Section
6.01         General
Authority.  Until such
time as the Senior Obligations shall have been paid in full (other than
contingent indemnification obligations) and until there is no commitment by any
Senior Credit Party to make further advances, incur obligations or otherwise
give value, each Loan Party hereby irrevocably appoints the Senior Collateral
Agent and any officer or agent thereof as its true and lawful attorney-in-fact,
with full power of substitution, in the name of such Loan Party, the Senior
Collateral Agent, the Senior Finance Parties or otherwise, for the sole use and
benefit of the Senior Collateral Agent and the Senior Finance Parties, but at
such Loan Party’s expense, to the extent permitted by Law, to exercise at any
time and from time to time while an Event of Default has occurred and is
continuing, all or any of the following powers with respect to all or any of
the Collateral; such power, being coupled with an interest, is irrevocable
until the Senior Obligations are paid in full (other than contingent
indemnification obligations) and until there is no commitment by any Senior
Credit Party to make further advances, incur obligations or otherwise give
value:

 

19

 

(i)            to take any and all reasonably
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to carry out the terms of this Agreement;

 

(ii)           to receive, take, indorse, assign and
deliver any and all checks, notes, drafts, acceptances, documents and other
negotiable and non-negotiable Instruments taken or received by such Loan Party
as, or in connection with, the Collateral;

 

(iii)          to accelerate any Pledged Note which
may be accelerated in accordance with its terms, and to otherwise demand, sue
for, collect, receive and give acquittance for any and all monies due or to
become due on or by virtue of any Collateral;

 

(iv)          to commence, settle, compromise,
compound, prosecute, defend or adjust any claim, suit, action or proceeding
with respect to, or in connection with, the Collateral;

 

(v)           to sell, transfer, assign or
otherwise deal in or with the Collateral or the Proceeds or avails thereof, as
fully and effectually as if the Senior Collateral Agent were the absolute owner
thereof;

 

(vi)          to extend the time of payment of any
or all of the Collateral and to make any allowance and other adjustments with
respect thereto;

 

(vii)         subject to the giving of notice to the
relevant Loan Party in accordance with Section 5.01(a) hereof, to vote
all or any part of the Pledged Shares, Pledged LLC Interests, Pledged
Partnership Interests and/or Pledged Notes (whether or not transferred into the
name of the Senior Collateral Agent) and give all consents, waivers and
ratifications in respect of the Collateral; and

 

(viii)        to do, at its option, but at the expense
of the Loan Parties, at any time or from time to time, all acts and things
which the Senior Collateral Agent deems reasonably necessary to protect or
preserve the Collateral and to realize upon the Collateral.

 

Section
6.02         Authority
of Senior Collateral Agent.  Each Loan Party acknowledges that the rights
and responsibilities of the Senior Collateral Agent under this Agreement with
respect to any action taken by either of them or the exercise or non-exercise
by the Senior Collateral Agent of any option, voting right, request, judgment
or other right or remedy provided for herein or resulting or arising out of
this Agreement shall, as between the Senior Collateral Agent and the other
Finance Parties, be governed by the Credit Agreement, the Intercreditor
Agreement and by such other agreements with respect thereto as may exist from
time to time among them, but, as between the Senior Collateral Agent and the
Loan Parties, the Senior Collateral Agent shall be conclusively presumed to be
acting as agent for the other Senior Finance Parties it represents as
collateral agent with full and valid authority so to act or refrain from
acting, and no Loan Party shall be under any obligation, or entitlement, to
make any inquiry respecting such authority.

 

Section
6.03         Remedies
upon Event of Default.

 

(a)           If
any Event of Default has occurred and is continuing, the Senior Collateral
Agent, upon being instructed to do so by the Required Senior Lenders, may, in
addition to all other rights and remedies granted to it in this Agreement and
in any other agreement securing, evidencing or relating to the Senior
Obligations (including without limitation, the right to give instructions or a
notice of sole control to an issuer subject to an Issuer Control
Agreement):  (i) exercise on behalf of
the Senior Finance

 

20

 

Parties all rights and remedies of a secured party
under the UCC (whether or not in effect in the jurisdiction where such rights
are exercised) and, in addition, (ii) without demand of performance or other
demand or notice of any kind (except as herein provided or as may be required
by applicable Law) to or upon any Loan Party or any other Person (all of which
demands and/or notices are hereby waived by each Loan Party to the extent
permitted by Law), (A) apply all cash, if any, then held by it as Collateral as
specified in Section 6.08 and (B) if there shall be no such cash or if
such cash shall be insufficient to pay all the Senior Obligations in full or
cannot be so applied for any reason or if the Senior Collateral Agent
determines to do so, collect, receive, appropriate and realize upon the
Collateral and/or sell, assign, give an option or options to purchase or
otherwise dispose of and deliver the Collateral (or contract to do so) or any part
thereof in one or more parcels (which need not be in round lots) at public or
private sale or at broker’s board or on any securities exchange, at any office
of the Senior Collateral Agent or elsewhere in such manner as is commercially
reasonable and as the Senior Collateral Agent may deem best, for cash, on
credit or for future delivery, without assumption of any credit risk and at
such price or prices as the Senior Collateral Agent may deem reasonably
satisfactory.

 

(b)           If
any Event of Default has occurred and is continuing, the Senior Collateral
Agent shall give each Loan Party not less than 10 days’ prior notice of the
time and place of any sale or other intended disposition of any of the
Collateral, except any Collateral which threatens to decline speedily in value
or is of a type customarily sold on a recognized market.  Any such notice shall (i) in the case of a
public sale, state the time and place fixed for such sale, (ii) in the case of
a sale at a broker’s board or on a securities exchange, state the board or
exchange at which such sale is to be made and the day on which the Collateral,
or the portion thereof being sold, will first be offered for sale, (iii) in the
case of a private sale, state the day after which such sale may be consummated,
(iv) contain the information specified in Section 9-613 of the UCC, (v) be
authenticated and (vi) be sent to the parties required to be notified pursuant
to Section 9-611(c) of the UCC; provided that, if the Senior Collateral
Agent fails to comply with this sentence in any respect, its liability for such
failure shall be limited to the liability (if any) imposed on it as a matter of
Law under the UCC.  The Senior Collateral
Agent and each Loan Party agree that such notice constitutes reasonable
notification within the meaning of Section 9-611 of the UCC.  Except as otherwise provided herein, each
Loan Party hereby waives, to the extent permitted by applicable Law, notice and
judicial hearing in connection with the Senior Collateral Agent’s taking
possession or disposition of any of the Collateral.

 

(c)           The
Senior Collateral Agent or any Senior Finance Party may be the purchaser of any
or all of the Collateral so sold at any public sale (or, if the Collateral is
of a type customarily sold in a recognized market or is of a type which is the
subject of widely distributed standard price quotations, at any private
sale).  If any Event of Default has
occurred and is continuing, each Loan Party will execute and deliver such
documents and take such other action as the Senior Collateral Agent deems
necessary or reasonably advisable in order that any such sale may be made in
compliance with Law.  Upon any such sale,
the Senior Collateral Agent shall have the right to deliver, assign and
transfer to the purchaser thereof the Collateral so sold.  Each purchaser at any such sale shall hold
the Collateral so sold to it absolutely and free from any claim or right of
whatsoever kind.  Any such public sale
shall be held at such time or times within ordinary bankers hours and at such
place or places as the Senior Collateral Agent may fix in the notice of such
sale.  At any such sale, the Collateral
may be sold in one lot as an entirety or in separate parcels, as the Senior
Collateral Agent may determine.  The
Senior Collateral Agent shall not be obligated to make any such sale pursuant
to any such notice.  The Senior
Collateral Agent may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for the sale, and such sale may be
made at any time or place to which the same may be so adjourned without further
notice.  In the case of any sale of all
or any part of the Collateral on credit or for future delivery, the Collateral
so sold may be retained by the Senior Collateral Agent until the selling price
is paid by the purchaser thereof, but the Senior Collateral Agent shall not
incur any liability in the case of the failure of such purchaser to take up

 

21

 

and pay for the Collateral so sold and, in the case of
any such failure, such Collateral may again be sold upon like notice.

 

Section
6.04         Securities
Act; Registration Rights.

 

(a)           Securities Act.  In view of the position of the Loan Parties
in relation to the Collateral, or because of other present or future
circumstances, a question may arise under the Securities Act of 1933, as now or
hereafter in effect, or any similar statute hereafter enacted analogous in
purpose or effect (such Act and any such similar statute as from time to time
in effect being herein called the “Federal Securities Laws”) with
respect to any disposition of the Collateral permitted hereunder.  Each Loan Party understands that compliance
with the Federal Securities Laws might very strictly limit the course of
conduct of the Senior Collateral Agent if the Senior Collateral Agent were to
attempt to dispose of all or any part of the Collateral, and might also limit
the extent to which or the manner in which any subsequent transferee of any
Collateral could dispose of the same. 
Similarly, there may be other legal restrictions or limitations
affecting the Senior Collateral Agent in any attempt to dispose of all or part
of the Collateral under applicable Blue Sky or other state securities laws or
similar Laws analogous in purpose or effect. 
Without limiting the generality of the foregoing, the provisions of this
Section 6.04 would apply if, for example, the Senior Collateral Agent
were to place all or any part of the Collateral for private placement by an
investment banking firm, or if such investment banking firm purchased all or
any part of the Collateral for its own account, or if the Senior Collateral
Agent placed all or any part of the Collateral privately with a purchaser or
purchasers.

 

Each Loan Party expressly
agrees that the Senior Collateral Agent is authorized, in connection with any
sale of any Collateral, if it deems it advisable so to do, (i) to restrict the
prospective bidders on or purchasers of any of the Collateral to a limited
number of sophisticated investors who will represent and agree that they are
purchasing for their own account for investment and not with a view to the
distribution or sale of any of such Collateral, (ii) to cause to be placed on certificates
for any or all of the Collateral or on any other securities pledged hereunder a
legend to the effect that such security has not been registered under the
Securities Act of 1933 and may not be disposed of in violation of the provision
of said Act and (iii) to impose such other limitations or conditions in
connection with any such sale as the Senior Collateral Agent deems necessary or
advisable in order to comply with said Act or any other Law.  Each Loan Party covenants and agrees that it
will execute and deliver such documents and take such other action as the
Senior Collateral Agent deems necessary or advisable in order that any such
sale may be made in compliance with the Securities Act of 1933 and all other
applicable Laws.  Each Loan Party acknowledges
and agrees that such limitations may result in prices and other terms less
favorable to the seller than if such limitations were not imposed, and,
notwithstanding such limitations, agrees that any such sale shall not be deemed
to have been made in a commercially unreasonable manner solely by virtue of
such sale being private, it being the agreement of the Loan Parties and the
Senior Collateral Agent that the provisions of this Section 6.04 will
apply notwithstanding the existence of a public or private market upon which
the quotations or sales prices may exceed substantially the price at which the
Senior Collateral Agent sells the Collateral. 
The Senior Collateral Agent shall be under no obligation to delay a sale
of any Collateral for a period of time necessary to permit the issuer of any
securities contained therein to register such securities under the Federal
Securities Laws, or under applicable state securities laws, even if the issuer
would agree to do so.  Furthermore, each
Loan Party acknowledges that it is aware that Section 9-610 of the UCC provides
that the Senior Collateral Agent or a Senior Finance Party may purchase
Collateral if it is sold at a public sale. 
Each Loan Party also acknowledges that it is aware that staff personnel
of the United States Securities and Exchange Commission have, over a period of
years, issued various No-Action Letters that describe procedures which, in the
view of the SEC staff, permit a foreclosure sale of securities to occur in a
manner that is public for purposes of Part 6 of Article 9 of the UCC, yet not
public for purposes of Section 4(2) of the Securities Act.  Each Loan Party is also aware that the Senior
Collateral Agent or one or more Senior Finance Party may wish to purchase
Collateral that is

 

22

sold at a
foreclosure sale, and such Loan Party believes that such purchases would be
appropriate in circumstances in which the Collateral is sold in conformity with
the principles set forth in the No-Action Letters.  Accordingly, each Loan Party specifically
agrees that a foreclosure sale conducted in conformity with the principles set
forth in the No-Action Letters:  (i)
shall be considered to be a “public” sale for purposes of Section 9-610 of the
UCC; (ii) will be considered commercially reasonable notwithstanding that the
Senior Collateral Agent or other Senior Finance Party has not registered or
sought to register the Collateral under the Securities Laws, even if one or
more Loan Parties agrees to pay all costs of the registration process; and
(iii) shall be considered to be commercially reasonable notwithstanding that
the Senior Collateral Agent or one or more other Senior Finance Party purchases
Collateral at such a sale.

 

(b)           Registration Rights.  If the Senior Collateral Agent shall
determine to exercise its right to sell all or any of the Collateral and if in
the opinion of counsel for the Senior Collateral Agent it is necessary, or if
in the opinion of the Senior Collateral Agent it is reasonably advisable, to
have all or any of the securities included in the Collateral or the portion
thereof to be sold registered under the provisions of the Federal Securities
Laws, each Loan Party agrees, at its own expense (including, without
limitation, expenses relating to brokers commissions), (i) to execute and
deliver, and to use its commercially reasonable efforts to cause each
corporation whose securities are to be sold and their respective directors and
officers to execute and deliver, all such instruments and documents, and to do
or cause to be done all other such acts and things, as may be necessary or, in
the opinion of the Senior Collateral Agent, reasonably advisable to register
such securities under the provisions of the Federal Securities Laws and to
cause the registration statement relating thereto to become effective and to
remain effective for such period as prospectuses are required by Law to be
furnished, and to make or cause to be made all amendments and supplements
thereto and to the related prospectus which, in the opinion of the Senior Collateral
Agent, are necessary or advisable, all in conformity with the requirements of
the Securities Act of 1933 and the rules and regulations of the Securities and
Exchange Commission thereunder, (ii) to use its best efforts to cause the
corporation whose securities are to be sold to agree to prepare, and to make
available to its security holders as soon as practicable, an earnings statement
(which need not be audited) covering the period of at least 12 months beginning
with the first month after the effective date of any such registration
statement, which earning statement will satisfy the provisions of Section 11(a)
of the Securities Act of 1933, (iii) to use its commercially reasonable efforts
to qualify such securities under state Blue Sky or securities laws and to
obtain the approval of any Governmental Authorities for the sale of such
securities as requested by the Senior Collateral Agent and (iv) at the request
of the Senior Collateral Agent, to indemnify and hold harmless the Senior
Collateral Agent and any underwriters (and any person controlling any of the
foregoing) from and against any loss, liability, claim, damage and expense (and
reasonable counsel fees incurred in connection therewith) under the Securities
Act of 1933 or otherwise insofar as such loss, liability, claim, damage or
expense arises out of or is based upon any untrue statement or alleged untrue
statement of a material fact contained in such registration statement or
prospectus or in any preliminary prospectus or any amendment or supplement
thereto, or arises out of or is based upon any omission or alleged omission to
state therein a material fact required to be stated or necessary to make the
statements therein not misleading, such indemnification to remain operative
regardless of any investigation made by or on behalf of the Senior Collateral
Agent or any underwriters (or any person controlling any of the foregoing); provided
that no Loan Party shall be liable in any case to the extent that any such
loss, liability, claim, damage or expense arises out of or is based on an
untrue statement or alleged untrue statement or an omission or an alleged
omission made in reliance upon and in conformity with written information
furnished to such Loan Party by the Senior Collateral Agent or any underwriter
expressly for use in such registration statement or prospectus.

 

Section
6.05         Other Rights of the Senior Collateral Agent.

 

(a)           If any
Event of Default has occurred and is continuing, the Senior Collateral Agent,
instead of exercising the power of sale conferred upon it pursuant to Section
6.03, may proceed by

 

23

 

a suit or suits at law or in
equity to foreclose the Security Interest and sell the Collateral, or any
portion thereof, under a judgment or decree of a court or courts of competent
jurisdiction, and may in addition institute and maintain such suits and
proceedings as the Senior Collateral Agent may deem appropriate to protect and
enforce the rights vested in it by this Agreement.

 

(b)           If any
Event of Default has occurred and is continuing, the Senior Collateral Agent
shall, to the extent permitted by applicable Law, without notice to any Loan
Party or any party claiming through any Loan Party, without regard to the
solvency or insolvency at such time of any Person then liable for the payment
of any of the Finance Obligations, without regard to the then value of the
Collateral and without requiring any bond from any complainant in such
proceedings, be entitled as a matter of right to the appointment of a receiver
or receivers (who may be the Senior Collateral Agent) of the Collateral or any
part thereof, and of the profits, revenues and other income thereof, pending
such proceedings, with such powers as the court making such appointment shall confer,
and to the entry of an order directing that the profits, revenues and other
income of the property constituting the whole or any part of the Collateral be
segregated, sequestered and impounded for the benefit of the Senior Collateral
Agent, and each Loan Party irrevocably consents to the appointment of such
receiver or receivers and to the entry of such order.

 

Section
6.06         Limitation on Duty of the Senior Collateral
Agent in Respect of Collateral. 
Beyond the exercise of reasonable care in the custody thereof, neither
the Senior Collateral Agent nor any Senior Finance Party shall have any duty to
exercise any rights or take any steps to preserve the rights of any Loan Party
in the Collateral in its or their possession or control or in the possession or
control of any agent or bailee or any income thereon or as to the preservation
of rights against prior parties or any other rights pertaining thereto, nor
shall the Senior Collateral Agent or any Senior Finance Party be liable to any
Loan Party or any other Person for failure to meet any obligation imposed by
Section 9-207 of the UCC or any successor provision.  Each Loan Party agrees to the extent it may
lawfully do so that the Senior Collateral Agent shall at no time be required
to, nor shall the Senior Collateral Agent be liable to any Loan Party for any
failure to, account separately to any Loan Party for amounts received or
applied by the Senior Collateral Agent from time to time in respect of the
Collateral pursuant to the terms of this Agreement.  Without limiting the foregoing, the Senior
Collateral Agent shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession or control if the
Collateral is accorded treatment substantially equal to that which the Senior
Collateral Agent accords its own property, and (i) shall not be liable or
responsible for any loss or damage to any of the Collateral, or for any
diminution in the value thereof, by reason of the act or omission of any agent
or bailee selected by the Senior Collateral Agent in good faith (absent gross
negligence and willful misconduct) or (ii) shall not have any duty or
responsibility for ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not the Senior Collateral Agent has or is deemed to have
knowledge of such matters.

 

Section
6.07         Waiver and Estoppel.

 

(a)           Each Loan
Party agrees, to the extent it may lawfully do so, that it will not at any time
in any manner whatsoever claim or take the benefit or advantage of, any
appraisal, valuation, stay, extension, moratorium, turnover or redemption Law,
or any Law permitting it to direct the order in which the Collateral shall be
sold, now or at any time hereafter in force which may delay, prevent or
otherwise affect the performance or enforcement of this Agreement, and each
Loan Party hereby waives all benefit or advantage of all such Laws to the
extent permitted by Law.  Each Loan Party
covenants that it will not hinder, delay or impede the execution of any power
granted to the Senior Collateral Agent, the Administrative Agent or any other
Finance Party in any Finance Document.

 

24

 

(b)           Each Loan
Party, to the extent it may lawfully do so, on behalf of itself and all who
claim through or under it, including without limitation any and all subsequent
creditors, vendees, assignees and lienors, waives and releases all rights to
demand or to have any marshalling of the Collateral upon any sale, whether made
under any power of sale granted herein or pursuant to judicial proceedings or
under any foreclosure or any enforcement of this Agreement, and consents and
agrees that all of the Collateral may at any such sale be offered and sold as
an entirety.

 

(c)           Each Loan
Party waives, to the extent permitted by Law, presentment, demand, protest and
any notice of any kind (except the notices expressly required hereunder or in
the other Finance Documents) in connection with this Agreement and any action
taken by the Senior Collateral Agent with respect to the Collateral.

 

Section
6.08         Application of Proceeds.

 

(a)           Priority of Distributions.  The proceeds of any sale by the Senior
Collateral Agent of, or other realization upon, all or any part of the
Collateral (including any proceeds received and held pursuant to Section
5.01) and any cash held by the Senior Collateral Agent or its nominee or
custodian hereunder shall be paid over to the Administrative Agent for application
as provided in the Credit Agreement, subject in all cases to the priorities set
forth in Section 3.02 of the Intercreditor Agreement.  The Senior Collateral Agent may make
distributions hereunder in cash or in kind or, on a ratable basis, in any combination
thereof.

 

(b)           Distributions with Respect to Letters of Credit.  Each of the Loan Parties and the Finance
Parties agrees and acknowledges that if (after all outstanding Loans and L/C
Disbursements have been paid in full) the Lenders are to receive a distribution
on account of undrawn amounts with respect to Letters of Credit issued (or
deemed issued) under the Credit Agreement, such amounts shall be deposited in
the L/C Cash Collateral Account (as defined in the Senior Security Agreement)
as cash security for the repayment of Senior Credit Obligations owing to the
Lenders as such.  Upon termination of all
outstanding Letters of Credit, all of such cash security shall be applied to
the remaining Senior Credit Obligations of the Lenders.  If there remains any excess cash security,
such excess cash shall be withdrawn by the Senior Collateral Agent from the L/C
Cash Collateral Account and distributed in accordance with Section 6.08(a)
hereof.

 

(c)           Reliance by the Senior Collateral Agent.  For purposes of applying payments received in
accordance with this Section 6.08, the Senior Collateral Agent shall be
entitled to rely upon (i) the Administrative Agent under the Credit Agreement
and (ii) the authorized representative (the “Representative”) for the
Swap Creditors for a determination (which the Administrative Agent, each
Representative for any Swap Creditor and the Finance Parties agree (or shall
agree) to provide upon request of the Senior Collateral Agent) of the
outstanding Credit Obligations and Swap Obligations owed to the Finance
Parties, and shall have no liability to any Loan Party or any other Finance
Party for actions taken in reliance on such information except in the case of
its gross negligence, bad faith or willful misconduct.  Unless it has actual knowledge (including by
way of written notice from a Swap Creditor) to the contrary, the Senior
Collateral Agent, in acting hereunder, shall be entitled to assume that no Swap
Agreements are in existence.  All distributions
made by the Senior Collateral Agent pursuant to this Section shall be
presumptively correct (except in the event of manifest error, gross negligence
or willful misconduct), and the Senior Collateral Agent shall have no duty to
inquire as to the application by the Finance Parties of any amounts distributed
to them.

 

(d)           Deficiencies.  It is understood that the Loan Parties shall
remain jointly and severally liable to the extent of any deficiency between the
amount of the proceeds of the Collateral and the amount of the Senior
Obligations.

 

25

 

ARTICLE VII

THE SENIOR COLLATERAL AGENT

 

Section
7.01         Concerning the Senior Collateral Agent.  The provisions of Article IX of the
Credit Agreement shall inure to the benefit of the Senior Collateral Agent in
respect of this Agreement and shall be binding upon all Loan Parties and all
Senior Finance Parties and upon the parties hereto in such respect.  In furtherance and not in derogation of the
rights, privileges and immunities of the Senior Collateral Agent therein set
forth:

 

(i)            The
Senior Collateral Agent is authorized to take all such actions as are provided
to be taken by it as Senior Collateral Agent hereunder and all other action
reasonably incidental thereto.  As to any
matters not expressly provided for herein (including, without limitation, the
timing and methods of realization upon the Collateral), the Senior Collateral
Agent shall act or refrain from acting in accordance with written instructions
from the Required Senior Lenders or, in the absence of such instructions or
provisions, in accordance with its discretion.

 

(ii)           The
Senior Collateral Agent shall not be responsible for the existence, genuineness
or value of any of the Collateral or for the validity, perfection, priority or
enforceability of the Security Interest created hereunder in any of the
Collateral, whether impaired by operation of Law or by reason of any action or
omission to act on its part hereunder unless such action or omission
constitutes gross negligence or willful misconduct.  The Senior Collateral Agent shall not have a
duty to ascertain or inquire as to the performance or observance of any of the
terms of this Agreement by any Loan Party.

 

Section
7.02         Appointment of Co-Collateral Agent.  At any time or times, in order to comply with
any legal requirement in any jurisdiction, the Senior Collateral Agent may, in
consultation with the Borrower and, unless an Event of Default shall have
occurred and be continuing, with the consent of the Borrower (not to be
unreasonably withheld or delayed), appoint another bank or trust company or one
or more other persons, either to act as co-agent or co-agents, jointly with the
Senior Collateral Agent, or to act as separate agent or agents on behalf of the
Senior Finance Parties with such power and authority as may be necessary for
the effectual operation of the provisions hereof and may be specified in the
instrument of appointment (which may, in the discretion of the Senior
Collateral Agent, include provisions for the protection of such co-agent or
separate agent similar to the provisions of Section 7.01).  Notwithstanding any such appointment but only
to the extent not inconsistent with such legal requirements or, in the
reasonable judgment of the Senior Collateral Agent, not unduly burdensome to it
or any such co-agent, each Loan Party shall, so long as no Event of Default
shall have occurred and be continuing, be entitled to deal solely and directly
with the Senior Collateral Agent rather than any such co-agent in connection
with the Senior Collateral Agent’s rights and obligations under this Agreement.

 

Section
7.03         Appointment of Sub-Agents.  The Senior Collateral Agent shall have the
right to appoint one or more sub-agents for the purpose of retaining physical
possession of the Pledged Shares, Pledged LLC Interests, Pledged Partnership
Interests and Pledged Notes, which may be held (in the discretion of the Senior
Collateral Agent) in the name of the relevant Loan Party, indorsed or assigned
in blank or in favor of the Senior Collateral Agent or any nominee or custodian
of the Senior Collateral Agent or a sub-agent appointed by the Senior
Collateral Agent.

 

ARTICLE
VIII

MISCELLANEOUS

 

Section
8.01         Notices.  (a)           Unless
otherwise expressly provided herein, all notices, and other communications
provided for hereunder shall be in writing (including by facsimile

 

26

 

transmission) and mailed, faxed
or delivered to the address, facsimile number or (subject to subsection (b)
below) electronic mail address specified for notices: (i) in the case of Parent
Holdings or any Subsidiary Guarantor as set forth in Section 5.01 of the
Guaranty; (ii) in the case of Holdings, the Borrower, the Administrative Agent
or any Lender, as specified in or pursuant to Section 10.02 of the
Credit Agreement; (iii) in the case of the Senior Collateral Agent, as set
forth in the signature pages hereto; (iv) in the case of any Swap Creditor as
set forth in any applicable Swap Agreement; or (v) in the case of any party, at
such other address as shall be designated by such party in a notice to the
Senior Collateral Agent and each other party hereto.  All such notices and other communications
shall be deemed to be given or made upon the earlier to occur of: (i) actual
receipt by the intended recipient and (ii) (A) if delivered by hand or by
courier, when signed for by the intended recipient; (B) if delivered by mail,
four Business Days after deposit in the mails, postage prepaid; (C) if
delivered by facsimile transmission, when sent and receipt has been confirmed
by telephone; and (D) if delivered by electronic mail (which form of delivery
is subject to the provisions of subsection (b) below), when delivered.  Rejection or refusal to accept, or the
inability to deliver because of a changed address of which no notice was given
shall not affect the validity of notice given in accordance with this Section.

 

(b)           Except as
expressly provided herein or as may be agreed by the Administrative Agent in
its sole discretion, electronic mail and internet and intranet websites may be
used only to distribute routine communications, such as financial statements
and other information, and to distribute Loan Documents for execution by the
parties thereto, to distribute executed Loan Documents in Adobe PDF format and
may not be used for any other purpose.

 

Section
8.02         No Waivers; Non-Exclusive Remedies.  No failure or delay on the part of the Senior
Collateral Agent or any Senior Finance Party to exercise, no course of dealing
with respect to, and no delay in exercising, any right, power or privilege
under this Agreement or any other Senior Finance Document or any other document
or agreement contemplated hereby or thereby and no course of dealing between
the Senior Collateral Agent or any Senior Finance Party and any of the Loan
Parties shall operate as a waiver thereof nor shall any single or partial
exercise of any such right, power or privilege hereunder or under any Senior
Finance Document preclude any other or further exercise thereof or the exercise
of any other right, power or privilege hereunder or thereunder.  The rights and remedies provided herein and
in the other Senior Finance Documents are cumulative and are not exclusive of
any other remedies provided by Law. 
Without limiting the foregoing, nothing in this Agreement shall impair
the right of any Senior Finance Party to exercise any right of set-off or
counterclaim it may have and to apply the amount subject to such exercise to
the payment of indebtedness of any Loan Party other than its indebtedness under
the Senior Finance Documents.  Each Loan
Party agrees, to the fullest extent it may effectively do so under applicable
Law, that any holder, as to which the identity is disclosed, of a participation
in a Senior Obligation, whether or not acquired pursuant to the terms of any
applicable Senior Finance Document, may exercise rights of set-off or
counterclaim or other rights with respect to such participation as fully as if
such holder of a participation were a direct creditor of the Loan Party in the
amount of such participation.

 

Section
8.03         Compensation and Expenses of the Senior
Collateral Agent; Indemnification.

 

(a)           Expenses.  The Loan Parties, jointly and severally,
agree (i) to pay or reimburse the Senior Collateral Agent for all reasonable
out-of-pocket costs and expenses incurred in connection with the preparation,
negotiation and execution of this Agreement and any amendment, waiver, consent
or other modification of the provisions hereof (whether or not the transactions
contemplated hereby are consummated), and the consummation of the transactions
contemplated hereby, including all fees, disbursements and other charges of
Fried, Frank, Harris, Shriver & Jacobson LLP, counsel for the Senior
Collateral Agent, (ii) to pay or reimburse the Senior Collateral Agent and the
other Senior Finance Parties

 

27

 

for all taxes which the Senior
Collateral Agent or any Senior Finance Party may be required to pay by reason
of the security interests granted in the Collateral (including any applicable
transfer taxes) or to free any of the Collateral from the lien thereof and
(iii) to pay or reimburse each Agent, any Representative of one or more Swap
Creditors and each other Senior Finance Party for all reasonable costs and
expenses incurred in connection with the enforcement, attempted enforcement, or
preservation of any rights and remedies under this Agreement (including all
such costs and expenses incurred during any “workout” or restructuring in respect
of the Senior Obligations and during any legal proceeding, including any
proceeding under any Debtor Relief Law), including all reasonable fees and
disbursements of counsel, (including the allocated charges of internal
counsel); provided that the Loan Parties shall not, be required to
reimburse the legal fees and expenses of more than one outside counsel (in
addition to up to one local counsel in each applicable local jurisdiction) for
all Persons indemnified under this clause (iii) unless, in the written
opinion of outside counsel reasonably satisfactory to the Loan Parties and the
Senior Collateral Agent, representation of all such indemnified persons would
be inappropriate due to the existence of an actual or potential conflict of
interest.  The foregoing costs and
expenses shall include all search, filing, recording, title insurance and
appraisal charges and fees and taxes related thereto, and other out-of-pocket
expenses incurred by any Agent and the costs of independent public accountants
and other outside experts retained by or on behalf of the Agents and the Senior
Finance Parties.  The agreements in this Section
8.03(a) shall survive the termination of the Revolving and Term B
Commitments and Swap Agreements and repayment of all Senior Obligations.

 

(b)           Protection of Collateral.  If any Loan Party fails to comply with the
provisions of any Senior Finance Document, such that the value of any
Collateral or the validity, perfection, rank or value of the Security Interest
is thereby materially diminished or materially put at risk, the Senior
Collateral Agent may, but shall not be required to, effect such compliance on
behalf of such Loan Party, and the Loan Parties shall reimburse the Senior
Collateral Agent for the out-of-pocket costs thereof within 10 Business days of
demand.  Any and all excise, property,
sales and use taxes imposed by any state, federal or local authority on any of
the Collateral, or in respect of periodic appraisals of the Collateral, or in
respect of the sale or other disposition thereof shall be borne and paid by the
Loan Parties.  If any Loan Party fails to
promptly pay any portion thereof when due, the Senior Collateral Agent may, at
its option, but shall not be required to, pay the same and charge the Loan
Parties’ account therefor, and the Loan Parties agree to reimburse the Senior
Collateral Agent therefor on demand.  All
sums so paid or incurred by the Senior Collateral Agent for any of the
foregoing and any and all other sums for which any Loan Party may become liable
hereunder and all costs and expenses (including attorneys’ fees, legal expenses
and court costs) reasonably incurred by the Senior Collateral Agent in
enforcing or protecting the Security Interest or any of its rights or remedies
under this Agreement, shall, together with interest thereon until paid at the
rate applicable to Revolving Base Rate Loans plus 2%, be additional Senior
Obligations hereunder.

 

(c)           Indemnification.  Whether or not the transactions contemplated
hereby or by the other Senior Finance Documents are consummated, each Loan
Party, jointly and severally, agrees to indemnify save and hold harmless the
Senior Collateral Agent, the Representatives, each other Senior Finance Party
and their respective Affiliates, directors, officers, employees, counsel,
agents and, in the case of any Funds, trustees, advisors and attorneys-in-fact
and their respective successors and assigns (collectively, the “Indemnitees”)
from and against: (i) any and all claims, demands, actions or causes of action
that may at any time (including at any time following repayment of the Senior
Obligations and the resignation or removal of any Agent or Representative or
the replacement of any Senior Lender) be asserted or imposed against any
Indemnitee, arising out of or in any way relating to or arising out of the
ownership, purchasing, delivery, control, acceptance, financing, possession,
sale, return or other disposition of the Collateral, the violation of the Laws
of any country, state or other governmental body or unit, or any tort or
contract claim; (ii) any administrative or investigative proceeding by any
Governmental Authority arising out of or related to a claim, demand, action or
cause of action described

 

28

 

in clause (i) above; and (iii)
any and all liabilities (including liabilities under indemnities), losses,
costs or expenses (including fees and disbursements of counsel) that any
Indemnitee suffers or incurs as a result of the assertion of any foregoing
claim, demand, action or cause of action or proceeding, or as a result of the
preparation of any defense in connection with any foregoing claim, demand,
action or cause of action or proceeding, in all cases, and whether or not an
Indemnitee is a party to such claim, demand, action or cause of action, or
proceeding; provided that no Indemnitee shall be entitled to
indemnification for any claim to the extent such claim is determined by a court
of competent jurisdiction in a final non-appealable judgment to have been
caused by its own gross negligence or willful misconduct; and provided  further
that the Loan Parties shall not be required to reimburse the legal fees and
expenses of more than one outside counsel (in addition to up to one local
counsel in each applicable local jurisdiction) for all Indemnities unless, in
the written opinion of outside counsel reasonably satisfactory to the Loan
Parties and the Senior Collateral Agent, representation of all such Indemnitees
would be inappropriate due to the existence of an actual or potential conflict
of interest.  In the case of an
investigation, litigation or other proceeding to which the indemnity in this Section 8.03(c)
applies, such indemnity shall be effective whether or not such investigation,
litigation or proceeding is brought by any Loan Party, its directors,
shareholders or creditors or an Indemnitee or any other Person or any
Indemnitee is otherwise a party thereto and whether or not the transactions
contemplated hereby are consummated.  Without
prejudice to the survival of any other agreement of the Loan Parties hereunder
and under the other Senior Finance Documents, the agreements and obligations of
the Loan Parties contained in this Section 8.03(c) shall survive the
repayment of the Loans, L/C Obligations and other obligations under the Senior
Finance Documents and the termination of the Revolving and Term B
Commitments.  Any amounts paid by any
Indemnitee as to which such Indemnitee has a right to reimbursement hereunder
shall constitute Senior Obligations.

 

(d)           Contribution.  If and to the extent that the obligations of
any Loan Party under this Section 8.03 are unenforceable for any reason,
each Loan Party hereby agrees to make the maximum contribution to the payment
and satisfaction of such obligations which is permissible under applicable Law.

 

Section
8.04         Enforcement.  The Senior Finance Parties agree that this
Agreement may be enforced only by the action of the Senior Collateral Agent,
acting upon the instructions of the Required Senior Lenders (or, after the date
on which all Senior Credit Obligations have been paid in full and all
Commitments with respect thereto terminated, the holders of at least 51% of the
outstanding Swap Obligations) and that no other Senior Finance Party shall have
any right individually to seek to enforce this Agreement or to realize upon the
security to be granted hereby, it being understood and agreed that such rights
and remedies may be exercised by the Senior Collateral Agent or the holders of
at least 51% of the outstanding Swap Obligations, as the case may be, for the
benefit of the Senior Finance Parties upon the terms of this Agreement, the
Intercreditor Agreement and the other Senior Finance Documents.

 

Section
8.05         Amendments and Waivers.  Any provision of this Agreement may be
amended, changed, discharged, terminated or waived if, but only if, such
amendment or waiver is in writing and is signed by each Loan Party directly
affected by such amendment, change, discharge, termination or waiver (it being
understood that the addition or release of any Loan Party hereunder shall not
constitute an amendment, change, discharge, termination or waiver affecting any
Loan Party other than the Loan Party so added or released) and (i) the Senior
Collateral Agent (with the consent of the Required Senior Lenders or, to the
extent required by Section 10.01 of the Credit Agreement, all or such
lesser amount of the Lenders as may be specified therein), at all times prior
to the time on which all Senior Credit Obligations have been paid in full
(other than contingent indemnification obligations) and all Commitments with
respect thereto have been terminated or (ii) the holders of more than 50% of
all Swap Obligations then outstanding, at all times after the time at which the
Senior Credit Obligations have been paid in full and all Commitments with
respect thereto have been terminated; provided, however, that

 

29

 

no such amendment, change,
discharge, termination or waiver shall be made to Section 6.08 hereof or
this Section 8.05 without the consent of each Senior Finance Party
adversely affected thereby except to the extent expressly provided in the
Credit Agreement or the Intercreditor Agreement.

 

Section
8.06         Successors and Assigns.  This Agreement shall be binding upon each of
the parties hereto and inure to the benefit of the Senior Collateral Agent and
the Senior Finance Parties and their respective successors and permitted
assigns.  In the event of an assignment
of all or any of the Senior Obligations, the rights hereunder, to the extent
applicable to the indebtedness so assigned, may be transferred with such
indebtedness in accordance with the Credit Agreement.  No Loan Party shall assign or delegate any of
its rights and duties hereunder without the prior written consent of the
Required Senior Lenders or all or such lesser number of the Lenders as provided
in Section 10.01 of the Credit Agreement.  Upon the payment in full of the Senior
Obligations (other than contingent indemnification obligations), the rights of
the Senior Collateral Agent (in its capacity as collateral agent for the Senior
Finance Parties other than in respect of outstanding Letters of Credit and cash
collateral provided in respect thereof and for related fees, costs,
indemnification and expenses) and the rights of the Senior Finance Parties
under this Agreement shall be deemed to have been assigned, with the consent
and at the direction of the Borrower, to the Second Lien Collateral Agent for
the benefit of the Second Lien Credit Parties.

 

Section
8.07         Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW
OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES,
EXCEPT AS OTHERWISE REQUIRED BY MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE
EXTENT THAT REMEDIES PROVIDED BY THE LAWS OF ANY JURISDICTIONS OTHER THAN NEW
YORK ARE GOVERNED BY THE LAWS OF SUCH JURISDICTIONS.

 

Section
8.08         Limitation of Law; Severability.

 

(a)           All
rights, remedies and powers provided in this Agreement may be exercised only to
the extent that the exercise thereof does not violate any applicable provision
of Law, and all the provisions of this Agreement are intended to be subject to
all applicable mandatory provisions of Law which may be controlling and be
limited to the extent necessary so that they will not render this Agreement
invalid, unenforceable in whole or in part, or not entitled to be recorded, registered
or filed under the provisions of any applicable Law.

 

(b)           If any
provision hereof is invalid or unenforceable in any jurisdiction, then, to the
fullest extent permitted by Law, (i) the other provisions hereof shall remain
in full force and effect in such jurisdiction and shall be liberally construed
in favor of the Senior Collateral Agent and the Senior Finance Parties in order
to carry out the intentions of the parties hereto as nearly as may be possible
and (ii) the invalidity or unenforceability of any provision hereof in any
jurisdiction shall not affect the validity or enforceability of such provisions
in any other jurisdiction.

 

Section
8.09         Counterparts; Effectiveness.  This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.  This Agreement shall become effective with
respect to each Loan Party when the Senior Collateral Agent shall receive
counterparts hereof executed by itself and such Loan Party.  This Agreement may be transmitted and/or
signed by facsimile or Adobe PDF file and if so transmitted or signed, shall,
subject to requirements of law, have the same force and effect as a manually
signed original and shall be binding on the Loan Parties and the Senior
Collateral Agent.

 

30

 

 

Section
8.10         Additional Loan Parties.  It is understood and agreed that any Subsidiary of Holdings that is
required by any Loan Document to execute a counterpart of this Agreement after
the date hereof shall automatically become a Loan Party hereunder with the same
force and effect as if originally named as a Loan Party hereunder by executing
an instrument of accession or joinder satisfactory in form and substance to the
Senior Collateral Agent and delivering the same to the Senior Collateral
Agent.  Concurrently with the execution
and delivery of such instrument of accession or joinder, such Subsidiary shall take all such actions
and deliver to the Senior Collateral Agent all such documents and agreements as
such Subsidiary would have been
required to deliver to the Senior Collateral Agent on or prior to the date of
this Agreement had such Subsidiary been
a party hereto on the date of this Agreement. 
Such additional materials shall include, among other things, supplements
to Schedules I, II, III and IV hereto (which
Schedules shall thereupon automatically be amended and supplemented to include
all information contained in such supplements) such that, after giving effect
to the accession or joinder of such Subsidiary,
each of Schedules I, II, III and IV hereto is true,
complete and correct with respect to such Subsidiary
as of the effective date of such accession or joinder.  The execution and delivery of any such
instrument of accession or joinder, and the amendment and supplementation of
the Schedules hereto as provided in the immediately preceding sentence, shall
not require the consent of any other Loan Party hereunder.  The rights and obligations of each Loan Party
hereunder shall remain in full force and effect notwithstanding the addition of
any new Loan Party as a party to this Agreement.

 

Section
8.11         Termination; Release of Loan Parties.

 

(a)           Termination.  Upon the full payment and performance of all
Senior Obligations other than contingent indemnification obligations, the
cancellation or expiration of all outstanding L/C Obligations and Swap
Agreements and the termination of all Revolving and Term B Commitments under
the Loan Documents, the Security Interest created hereunder shall terminate and
all rights to the Collateral shall be deemed to have been assigned, with the
consent and at the direction of the Loan Parties, to the Second Lien Collateral
Agent for the benefit of the Second Lien Credit Parties to the extent such
Second Lien Obligations are outstanding. 
In addition, at any time and from time to time prior to such termination
of such Security Interest, the Senior Collateral Agent may release any of the
Collateral as contemplated by the Credit Agreement or the Intercreditor
Agreement.  Upon any such termination of
the Security Interest created hereunder or release of Collateral, the Senior
Collateral Agent will, upon request by and at the expense of any Loan Party,
execute and deliver to such Loan Party such documents as such Loan Party shall
reasonably request to evidence the termination of the Security Interest created
hereunder or the release of such Collateral, as the case may be.  Any such documents shall be without recourse
to or warranty by the Senior Collateral Agent or the Senior Finance
Parties.  The Senior Collateral Agent
shall have no liability whatsoever to any Senior Finance Party as a result of
any release of Collateral by it as permitted by this Section 8.11.  Upon any release of Collateral pursuant to
this Section 8.11, none of the Senior Finance Parties shall have any
continuing right or interest in such Collateral or the Proceeds thereof.

 

(b)           Release of Loan Parties.  If any part of the Collateral is sold or otherwise
disposed of or liquidated in compliance with the requirements of the Loan
Documents (or such sale, other disposition or liquidation has been approved in
writing by those Senior Finance Parties whose approval is required by the
applicable Senior Finance Documents) and the proceeds of such sale, disposition
or liquidation are applied in accordance with the provisions of the Senior
Finance Documents, to the extent applicable, the Senior Collateral Agent, at
the request and expense of such Loan Party, will duly release from the security
interest created hereby and assign, transfer and deliver to such Loan Party
(without recourse and without representation or warranty) such of the
Collateral as is then being (or has been) so sold, disposed of or liquidated as
may be in the possession or control of the Senior Collateral Agent and has not
theretofore been released pursuant to this Agreement.

 

31

 

Section
8.12         Entire Agreement.  This Agreement and the other Loan Documents
and, in the case of the Swap Creditors, the Swap Agreements, constitute the
entire agreement and understanding among the parties hereto and supersede any
and all prior agreements and understandings, oral or written, and any
contemporaneous oral agreements and understandings relating to the subject
matter hereof and thereof.

 

[Signature
Pages Follow]

 

32

 

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

 

	
  LOAN PARTIES:

  	
  VERIFONE HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Donald C. Campion

  	
   

  
	
   

  	
   

  	
  Name: Donald C. Campion

  
	
   

  	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VERIFONE INTERMEDIATE HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Donald C. Campion

  	
   

  
	
   

  	
   

  	
  Name: Donald C. Campion

  
	
   

  	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  VERIFONE, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Donald C. Campion

  	
   

  
	
   

  	
   

  	
  Name: Donald C. Campion

  
	
   

  	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  SENIOR COLLATERAL AGENT:

  	
  BANK OF AMERICA, N.A.,

  
	
   

  	
   

  	
  as Senior Collateral Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ W. Thomas Barnett

  	
   

  
	
   

  	
   

  	
  Name: W. Thomas Barnett

  
	
   

  	
   

  	
  Title: Managing DirectorExhibit 10.12

 

CHANGE IN CONTROL SEVERANCE AGREEMENT

 

THIS AGREEMENT is entered into with effect
from July 1, 2004, by and between VeriFone Holdings, Inc., a Delaware
corporation (“VeriFone”),
and the executive named on such signature page (“Executive”).

 

W I T N E S S E T H

 

WHEREAS, VeriFone considers the establishment
and maintenance of a sound and vital management to be essential to protecting
and enhancing the best interests of VeriFone and its stockholders; and

 

WHEREAS, VeriFone recognizes the possibility
that it may experience a change in control and that such a change of control
and its possibility subjects VeriFone to the risk of the departure or
distraction of its key management; and

 

WHEREAS, VeriFone’s Board of Directors has
determined that it is in the best interests of VeriFone and its stockholders to
secure Executive’s continued services and to ensure Executive’s continued
dedication to his duties notwithstanding the possibility or the occurrence of a
change in control;

 

NOW, THEREFORE, for and in consideration of
the premises and the mutual covenants and agreements herein contained, VeriFone
and Executive hereby agree as follows:

 

1.             Definitions.  As used in this Agreement, the following
terms shall have the respective meanings set forth below:

 

(a)           “Board”
means the Board of Directors of VeriFone.

 

(b)           “Bonus Amount”
means the greater of (i) Executive’s target incentive bonus for the fiscal
year which includes Executive’s Date of Termination and (ii) Executive’s
target incentive bonus for the fiscal year which included the date of a
Change-in-Control.

 

(c)           “Cause”
means (i) the willful and continued failure of Executive to perform
substantially his duties with VeriFone (other than any such failure (x)
resulting from Executive’s incapacity due to physical or mental illness or (y)
subsequent to a Qualifying Termination) after a written demand for substantial
performance is delivered to Executive by the Board which identifies the manner
in which the Board believes that Executive has not substantially performed
Executive’s duties, or (ii) the engaging by Executive in illegal conduct
or gross misconduct which is demonstrably and materially injurious to VeriFone
or its affiliates.  Any act, or failure
to act, based upon authority given pursuant to a resolution duly adopted by the
Board, based upon the advice of counsel for VeriFone or upon the instructions
of VeriFone’s chief executive officer shall be conclusively presumed to be
done, or omitted to be done, by Executive in good faith 

 

 

and in the best interests of VeriFone.  Cause shall not exist unless and until
VeriFone has delivered to Executive a copy of a resolution duly adopted by
two-thirds (2/3) of the entire Board at a meeting of the Board called and held
for such purpose (after reasonable notice to Executive and an opportunity for
Executive, together with counsel, to be heard before the Board), finding that
in the good faith opinion of the Board an event set forth in clauses (i)
or (ii) has occurred.  VeriFone must
notify Executive of any event constituting Cause within ninety (90) days
following VeriFone’s knowledge of its existence or such event shall not
constitute Cause under this Agreement.

 

(d)           “Change in
Control” means the occurrence of any one of the following
events:

 

(i)            any “person” (as such term is
defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)
and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) other
than a Permitted Holder is or becomes the “beneficial owner” (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of 40% or more
of the outstanding VeriFone Voting
Securities; provided, however, that the event described in
this paragraph (i) shall not be deemed to be a Change in Control if it
occurs by virtue of any acquisition:  (A) by VeriFone or any
Subsidiary, (B) by any employee benefit plan (or related trust) sponsored
or maintained by VeriFone or any Subsidiary, (C) by any underwriter or
broker temporarily holding securities in connection with an offering of such
securities, (D) pursuant to a Non-Qualifying Transaction (as defined in
paragraph (ii) below or (E) pursuant to any acquisition by Executive
or any group of persons including Executive (or any entity controlled by Executive
or any group of persons including Executive);

 

(ii)           the consummation of a merger,
consolidation, statutory share exchange or similar form of corporate
transaction involving VeriFone or any of its Subsidiaries that requires the
approval of VeriFone’s stockholders, whether for such transaction or the
issuance of securities in the transaction (a “Business Combination”), unless immediately following such
Business Combination:  (A) a
majority of the total voting power of (x) the corporation resulting from
such Business Combination (the “Surviving
Corporation”), or (y) if applicable, the ultimate parent
corporation that directly or indirectly has beneficial ownership of at least
95% of the voting securities eligible to elect directors of the Surviving
Corporation (the “Parent Corporation”),
is represented by VeriFone Voting Securities that were outstanding immediately
prior to such Business Combination (or, if applicable, is represented by shares
into which such VeriFone Voting Securities were converted pursuant to such Business
Combination), (B) no person (other than one or more Permitted Holders or
any employee benefit plan (or related trust) sponsored or maintained by the
Surviving Corporation or the Parent Corporation), is or becomes the beneficial
owner, directly or indirectly, of a majority of the total voting power of the
outstanding voting securities eligible to elect directors of 

 

2

 

the Parent
Corporation (or, if there is no Parent Corporation, the Surviving Corporation)
and (C) a majority of the members of the board of directors of the Parent
Corporation (or, if there is no Parent Corporation, the Surviving Corporation)
following the consummation of the Business Combination were Incumbent Directors
(as defined below) at the time of the Board’s approval of the execution of the
initial agreement providing for or recommendation of the offer to stockholders
effecting such Business Combination(any Business Combination which satisfies
all of the criteria specified in (A), (B) and (C) above shall be deemed to be a
“Non-Qualifying Transaction”);

 

(iii)          individuals who, on the date
hereof constitute the Board (the “Incumbent Directors”)
cease for any reason to constitute at least a majority of the Board, provided
that any person becoming a director subsequent to the date hereof whose
election or nomination for election was approved by a vote of a majority of the
Incumbent Directors then on the Board (either by a specific vote or by approval
of the proxy statement of VeriFone in which such person is named as a nominee
for director, without written objection to such nomination) shall be an
Incumbent Director; provided, however, that no individual initially elected or
nominated as a director of VeriFone as a result of an actual or threatened
election contest with respect to directors or as a result of any other actual
or threatened solicitation of proxies by or on behalf of any person other than
the Board shall be deemed to be an Incumbent Director;

 

(iv)          a sale of all or substantially
all of VeriFone’s assets other than in connection with a Non-Qualifying
Transaction; or

 

(v)           completion of a plan of
complete liquidation or dissolution of VeriFone.

 

Notwithstanding the foregoing, a Change in
Control of VeriFone shall not be deemed to occur solely because any person
acquires beneficial ownership of a majority of VeriFone Voting Securities as a
result of the acquisition of VeriFone Voting Securities by VeriFone which
reduces the number of VeriFone Voting Securities outstanding; provided, that
if after such acquisition by VeriFone such person becomes the beneficial owner
of additional VeriFone Voting Securities that increases the percentage of
outstanding VeriFone Voting Securities beneficially owned by such person, a
Change in Control of VeriFone shall be deemed to occur at that time.

 

(e)           “Date of
Termination” means (i) the effective date on which
Executive’s employment by VeriFone terminates as specified in a prior written
notice by VeriFone or Executive, as the case may be, to the other, delivered
pursuant to Section 11 or (ii) if Executive’s employment by VeriFone
terminates by reason of death, the date of Executive’s death.

 

(f)            “Disability”
means termination of Executive’s employment by VeriFone due to Executive’s
absence from Executive’s duties on a full-time basis for at 

 

3

 

least ninety (90) consecutive days or for
shorter periods aggregating at least one hundred twenty (120) days during any
twelve-month period as a result of Executive’s incapacity due to documented
illness, accident, injury, physical or mental incapacity or other disability.

 

(g)           “Fully Vest”
means (i) any stock options, stock appreciation rights or similar rights
granted under the Plan shall become fully vested and immediately exercisable,
(ii) any restricted stock, restricted stock units and other stock-based
rights granted under the Plan will become fully vested, any restrictions
applicable to such rights shall lapse, and (iii) any performance goals applicable
to any such rights will be deemed to be fully satisfied.

 

(h)           “Good Reason”
means, without Executive’s express written consent, the occurrence of any of
the following events during a Qualifying Termination Period:

 

(i)            any material and adverse
change in the status, duties or responsibilities (including titles, offices and
reporting responsibilities) of Executive that is inconsistent with Executive’s
position, status, duties and responsibilities with VeriFone immediately prior
to the commencement of such Qualifying Termination Period (including any
material and adverse diminution of such status, duties or responsibilities;

 

(ii)           a reduction by VeriFone in
Executive’s rate of annual base salary or annual target bonus opportunity as in
effect immediately prior to the commencement of such Qualifying Termination
Period;

 

(iii)          any requirement of VeriFone
that Executive be based anywhere more than fifty (50) miles from the office
where Executive is based at the time of the Change in Control;

 

(iv)          the failure of VeriFone to (A)
continue in effect any employee benefit plan, compensation plan, welfare
benefit plan or material fringe benefit plan in which Executive is
participating immediately prior to such Change in Control or the taking of any
action by VeriFone which would adversely affect Executive’s participation in or
reduce Executive’s benefits under any such plan, unless Executive is permitted
to participate in other plans providing Executive with substantially equivalent
benefits in the aggregate, or (B) provide Executive with paid vacation in
accordance with the policies of VeriFone as in effect for Executive immediately
prior to the commencement of such Qualifying Termination Period, including the
crediting of all service for which Executive had been credited under such
policies; or

 

(v)           any purported termination of
Executive’s employment which is not effectuated pursuant to Section 11(b)
(and which will not constitute a termination hereunder).

 

4

 

Notwithstanding anything herein to the
contrary, termination of employment by Executive for any reason during the
30-day period commencing six months after the date of a Change in Control shall
constitute Good Reason.

 

Any action taken in good faith and which is
remedied by VeriFone within ten (10) days after receipt of notice thereof given
by Executive shall not constitute Good Reason. 
Executive’s right to terminate employment for Good Reason shall not be
affected by Executive’s incapacity due to mental or physical illness and
Executive’s continued employment shall not constitute consent to, or a waiver
of rights with respect to, any event or condition constituting Good Reason;
provided, however, that Executive must provide notice of termination of
employment within ninety (90) days following Executive’s knowledge of an event
constituting Good Reason or such event shall not constitute Good Reason under
this Agreement.

 

(i)            “Permitted Holder”
means (i) GTCR Fund VII, L.P. and its affiliates and (ii) VeriFone’s
Chief Executive Officer in office as of the date hereof.

 

(j)            “Plan” means
the VeriFone Holdings, Inc. New Founders Stock Option Plan (or any successor or
replacement stock option plan) and any Stock Option Agreement entered into
pursuant thereto.

 

(k)           “Qualifying Termination”
means a termination of Executive’s Employment (i) during a Qualifying
Termination Period (A) by VeriFone other than for Cause or (B) by
Executive for Good Reason (ii) prior to the commencement of a Qualifying
Termination Period for reasons that would have constituted a Qualifying
Termination if they had occurred during a Qualifying Termination Period under
clause (i) if (A) Executive reasonably demonstrates that such termination (or
event constituting Good Reason) was at the request of a third party that had
indicated an intention to, or had taken steps reasonably calculated to, effect
a Change in Control or was otherwise intended to facilitate such Change in
Control and (B) a Change in Control involving such third party occurs within
180 days thereafter (in such case, the date immediately prior to the date of
such termination of employment or event constituting Good Reason shall be
treated as the commencement of a Qualifying Termination Period). Termination of
employment on account of death, Disability or Retirement shall not be treated
as a Qualifying Termination.

 

(l)            “Qualifying
Termination Period” means the period beginning ninety (90) days
prior to a Change in Control and ending eighteen (18) months following such
Change in Control.   For purposes of
determining the timing of payments and benefits to Executive under
Section 4, the date of the actual Change in Control shall be treated as
Executive’s Date of Termination under Section 1(e), and for purposes of
determining the amount of payments and benefits to Executive under
Section 4, the date Executive’s employment is actually terminated shall be
treated as Executive’s “Date of Termination”.

 

5

 

(m)          “Retirement”
means Executive’s mandatory retirement (not including any mandatory early
retirement) in accordance with VeriFone’s retirement policy generally
applicable to its salaried employees, as in effect immediately prior to the
Change in Control, or in accordance with any retirement arrangement established
with respect to Executive with Executive’s written consent.

 

(n)           “Subsidiary”
means any corporation or other entity in which VeriFone has a direct or
indirect ownership interest of a majority of the total combined voting power of
the then outstanding securities or interests of such corporation or other
entity entitled to vote generally in the election of directors or in which
VeriFone has the right to receive a majority of the distribution of profits or
a majority of the assets upon liquidation or dissolution.

 

(o)           “VeriFone Voting
Securities” means securities of VeriFone having the right to
vote for the election of the Board (with regard to the occurrence of any
contingency).

 

2.             Obligation of Executive.  In the event of a tender or exchange offer,
proxy contest, or the execution of any agreement which, if consummated, would
constitute a Change in Control, Executive agrees not to voluntarily leave the
employ of VeriFone, other than as a result of Disability, Retirement or an
event which would constitute Good Reason if a Change in Control had occurred,
until the Change in Control occurs or, if earlier, such tender or exchange
offer, proxy contest, or agreement is terminated or abandoned.

 

3.             Term of Agreement.  This Agreement shall be effective on the date
hereof and shall continue in effect until VeriFone shall have given two (2)
years’ written notice of cancellation; provided, that,
notwithstanding the delivery of any such notice, this Agreement shall continue
in effect for a period of two (2) years after a Change in Control, if such
Change in Control shall have occurred during the term of this Agreement.  Notwithstanding anything in this Section to
the contrary, this Agreement shall terminate if Executive or VeriFone
terminates Executive’s employment prior to the commencement of any Qualifying
Termination Period.

 

4.             Payments Upon Termination
of Employment.

 

(a)           Severance.  If the employment of Executive shall
terminate pursuant to a Qualifying Termination, then VeriFone shall pay to
Executive:

 

(i)            Earned Payments.  Within ten (10) days following the Date of
Termination a lump-sum cash amount equal to the sum of (A) Executive’s base
salary through the Date of Termination and any bonus amounts which have become
payable, to the extent not theretofore paid or deferred, (B) a pro  rata
portion of Executive’s annual bonus for the fiscal year in which Executive’s
Date of Termination occurs in an amount at least equal to (x) Executive’s
Bonus Amount, multiplied by (y) a fraction, the numerator of which is the
number of days in the fiscal year in which the Date of Termination occurs 

 

6

 

through the
Date of Termination and the denominator of which is three hundred sixty-five
(365), and reduced by (z) any amounts paid from VeriFone’s annual incentive
plan for the fiscal year in which Executive’s Date of Termination occurs and
(C), any compensation previously deferred by Executive other than pursuant to a
tax-qualified plan (together with any interest and earnings thereon) and any
accrued vacation pay, in each case to the extent not theretofore paid; plus

 

(ii)           Severance
Payments.  Within ten (10)
days following the Date of Termination, a lump-sum cash amount equal to (A)
Executive’s annual base salary during the 12-month period immediately prior to
Executive’s Date of Termination, plus (B) Executive’s Bonus Amount.

 

(b)           Benefits.  If the employment of Executive shall
terminate  pursuant to a Qualifying
Termination, then VeriFone shall continue to provide, for a period of twelve
months following Executive’s Date of Termination, Executive (and Executive’s
dependents, if applicable) with the same level of medical, dental, accident,
disability and life insurance benefits, upon substantially the same terms and
conditions (including contributions required by Executive for such benefits) as
existed immediately prior to Executive’s Date of Termination (or, if more
favorable to Executive, as such benefits and terms and conditions existed
immediately prior to the Change in Control); provided, that, if
Executive cannot continue to participate in VeriFone plans providing such
benefits, VeriFone shall otherwise provide such benefits on the same after-tax
basis as if continued participation had been permitted.  Notwithstanding the foregoing, in the event
Executive becomes reemployed and becomes eligible to receive employee benefits
from such employer, the employee benefits described herein shall be secondary
to such benefits during the period of Executive’s eligibility, but only to the
extent that VeriFone reimburses Executive for any increased cost and provides
any additional benefits necessary such that Executive receives the employee
benefits provided hereunder.

 

5.             Vesting

 

(a)           Upon the occurrence of a Change in Control (other
than pursuant to clause (ii) or (iv) of Section 1(d) above), and
immediately prior to the occurrence of a Change in Control under
clause (ii) of Section 1(d) above, unless the applicable award
agreement expressly provides otherwise, all outstanding stock options and stock
appreciation rights granted to Executive under the Plan and all restricted
stock, restricted stock units and other stock-based rights granted to Executive
under the Plan shall Fully Vest.

 

(b)           Upon the occurrence of a Change in Control
specified in paragraph (d)(v) of the definition of such term, all
outstanding options or rights granted under the Plan will terminate upon
consummation of the liquidation or dissolution of VeriFone.  The Board may, in the exercise of its sole
discretion in such instance, (i) provide that option or right shall Fully
Vest as of any specified date prior to such 

 

7

liquidation or dissolution and/or
(ii) declare that any option or right shall terminate as of any specified
date.

 

6.             Limitation on Payments by
VeriFone.

 

(a)           Notwithstanding anything in this Agreement to the
contrary, in the event it shall be determined that (i) any payment, award,
benefit or distribution (or any acceleration of any payment, award, benefit or
distribution) by VeriFone (or any of its affiliated entities) or any entity
which effectuates a Change in Control (or any of its affiliated entities) to or
for the benefit of Executive (whether pursuant to the terms of this Agreement
or otherwise) (the “Payments”)
would be subject to the excise tax (the “Excise
Tax”) under Section 4999 of the Internal Revenue Code of
1986, as amended (the “Code”),
and (ii) the reduction of the amounts payable to Executive under this
Agreement to the maximum amount that could be paid to Executive without giving
rise to the Excise Tax (the “Safe Harbor Cap”)
would provide the Executive with a greater after tax amount than if such
amounts were not reduced, then the amounts payable to Executive under this
Agreement shall be reduced to the Safe
Harbor Cap.  The reduction of the
amounts payable hereunder, if applicable, shall be made by reducing first the
payments under Section 6(a) (ii), unless an alternative method of reduction is
elected by Executive.  For purposes of
reducing the Payments to the Safe Harbor Cap, only amounts payable to Executive
under this Agreement (and no other Payments) shall be reduced, unless consented
to by Executive.  If the reduction of the
amounts payable hereunder would not result in a greater after tax result to
Executive, no amounts payable under this Agreement shall be reduced pursuant to
this provision.

 

(b)           All determinations required to be made under this
Section 6 shall be made by a public accounting firm that is retained by
VeriFone (the “Accounting Firm”)
which shall provide detailed supporting calculations both to VeriFone and
Executive within fifteen (15) business days of the receipt of notice from
VeriFone or the Executive that a payment is to be made hereunder.  Notwithstanding the foregoing, in the event
(i) the Board shall determine prior to the Change in Control that the
Accounting Firm is precluded from performing such services under applicable
auditor independence rules or (ii) the Audit Committee of the Board determines
that it does not want the Accounting Firm to perform such services because of
auditor independence concerns or (iii) the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting the Change
in Control, the Board shall appoint another nationally recognized public
accounting firm to make the determinations required hereunder (which accounting
firm shall then be referred to as the Accounting Firm hereunder).  If payments are reduced to the Safe Harbor
Cap, the Accounting Firm shall provide a reasonable opinion to Executive that
he or she is not required to report any Excise Tax on his or her federal income
tax return.  All fees, costs and expenses
(including, but not limited to, the costs of retaining experts) of the
Accounting Firm shall be borne by VeriFone. 
If the Accounting Firm determines that no Excise Tax is payable by
Executive, it shall furnish Executive with a written opinion to such effect,
and to the effect that failure to report the Excise Tax, if any, on Executive’s
applicable federal income tax return will not result in the imposition of a
negligence or similar penalty.  In the event
the Accounting Firm 

 

8

 

determines that the Payments shall be reduced
to the Safe Harbor Cap, it shall furnish Executive with a written opinion to
such effect.  The determination by the
Accounting Firm shall be binding upon VeriFone and Executive (except as
provided in paragraph (c) below).

 

(c)           If it is established pursuant to a final
determination of a court or the Internal Revenue Service (the “IRS”) proceeding which has been finally
and conclusively resolved, that Payments have been made to, or provided for the
benefit of, Executive by VeriFone, which are in excess of the limitations
provided in this Section 6 (hereinafter referred to as an “Excess Payment”), such Excess Payment
shall be deemed for all purposes to be an advance to Executive made on the date
Executive received the Excess Payment and Executive shall repay the Excess
Payment to VeriFone on demand, together with interest on the Excess Payment at
the applicable federal rate (as defined in Section 1274(d) of the Code) from
the date of Executive’s receipt of such Excess Payment until the date of such
repayment. [As a result of the uncertainty in the application of Section 4999
of the Code at the time of the determination, it is possible that Payments
which will not have been made by VeriFone should have been made (an “Underpayment”), consistent with the
calculations required to be made under this Section 6.  In the event that it is determined (i) by the
Accounting Firm, VeriFone (which shall include the position taken by VeriFone,
or together with its consolidated group, on its federal income tax return) or
the IRS or (ii) pursuant to a determination by a court, that an Underpayment
has occurred, VeriFone shall pay an amount equal to such Underpayment to
Executive within ten (10) days of such determination together with interest on
such amount at the applicable federal rate from the date such amount would have
been paid to Executive until the date of payment.]  Executive shall cooperate, to the extent his
or her expenses are reimbursed by VeriFone, with any reasonable requests by
VeriFone in connection with any contests or disputes with the Internal Revenue
Service in connection with the Excise Tax or the determination of the Excess
Payment.  Notwithstanding the foregoing,
in the event that amounts payable under this Agreement were reduced pursuant to
Section 6(a) and the value is stock options is subsequently redetermined by the
Accounting Firm (as defined below) within the context of Treasury Regulation
§1.280G-1 Q/A 33 that reduces the value of the Payments attributable to such
options, VeriFone shall promptly pay to Executive any amounts payable under
this Agreement that were not previously paid solely as a result of
Section 6 (a) up to the Safe Harbor Cap.

 

7.             Withholding Taxes.  VeriFone may withhold from all payments due
to Executive (or his beneficiary or estate) hereunder all taxes which, by
applicable federal, state, local or other law, VeriFone is required to withhold
therefrom.

 

8.             Reimbursement of Expenses.  If any contest or dispute shall arise under
this Agreement involving termination of Executive’s employment with VeriFone or
involving the failure or refusal of VeriFone to perform fully in accordance
with the terms hereof, VeriFone shall reimburse Executive, on a current basis,
for all reasonable legal fees and expenses, if any, incurred by Executive in
connection with such contest or dispute (regardless of the result thereof),
together with interest in an amount equal to the 

 

9

 

prime rate of
Wells Fargo Bank N.A. from time to time in effect, but in no event higher than
the maximum legal rate permissible under applicable law, such interest to
accrue from the date VeriFone receives Executive’s statement for such fees and
expenses through the date of payment thereof, regardless of whether or not
Executive’s claim is upheld by a court of competent jurisdiction/arbitration
panel; provided, however, Executive shall be required to repay any such amounts
to VeriFone to the extent that a court or arbitration panel issues a final and
non-appealable order determining that the position taken by Executive was
frivolous or advanced by Executive in bad faith.

 

9.             Scope of Agreement.  Nothing in this Agreement shall be deemed to
entitle Executive to continued employment with VeriFone or its Subsidiaries,
and if Executive’s employment with VeriFone shall terminate other than during a
Qualifying Termination Period, Executive shall have no further rights under
this Agreement (except as otherwise provided hereunder); provided, however,
that any termination of Executive’s employment during a Qualifying Termination
Period shall be subject to all of the provisions of this Agreement.

 

10.           Successors; Binding
Agreement.

 

(a)           This Agreement shall not be terminated by any
Business Combination.  In the event of
any Business Combination, the provisions of this Agreement shall be binding
upon the Surviving Corporation, and such Surviving Corporation shall be treated
as VeriFone hereunder.

 

(b)           VeriFone agrees that in connection with any
Business Combination, it will cause any successor entity to VeriFone
unconditionally to assume, by written instrument delivered to Executive (or his
beneficiary or estate), all of the obligations of VeriFone hereunder.  Failure of VeriFone to obtain such assumption
prior to the effectiveness of any such Business Combination that constitutes a
Change in Control, shall constitute Good Reason hereunder and shall entitle
Executive to compensation and other benefits from VeriFone in the same amount
and on the same terms as Executive would be entitled hereunder if Executive’s
employment were terminated by reason of a Qualifying Termination.  For purposes of implementing the foregoing,
the date on which any such Business Combination becomes effective shall be
deemed the date Good Reason occurs, and shall be the Date of Termination if
requested by Executive.

 

(c)           This Agreement shall inure to the benefit of and be
enforceable by Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.  If Executive shall die while any amounts
would be payable to Executive hereunder had Executive continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to such person or persons appointed in writing
by Executive to receive such amounts or, if no person is so appointed, to
Executive’s estate.

 

10

 

11.           Notices.  (a)  For purposes of this Agreement, all notices
and other communications required or permitted hereunder shall be in writing
and shall be deemed to have been duly given when delivered or five (5) days
after deposit in the United States mail, certified and return receipt
requested, postage prepaid, addressed as follows:

 

If to the Executive, as indicated on the signature page hereof:

 

If to VeriFone:

 

VeriFone Holdings, Inc.

2455 Augustine Drive

Santa Clara, CA  95054

Attention:  Chief Executive Officer

Facsimile:   (408) 330-6332

 

with copies to:

 

Sullivan & Cromwell LLP

1870 Embarcadero Road

Palo Alto, California  94303

Attention:  Scott D. Miller

Facsimile:  (650) 461-5700

 

or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notices of change of address shall be
effective only upon receipt.

 

(b)           A written notice of Executive’s Date of Termination
by VeriFone or Executive, as the case may be, to the other, shall (i) indicate
the specific termination provision in this Agreement relied upon, (ii) to the
extent applicable, set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive’s employment under the
provision so indicated and (iii) specify the termination date (which date shall
be not less than fifteen (15) (thirty (30), if termination is by VeriFone for
Disability) nor more than sixty (60) days after the giving of such
notice).  The failure by Executive or
VeriFone to set forth in such notice any fact or circumstance which contributes
to a showing of Good Reason or Cause shall not waive any right of Executive or
VeriFone hereunder or preclude Executive or VeriFone from asserting such fact
or circumstance in enforcing Executive’s or VeriFone’s rights hereunder.

 

12.           Full Settlement;
Resolution of Disputes and Costs

 

(a)           VeriFone’s
obligation to make any payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall be in lieu and in full settlement of
all other severance payments to Executive under any other agreement between
Executive and VeriFone, and any severance plan of VeriFone.  VeriFone’s 

 

11

 

obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which VeriFone may have against
Executive or others.  In no event shall
Executive be obligated to seek other employment or take other action by way of mitigation
of the amounts payable to Executive under any of the provisions of this
Agreement and, except as provided in Section 4(b), such amounts shall not
be reduced whether or not Executive obtains other employment.

 

(b)           Any
dispute or controversy arising under or in connection with this Agreement shall
be settled exclusively by arbitration in Santa Clara County, California by
three arbitrators in accordance with the commercial arbitration rules of the
American Arbitration Association then in effect.  Judgment may be entered on the arbitrators’
award in any court having jurisdiction. 
VeriFone shall bear all costs and expenses arising in connection with
any arbitration proceeding pursuant to this Section except in the case of
arbitration that is finally determined to have been commenced by Executive in
bad faith.

 

13.           Employment with
Subsidiaries.  Employment
with VeriFone for purposes of this Agreement shall include employment with any
Subsidiary.

 

14.           Survival.  The respective obligations and benefits
afforded to VeriFone and Executive as provided in Sections 4 (to the
extent that payments or benefits are owed as a result of a termination of
employment that occurs during the term of this Agreement), 5, 6 (to the extent
that Payments are made to Executive as a result of a Change in Control that occurs
during the term of this Agreement), 7, 8, 10(c) and 12 shall survive the
termination of this Agreement.

 

15.           GOVERNING LAW; VALIDITY.  THE INTERPRETATION, CONSTRUCTION AND
PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD
TO THE PRINCIPLE OF CONFLICTS OF LAWS. 
THE INVALIDITY OR UNENFORCEABILITY OF ANY PROVISION OF THIS AGREEMENT
SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF ANY OTHER PROVISION OF THIS
AGREEMENT, WHICH OTHER PROVISIONS SHALL REMAIN IN FULL FORCE AND EFFECT.

 

16.           Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.

 

17.           Miscellaneous.  No provision of this Agreement may be
modified or waived unless such modification or waiver is agreed to in writing
and signed by Executive and by a duly authorized officer of VeriFone.  No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any condition
or provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same
or at any prior or 

 

12

 

subsequent
time.  Failure by Executive or VeriFone
to insist upon strict compliance with any provision of this Agreement or to
assert any right Executive or VeriFone may have hereunder, including without
limitation, the right of Executive to terminate employment for Good Reason,
shall not be deemed to be a waiver of such provision or right or any other
provision or right of this Agreement. 
Except as otherwise specifically provided herein, the rights of, and
benefits payable to, Executive, his estate or his beneficiaries pursuant to
this Agreement are in addition to any rights of, or benefits payable to,
Executive, his estate or his beneficiaries under any other employee benefit
plan or compensation program of VeriFone.

 

13

 

[SIGNATURE
PAGE TO CHANGE IN CONTROLSEVERANCE AGREEMENT]

 

 

IN WITNESS WHEREOF, VeriFone has caused this
Agreement to be executed by a duly authorized officer of VeriFone and Executive
has executed this Agreement with effect from the date first written above.

 

	
   

  	
  VERIFONE HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
  /s/ Doug Bergeron

  	
   

  
	
   

  	
  Doug Bergeron

  
	
   

  	
  Chairman and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  /s/ Barry Zwarenstein

  	
   

  
	
   

  	
  Barry Zwarenstein

  
	
   

  	
  Executive Address for Notices:

  
	
   

  	
   

  
	
   

  	
  2099 Gateway Place, Suite 600

  
	
   

  	
  San Jose, CA 95110

  

 

14

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