Exhibit 10.2

GUARANTEE AND

COLLATERAL AGREEMENT

Dated and effective as of August 19, 2011,

among

QUALITY DISTRIBUTION, INC.,

as Holdings,

QUALITY DISTRIBUTION, LLC,

as Borrower,

each Subsidiary of the Borrower

identified herein, and

BANK OF AMERICA, N.A.,

as Administrative Agent and Collateral Agent

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TABLE OF CONTENTS

 

          Page  

ARTICLE I

  

DEFINITIONS

     1   

Section 1.01

  

Credit Agreement

     1   

Section 1.02

  

Other Defined Terms

     1   

ARTICLE II

  

GUARANTEE

     6   

Section 2.01

  

Guarantee

     6   

Section 2.02

  

Guarantee of Payment

     7   

Section 2.03

  

No Limitations, Etc

     7   

Section 2.04

  

Reinstatement

     9   

Section 2.05

  

Agreement To Pay; Contribution; Subrogation

     9   

Section 2.06

  

Information

     10   

Section 2.07

  

Maximum Liability

     10   

Section 2.08

  

Payment Free and Clear of Taxes

     10   

ARTICLE III

  

PLEDGE OF SECURITIES

     11   

Section 3.01

  

Pledge

     11   

Section 3.02

  

Delivery of the Pledged Collateral

     11   

Section 3.03

  

Representations, Warranties and Covenants

     12   

Section 3.04

  

Registration in Nominee Name; Denominations

     14   

Section 3.05

  

Voting Rights; Dividends and Interest, Etc

     14   

Section 3.06

  

Subsequently Acquired Pledged Collateral

     16   

ARTICLE IV

  

SECURITY INTERESTS IN OTHER PERSONAL PROPERTY

     16   

Section 4.01

  

Security Interest

     16   

Section 4.02

  

Representations and Warranties

     19   

Section 4.03

  

Covenants

     22   

Section 4.04

  

Other Actions

     25   

Section 4.05

  

Covenants Regarding Patent, Trademark and Copyright Collateral

     26   

ARTICLE V

   REPRESENTATIONS, WARRANTIES AND COVENANTS WITH RESPECT TO TRANSPORTATION
EQUIPMENT      28   

Section 5.01

  

Representations and Warranties

     28   

Section 5.02

  

Perfection of Security Interests in Transportation Equipment Represented by a
Certificate of Title

     28   

Section 5.03

  

Maintenance of Registration

     29   

Section 5.04

  

Remedies

     29   

Section 5.05

  

Further Assurances

     29   

ARTICLE VI

  

REMEDIES

     30   

Section 6.01

  

Remedies Upon Default

     30   

 

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TABLE OF CONTENTS

(continued)

 

          Page  

Section 6.02

  

Application of Proceeds

     31   

Section 6.03

  

Securities Act, Etc

     32   

Section 6.04

  

Remedies Cumulative

     32   

Section 6.05

  

Discontinuance of Proceedings

     33   

ARTICLE VII

  

[RESERVED]

     33   

ARTICLE VIII

  

INDEMNITY, SUBROGATION AND SUBORDINATION

     33   

Section 8.01

  

Indemnity

     33   

Section 8.02

  

Contribution and Subrogation

     33   

Section 8.03

  

Subordination

     34   

ARTICLE IX

  

MISCELLANEOUS

     34   

Section 9.01

  

Notices

     34   

Section 9.02

  

Security Interest Absolute

     35   

Section 9.03

  

Limitation By Law

     35   

Section 9.04

  

Binding Effect; Several Agreement

     35   

Section 9.05

  

Successors and Assigns

     35   

Section 9.06

  

Administrative Agent’s and Collateral Agent’s Fees and Expenses; Indemnification

     36   

Section 9.07

  

Collateral Agent Appointed Attorney-in-Fact; Duty of Collateral Agent

     37   

Section 9.08

  

GOVERNING LAW

     37   

Section 9.09

  

Waivers; Amendment

     38   

Section 9.10

  

WAIVER OF JURY TRIAL

     38   

Section 9.11

  

Severability

     38   

Section 9.12

  

Counterparts

     38   

Section 9.13

  

Headings

     39   

Section 9.14

  

Jurisdiction; Consent to Service of Process

     39   

Section 9.15

  

Termination or Release

     39   

Section 9.16

  

Additional Subsidiaries

     40   

Section 9.17

  

Right of Set-off

     40   

 

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TABLE OF CONTENTS

(continued)

 

                 Page

SCHEDULES

        

Schedule I

     –       Subsidiary Parties   

Schedule II

     –       Pledged Stock; Debt Securities   

Schedule III

     –       Intellectual Property   

Schedule IV

     –       Filing Jurisdictions   

Schedule V

     –       Commercial Tort Claims   

Schedule VI

     –       Matters Relating to Accounts and Inventory   

Schedule VII

     –       Titled Transportation Equipment   

EXHIBITS

        

Exhibit I

     –       Form of Supplement to the Guarantee and Collateral Agreement   

 

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GUARANTEE AND COLLATERAL AGREEMENT dated and effective as of August 19, 2011
(this “Agreement”), among QUALITY DISTRIBUTION, INC., a Florida corporation
(“Holdings”), QUALITY DISTRIBUTION, LLC, a Delaware limited liability company
(the “Borrower”), each Subsidiary of the Borrower identified on Schedule I or
otherwise identified herein as a party (each, a “Subsidiary Party”), and Bank of
America, N.A. (“Bank of America”), as administrative agent (in such capacity,
the “Administrative Agent”) and as collateral agent for the Secured Parties (as
defined below) (in such capacity, the “Collateral Agent”).

Reference is made to the Credit Agreement dated as of August 19, 2011 (as
amended, amended and restated, supplemented, waived or otherwise modified from
time to time, the “Credit Agreement”), among Holdings, the Borrower, the lenders
party thereto from time to time (the “Lenders”), the Administrative Agent, the
Collateral Agent, JPMorgan Chase Bank, N.A., as syndication agent, and SunTrust
Bank and Regions Business Capital, a division of Regions Bank, each as
co-documentation agent.

The Lenders have agreed to extend credit to the Borrower subject to the terms
and conditions set forth in the Credit Agreement. The obligations of the Lenders
to extend such credit are conditioned upon, among other things, the execution
and delivery of this Agreement. Holdings and the Subsidiary Parties are
affiliates of the Borrower, will derive substantial benefits from the extension
of credit to the Borrower pursuant to the Credit Agreement and are willing to
execute and deliver this Agreement in order to induce the Lenders to extend such
credit. Accordingly, the parties hereto agree as follows:

ARTICLE I

Definitions

Section 1.01 Credit Agreement. (a) Capitalized terms used in this Agreement and
not otherwise defined herein have the respective meanings assigned thereto in
the Credit Agreement. All capitalized terms defined in the New York UCC (as
defined herein) and not defined in this Agreement have the meanings specified
therein. The term “Instrument” shall have the meaning specified in Article 9 of
the New York UCC.

(b) The rules of construction specified in Section 1.02 of the Credit Agreement
also apply to this Agreement.

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

“Account” shall mean, with respect to a person, any of such person’s now owned
and hereafter acquired or arising accounts, as defined in the UCC, including any
rights to payment for the sale or lease of goods or rendition of services,
whether or not they have been earned by performance.

“Account Debtor” shall mean any person who is or who may become obligated to any
Pledgor under, with respect to, or on account of an Account, Chattel Paper,
General Intangibles, Instruments or Investment Property.

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“Administrative Agent” shall have the meaning assigned to such term in the
preliminary statement of this Agreement.

“Article 9 Collateral” shall have the meaning assigned to such term in
Section 4.01.

“Bank of America” shall have the meaning assigned to such term in the
preliminary statement of this Agreement.

“Cash Management Obligations” shall mean the due and punctual payment and
performance of all obligations of Holdings, the Borrower and any of their
Subsidiaries in respect of overdrafts and related liabilities and/or arising
from cash management services (including treasury, depository, overdraft, credit
or debit card, electronic funds transfer, netting, ACH services and other cash
management arrangements), in each case owed to a counterparty that is the
Administrative Agent, the Collateral Agent, the Syndication Agent, the
Documentation Agent, a Lender or an Affiliate of any of the foregoing on the
Closing Date, if such obligations are in effect on the Closing Date, or
otherwise at the time the arrangements governing such obligation are entered
into.

“Collateral” shall mean all Article 9 Collateral and Pledged Collateral.

“Collateral Agent” shall have the meaning assigned to such term in the
preliminary statement of this Agreement.

“Control Agreement” shall mean a deposit account control agreement, a securities
account control agreement or a commodity account control agreement, as
applicable, enabling the Collateral Agent to obtain “control” (within the
meaning of the New York UCC) of any such accounts, in form and substance
reasonably satisfactory to the Collateral Agent.

“Copyright License” shall mean any written agreement, now or hereafter in
effect, granting any right to any Pledgor under any Copyright now or hereafter
owned by any third party, and all rights of any Pledgor under any such agreement
(including, without limitation, any such rights that such Pledgor has the right
to license).

“Copyrights” shall mean all of the following now owned or hereafter acquired by
any Pledgor: (a) all copyright rights in any work subject to the copyright laws
of the United States or any other country, whether as author, assignee,
transferee or otherwise, (b) all registrations and applications for registration
of any such Copyright in the United States or any other country, including
registrations, supplemental registrations and pending applications for
registration in the United States Copyright Office and the right to obtain all
renewals thereof, including those listed on Schedule III, (c) all claims for,
and rights to sue for, past or future infringements of any of the foregoing and
(d) all income, royalties, damages and payments now or hereafter due and payable
with respect to any of the foregoing, including damages and payments for past or
future infringement thereof.

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

 

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“Federal Securities Laws” shall have the meaning assigned to such term in
Section 6.03.

“General Intangibles” shall mean all “General Intangibles” as defined in the New
York UCC, including all choses in action and causes of action and all other
intangible personal property of any Pledgor of every kind and nature (other than
Accounts) now owned or hereafter acquired by any Pledgor, including corporate or
other business records, indemnification claims, contract rights (including
rights under leases, whether entered into as lessor or lessee, Swap Agreements
and other agreements), Intellectual Property (but excluding “intent-to-use”
applications for trademark or service mark registrations filed pursuant to
Section 1(b) of the Lanham Act, 15 U.S.C. § 1051, unless and until an Amendment
to Allege Use or a Statement of Use under Sections 1(c) and 1(d) of the Lanham
Act has been filed, to the extent that, and solely during the period for which,
any assignment of an “intent-to-use” application prior to such filing would
violate the Lanham Act), goodwill, registrations, franchises, tax refund claims
and any guarantee, claim, security interest or other security held by or granted
to any Pledgor to secure payment by an Account Debtor of any of the Accounts.

“Guarantors” shall mean Holdings and the Subsidiary Parties.

“Intellectual Property” shall mean all intellectual property of every kind and
nature now owned or hereafter acquired by any Pledgor, including inventions,
designs, Patents, Copyrights, Trademarks, Patent Licenses, Copyright Licenses,
Trademark Licenses, trade secrets, domain names, confidential or proprietary
technical and business information, know-how, show-how or other data or
information and all related documentation.

“Intellectual Property Collateral” shall have the meaning assigned to such term
in Section 4.02(h).

“Intellectual Property Security Agreement” shall mean a security agreement in
the form hereof or a short form hereof, in each case, which form shall be
reasonably acceptable to the Administrative Agent.

“Inventory” shall mean, with respect to a person, all of such person’s now owned
and hereafter acquired inventory, as defined in the UCC, goods, and merchandise,
wherever located, in each case to be furnished under any contract of service or
held for sale or lease, all returned goods, raw materials, work-in-process,
finished goods (including embedded software), other materials, and supplies of
any kind, nature, or description which are used or consumed in such person’s
business or used in connection with the packing, shipping, advertising, selling,
or finishing of such goods, merchandise, and other property, and all documents
of title or other documents representing them.

“IP Agreements” shall mean all material Copyright Licenses, Patent Licenses,
Trademark Licenses, and all other agreements, permits, consents, orders and
franchises relating to the license, development, use or disclosure of any
material Intellectual Property to which a Pledgor, now or hereafter, is a party
or a beneficiary, including, without limitation, the agreements set forth on
Schedule III hereto.

 

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“Lenders” shall have the meaning assigned to such term in the preliminary
statement of this Agreement.

“Loan Document Obligations” shall mean (a) the due and punctual payment by the
Borrower of (i) the unpaid principal of and interest (including interest
accruing during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or allowable in such
proceeding) on the Loans made to the Borrower, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by the Borrower under the
Credit Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon
(including interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) and obligations to provide cash collateral, in
each case to the extent allocated under the Credit Agreement and (iii) all other
monetary obligations of the Borrower to any of the Secured Parties under the
Credit Agreement and each of the other Loan Documents, including obligations to
pay fees, expense and reimbursement obligations and indemnification obligations,
whether primary, secondary, direct, contingent, fixed or otherwise (including
monetary obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), (b) the due and punctual performance of all other
obligations of the Borrower to the Secured Parties under or pursuant to the
Credit Agreement and each of the other Loan Documents and (c) the due and
punctual payment and performance of all the obligations of each other Loan Party
under or pursuant to this Agreement and each of the other Loan Documents.

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

“Patent License” shall mean any written agreement, now or hereafter in effect,
granting to any Pledgor any right to make, use or sell any invention covered by
a Patent, now or hereafter owned by any third party (including, without
limitation, any such rights that such Pledgor has the right to license).

“Patents” shall mean all of the following now owned or hereafter acquired by any
Pledgor: (a) all letters patent of the United States or the equivalent thereof
in any other country or jurisdiction, including those listed on Schedule III,
and all applications for letters patent of the United States or the equivalent
thereof in any other country or jurisdiction, including those listed on Schedule
III, (b) all provisionals, reissues, extensions, continuations, divisions,
continuations-in-part, reexaminations or revisions thereof, and the inventions
disclosed or claimed therein, including the right to make, use, import and/or
sell the inventions disclosed or claimed therein, (c) all claims for, and rights
to sue for, past or future infringements of any of the foregoing and (d) all
income, royalties, damages and payments now or hereafter due and payable with
respect to any of the foregoing, including damages and payments for past or
future infringement thereof.

“Permitted Liens” shall mean any Lien permitted by Section 6.02 of the Credit
Agreement.

 

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“Pledged Collateral” shall have the meaning assigned to such term in
Section 3.01.

“Pledged Debt Securities” shall have the meaning assigned to such term in
Section 3.01.

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

“Pledged Stock” shall have the meaning assigned to such term in Section 3.01.

“Pledgor” shall mean the Borrower and each Guarantor.

“Secured Obligations” shall mean (a) the Loan Document Obligations, (b) the Cash
Management Obligations and (c) the Secured Swap Obligations.

“Secured Parties” shall mean (a) the Lenders, (b) the Administrative Agent, the
Collateral Agent and any other Agent, (c) each Issuing Bank, (d) each
counterparty to any Swap Agreement entered into with a Loan Party the
obligations under which constitute Secured Swap Obligations, (e) each
counterparty to any cash management or similar obligation described in the
definition of Cash Management Obligations entered into with a Loan Party,
(f) the beneficiaries of each indemnification obligation undertaken by any Loan
Party under any Loan Document and (g) the successors and permitted assigns of
each of the foregoing.

“Secured Swap Obligations” shall mean the due and punctual payment and
performance of all obligations of each Loan Party under each Swap Agreement that
(i) is in effect on the Closing Date with a counterparty that is the
Administrative Agent, the Collateral Agent, the Syndication Agent, the
Documentation Agent, a Lender or an Affiliate of any of the foregoing as of the
Closing Date or (ii) is entered into after the Closing Date with any
counterparty that is the Administrative Agent, the Collateral Agent, the
Syndication Agent, the Documentation Agent, a Lender or an Affiliate of any of
the foregoing at the time such Swap Agreement is entered into and, in case of
each of the foregoing clauses (i) and (ii), has been disclosed to the
Administrative Agent by written notice.

“Security Interest” shall have the meaning assigned to such term in
Section 4.01.

“Silfies Note” means that certain Promissory Note dated as of May 1, 2010 in
favor of Quality Carriers, Inc., and issued by F. T. Silfies, Inc. in the
original principal amount of $3.0 million.

“Subsidiary Party” shall have the meaning assigned to such term in the
preliminary statement of this Agreement, and any Subsidiary that becomes a party
hereto pursuant to Section 9.16.

“Supporting Obligations” shall mean any “supporting obligation” as such term is
defined in the New York UCC, now or hereafter owned by any Pledgor, or in which
any Pledgor has any rights, and, in any event, shall include, but shall not be
limited to all of such Pledgor’s rights in any Letter-of-Credit Right or
secondary obligation that supports the payment or performance of, and all
security for, any Account, Chattel Paper, Document, General Intangible,
Instrument or Investment Property.

 

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“Tractor Trailer” shall mean any truck, tractor, trailer, tank trailer or other
trailer or similar vehicle or trailer.

“Trademark License” shall mean any written agreement, now or hereafter in
effect, granting to any Pledgor any right to use any Trademark now or hereafter
owned by any third party (including, without limitation, any such rights that
such Pledgor has the right to license).

“Trademarks” shall mean all of the following now owned or hereafter acquired by
any Pledgor: (a) all trademarks, service marks, corporate names, company names,
business names, fictitious business names, trade styles, trade dress, logos,
other source or business identifiers, designs and general intangibles of like
nature, now existing or hereafter adopted or acquired, all registrations thereof
(if any), and all registration and recording applications filed in connection
therewith, including registrations and registration applications in the United
States Patent and Trademark Office or any similar offices in any State of the
United States or any other country or any political subdivision thereof (except
for “intent-to-use” applications for trademark or service mark registrations
filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. § 1051, unless and
until an Amendment to Allege Use or a Statement of Use under Sections 1(c) and
1(d) of the Lanham Act has been filed, to the extent that, and solely during the
period for which, any assignment of an “intent-to-use” application prior to such
filing would violate the Lanham Act), and all renewals thereof, including those
listed on Schedule III, (b) all goodwill associated therewith or symbolized
thereby, (c) all claims for, and rights to sue for, past or future infringements
of any of the foregoing and (d) all income, royalties, damages and payments now
or hereafter due and payable with respect to any of the foregoing, including
damages and payments for past or future infringement thereof.

“Transportation Equipment” means each of the following types of licensed
vehicles and Tractor Trailers owned by any Pledgor: (a) vehicles and Tractor
Trailers used for the transportation and delivery of goods, and (b) vehicles and
Tractor Trailers used for leasing service and (c) vehicles and Tractor Trailers
otherwise in connection with a Pledgor’s business, in each case used in the
ordinary course of such Pledgor’s business.

ARTICLE II

Guarantee

Section 2.01 Guarantee. Each Guarantor absolutely, irrevocably and
unconditionally guarantees, jointly and severally with the other Guarantors, to
the Administrative Agent, for the ratable benefit of the Secured Parties, as a
primary obligor and not merely as a surety, the due and punctual payment in full
in cash and performance of the Secured Obligations. Each Guarantor further
agrees that the Secured Obligations may be extended or renewed, in whole or in
part, without notice to or further assent from it, and that it will remain bound
upon its guarantee notwithstanding any extension or renewal of any Secured
Obligation. Each Guarantor waives presentment to, demand of payment from and
protest to the Borrower or any other Loan Party of any of the Secured
Obligations, and also waives notice of acceptance of its guarantee and notice of
protest for nonpayment.

 

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Section 2.02 Guarantee of Payment. Each Guarantor further agrees that its
guarantee hereunder constitutes a guarantee of payment when due (whether at the
stated maturity, by acceleration or otherwise) and not of collection, and waives
any right to require that any resort be had by the Administrative Agent or any
other Secured Party to any security held for the payment of the Secured
Obligations or to any balance of any Deposit Account or credit on the books of
the Administrative Agent or any other Secured Party in favor of the Borrower or
any other person.

Section 2.03 No Limitations, Etc. (a) Except for termination of a Guarantor’s
obligations hereunder as expressly provided for in Section 9.15 and except as
provided in Section 2.07, the obligations of each Guarantor hereunder shall not
be subject to any reduction, limitation, impairment or termination for any
reason, including any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense or setoff, counterclaim,
recoupment or termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Secured Obligations or otherwise (other than defense of
payment or performance).

Without limiting the generality of the foregoing, the obligations of each
Guarantor hereunder, to the fullest extent permitted by applicable law, shall
not be discharged or impaired or otherwise affected by, and each Guarantor
hereby waives any defense to the enforcement hereof by reason of:

(i) the failure of the Administrative Agent, the Collateral Agent or any other
Secured Party to assert any claim or demand or to exercise or enforce any right
or remedy under the provisions of any Loan Document or otherwise;

(ii) any rescission, waiver, amendment or modification of, or any release from
any of the terms or provisions of, any Loan Document or any other agreement,
including with respect to any other Guarantor under this Agreement;

(iii) the delay or failure to perfect any security interest in, or the exchange,
substitution, release or any impairment of, any security held by the Collateral
Agent or any other Secured Party for the Secured Obligations;

(iv) any default, failure or delay, willful or otherwise, in the performance of
the Secured Obligations;

(v) any other act or omission that may or might in any manner or to any extent
vary the risk of any Guarantor or otherwise operate as a discharge of any
Guarantor as a matter of law or equity (other than the payment in full in cash
or immediately available funds of all the Secured Obligations);

(vi) any illegality, lack of validity or unenforceability of any Secured
Obligation;

 

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(vii) any change in the corporate existence, structure or ownership of the
Borrower, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting the Borrower or its assets or any resulting release or
discharge of any Secured Obligation;

(viii) the existence of any claim, set-off or other rights that the Guarantors
may have at any time against the Borrower, the Administrative Agent, the
Collateral Agent, any other Secured Party or any other person, whether in
connection herewith or any unrelated transactions; provided that nothing herein
will prevent the assertion of any such claim by separate suit or compulsory
counterclaim;

(ix) any action permitted or authorized hereunder; or

(x) any other circumstance (including, without limitation, any statute of
limitations) or any existence of or reliance on any representation by the
Administrative Agent, the Collateral Agent or any other Secured Party that might
otherwise constitute a defense to, or a legal or equitable discharge of, the
Borrower a Guarantor or any other guarantor or surety.

Each Guarantor expressly authorizes the Secured Parties to take and hold
security for the payment and performance of the Secured Obligations, to
exchange, waive or release any or all such security (with or without
consideration), to enforce or apply such security and direct the order and
manner of any sale thereof in their sole discretion or to release or substitute
any one or more other guarantors or obligors upon or in respect of the Secured
Obligations, all without affecting the obligations of any Guarantor hereunder.

(b) To the fullest extent permitted by applicable law, each Guarantor waives any
defense based on or arising out of any defense of any other Loan Party or the
unenforceability of the Secured Obligations or any part thereof from any cause,
or the cessation from any cause of the liability of any other Loan Party, other
than the payment in full in cash or immediately available funds of all the
Secured Obligations (other than contingent indemnity or expense reimbursement
obligations as to which no claim has been made). The Administrative Agent, the
Collateral Agent and the other Secured Parties may, at their election, foreclose
on any security held by one or more of them by one or more judicial or
nonjudicial sales, accept an assignment of any such security in lieu of
foreclosure, compromise or adjust any part of the Secured Obligations, make any
other accommodation with any other Loan Party or exercise any other right or
remedy available to them against any other Loan Party, without affecting or
impairing in any way the liability of any Guarantor hereunder except to the
extent the Secured Obligations (other than contingent indemnity or expense
reimbursement obligations as to which no claim has been made) have been paid in
full in cash or immediately available funds. To the fullest extent permitted by
applicable law, each Guarantor waives any defense arising out of any such
election even though such election operates, pursuant to applicable law, to
impair or to extinguish any right of reimbursement or subrogation or other right
or remedy of such Guarantor against any other Loan Party, as the case may be, or
any security.

 

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(c) Each Guarantor hereby acknowledges and affirms that it understands that to
the extent the Secured Obligations are secured by Real Property located in the
State of California, such Guarantor shall be liable for the full amount of the
liability hereunder notwithstanding foreclosure on such Real Property by trustee
sale or any other reason impairing such Guarantor’s or any Secured Party’s right
to proceed against the Borrower, any other Loan Party or any other guarantor of
the Secured Obligations. In accordance with Section 2856 of the California Code
of Civil Procedure, each Guarantor hereby waives until such time as the Secured
Obligations have been paid in full in cash:

(i) all rights of subrogation, reimbursement, indemnification, and contribution
and any other rights and defenses that are or may become available to such
Guarantor by reason of Sections 2787 to 2855, inclusive, 2899 and 3433 of the
California Code of Civil Procedure;

(ii) all rights and defenses that such Guarantor may have because the Secured
Obligations are secured by Real Property located in California, meaning, among
other things, that: (A) the Secured Parties may collect from such Guarantor
without first foreclosing on any real or personal property collateral pledged by
any Loan Party, and (B) if the Secured Parties foreclose on any Real Property
collateral pledged by any Loan Party, (1) the amount of the Secured Obligations
may be reduced only by the price for which that collateral is sold at the
foreclosure sale, even if the collateral is worth more than the sale price, and
(2) the Secured Parties may collect from such Guarantor even if the Secured
Parties, by foreclosing on the Real Property collateral, have destroyed any
right that such Guarantor may have to collect from any Loan Party, it being
understood that this is an unconditional and irrevocable waiver of any rights
and defenses such Guarantor may have because the Secured Obligations are secured
by Real Property (including, without limitation, any rights or defenses based
upon Sections 580a, 580d or 726 of the California Code of Civil Procedure); and

(iii) all rights and defenses arising out of an election of remedies by the
Secured Parties, even though that election of remedies, such as a nonjudicial
foreclosure with respect to security for the Secured Obligations, has destroyed
each such Guarantor’s rights of subrogation and reimbursement against any Loan
Party by the operation of Section 580d of the California Code of Civil Procedure
or otherwise.

Section 2.04 Reinstatement. Each Guarantor agrees that its guarantee hereunder
shall continue to be effective or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any Secured Obligation is rescinded or
must otherwise be restored by the Administrative Agent, the Collateral Agent or
any other Secured Party upon the bankruptcy or reorganization of the Borrower or
any other Loan Party or otherwise.

Section 2.05 Agreement To Pay; Contribution; Subrogation. In furtherance of the
foregoing and not in limitation of any other right that the Administrative
Agent, the Collateral Agent or any other Secured Party has at law or in equity
against any Guarantor by virtue hereof, upon the failure of a Borrower to pay
any Secured Obligation when and as the same shall become due, whether at
maturity, by acceleration, after notice of prepayment or otherwise, each
Guarantor hereby promises to and will forthwith pay, or cause to be paid, to the
Administrative Agent for distribution to the applicable Secured Parties in cash
the amount of such unpaid Secured Obligation. Each Guarantor hereby
unconditionally and irrevocably agrees that in the event any payment shall be
required to be made to any Secured Party under this guarantee or any other
guarantee, such Guarantor will contribute, to the maximum extent permitted by
law, such amounts to each other Guarantor and each other guarantor so as to
maximize the aggregate amount paid to the Secured Parties under or in respect of
the Loan Documents. Upon payment by any Guarantor of any sums to the
Administrative Agent as provided above, all rights of such Guarantor against the
Borrower, any other Loan Party or any other Guarantor arising as a result
thereof by way of right of subrogation, contribution, reimbursement, indemnity
or otherwise shall in all respects be subject to Article VIII.

 

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Section 2.06 Information. Each Guarantor assumes all responsibility for being
and keeping itself informed of the financial condition and assets of the
Borrower and each other Loan Party, and of all other circumstances bearing upon
the risk of nonpayment of the Secured Obligations and the nature, scope and
extent of the risks that such Guarantor assumes and incurs hereunder, and agrees
that none of the Administrative Agent, the Collateral Agent or the other Secured
Parties will have any duty to advise such Guarantor of information known to it
or any of them regarding such circumstances or risks.

Section 2.07 Maximum Liability. Each Guarantor, and by its acceptance of this
guarantee, the Administrative Agent, the Collateral Agent and each Lender hereby
confirms that it is the intention of all such persons that this guarantee and
the Secured Obligations of each Guarantor hereunder not constitute a fraudulent
transfer or conveyance for purposes of the U.S. Bankruptcy Code or any other
federal, state or foreign bankruptcy, insolvency, receivership or similar law,
the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or
any similar foreign, federal or state law to the extent applicable to this
guarantee and the Secured Obligations of each Guarantor hereunder. To effectuate
the foregoing intention, the Administrative Agent, the Collateral Agent, the
Lenders and the Guarantors hereby irrevocably agree that the Secured Obligations
of Holdings and each Subsidiary Party under this guarantee at any time shall be
limited to the maximum amount as will result in the Secured Obligations of such
Guarantor under this guarantee not constituting a fraudulent transfer or
conveyance.

Section 2.08 Payment Free and Clear of Taxes. Any and all payments by or on
account of any obligation of any Guarantor hereunder or under any other Loan
Document shall be made in Dollars free and clear of, and without deduction for,
any Indemnified Taxes or Other Taxes on the same terms and to the same extent
that payments by the Borrower are required to be made pursuant to the terms of
Section 2.17 of the Credit Agreement. The provisions of Section 2.17 of the
Credit Agreement shall apply to each Guarantor mutatis mutandis.

 

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ARTICLE III

Pledge of Securities

Section 3.01 Pledge. As security for the payment in full in cash or performance,
as the case may be, in full of its Secured Obligations, each Pledgor hereby
assigns and pledges to the Collateral Agent, its successors and permitted
assigns, for the ratable benefit of the Secured Parties, and hereby grants to
the Collateral Agent, its successors and permitted assigns, for the ratable
benefit of the Secured Parties, a continuing security interest in all of such
Pledgor’s right, title and interest in, to and under (a) the Equity Interests
directly owned by it (including those listed on Schedule II) and any other
Equity Interests obtained in the future by such Pledgor and any certificates
representing all such Equity Interests (the “Pledged Stock”); provided that the
Pledged Stock shall not include (i) the issued and outstanding voting Equity
Interests of any Foreign Subsidiary directly owned by such Pledgor to the extent
the pledge of any such Equity Interests would cause more than 65% of the
outstanding voting Equity Interests of such Foreign Subsidiary to be pledged
hereunder, (ii) to the extent applicable law requires that a subsidiary of such
Pledgor issue directors’ qualifying shares or similar shares, such shares or
nominee or other similar shares, (iii) any Equity Interests of a Subsidiary
(which Subsidiary is set forth on Schedule 1.01B to the Credit Agreement) to the
extent that, as of the Closing Date, and for so long as, such a pledge of such
Equity Interests would violate applicable law or an enforceable contractual
obligation binding on or relating to such Equity Interests, or (iv) any Equity
Interests of a person that is not directly or indirectly a Subsidiary, as to
which Article IV shall apply; (b)(i) the debt obligations listed opposite the
name of such Pledgor on Schedule II, (ii) any debt securities in the future
issued to such Pledgor, and (iii) the certificates, promissory notes and any
other instruments, if any, evidencing such debt obligations and debt securities
(the “Pledged Debt Securities”); (c) subject to Section 3.05 hereof, all
payments of principal or interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of, in exchange for or upon the conversion of, and all other proceeds
received in respect of, the securities referred to in clauses (a) and (b) above;
(d) subject to Section 3.05 hereof, all rights and privileges of such Pledgor
with respect to the securities and other property referred to in clauses (a),
(b) and (c) above; and (e) all proceeds of any of the foregoing (the items
referred to in clauses (a) through (d) above being collectively referred to as
the “Pledged Collateral”).

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

Section 3.02 Delivery of the Pledged Collateral. (a) Each Pledgor agrees
promptly to deliver or cause to be delivered to the Collateral Agent, for the
ratable benefit of the Secured Parties, any and all Pledged Securities (except
in the case of promissory notes or other instruments evidencing Indebtedness,
only to the extent required to be delivered pursuant to paragraph (b) of this
Section 3.02). The limited liability company interests of the Borrower (i) shall
at all times constitute securities governed by Article 8 of the New York UCC in
accordance with organizational documents of the Borrower and (ii) shall be
certificated and shall be subject to the requirements of this Section 3.02(a).
The limited liability company interests or partnership interests of any
Subsidiary shall provide that they may constitute securities governed by Article
8 of the Uniform Commercial Code as in effect in any jurisdiction.

 

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(b) Each Pledgor will cause any Indebtedness for borrowed money having an
aggregate principal amount in excess of $1.0 million (other than
(i) intercompany current liabilities incurred in the ordinary course of business
in connection with the cash management operations of Holdings, the Borrower and
its Subsidiaries, (ii) to the extent that a pledge of such promissory note or
instrument would violate applicable law or (iii) so long as the outstanding
principal amount thereof is less than $5.0 million, the Silfies Note) owed to
such Pledgor by any person to be evidenced by a duly executed promissory note
that is pledged and delivered to the Collateral Agent, for the ratable benefit
of the Secured Parties, pursuant to the terms hereof. To the extent any such
promissory note is a demand note, each Pledgor party thereto agrees, if
requested by the Collateral Agent, to immediately demand payment thereunder upon
an Event of Default specified under Section 7.01(b), (c), (f), (h), (i) and
(l) of the Credit Agreement unless such demand would not be commercially
reasonable or would otherwise expose such Pledgor to liability to the maker.

(c) Upon delivery to the Collateral Agent, (i) any Pledged Securities required
to be delivered pursuant to the foregoing paragraphs (a) and (b) of this
Section 3.02 shall be accompanied by stock powers or note powers, as applicable,
duly executed in blank or other instruments of transfer reasonably satisfactory
to the Collateral Agent and by such other instruments and documents as the
Collateral Agent may reasonably request and (ii) all other property composing
part of the Pledged Collateral delivered pursuant to the terms of this Agreement
shall be accompanied to the extent necessary to perfect the security interest in
or allow realization on the Pledged Collateral by proper instruments of
assignment duly executed by the applicable Pledgor and such other instruments or
documents (including issuer acknowledgments in respect of uncertificated
securities) as the Collateral Agent may reasonably request. Each delivery of
Pledged Securities shall be accompanied by a schedule describing the securities,
which schedule shall be attached hereto as Schedule II (or a supplement to
Schedule II, as applicable) and made a part hereof; provided that failure to
attach any such schedule hereto shall not affect the validity of such pledge of
such Pledged Securities. Each schedule so delivered shall supplement any prior
schedules so delivered.

Section 3.03 Representations, Warranties and Covenants. The Pledgors, jointly
and severally, represent, warrant and covenant to and with the Collateral Agent,
for the ratable benefit of the Secured Parties, that:

(a) Schedule II correctly sets forth the percentage of the issued and
outstanding shares of each class of the Equity Interests of the issuer thereof
represented by such Pledged Stock and includes all Equity Interests, debt
securities and promissory notes or instruments evidencing Indebtedness required
to be (i) pledged in order to satisfy the Collateral and Guarantee Requirement,
or (ii) delivered pursuant to Section 3.02;

(b) the Pledged Stock and Pledged Debt Securities (solely with respect to
Pledged Debt Securities issued by a person that is not a subsidiary of Holdings
or an Affiliate of any such subsidiary, to the best of each Pledgor’s knowledge)
have been duly and validly authorized and issued by the issuers thereof and
(i) in the case of Pledged Stock, are fully paid and nonassessable (other than
with respect to Pledged Stock consisting of membership interests of limited
liability companies to the extent provided in Sections 18-502 and 18-607 of the
Delaware Limited Liability Company Act) and (ii) in the case of Pledged Debt
Securities, (solely with respect to Pledged Debt Securities issued by a person
that is not a subsidiary of Holdings or an Affiliate of any such subsidiary, to
the best of each Pledgor’s knowledge) are legal, valid and binding obligations
of the issuers thereof, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors’ rights generally, general equitable
principles (whether considered in a proceeding at law or in equity) and an
implied covenant of good faith and fair dealing;

 

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(c) except for the security interests granted hereunder, each Pledgor (i) is
and, subject to any transfers made in compliance with the Credit Agreement, will
continue to be the direct owner, beneficially and of record, of the Pledged
Securities indicated on Schedule II as owned by such Pledgor, (ii) holds the
same free and clear of all Liens, other than Permitted Liens, (iii) will make no
assignment, pledge, hypothecation or transfer of, or create or permit to exist
any security interest in or other Lien on, the Pledged Collateral, other than
pursuant to a transaction permitted by the Credit Agreement (and other than
Permitted Liens) and (iv) subject to the rights of such Pledgor under the Loan
Documents to dispose of Pledged Collateral, will use commercially reasonable
efforts (or, in the case of Equity Interests in Subsidiaries, best efforts) to
defend its title or interest hereto or therein against any and all Liens (other
than Permitted Liens arising by operation of law), however arising, of all
persons;

(d) other than as set forth in the Credit Agreement or the schedules thereto,
and except for restrictions and limitations imposed by the Loan Documents or
securities laws generally or otherwise permitted to exist pursuant to the terms
of the Credit Agreement, the Pledged Stock (other than partnership interests) is
and will continue to be freely transferable and assignable, and none of the
Pledged Stock is or will be subject to any option, right of first refusal,
shareholders agreement, charter or by-law provisions or contractual restriction
of any nature that might prohibit, impair, delay or otherwise affect the pledge
of such Pledged Stock hereunder, the sale or disposition thereof pursuant hereto
or the exercise by the Collateral Agent of rights and remedies hereunder;

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

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

(g) by virtue of the execution and delivery by the Pledgors of this Agreement
and the Foreign Pledge Agreements, when any Pledged Securities (including
Pledged Stock of any Domestic Subsidiary, or any foreign stock covered by a
Foreign Pledge Agreement) are delivered to the Collateral Agent, for the ratable
benefit of the Secured Parties, in accordance with this Agreement and a
financing statement covering such Pledged Securities is filed in the appropriate
filing office, the Collateral Agent will obtain, for the ratable benefit of the
Secured Parties, a legal, valid and perfected lien upon and security interest in
such Pledged Securities under the New York UCC as security for the payment and
performance of the Secured Obligations (subject only to) Permitted Liens);

(h) each Pledgor that is an issuer of the Pledged Collateral confirms that is
has received notice of the security interest granted hereunder;

(i) as of the Closing Date, none of the Equity Interests in limited liability
companies or partnerships that is pledged by the Pledgors hereunder constitutes
a security under Section 8-103 of the New York UCC or the corresponding code or
statute of any other applicable jurisdiction; and

 

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(j) the Pledgors shall not amend, or permit to be amended, the limited liability
company agreement (or operating agreement or similar agreement) or partnership
agreement of any subsidiary of any Loan Party whose Equity Interests are, or are
required to be, Collateral in a manner to cause such Equity Interests to
constitute a security under Section 8-103 of the New York UCC or the
corresponding code or statute of any other applicable jurisdiction unless such
Loan Party shall have first delivered 10 days written notice to the Collateral
Agent and shall have taken all actions contemplated hereby and as otherwise
reasonably required by the Collateral Agent to maintain the security interest of
the Collateral Agent therein as a valid, perfected, first priority security
interest.

Section 3.04 Registration in Nominee Name; Denominations. The Collateral Agent,
on behalf of the Secured Parties, shall have the right (in its sole and absolute
discretion) to hold the Pledged Securities in the name of the applicable
Pledgor, endorsed or assigned in blank or in favor of the Collateral Agent or,
if an Event of Default shall have occurred and be continuing, in its own name as
pledgee or the name of its nominee (as pledgee or as sub-agent). Each Pledgor
will promptly give to the Collateral Agent copies of any notices or other
communications received by it with respect to Pledged Securities registered in
the name of such Pledgor. If an Event of Default shall have occurred and be
continuing, the Collateral Agent shall have the right to exchange the
certificates representing Pledged Securities for certificates of smaller or
larger denominations for any purpose consistent with this Agreement. Each
Pledgor shall use its commercially reasonable efforts to cause any Subsidiary of
any Loan Party that is not a party to this Agreement to comply with a request by
the Collateral Agent, pursuant to this Section 3.04, to exchange certificates
representing Pledged Securities issued by such Subsidiary for certificates of
smaller or larger denominations.

Section 3.05 Voting Rights; Dividends and Interest, Etc. (a) Unless and until an
Event of Default shall have occurred and be continuing and the Collateral Agent
shall have given notice to the relevant Pledgors of the Collateral Agent’s
intention to exercise its rights hereunder:

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

(ii) The Collateral Agent shall promptly execute and deliver to each Pledgor, or
cause to be executed and delivered to such Pledgor, all such proxies, powers of
attorney and other instruments as such Pledgor may reasonably request for the
purpose of enabling such Pledgor to exercise the voting and/or consensual rights
and powers it is entitled to exercise pursuant to subparagraph (i) above;
provided that any failure of the Collateral Agent to so deliver any such
instrument shall not in any way impair or affect the Collateral Agent’s rights
and remedies hereunder.

 

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(iii) Each Pledgor shall be entitled to receive and retain any and all
dividends, interest, principal and other distributions paid on or distributed in
respect of the Pledged Collateral to the extent and only to the extent that such
dividends, interest, principal and other distributions are permitted by, and
otherwise paid or distributed in accordance with, the terms and conditions of
the Credit Agreement, the other Loan Documents and applicable laws; provided
that (A) any noncash dividends, interest, principal or other distributions,
payments or other consideration in respect thereof, including any rights to
receive the same to the extent not so distributed or paid, that would constitute
Pledged Securities, whether resulting from a subdivision, combination or
reclassification of the outstanding Equity Interests of the issuer of any
Pledged Securities, received in exchange for Pledged Securities or any part
thereof, or in redemption thereof, as a result of any merger, consolidation,
acquisition or other exchange of assets to which such issuer may be a party or
otherwise and (B) any non-cash dividends and other distributions paid or payable
in respect of any Pledged Securities that would constitute Pledged Securities in
connection with a partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid in surplus, shall be and
become part of the Pledged Collateral, and, if received by any Pledgor, shall
not be commingled by such Pledgor with any of its other funds or property but
shall be held separate and apart therefrom, shall be held in trust for the
benefit of the Collateral Agent, for the ratable benefit of the Secured Parties,
and shall be forthwith delivered to the Collateral Agent, for the ratable
benefit of the Secured Parties, in the same form as so received (endorsed in a
manner reasonably satisfactory to the Collateral Agent).

(b) Upon the occurrence and during the continuance of an Event of Default and
after notice by the Collateral Agent to the Borrower of the Collateral Agent’s
intention to exercise its rights hereunder, all rights of any Pledgor to
dividends, interest, principal or other distributions that such Pledgor is
authorized to receive pursuant to paragraph (a)(iii) of this Section 3.05 shall
cease, and all such rights shall thereupon become vested, for the ratable
benefit of the Secured Parties, in the Collateral Agent which shall have the
sole and exclusive right and authority to receive and retain such dividends,
interest, principal or other distributions; provided, however, that even after
the occurrence of an Event of Default (other than an event of default under
Sections 7.01(h) or (i) of the Credit Agreement), any Pledgor may continue to
exercise dividend and distribution rights solely to the extent permitted under
subclause (i), subclause (iii), subclause (v) and, solely in order to permit
Holdings to make customary salary and other benefit payments (but excluding the
payment of any bonuses) to, and provide customary indemnities on behalf of,
officers and employees of Holdings, subclause (vi) of Section 6.06(b) of the
Credit Agreement. All dividends, interest, principal or other distributions
received by any Pledgor contrary to the provisions of this Section 3.05 shall
not be commingled by such Pledgor with any of its other funds or property but
shall be held separate and apart therefrom, shall be held in trust for the
benefit of the Collateral Agent, for the ratable benefit of the Secured Parties,
and shall be forthwith delivered to the Collateral Agent, for the ratable
benefit of the Secured Parties, in the same form as so received (endorsed in a
manner reasonably satisfactory to the Collateral Agent). Any and all money and
other property paid over to or received by the Collateral Agent pursuant to the
provisions of this paragraph (b) shall be retained by the Collateral Agent in an
account to be established by the Collateral Agent upon receipt of such money or
other property and shall be applied in accordance with the provisions of
Section 6.02 hereof. After all Events of Default have been cured or waived and
the Borrower has delivered to the Collateral Agent a certificate to that effect,
the Collateral Agent shall promptly repay to each Pledgor (without interest) all
dividends, interest, principal or other distributions that such Pledgor would
otherwise be permitted to retain pursuant to the terms of paragraph (a)(iii) of
this Section 3.05 and that remain in such account.

 

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(c) Upon the occurrence and during the continuance of an Event of Default and
after notice by the Collateral Agent to the Borrower of the Collateral Agent’s
intention to exercise its rights hereunder, all rights of any Pledgor to
exercise the voting and/or consensual rights and powers it is entitled to
exercise pursuant to paragraph (a)(i) of this Section 3.05, and the obligations
of the Collateral Agent under paragraph (a)(ii) of this Section 3.05, shall
cease, and all such rights shall thereupon become vested in the Collateral
Agent, for the ratable benefit of the Secured Parties, which shall have the sole
and exclusive right and authority to exercise such voting and consensual rights
and powers; provided that, unless otherwise directed by the Required Lenders,
the Collateral Agent shall have the right from time to time following and during
the continuance of an Event of Default to permit the Pledgors to exercise such
rights. After all Events of Default have been cured or waived and the Borrower
has delivered to the Collateral Agent a certificate to that effect, each Pledgor
shall have the right to exercise the voting and/or consensual rights and powers
that such Pledgor would otherwise be entitled to exercise pursuant to the terms
of paragraph (a)(i) above.

(d) Notwithstanding anything to the contrary contained in this Section 3.05, if
an Event of Default of the type referred to in Sections 7.01(h) or (i) of the
Credit Agreement shall have occurred and be continuing, the Collateral Agent
shall not be required to give any notice referred to in this Section 3.05 in
order to exercise any of its rights described in said Sections, and the
suspension of the rights of each of the Pledgors under said Sections shall be
automatic upon the occurrence of such Event of Default.

Section 3.06 Subsequently Acquired Pledged Collateral. If any Pledgor shall
acquire (by purchase, stock dividend, distribution or otherwise) any additional
Pledged Collateral at any time or from time to time after the date hereof,
(i) such Pledged Collateral shall automatically (and without any further action
being required to be taken) be subject to the pledge and security interests
created pursuant to Section 3.01 (and subject to the terms thereof) and
(ii) such Pledgor will thereafter promptly and, in any event, within 10 Business
Days after it obtains such Pledged Collateral, deliver to the Collateral Agent
such supplements to Schedule II hereto as may be necessary to cause such
Schedule to be complete and accurate at such time.

ARTICLE IV

Security Interests in Other Personal Property

Section 4.01 Security Interest. (a) As security for the payment in cash or
performance when due (whether at the stated maturity, by acceleration or
otherwise), as the case may be, in full of the Secured Obligations, each Pledgor
hereby assigns and pledges to the Collateral Agent, its successors and permitted
assigns, for the ratable benefit of the Secured Parties, and hereby grants to
the Collateral Agent, its successors and permitted assigns, for the ratable
benefit of the Secured Parties, a continuing security interest (the “Security
Interest”) in all right, title and interest in or to any and all of the
following assets and properties now owned or at any time hereafter acquired by
such Pledgor or in which such Pledgor now has or at any time in the future may
acquire any right, title or interest (collectively, the “Article 9 Collateral”):

(i) all Accounts;

 

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(ii) all Chattel Paper (including, without limitation, all Tangible Chattel
Paper and all Electronic Chattel Paper);

(iii) all cash and Deposit Accounts;

(iv) all computer programs of such Pledgor and all intellectual property rights
therein and all other proprietary information of such Pledgor, including but not
limited to Domain Names and trade secret rights;

(v) all Intellectual Property;

(vi) all Documents;

(vii) all Equipment;

(viii) all General Intangibles;

(ix) all Goods;

(x) all Instruments;

(xi) all Inventory;

(xii) all Investment Property;

(xiii) all Letter-of-Credit Rights (whether or not the respective letter of
credit is evidenced by a writing);

(xiv) all Commercial Tort Claims;

(xv) (1) Securities Accounts, (2) Financial Assets credited to Securities
Accounts or Deposit Accounts from time to time, and all Security Entitlements in
respect thereof, (3) all cash held in any Securities Account or Deposit Account
and (4) all other Money in the possession of the Collateral Agent;

(xvi) all Commodity Accounts;

(xvii) all other personal property not otherwise described above (except for
property specifically excluded from any defined term used in any of the
foregoing clauses);

(xviii) all books and Records pertaining to the Article 9 Collateral;

 

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(xix) all Software and all Software licensing rights, all writings, plans,
specifications and schematics, all engineering drawings, customer lists,
goodwill and licenses, and all recorded data of any kind or nature, regardless
of the medium of recording;

(xx) all Transportation Equipment; and

(xxi) to the extent not otherwise included, all proceeds, Supporting Obligations
and products of any and all of the foregoing and all collateral security and
guarantees given by any person with respect to any of the foregoing.

Notwithstanding anything to the contrary in this Agreement, this Agreement shall
not constitute a grant of a security interest in (a) any assets (including
Equity Interests), whether now owned or hereafter acquired, with respect to
which the Collateral and Guarantee Requirement or the other paragraphs of
Section 5.10 of the Credit Agreement would not be required to be satisfied by
reason of Section 5.10(g) of the Credit Agreement if hereafter acquired (it
being understood, however, that cash, Deposit Accounts and Securities Accounts
shall not be excluded from the grant of the Security Interest pursuant to this
Section 4.01 by virtue of clause (iii) of Section 5.10(g) of the Credit
Agreement), (b) any property excluded from the definition of Pledged Collateral
by virtue of the proviso to Section 3.01(a) hereof (other than
Section 3.01(a)(iv)), (c) any Letter-of-Credit Rights to the extent any Pledgor
is required by applicable law to apply the proceeds of a drawing of such Letter
of Credit for a specified purpose or (d) any Pledgor’s right, title or interest
in any license, contract or agreement to which such Pledgor is a party or any of
its right, title or interest thereunder to the extent, but only to the extent,
that such a grant would, under the terms of such license, contract or agreement,
result in a breach of the terms of, or constitute a default under, or result in
the abandonment, invalidation or unenforceability of, any license, contract or
agreement to which such Pledgor is a party (other than to the extent that any
such term would be rendered ineffective pursuant to Section 9-406, 9-407, 9-408
or 9-409 of the New York UCC or any other applicable law (including, without
limitation, Title 11 of the United States Code) or principles of equity);
provided that (x) immediately upon the ineffectiveness, lapse or termination of
any such provision, the Collateral shall include, and such Pledgor shall be
deemed to have granted a security interest in, all such rights and interests
without any further action on the part of such Pledgor or any Secured Party as
if such provision had never been in effect and (y) the right to receive payments
of money or other consideration in respect of such license, contract or
agreement shall not be excluded from the security interest created hereunder.

(b) Each Pledgor hereby irrevocably authorizes the Collateral Agent at any time
and from time to time to file in any relevant jurisdiction any financing
statements (including fixture filings) with respect to the Article 9 Collateral
or any part thereof and amendments thereto that contain the information required
by Article 9 of the Uniform Commercial Code of each applicable jurisdiction for
the filing of any financing statement or amendment, including (i) whether such
Pledgor is an organization, the type of organization and any organizational
identification number issued to such Pledgor, (ii) in the case of a financing
statement filed as a fixture filing, a sufficient description of the real
property to which such Article 9 Collateral relates and (iii) a description of
collateral that describes such property in any other manner as the Collateral
Agent may reasonably determine is necessary or advisable to ensure the
perfection of the security interest in the Article 9 Collateral granted under
this Agreement, including describing such property as “all assets” or “all
property”. Each Pledgor agrees to provide such information to the Collateral
Agent promptly upon request.

 

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The Collateral Agent is further authorized to file with the United States Patent
and Trademark Office or United States Copyright Office (or any successor office)
such documents as may be reasonably necessary or advisable for the purpose of
perfecting, confirming, continuing, enforcing or protecting the Security
Interest granted by each Pledgor, without the signature of any Pledgor, and
naming any Pledgor or the Pledgors as debtors and the Collateral Agent as
secured party. Notwithstanding anything to the contrary herein, no Pledgor shall
be required to take any action under the laws of any jurisdiction other than the
United States (or any political subdivision thereof) and its territories and
possessions for the purpose of perfecting the Security Interest in any Article 9
Collateral of such Pledgor constituting Patents, Trademarks or Copyrights.

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

(d) Notwithstanding anything to the contrary in this Agreement or the Credit
Agreement, none of the Pledgors shall be required to enter into any Control
Agreement with respect to any cash or Deposit Account (except as provided in
Section 5.11 of the Credit Agreement) or any Securities Account or Commodities
Account (except as otherwise provided in Section 4.04(b)).

Section 4.02 Representations and Warranties. The Pledgors jointly and severally
represent and warrant to the Collateral Agent and the Secured Parties that:

(a) Schedule I hereto sets forth the following information with respect to each
Pledgor: (i) its true and correct legal name, (ii) its jurisdiction of
formation, (iii) the location of its chief executive office, (iv) the type of
entity of such Pledgor, (v) whether it is a registered organization, (vi) its
organizational identification number, if any, and (vii) its Federal Taxpayer
Identification Number.

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

 

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(c) The information set forth in any schedule, annex or other document attached
hereto is correct and complete, in all material respects, as of the Closing
Date. The Uniform Commercial Code financing statements (including fixture
filings, as applicable) or other appropriate filings, recordings or
registrations containing a description of the Article 9 Collateral that have
been prepared by the Collateral Agent for filing in each governmental, municipal
or other office specified in Schedule IV (or specified by notice from the
Borrower to the Collateral Agent after the Closing Date in the case of filings,
recordings or registrations required by Section 5.10 of the Credit Agreement)
constitute all the filings, recordings and registrations (except to the extent
that filings are required to be made in the United States Patent and Trademark
Office and the United States Copyright Office, or any similar office in any
other jurisdiction, in order to perfect the Security Interest in Article 9
Collateral consisting of United States Patents, United States registered
Trademarks and United States registered Copyrights) that are necessary to
publish notice of and protect the validity of and to establish a legal, valid
and perfected security interest in favor of the Collateral Agent (for the
ratable benefit of the Secured Parties) in respect of all Article 9 Collateral
in which the Security Interest may be perfected by filing, recording or
registration in the United States (or any political subdivision or state
thereof) and its territories and possessions, and no further or subsequent
filing, refiling, recording, rerecording, registration or reregistration is
necessary in any such jurisdiction, except as provided under applicable law with
respect to the filing of continuation statements or amendments. Each Pledgor
represents and warrants that a fully executed Intellectual Property Security
Agreement containing a description of all Article 9 Collateral consisting of
Intellectual Property with respect to United States Patents (and Patents for
which United States applications are pending), United States registered
Trademarks (and Trademarks for which United States registration applications are
pending) and United States registered Copyrights (and Copyrights for which
United States registration applications are pending) has been delivered to the
Collateral Agent for recording with the United States Patent and Trademark
Office and the United States Copyright Office pursuant to 35 U.S.C. § 261, 15
U.S.C. § 1060 or 17 U.S.C. § 205 and the regulations thereunder, as applicable,
and reasonably requested by the Collateral Agent, to protect the validity of and
to establish a legal, valid and perfected security interest in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, in respect of
all Article 9 Collateral consisting of such Intellectual Property in which a
security interest may be perfected by recording with the United States Patent
and Trademark Office and the United States Copyright Office, and no further or
subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary (other than the Uniform Commercial Code financings
statements referred to above, and other than such actions as are necessary to
perfect the Security Interest with respect to any Article 9 Collateral
consisting of United States Patents, Trademarks and Copyrights (or registration
or application for registration thereof) acquired or developed after the date
hereof).

(d) The Security Interest constitutes (i) a legal and valid security interest in
all the Article 9 Collateral securing the payment and performance of the Secured
Obligations, (ii) subject to the filings described in Section 4.02(c), a
perfected security interest in all Article 9 Collateral in which a security
interest may be perfected by filing, recording or registering a financing
statement or analogous document in the United States (or any political
subdivision thereof) and its territories and possessions pursuant to the Uniform
Commercial Code or other applicable law in such jurisdictions and (iii) a
security interest that shall be perfected in all Article 9 Collateral in which a
security interest may be perfected upon the receipt and recording of the
Intellectual Property Security Agreement with the United States Patent and
Trademark Office and the United States Copyright Office, as applicable. The
Security Interest is and shall be prior to any other Lien on any of the Article
9 Collateral other than Permitted Liens.

 

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(e) The Article 9 Collateral is owned by the Pledgors free and clear of any
Lien, other than Permitted Liens. None of the Pledgors has filed or consented to
the filing of (i) any financing statement or analogous document under the
Uniform Commercial Code or any other applicable laws covering any Article 9
Collateral, (ii) any assignment in which any Pledgor assigns any Article 9
Collateral or any security agreement or similar instrument covering any Article
9 Collateral with the United States Patent and Trademark Office or the United
States Copyright Office or (iii) any assignment in which any Pledgor assigns any
Article 9 Collateral or any security agreement or similar instrument covering
any Article 9 Collateral with any foreign governmental, municipal or other
office, which financing statement or analogous document, assignment, security
agreement or similar instrument is still in effect, except, in each case, for
Permitted Liens.

(f) None of the Pledgors holds any Commercial Tort Claim individually in excess
of $1.0 million as of the Closing Date except as indicated on Schedule V.

(g) Except as set forth in Schedule VI, as of the Closing Date, all Accounts
have been originated by the Pledgors and all Inventory has been produced or
acquired by the Pledgors in the ordinary course of business.

(h) As to itself and its Article 9 Collateral consisting of Intellectual
Property (the “Intellectual Property Collateral”), to the best of each Pledgor’s
knowledge:

(i) The Intellectual Property Collateral set forth on Schedule III includes all
of the material Patents, Trademarks, Copyrights and IP Agreements owned by such
Pledgor as of the date hereof.

(ii) The Intellectual Property Collateral is subsisting and has not been
adjudged invalid or unenforceable in whole or part (except for office actions
issued in the ordinary course by the United States Patent and Trademark Office
or any similar office in any foreign jurisdiction), and to the best of such
Pledgor’s knowledge, is valid and enforceable, except as would not reasonably be
expected to have a Material Adverse Effect. Such Pledgor is not aware of any
uses of any item of Intellectual Property Collateral that would be expected to
lead to such item becoming invalid or unenforceable, except as would not
reasonably be expected to have a Material Adverse Effect.

(iii) Such Pledgor has made or performed all commercially reasonable acts,
including without limitation filings, recordings and payment of all required
fees and taxes, required to maintain and protect its interest in each and every
item of Intellectual Property Collateral in full force and effect in the United
States and such Pledgor has used proper statutory notice in connection with its
use of each Patent, Trademark and Copyright in the Intellectual Property
Collateral, in each case, except to the extent that the failure to do so would
not reasonably be expected to have a Material Adverse Effect.

(iv) With respect to each IP Agreement, the absence, termination or violation of
which would reasonably be expected to have a Material Adverse Effect: (A) such
Pledgor has not received any notice of termination or cancellation under such IP
Agreement; (B) such Pledgor has not received any notice of a breach or default
under such IP Agreement, which breach or default has not been cured or waived;
and (C) neither such Pledgor nor any other party to such IP Agreement is in
breach or default thereof in any material respect, and no event has occurred
that, with notice or lapse of time or both, would constitute such a breach or
default or permit termination, modification or acceleration under such IP
Agreement.

 

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(v) Except as would not reasonably be expected to have a Material Adverse
Effect, no Pledgor or Intellectual Property Collateral is subject to any
outstanding consent, settlement, decree, order, injunction, judgment or ruling
restricting the use of any Intellectual Property Collateral or that would impair
the validity or enforceability of such Intellectual Property Collateral.

Section 4.03 Covenants. (a) Each Pledgor agrees to provide at least 10 days’
prior written notice to the Collateral Agent of any change (i) in its corporate
or organization name, (ii) in its identity or type of organization or corporate
structure, (iii) in its Federal Taxpayer Identification Number or organizational
identification number or (iv) in its “location” (determined as provided in UCC
Section 9-307). Each Pledgor agrees promptly to provide the Collateral Agent
with certified organizational documents reflecting any of the changes described
in the immediately preceding sentence. Each Pledgor agrees not to effect or
permit any change referred to in the first sentence of this paragraph (a) unless
all filings have been made, or will have been made within any applicable
statutory period, under the Uniform Commercial Code or otherwise that are
required in order for the Collateral Agent to continue at all times prior to and
following such change to have a valid, legal and perfected first priority
security interest in all the Article 9 Collateral, for the ratable benefit of
the Secured Parties. Each Pledgor agrees promptly to notify the Collateral Agent
if any material portion of the Article 9 Collateral owned or held by such
Pledgor is damaged or destroyed.

(b) Subject to the rights of such Pledgor under the Loan Documents to dispose of
Collateral, each Pledgor shall, at its own expense, use commercially reasonable
efforts to defend title to the Article 9 Collateral against all persons and to
defend the Security Interest of the Collateral Agent, for the ratable benefit of
the Secured Parties, in the Article 9 Collateral and the priority thereof
against any Lien that is not a Permitted Lien.

(c) Each Pledgor agrees, at its own expense, to execute, acknowledge, deliver
and cause to be duly filed all such further instruments and documents and take
all such actions as the Collateral Agent may from time to time reasonably
request to better assure, preserve, protect and perfect the Security Interest
and the rights and remedies created hereby, including the payment of any fees
and taxes required in connection with the execution and delivery of this
Agreement and the granting of the Security Interest and the filing of any
financing statements (including fixture filings) or other documents in
connection herewith or therewith. If any amount payable under or in connection
with any of the Article 9 Collateral that is in excess of $1.0 million shall be
or become evidenced by any promissory note or other instrument, such note or
instrument shall be promptly pledged and delivered to the Collateral Agent, for
the ratable benefit of the Secured Parties, duly endorsed in a manner reasonably
satisfactory to the Collateral Agent.

 

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Without limiting the generality of the foregoing, each Pledgor hereby agrees
that, should it obtain an ownership or other interest in any Intellectual
Property after the Closing Date (i) the provisions of this Agreement shall
automatically apply thereto, and (ii) any such Intellectual Property shall
automatically become part of the Collateral subject to the terms and conditions
of this Agreement. At the time of any required delivery of information pursuant
to Section 5.04(a) of the Credit Agreement, each Pledgor shall (i) deliver to
the Collateral Agent such supplements to Schedule III hereto as may be necessary
to cause such Schedule to be complete and accurate at such time, (ii) sign and
deliver to the Collateral Agent an appropriate Intellectual Property Security
Agreement with respect to all applicable Intellectual Property owned or
exclusively licensed by it as of the last day of the applicable fiscal year, to
the extent that such Intellectual Property is not covered by any previous
Intellectual Property Security Agreement so signed and delivered by it and
(iii) take such other action as shall be necessary in order that all
representations and warranties hereunder shall be true and correct with respect
to such Collateral, in each case within 30 days after the date of delivery of
the delivery of the relevant information required to be delivered pursuant to
Section 5.04(a) of the Credit Agreement (or such later date as the Collateral
Agent may determine in its sole and absolute discretion).

(d) After the occurrence of an Event of Default and during the continuance
thereof, the Collateral Agent shall have the right to verify under reasonable
procedures the validity, amount, quality, quantity, value, condition and status
of, or any other matter relating to, the Article 9 Collateral, including, in the
case of Accounts or Article 9 Collateral in the possession of any third person,
by contacting Account Debtors or the third person possessing such Article 9
Collateral for the purpose of making such a verification. The Collateral Agent
shall have the right to share any information it gains from such inspection or
verification with any Secured Party.

(e) At its option, the Collateral Agent may discharge past due taxes,
assessments, charges, fees, Liens, security interests or other encumbrances at
any time levied or placed on the Article 9 Collateral and not a Permitted Lien,
and may pay for the maintenance and preservation of the Article 9 Collateral to
the extent any Pledgor fails to do so as required by the Credit Agreement or
this Agreement, and each Pledgor jointly and severally agrees to reimburse the
Collateral Agent on demand for any reasonable payment made or any reasonable
expense incurred by the Collateral Agent pursuant to the foregoing
authorization; provided, however, that nothing in this Section 4.03(e) shall be
interpreted as excusing any Pledgor from the performance of, or imposing any
obligation on the Collateral Agent or any Secured Party to cure or perform, any
covenants or other promises of any Pledgor with respect to taxes, assessments,
charges, fees, Liens, security interests or other encumbrances and maintenance
as set forth herein or in the other Loan Documents.

(f) Each Pledgor (rather than the Collateral Agent or any Secured Party) shall
remain liable for the observance and performance of all the conditions and
obligations to be observed and performed by it under each contract, agreement or
instrument relating to the Article 9 Collateral and each Pledgor jointly and
severally agrees to indemnify and hold harmless the Collateral Agent and the
Secured Parties from and against any and all liability for such performance.

 

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(g) None of the Pledgors shall make or permit to be made an assignment, pledge
or hypothecation of the Article 9 Collateral or shall grant any other Lien in
respect of the Article 9 Collateral, except as permitted by the Credit Agreement
and the other provisions hereof. None of the Pledgors shall make or permit to be
made any transfer of the Article 9 Collateral and each Pledgor shall remain at
all times in possession of the Article 9 Collateral owned by it, except as
permitted by the Credit Agreement and the other provisions hereof.

(h) None of the Pledgors will, without the Collateral Agent’s prior written
consent (which consent shall not be unreasonably withheld), grant any extension
of the time of payment of any Accounts included in the Article 9 Collateral,
compromise, compound or settle the same for less than the full amount thereof,
release, wholly or partly, any person liable for the payment thereof or allow
any credit or discount whatsoever thereon, other than extensions, credits,
discounts, compromises or settlements granted or made in the ordinary course of
business and consistent with prudent business practices or as otherwise
permitted under the Credit Agreement.

(i) None of the Pledgors shall re-date any invoice or sale or make sales on
extended dating or extend or modify any Account outside the ordinary course of
business.

(j) Each Pledgor shall take commercially reasonable steps to settle, contest, or
adjust any dispute or claim in excess of $1.0 million at no expense to the
Secured Parties. No discount, credit, or allowance shall be granted to any
Account Debtor without the Collateral Agent’s prior written consent, except for
discounts, credits, and allowances made or given in the ordinary course of
business of the Borrower (unless an Event of Default has occurred and is
continuing and the Collateral Agent has notified the Borrower that such
exception is withdrawn).

(k) If an Account Debtor returns any Inventory to any Pledgor then, unless an
Event of Default exists and the Collateral Agent has given notice to such
Pledgor not to do so, such Pledgor shall promptly determine the reason for such
return and if such return has a valid reason shall issue a credit memorandum to
the Account Debtor in the appropriate amount. All returned Inventory of a
Borrower or its Subsidiaries shall be subject to the Collateral Agent’s Liens
thereon.

(l) Each Pledgor shall keep its Inventory (other than returned or obsolete
Inventory) in good and marketable condition, except for damaged or defective
Goods arising in the ordinary course of its business. Each Pledgor will not,
without the prior written consent of the Collateral Agent, acquire or maintain
any Inventory in excess of $1.0 million at any time on consignment or approval
unless such Inventory is disclosed to the Collateral Agent and the Borrower
takes appropriate steps to insure that all of such Inventory meets the criteria
of Eligible Inventory, including delivery of appropriate subordination
agreements, if necessary. The Pledgors will conduct a physical count of their
Inventory at least once per each of their respective fiscal years, and during
the existence of an Event of Default, at such other times as the Collateral
Agent may reasonably request. Without the Collateral Agent’s written consent,
the Pledgors will not sell, through a single transaction or a series of related
transactions, Inventory on a bill and hold, guaranteed sale, sale and return,
sale on approval, consignment, or other repurchase or return basis in excess of
$1.0 million.

 

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(m) In connection with all Inventory financed by letters of credit, the Pledgors
will, when an Event of Default is continuing, at the Collateral Agent’s request,
instruct all suppliers, carriers, forwarders, customs brokers, warehouses or
other persons receiving or holding cash, checks, inventory, documents or
instruments in which the Collateral Agent holds a security interest to deliver
them to the Collateral Agent and/or subject to the Collateral Agent’s order, and
if they shall come into the Borrower’s or its Subsidiaries’ possession, to
deliver them, upon request, to the Collateral Agent in their original form. The
Pledgors shall also, when an Event of Default is continuing, at the Collateral
Agent’s request, designate the Collateral Agent as the consignee on all bills of
lading and other negotiable and non-negotiable documents.

(n) Each Pledgor irrevocably makes, constitutes and appoints the Collateral
Agent (and all officers, employees or agents designated by the Collateral Agent)
as such Pledgor’s true and lawful agent (and attorney-in-fact) for the purpose,
during the continuance of an Event of Default, of making, settling and adjusting
claims in respect of Article 9 Collateral under policies of insurance, endorsing
the name of such Pledgor on any check, draft, instrument or other item of
payment for the proceeds of such policies of insurance and for making all
determinations and decisions with respect thereto. In the event that any Pledgor
at any time or times shall fail to obtain or maintain any of the policies of
insurance required hereby or under the Credit Agreement or to pay any premium in
whole or part relating thereto, the Collateral Agent may, without waiving or
releasing any obligation or liability of the Pledgors hereunder or any Event of
Default, in its sole and absolute discretion, obtain and maintain such policies
of insurance and pay such premium and take any other actions with respect
thereto as the Collateral Agent reasonably deems advisable. All sums disbursed
by the Collateral Agent in connection with this Section 4.03(n), including
reasonable attorneys’ fees, court costs, expenses and other charges relating
thereto, shall be payable, upon demand, by the Pledgors to the Collateral Agent
and shall be additional Secured Obligations secured hereby.

Section 4.04 Other Actions. In order to further ensure the attachment,
perfection and priority of, and the ability of the Collateral Agent to enforce,
for the ratable benefit of the Secured Parties, the Collateral Agent’s security
interest in the Article 9 Collateral, each Pledgor agrees, in each case at such
Pledgor’s own expense, to take the following actions with respect to the
following Article 9 Collateral:

(a) Instruments and Tangible Chattel Paper. If any Pledgor shall at any time
hold or acquire any Instruments (other than checks received and processed in the
ordinary course of business) or Tangible Chattel Paper evidencing an amount in
excess of $1.0 million, such Pledgor shall forthwith endorse, assign and deliver
the same to the Collateral Agent, accompanied by instruments of transfer or
assignment duly executed in blank.

 

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(b) Investment Property. Except to the extent otherwise provided in Article III,
if any Pledgor shall at any time hold or acquire any Certificated Security, such
Pledgor shall forthwith endorse, assign and deliver the same to the Collateral
Agent, accompanied by instruments of transfer or assignment duly executed in
blank. If any security of a domestic issuer now owned or hereafter acquired by
any Pledgor is uncertificated and is issued to such Pledgor or its nominee
directly by the issuer thereof, such Pledgor shall promptly notify the
Collateral Agent in writing of such uncertificated securities and (i) upon the
Administrative Agent’s reasonable request or (ii) upon the occurrence and during
the continuance of an Event of Default, such Pledgor shall, pursuant to an
agreement in form and substance reasonably satisfactory to the Collateral Agent,
either (x) cause the issuer to agree to comply with instructions from the
Collateral Agent as to such security, without further consent of any Pledgor or
such nominee, or (y) cause the issuer to register the Collateral Agent as the
registered owner of such security. If any security or other Investment Property,
whether certificated or uncertificated, representing an Equity Interest in a
third party and having a fair market value in excess of $1.0 million now or
hereafter acquired by any Pledgor is held by such Pledgor or its nominee through
a securities intermediary or commodity intermediary, such Pledgor shall promptly
notify the Collateral Agent thereof and, at the Collateral Agent’s request and
option, pursuant to a Control Agreement in form and substance reasonably
satisfactory to the Collateral Agent, either (A) cause such securities
intermediary or commodity intermediary, as applicable, to agree, in the case of
a securities intermediary, to comply with entitlement orders or other
instructions from the Collateral Agent to such securities intermediary as to
such securities or other Investment Property or, in the case of a commodity
intermediary, to apply any value distributed on account of any commodity
contract as directed by the Collateral Agent to such commodity intermediary, in
each case without further consent of any Pledgor or such nominee, or (B) in the
case of financial assets or other Investment Property held through a securities
intermediary, arrange for the Collateral Agent to become the entitlement holder
with respect to such Investment Property, for the ratable benefit of the Secured
Parties, with such Pledgor being permitted, only with the consent of the
Collateral Agent, to exercise rights to withdraw or otherwise deal with such
Investment Property. The Collateral Agent agrees with each of the Guarantors
that the Collateral Agent shall not give any such entitlement orders or
instructions or directions to any such issuer, securities intermediary or
commodity intermediary, and shall not withhold its consent to the exercise of
any withdrawal or dealing rights by any Pledgor, unless an Event of Default has
occurred and is continuing or, after giving effect to any such withdrawal or
dealing rights, would occur. The provisions of this paragraph (b) shall not
apply to any financial assets credited to a Securities Account for which the
Collateral Agent is the securities intermediary.

(c) Commercial Tort Claims. If any Pledgor shall at any time hold or acquire a
Commercial Tort Claim in an amount reasonably estimated to exceed $1.0 million,
such Pledgor shall promptly notify the Collateral Agent thereof in a writing
signed by such Pledgor, including a summary description of such claim, and grant
to the Collateral Agent in writing a security interest therein and in the
proceeds thereof, all under the terms and provisions of this Agreement, with
such writing to be in form and substance reasonably satisfactory to the
Collateral Agent.

Section 4.05 Covenants Regarding Patent, Trademark and Copyright Collateral.
Except as permitted by the Credit Agreement: (a) Each Pledgor agrees that it
will not knowingly do any act or omit to do any act (and will exercise
commercially reasonable efforts to prevent its licensees from doing any act or
omitting to do any act) whereby any Patent that is material to the normal
conduct of such Pledgor’s business may become prematurely invalidated,
abandoned, lapsed or dedicated to the public, and agrees that it shall take
commercially reasonable steps with respect to any material products covered by
any such Patent as necessary and sufficient to establish and preserve its rights
under applicable patent laws.

 

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(b) Each Pledgor will, and will use its commercially reasonable efforts to cause
its licensees or its sublicensees to, for each material Trademark necessary to
the normal conduct of such Pledgor’s business, (i) maintain such Trademark in
full force free from any adjudication of abandonment or invalidity for non-use,
(ii) maintain the quality of products and services offered under such Trademark,
(iii) display such Trademark with notice of federal or foreign registration or
claim of trademark or service mark as required under applicable law and (iv) not
knowingly use or knowingly permit its licensees’ use of such Trademark in
violation of any third-party rights.

(c) Each Pledgor will, and will use its commercially reasonable efforts to cause
its licensees and its sublicensees to, for each work covered by a material
Copyright necessary to the normal conduct of such Pledgor’s business that it
publishes, displays and distributes, use a copyright notice as necessary and
sufficient to establish and preserve its rights under applicable copyright laws.

(d) Each Pledgor shall notify the Collateral Agent promptly if it knows that any
Patent, Trademark or Copyright material to the normal conduct of such Pledgor’s
business may imminently become abandoned, lapsed or dedicated to the public, or
of any materially adverse determination or development, (excluding office
actions and similar determinations or developments) in the United States Patent
and Trademark Office, United States Copyright Office, any court or any similar
office of any country, regarding such Pledgor’s ownership of any such material
Patent, Trademark or Copyright or its right to register or to maintain the same.

(e) Each Pledgor, either itself or through any agent, employee, licensee or
designee, shall (i) inform the Collateral Agent on an annual basis of each
application by itself, or through any agent, employee, licensee or designee, for
any Patent with the United States Patent and Trademark Office and each
registration of any Trademark or Copyright with the United States Patent and
Trademark Office, the United States Copyright Office or any comparable office or
agency in any other country filed during the preceding twelve-month period, and
(ii) upon the reasonable request of the Collateral Agent, execute and deliver
any and all agreements, instruments, documents and papers as the Collateral
Agent may reasonably request to evidence the Collateral Agent’s security
interest in such Patent, Trademark or Copyright.

(f) Each Pledgor shall exercise its reasonable business judgment consistent with
the practice in any proceeding before the United States Patent and Trademark
Office, the United States Copyright Office or any comparable office or agency in
any other country with respect to maintaining and pursuing each application
relating to any Patent, Trademark and/or Copyright (and obtaining the relevant
grant or registration) material to the normal conduct of such Pledgor’s business
and to maintain (i) each issued Patent and (ii) the registrations of each
Trademark and each Copyright that is material to the normal conduct of such
Pledgor’s business, including, when applicable and necessary in such Pledgor’s
reasonable business judgment, timely filings of applications for renewal,
affidavits of use, affidavits of incontestability and payment of maintenance
fees, and, if any Pledgor believes necessary in its reasonable business
judgment, to initiate opposition, interference and cancellation proceedings
against third parties.

(g) In the event that any Pledgor knows or has reason to know that any Article 9
Collateral consisting of a Patent, Trademark or Copyright material to the normal
conduct of its business has been or is about to be materially infringed,
misappropriated or diluted by a third party, such Pledgor shall promptly notify
the Collateral Agent and shall, if such Pledgor deems it necessary in its
reasonable business judgment, promptly sue and recover any and all damages, and
take such other actions as are reasonably appropriate under the circumstances.

 

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ARTICLE V

Representations, Warranties and Covenants with respect to Transportation
Equipment

The Pledgors jointly and severally represent, warrant and covenant to the
Collateral Agent and the Secured Parties as follows:

Section 5.01 Representations and Warranties. Each Pledgor is the true, lawful,
sole and exclusive owner of or otherwise has the right to use the Transportation
Equipment of such Pledgor. All Transportation Equipment represented by a
certificate of title that such Pledgor presently owns or uses in connection with
its business is set forth on Schedule VII hereto (including the vehicle
identification numbers, state or province of registration and (in the case of
any such Transportation Equipment acquired after the Closing Date) the date of
acquisition thereof). Upon (i) completion of the actions contemplated by
Sections 5.02 below (which actions have been taken, if this representation and
warranty is being made after the date by which such actions are required to have
been taken pursuant to Section 5.02) and (ii) if required for perfection under
the law of the relevant jurisdiction, receipt by the Collateral Agent of
official notification from the applicable Governmental Authority of the
perfection of the Security Interest in Transportation Equipment contemplated
hereby, all filings, registrations, recordings and other actions shall have been
taken such that Transportation Equipment constituting Collateral of the Pledgors
shall be subject to the duly perfected Security Interest of the Collateral Agent
for the benefit of the Secured Parties. Such Security Interest shall be prior to
any other Lien other than Permitted Liens.

Section 5.02 Perfection of Security Interests in Transportation Equipment
Represented by a Certificate of Title. (a) With respect to Transportation
Equipment constituting Collateral and owned by the Pledgors on the Closing Date,
the Pledgors shall comply with Section 5.10(h) of the Credit Agreement. With
respect to all Transportation Equipment constituting Collateral from time to
time after the Closing Date acquired by any Pledgor and represented by a
certificate of title, within 90 days (or such longer period as the Collateral
Agent shall determine in its sole and absolute discretion) of the date of
acquisition of such Transportation Equipment, each Pledgor shall (i) cause to be
delivered to the applicable Governmental Authority a duly completed application,
pay any applicable fees and take any other actions within its control necessary
in order to cause the certificate of title for such Transportation Equipment at
all times to be registered with the applicable Governmental Authority showing
“Bank of America, N.A., as Collateral Agent” as first lienholder thereon in the
manner prescribed in the applicable jurisdiction (and Bank of America in such
capacity shall be the only first lienholder so registered), (ii) if necessary to
perfect in any jurisdiction, cause the Lien of the Collateral Agent to be
identified on a notice of lien or other filing made in the appropriate filing
office in the applicable jurisdiction and pay all applicable fees in connection
therewith, (iii) provide the Collateral Agent evidence reasonably satisfactory
to it of the taking of the actions referred to in preceding clauses (i) and
(ii), and (iv) deliver the certificates of title for such Transportation
Equipment to the Collateral Agent (or its sub-agent). Promptly following the
receipt by any Pledgor of any document evidencing official notification from the
applicable Governmental Authority of the perfection of the Security Interest in
any Transportation equipment (and in any event within five Business Days
thereof), such Pledgor shall deliver such notification to the Collateral Agent
(or its sub-agent).

 

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(b) Each Pledgor agrees to execute all documentation reasonably required to
cause the registrations and filings with the applicable Governmental Authority
referred to in paragraph (a) of this Section 5.02 to be accomplished within the
periods specified therein. Each Pledgor hereby grants to the Collateral Agent an
absolute power of attorney to sign, upon the occurrence and during the
continuance of an Event of Default, any document or instrument, and to make such
filings, recordings and registrations, as may be required by the relevant
Governmental Authority in order to effect an absolute assignment of all right,
title and interest in any Transportation Equipment. Promptly following the
acquisition by any Pledgor of any Transportation Equipment (and in any event
within ten Business Days of such acquisition), such Pledgor shall deliver to the
Collateral Agent such supplements to Schedule VII hereto as may be necessary to
cause such Schedule to be complete and accurate at such time.

Section 5.03 Maintenance of Registration. Each Pledgor shall, at its own expense
and in accordance with reasonable business practices, process all documents
required by the relevant Governmental Authority to maintain vehicle
registrations for all of its owned Transportation Equipment in all material
respects.

Section 5.04 Remedies. If an Event of Default shall occur and be continuing, the
Collateral Agent may, by written notice to the relevant Pledgor, take any or all
of the following actions: (i) declare the entire right, title and interest of
such Pledgor in and to any Transportation Equipment constituting Collateral,
vested in the Collateral Agent for the benefit of the Secured Parties, in which
event such rights, title and interest shall immediately vest, in the Collateral
Agent for the benefit of the Secured Parties, and the Collateral Agent shall be
entitled to exercise the power of attorney referred to in Section 5.02(b) to
execute, cause to be acknowledged and notarized and to record said absolute
assignment with the applicable Governmental Authority and (ii) subject to
Section 6 hereof, take and use or sell the Transportation Equipment.

Section 5.05 Further Assurances. Each Pledgor will, at its own expense, make,
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from
time to time such lists, descriptions and designations of its owned
Transportation Equipment, documents of title, schedules, confirmatory
assignments, conveyances, financing statements, transfer endorsements, powers of
attorney, certificates, reports and other assurances or instruments, and take
such further steps relating to such Transportation Equipment constituting
Collateral and other property or rights covered by the security interest hereby
granted, which the Collateral Agent deems reasonably appropriate or advisable to
perfect, preserve or protect its security interest in such Transportation
Equipment.

 

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ARTICLE VI

Remedies

Section 6.01 Remedies Upon Default. Upon the occurrence and during the
continuance of an Event of Default, each Pledgor agrees to deliver each item of
Collateral to the Collateral Agent on demand, and it is agreed that the
Collateral Agent, in addition to any rights now or hereafter existing under
applicable law and under the other provisions of this Agreement, shall have all
rights as a secured creditor under the Uniform Commercial Code, and such other
rights and remedies to which a secured creditor is entitled under the laws in
effect in all relevant jurisdictions, and shall have the right to take any of or
all the following actions at the same or different times: (a) with respect to
any Article 9 Collateral consisting of Intellectual Property, on demand, to
cause the Security Interest to become an assignment, transfer and conveyance of
any of or all such Article 9 Collateral by the applicable Pledgors to the
Collateral Agent or to license or sublicense, whether general, special or
otherwise, and whether on an exclusive or a nonexclusive basis, any such Article
9 Collateral throughout the world on such terms and conditions and in such
manner as the Collateral Agent shall determine (other than in violation of any
then-existing licensing arrangements to the extent that waivers thereunder
cannot be obtained with the use of commercially reasonable efforts, which each
Pledgor hereby agrees to use), (b) with or without legal process (personally, or
by agents or attorneys) and with or without prior notice or demand for
performance, to take possession of the Article 9 Collateral and without
liability for trespass to the applicable Pledgor, to enter any premises where
the Article 9 Collateral may be located for the purpose of taking possession of
or removing the Article 9 Collateral and, generally, to exercise any and all
rights afforded to a secured party under the applicable Uniform Commercial Code
or other applicable law. Without limiting the generality of the foregoing, each
Pledgor agrees that the Collateral Agent shall have the right, subject to the
mandatory requirements of applicable law, to sell or otherwise dispose of all or
any part of the Collateral at a public or private sale or at any broker’s board
or on any securities exchange, for cash, upon credit or for future delivery as
the Collateral Agent shall deem appropriate. The Collateral Agent shall be
authorized in connection with any sale of a security (if it deems it advisable
to do so) pursuant to the foregoing to restrict the prospective bidders or
purchasers to persons who represent and agree that they are purchasing such
security for their own account, for investment, and not with a view to the
distribution or sale thereof. Upon consummation of any such sale of Collateral
pursuant to this Section 6.01, the Collateral Agent shall have the right to
assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any such sale shall hold the property
sold absolutely, free from any claim or right on the part of any Pledgor, and
each Pledgor hereby waives and releases (to the extent permitted by law) all
rights of redemption, stay, valuation and appraisal that such Pledgor now has or
may at any time in the future have under any rule of law or statute now existing
or hereafter enacted.

 

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The Collateral Agent shall, except in the case of Collateral that is perishable
or threatens to decline speedily in value or is of a type customarily sold on a
recognized market, give the applicable Pledgors 10 Business Days’ written notice
(which each Pledgor agrees is reasonable notice within the meaning of
Section 9-611 of the New York UCC or its equivalent in other jurisdictions) of
the Collateral Agent’s intention to make any sale of Collateral. Such notice, in
the case of a public sale, shall state the time and place for such sale and, in
the case of a sale at a broker’s board or on a securities exchange, shall state
the board or exchange at which such sale is to be made and the day on which the
Collateral, or portion thereof, will first be offered for sale at such board or
exchange. Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as the Collateral Agent may
fix and state in the notice (if any) of such sale. At any such sale, the
Collateral, or the portion thereof, to be sold may be sold in one lot as an
entirety or in separate parcels, as the Collateral Agent may in its sole and
absolute discretion determine. The Collateral Agent shall not be obligated to
make any sale of any Collateral if it shall determine not to do so, regardless
of the fact that notice of sale of such Collateral shall have been given. The
Collateral Agent may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by announcement
at the time and place fixed for sale, and such sale may, without further notice,
be made at the time and place to which the same was so adjourned. In the case of
any sale of all or any part of the Collateral made on credit or for future
delivery, the Collateral so sold may be retained by the Collateral Agent until
the sale price is paid by the purchaser or purchasers thereof, but the
Collateral Agent shall not incur any liability in the event that any such
purchaser or purchasers shall fail to take up and pay for the Collateral so sold
and, in the case of any such failure, such Collateral may be sold again upon
notice given in accordance with provisions above. At any public (or, to the
extent permitted by law, private) sale made pursuant to this Section 6.01, any
Secured Party may bid for or purchase, free (to the extent permitted by law)
from any right of redemption, stay, valuation or appraisal on the part of any
Pledgor (all such rights being also hereby waived and released to the extent
permitted by law), the Collateral or any part thereof offered for sale and may
make payment on account thereof by using any claim then due and payable to such
Secured Party from any Pledgor as a credit against the purchase price, and such
Secured Party may, upon compliance with the terms of sale, hold, retain and
dispose of such property in accordance with Section 6.02 hereof without further
accountability to any Pledgor therefor. For purposes hereof, a written agreement
to purchase the Collateral or any portion thereof shall be treated as a sale
thereof; the Collateral Agent shall be free to carry out such sale pursuant to
such agreement and no Pledgor shall be entitled to the return of the Collateral
or any portion thereof subject thereto, notwithstanding the fact that after the
Collateral Agent shall have entered into such an agreement all Events of Default
shall have been remedied and the Secured Obligations paid in full. As an
alternative to exercising the power of sale herein conferred upon it, the
Collateral Agent may proceed by a suit or suits at law or in equity to foreclose
this Agreement and to sell the Collateral or any portion thereof pursuant to a
judgment or decree of a court or courts having competent jurisdiction or
pursuant to a proceeding by a court-appointed receiver. Any sale pursuant to the
provisions of this Section 6.01 shall be deemed to conform to the commercially
reasonable standards as provided in Section 9-610(b) of the New York UCC or its
equivalent in other jurisdictions.

Section 6.02 Application of Proceeds. The Collateral Agent shall promptly apply
the proceeds, moneys or balances of any collection or sale of Collateral, as
well as any Collateral consisting of cash, in the manner specified in the Credit
Agreement.

The Collateral Agent shall have sole and absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the purchase money by the Collateral Agent or of the officer
making the sale shall be a sufficient discharge to the purchaser or purchasers
of the Collateral so sold and such purchaser or purchasers shall not be
obligated to see to the application of any part of the purchase money paid over
to the Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.

 

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Section 6.03 Securities Act, Etc. In view of the position of the Pledgors in
relation to the Pledged Collateral, or because of other current or future
circumstances, a question may arise under the Securities Act of 1933, as now or
hereafter in effect, or any similar federal statute hereafter enacted analogous
in purpose or effect (such Act and any such similar statute as from time to time
in effect being called the “Federal Securities Laws”) with respect to any
disposition of the Pledged Collateral permitted hereunder. Each Pledgor
understands that compliance with the Federal Securities Laws might very strictly
limit the course of conduct of the Collateral Agent if the Collateral Agent were
to attempt to dispose of all or any part of the Pledged Collateral, and might
also limit the extent to which or the manner in which any subsequent transferee
of any Pledged Collateral could dispose of the same. Similarly, there may be
other legal restrictions or limitations affecting the Collateral Agent in any
attempt to dispose of all or part of the Pledged Collateral under applicable
Blue Sky or other state securities laws or similar laws analogous in purpose or
effect. Each Pledgor acknowledges and agrees that in light of such restrictions
and limitations, the Collateral Agent, in its sole and absolute discretion,
(a) may proceed to make such a sale whether or not a registration statement for
the purpose of registering such Pledged Collateral or part thereof shall have
been filed under the Federal Securities Laws or, to the extent applicable, Blue
Sky or other state securities laws and (b) may approach and negotiate with a
single potential purchaser to effect such sale. Each Pledgor acknowledges and
agrees that any such sale might result in prices and other terms less favorable
to the seller than if such sale were a public sale without such restrictions. In
the event of any such sale, the Collateral Agent shall incur no responsibility
or liability for selling all or any part of the Pledged Collateral at a price
that the Collateral Agent, in its sole and absolute discretion, may in good
faith deem reasonable under the circumstances, notwithstanding the possibility
that a substantially higher price might have been realized if the sale were
deferred until after registration as aforesaid or if more than a single
purchaser were approached. The provisions of this Section 6.03 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
Collateral Agent sells.

Section 6.04 Remedies Cumulative. Each and every right, power and remedy hereby
specifically given to the Collateral Agent shall be in addition to every other
right, power and remedy specifically given to the Collateral Agent under this
Agreement, the other Security Documents or now or hereafter existing at law, in
equity or by statute and each and every right, power and remedy whether
specifically herein given or otherwise existing may be exercised from time to
time or simultaneously and as often and in such order as may be deemed expedient
by the Collateral Agent. All such rights, powers and remedies shall be
cumulative and the exercise or the beginning of the exercise of one shall not be
deemed a waiver of the right to exercise any other or others. No delay or
omission of the Collateral Agent in the exercise of any such right, power or
remedy and no renewal or extension of any of the Secured Obligations shall
impair any such right, power or remedy or shall be construed to be a waiver of
any Default or Event of Default or an acquiescence thereof. No notice to or
demand on any Pledgor in any case shall entitle it to any other or further
notice or demand in similar or other circumstances or constitute a waiver of any
of the rights of the Collateral Agent to any other or further action in any
circumstances without notice or demand. In the event that the Collateral Agent
shall bring any suit to enforce any of its rights hereunder and shall be
entitled to judgment, then in such suit the Collateral Agent may recover
reasonable expenses, including reasonable attorneys’ fees and expenses, and the
amounts thereof shall be included in such judgment.

 

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Section 6.05 Discontinuance of Proceedings. In case the Collateral Agent shall
have instituted any proceeding to enforce any right, power or remedy under this
Agreement by foreclosure, sale, entry or otherwise, and such proceeding shall
have been discontinued or abandoned for any reason or shall have been determined
adversely to the Collateral Agent, then and in every such case the relevant
Pledgor, the Collateral Agent and each holder of any of the Secured Obligations
shall be restored to their former positions and rights hereunder with respect to
the Collateral subject to the security interest created under this Agreement,
and all rights, remedies and powers of the Collateral Agent shall continue as if
no such proceeding had been instituted.

ARTICLE VII

[Reserved]

ARTICLE VIII

Indemnity, Subrogation and Subordination

Section 8.01 Indemnity. In addition to all such rights of indemnity and
subrogation as the Guarantors may have under applicable law (but subject to
Section 9.03 hereof), the Borrower agrees that (a) in the event a payment shall
be made by any Guarantor under this Agreement in respect of any Secured
Obligation of the Borrower, the Borrower shall indemnify such Guarantor for the
full amount of such payment and such Guarantor shall be subrogated to the rights
of the person to whom such payment shall have been made to the extent of such
payment and (b) in the event any assets of any Guarantor shall be sold pursuant
to this Agreement or any other Security Document to satisfy in whole or in part
an Secured Obligation of the Borrower, the Borrower shall indemnify such
Guarantor in an amount equal to the greater of the book value or the fair market
value of the assets so sold. Any amounts paid by any Indemnitee as to which such
Indemnitee has the right to reimbursement shall constitute Secured Obligations
secured by the Collateral. The indemnity obligations of each Pledgor contained
in this Article VIII shall continue in full force and effect notwithstanding the
full payment of all the Notes issued under the Credit Agreement, the termination
of all Swap Agreements giving rise to Secured Swap Obligations and all Letters
of Credit, and the payment of all other Secured Obligations and notwithstanding
the discharge thereof.

Section 8.02 Contribution and Subrogation. Each Guarantor (other than Holdings)
(a “Contributing Guarantor”) agrees (subject to Section 9.03 hereof) that, in
the event a payment shall be made by any other Guarantor (other than Holdings)
hereunder in respect of any Secured Obligation or assets of any other Guarantor
(other than Holdings and the Borrower) shall be sold pursuant to any Security
Document to satisfy any Secured Obligation owed to any Secured Party and such
other Guarantor (the “Claiming Guarantor”) shall not have been fully indemnified
by the Borrower as provided in Section 9.01 hereof, the Contributing Guarantor
shall indemnify the Claiming Guarantor in an amount equal to the amount of such
payment or the greater of the book value or the fair market value of such
assets, as applicable, in each case multiplied by a fraction of which the
numerator shall be the net worth of such Contributing Guarantor on the date
hereof and the denominator shall be the aggregate net worth of all the
Guarantors on the date hereof (or, in the case of any Guarantor becoming a party
hereto pursuant to Section 9.16 hereof, the date of the supplement hereto
executed and delivered by such Guarantor). Any Contributing Guarantor making any
payment to a Claiming Guarantor pursuant to this Section 8.02 shall be
subrogated to the rights of such Claiming Guarantor under Section 8.01 hereof to
the extent of such payment.

 

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Section 8.03 Subordination. (a) Notwithstanding any provision of this Agreement
to the contrary, all rights of the Guarantors under Sections 8.01 and 8.02
hereof and all other rights of indemnity, contribution or subrogation of the
Guarantors under applicable law or otherwise shall be fully subordinated to the
payment in full in cash or immediately available funds of the Secured
Obligations (other than contingent indemnity or expense reimbursement
obligations in respect of which no claim has been made). No failure on the part
of the Borrower or any Guarantor to make the payments required by Sections 8.01
and 8.02 hereof (or any other payments required under applicable law or
otherwise) shall in any respect limit the obligations and liabilities of the
Borrower with respect to the Secured Obligations or any Guarantor with respect
to its obligations hereunder, and the Borrower shall remain liable for the full
amount of the Secured Obligations and each Guarantor shall remain liable for the
full amount of its obligations hereunder. Without limiting the generality of the
foregoing, each Guarantor hereby agrees with the Secured Parties that it will
not exercise any right of subrogation which it may at any time otherwise have as
a result of this Agreement (whether contractual, under Section 509 of the U.S.
Bankruptcy Code or otherwise) until all Secured Obligations have been
irrevocably paid in full in cash; provided, that if any amount shall be paid to
such Guarantor on account of such subrogation rights at any time prior to the
irrevocable payment in full in cash of all the Secured Obligations, such amount
shall be held in trust for the benefit of the Secured Parties and shall
forthwith be paid to the Secured Parties to be credited and applied upon the
Secured Obligations, whether matured or unmatured, in accordance with the terms
of the Loan Documents or, if the Loan Documents do not provide for the
application of such amount, to be held by the Secured Parties as collateral
security for any Secured Obligations thereafter existing

(b) The Borrower and each Guarantor hereby agree that all Indebtedness and other
monetary obligations owed by it to the Borrower, any other Guarantor or any
Subsidiary shall be fully subordinated to the payment in full in cash or
immediately available funds of the Secured Obligations (other than contingent
indemnity or expense reimbursement obligations in respect of which no claim has
been made).

ARTICLE IX

Miscellaneous

Section 9.01 Notices. All communications and notices hereunder shall (except as
otherwise permitted herein) be in writing and given as provided in Section 9.01
of the Credit Agreement. All communications and notices hereunder to any
Subsidiary Party shall be given to it in care of the Borrower, with such notice
to be given as provided in Section 9.01 of the Credit Agreement.

 

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Section 9.02 Security Interest Absolute. All rights of the Collateral Agent
hereunder, the Security Interest in the Article 9 Collateral, the security
interest in the Pledged Collateral and all obligations of each Pledgor hereunder
shall be absolute and unconditional irrespective of (a) any lack of validity or
enforceability of the Credit Agreement, any other Loan Document, any agreement
with respect to any of the Secured Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Secured
Obligations, or any other amendment or waiver of or any consent to any departure
from the Credit Agreement, any other Loan Document or any other agreement or
instrument, (c) any exchange, release or non-perfection of any Lien on other
collateral, or any release or amendment or waiver of or consent under or
departure from any guarantee, securing or guaranteeing all or any of the Secured
Obligations or (d) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, any Pledgor in respect of the Secured
Obligations or this Agreement (other than a defense of payment or performance).

Section 9.03 Limitation By Law. 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 that may be controlling and to be limited to the extent necessary so that
they shall 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.

Section 9.04 Binding Effect; Several Agreement. This Agreement shall become
effective as to any party to this Agreement when a counterpart hereof executed
on behalf of such party shall have been delivered to the Administrative Agent
and a counterpart hereof shall have been executed on behalf of the
Administrative Agent and the Collateral Agent, and thereafter shall be binding
upon such party, the Administrative Agent, the Collateral Agent and their
respective permitted successors and assigns, and shall inure to the benefit of
such party, the Administrative Agent, the Collateral Agent and the other Secured
Parties and their respective permitted successors and assigns, except that no
party shall have the right to assign or transfer its rights or obligations
hereunder or any interest herein or in the Collateral (and any such assignment
or transfer shall be void) except as expressly contemplated by this Agreement or
the Credit Agreement. This Agreement shall be construed as a separate agreement
with respect to each party and may be amended, modified, supplemented, waived or
released with respect to any party without the approval of any other party and
without affecting the obligations of any other party hereunder.

Section 9.05 Successors and Assigns. Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
permitted successors and assigns of such party; and all covenants, promises and
agreements by or on behalf of any Pledgor, the Administrative Agent or the
Collateral Agent that are contained in this Agreement shall bind and inure to
the benefit of their respective permitted successors and assigns; provided that
no Pledgor may assign, transfer or delegate any of its rights or obligations
under this Agreement without the prior written consent of the Administrative
Agent and the Collateral Agent. The Administrative Agent or the Collateral
Agent, as the case may be, hereunder shall at all times be the same person that
is the Administrative Agent or the Collateral Agent, as the case may be, under
the Credit Agreement. Written notice of resignation by the Administrative Agent
or the Collateral Agent, as the case may be, pursuant to the Credit Agreement
shall also constitute notice of resignation as the Administrative Agent or the
Collateral Agent, as the case may be, under this Agreement. Upon the acceptance
of any appointment as the Administrative Agent or the Collateral Agent, as the
case may be, under the Credit Agreement by a successor Administrative Agent or
Collateral Agent, as the case may be, that successor Administrative Agent or
Collateral Agent, as the case may be, shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent or Collateral Agent, as the case may be, pursuant hereto.

 

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Section 9.06 Administrative Agent’s and Collateral Agent’s Fees and Expenses;
Indemnification. (a) The parties hereto agree that the Administrative Agent and
the Collateral Agent shall be entitled to reimbursement of its expenses incurred
hereunder as provided in Section 9.05 of the Credit Agreement.

(b) Without limitation of its indemnification obligations under the other Loan
Documents, each Pledgor jointly and severally agrees to indemnify the
Administrative Agent, the Collateral Agent and the other Indemnitees (as defined
in Section 9.05 of the Credit Agreement) against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including reasonable counsel fees, charges and disbursements, incurred
by or asserted against any Indemnitee arising out of, in connection with, or as
a result of, (i) the execution, delivery or performance of this Agreement or any
other Loan Document or any agreement or instrument contemplated hereby or
thereby, the performance by the parties hereto and thereto of their respective
obligations thereunder or the consummation of the Transactions and other
transactions contemplated hereby, (ii) the use of proceeds of the Loans or the
use of any Letter of Credit or (iii) any claim, litigation, investigation or
proceeding relating to any of the foregoing, or to the Collateral, whether or
not any Indemnitee is a party thereto; provided that such indemnity shall not,
as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee.

(c) Any such amounts payable as provided hereunder shall be additional Secured
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 9.06 shall remain operative and in full force and effect
regardless of the termination of this Agreement or any other Loan Document, the
consummation of the transactions contemplated hereby, the repayment of any of
the Secured Obligations, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of the Administrative Agent, the Collateral Agent or any
other Secured Party. All amounts due under this Section 9.06 shall be payable on
written demand therefor.

 

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Section 9.07 Collateral Agent Appointed Attorney-in-Fact; Duty of Collateral
Agent. (a) Each Pledgor hereby appoints the Collateral Agent the
attorney-in-fact of such Pledgor for the purpose of carrying out the provisions
of this Agreement and taking any action and executing any instrument that the
Collateral Agent may deem necessary or advisable to accomplish the purposes
hereof, which appointment is irrevocable and coupled with an interest. The
Collateral Agent shall have the right, upon the occurrence and during the
continuance of an Event of Default, with full power of substitution either in
the Collateral Agent’s name or in the name of such Pledgor, (a) to receive,
endorse, assign or deliver any and all notes, acceptances, checks, drafts, money
orders or other evidences of payment relating to the Collateral or any part
thereof, (b) to demand, collect, receive payment of, give receipt for and give
discharges and releases of all or any of the Collateral, (c) to ask for, demand,
sue for, collect, receive and give acquittance for any and all moneys due or to
become due under and by virtue of any Collateral, (d) to sign the name of any
Pledgor on any invoice or bill of lading relating to any of the Collateral,
(e) to send verifications of Accounts to any Account Debtor, (f) to commence and
prosecute any and all suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect or otherwise realize on all or any of
the Collateral or to enforce any rights in respect of any Collateral, (g) to
settle, compromise, compound, adjust or defend any actions, suits or proceedings
relating to all or any of the Collateral, (h) to notify, or to require any
Pledgor to notify, Account Debtors to make payment directly to the Collateral
Agent, and (i) to use, sell, assign, transfer, pledge, make any agreement with
respect to or otherwise deal with all or any of the Collateral, and to do all
other acts and things necessary to carry out the purposes of this Agreement, as
fully and completely as though the Collateral Agent were the absolute owner of
the Collateral for all purposes; provided that nothing herein contained shall be
construed as requiring or obligating the Collateral Agent to make any commitment
or to make any inquiry as to the nature or sufficiency of any payment received
by the Collateral Agent, or to present or file any claim or notice, or to take
any action with respect to the Collateral or any part thereof or the moneys due
or to become due in respect thereof or any property covered thereby.

(b) The Collateral Agent’s sole duty with respect to the custody, safekeeping
and physical preservation of the Collateral in its possession, under
Section 9-207 of the New York UCC or otherwise, shall be to deal with it in the
same manner as the Collateral Agent deals with similar property for its own
account. Neither the Collateral Agent, nor any other Secured Party nor any of
their respective officers, directors, partners, employees, agents, attorneys and
other advisors, attorneys-in-fact or affiliates shall be liable for failure to
demand, collect or realize upon any of the Collateral or for any delay in doing
so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of any Pledgor or any other person or to take any
other action whatsoever with regard to the Collateral or any part thereof. The
powers conferred on the Secured Parties hereunder are solely to protect the
Secured Parties’ interests in the Collateral and shall not impose any duty upon
any Secured Party to exercise any such powers. The Secured Parties shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
partners, employees, agents, attorneys and other advisors, attorneys-in-fact or
affiliates shall be responsible to any Pledgor for any act or failure to act
hereunder, except to the extent that any such act or failure to act is found by
a final and nonappealable decision of a court of competent jurisdiction to have
resulted primarily from their own gross negligence or willful misconduct in
breach of a duty owed to such Pledgor.

Section 9.08 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAWS OF THE STATE OF NEW YORK.

 

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Section 9.09 Waivers; Amendment. (a) No failure or delay by the Administrative
Agent, the Collateral Agent any Issuing Bank or any Lender in exercising any
right, power or remedy hereunder or under any other Loan Document shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy, or any abandonment or discontinuance of steps to enforce such a
right, power or remedy, preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. The rights, powers and remedies of
the Administrative Agent, the Collateral Agent, any Issuing Bank and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights, powers or remedies that they would otherwise have. No
waiver of any provision of this Agreement or consent to any departure by any
Loan Party therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) of this Section 9.09, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of a Loan or
the issuance of a Letter of Credit shall not be construed as a waiver of any
Default or Event of Default, regardless of whether the Administrative Agent, the
Collateral Agent any Lender or any Issuing Bank may have had notice or knowledge
of such Default or Event of Default at the time. No notice or demand on any Loan
Party in any case shall entitle any Loan Party to any other or further notice or
demand in similar or other circumstances.

(b) Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into
by the Administrative Agent, the Collateral Agent and the Loan Party or Loan
Parties with respect to which such waiver, amendment or modification is to
apply, subject to any consent required in accordance with Section 9.08 of the
Credit Agreement.

Section 9.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS. EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.10.

Section 9.11 Severability. In the event any one or more of the provisions
contained in this Agreement or in any other Loan Document should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby. The parties shall endeavor in
good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.

Section 9.12 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract, and shall become effective as
provided in Section 9.04 hereof. Delivery of an executed counterpart to this
Agreement by facsimile transmission shall be as effective as delivery of a
manually signed original.

 

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Section 9.13 Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.

Section 9.14 Jurisdiction; Consent to Service of Process. (a) Each party to this
Agreement hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or any other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Administrative Agent, the Collateral Agent any Issuing Bank or any Lender may
otherwise have to bring any action or proceeding relating to this Agreement or
any other Loan Document against any Pledgor, or its properties, in the courts of
any jurisdiction.

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

Section 9.15 Termination or Release. (a) This Agreement, the guarantees made
herein, the pledges made herein, the Security Interest and all other security
interests granted hereby shall terminate when (i) all the Secured Obligations
(other than contingent indemnity or expense reimbursement obligations in respect
of which no claim has been made) have been paid in full in cash or immediately
available funds, (ii) the Lenders have no further commitment to lend under the
Credit Agreement, (iii) the L/C Exposure has been reduced to zero and each
Issuing Bank has no further obligations to issue Letters of Credit under the
Credit Agreement and (iv) all Swap Agreements relating to Secured Swap
Obligations have been terminated.

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

(c) Upon any sale or other transfer by any Pledgor of any Collateral that is
permitted under the Credit Agreement to any person that is not a Pledgor, or
upon the effectiveness of any written consent to the release of the security
interest granted hereby in any Collateral pursuant to Section 9.08 of the Credit
Agreement, the security interest in such Collateral shall be automatically
released.

 

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(d) In connection with any termination or release pursuant to paragraph (a),
(b) or (c) of this Section 9.15, the Collateral Agent shall execute and deliver
to any Pledgor, at such Pledgor’s expense, all documents that such Pledgor shall
reasonably request to evidence such termination or release (including, without
limitation, UCC termination statements) and will duly assign and transfer to
such Pledgor such of the Pledged Collateral that may be in the possession of the
Collateral Agent and has not theretofore been sold or otherwise applied or
released pursuant to this Agreement; provided that the Collateral Agent shall
not be required to take any action under this Section 9.15(d) unless such
Pledgor shall have delivered to the Collateral Agent together with such request,
which may be incorporated into such request, (i) a reasonably detailed
description of the Collateral, which in any event shall be sufficient to effect
the appropriate termination or release without affecting any other Collateral,
and (ii) a certificate of a Responsible Officer of the Borrower or such Pledgor
certifying that the transaction giving rise to such termination or release is
permitted by the Credit Agreement and was consummated in compliance with the
Loan Documents. Any execution and delivery of documents pursuant to this
Section 9.15 shall be without recourse to or warranty by the Collateral Agent.

Section 9.16 Additional Subsidiaries. Upon execution and delivery by the
Administrative Agent, the Collateral Agent and any Subsidiary that is required
to become a party hereto by Section 5.10 of the Credit Agreement of an
instrument in the form of Exhibit I hereto, such Subsidiary shall become a
Subsidiary Party hereunder with the same force and effect as if originally named
as a Subsidiary Party herein. The execution and delivery of any such instrument
shall not require the consent of any other party to this Agreement. The rights
and obligations of each party to this Agreement shall remain in full force and
effect notwithstanding the addition of any new party to this Agreement.

Section 9.17 Right of Set-off. If an Event of Default shall have occurred and be
continuing, each Secured Party is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set-off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Secured Party to or for
the credit or the account of any party to this Agreement against any of and all
the obligations of such party now or hereafter existing under this Agreement
owed to such Secured Party, irrespective of whether or not Secured Party shall
have made any demand under this Agreement and although such obligations may be
unmatured. The rights of each Secured Party under this Section 9.17 are in
addition to other rights and remedies (including other rights of set-off) that
such Secured Party may have.

[Signature Page Follows]

 

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

 

QUALITY DISTRIBUTION, INC.

QUALITY DISTRIBUTION, LLC

AMERICAN TRANSINSURANCE GROUP, INC.

BOASSO AMERICA CORPORATION

CHEMICAL LEAMAN CORPORATION

MEXICO INVESTMENTS, INC.

POWER PURCHASING, INC.

QC DRY BULK, LLC

QC ENERGY RESOURCES, INC.

QC ENERGY RESOURCES, LLC

QD CAPITAL CORPORATION

QD RISK SERVICES, INC.

QUALA SYSTEMS, INC.

QUALITY CARRIERS, INC.

By:   /s/ Joseph J. Troy Name:   Joseph J. Troy Title:   Chief Financial Officer

 

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BANK OF AMERICA, N.A.

as Administrative Agent and Collateral Agent

By:   /s/ William DiCicro Name:   William DiCicro Title:   Vice President

 

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