Exhibit 10.2

 

 

SECURITY AGREEMENT

 

among

 

Global Defense & National Security Systems, Inc.,

 

STG GROUP, INC.,

 

STG, INC.,

 

ACCESS SYSTEMS, INCORPORATED,

 

SUCH OTHER ASSIGNORS PARTY HERETO

 

and

 

PNC BANK, NATIONAL ASSOCIATION
as COLLATERAL AGENT

 

  

Dated as of November 23, 2015

 

 

 

 

 

 

TABLE OF CONTENTS

 

    Page       ARTICLE I SECURITY INTERESTS 2       1.1 Grant of Security
Interests 2 1.2 Grant of License 5 1.3 Power of Attorney 5       ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS 6       2.1 Necessary Filings
6 2.2 No Liens 6 2.3 Other Financing Statements 6 2.4 Chief Executive Office,
Record Locations 7 2.5 Location of Inventory and Equipment 7 2.6 Legal Names;
Type of Organization (and Whether a Registered Organization); Jurisdiction of
Organization; Location; Organizational Identification Numbers; Changes Thereto;
etc 7 2.7 Trade Names; Etc 7 2.8 Certain Significant Transactions 8 2.9 Non-UCC
Property and Certificates of Title 8 2.10 As-Extracted Collateral;
Timber-to-be-Cut 8 2.11 Collateral in the Possession of a Bailee 8       ARTICLE
III SPECIAL PROVISIONS CONCERNING ACCOUNTS; CONTRACT RIGHTS; INSTRUMENTS;
CHATTEL PAPER AND CERTAIN OTHER COLLATERAL 9       3.1 Additional
Representations and Warranties 9 3.2 Maintenance of Records 9 3.3 Direction to
Account Debtors; Contracting Parties; etc 9 3.4 Modification of Terms; etc 10
3.5 Collection 10 3.6 Instruments 10 3.7 Assignors Remain Liable Under Accounts
11 3.8 Assignors Remain Liable Under Contracts 11 3.9 Deposit Accounts; Etc 11
3.10 Letter-of-Credit Rights 12 3.11 Commercial Tort Claims 12 3.12 Chattel
Paper 13 3.13 Further Actions 13 3.14 Motor Vehicles 13       ARTICLE IV SPECIAL
PROVISIONS CONCERNING TRADEMARKS AND DOMAIN NAMES 14       4.1 Additional
Representations and Warranties 14

 

i 

 

 

TABLE OF CONTENTS
(continued)

 

    Page       4.2 Licenses and Assignments 14 4.3 Infringements 15 4.4
Preservation of Marks and Domain Names 15 4.5 Maintenance of Registration 15 4.6
Future Registered Marks and Domain Names 15 4.7 Remedies 15       ARTICLE V
SPECIAL PROVISIONS CONCERNING PATENTS, COPYRIGHTS AND TRADE SECRETS 16       5.1
Additional Representations and Warranties 16 5.2 Licenses and Assignments 16 5.3
Infringements 16 5.4 Maintenance of Patents or Copyrights 17 5.5 Prosecution of
Patent or Copyright Applications 17 5.6 Other Patents and Copyrights 17 5.7
Remedies 17       ARTICLE VI PROVISIONS CONCERNING ALL COLLATERAL 18       6.1
Protection of Collateral Agent’s Security 18 6.2 Warehouse Receipts
Non-Negotiable 18 6.3 Additional Information 18 6.4 Further Actions 18 6.5
Financing Statements 19       ARTICLE VII REMEDIES UPON OCCURRENCE OF AN EVENT
OF DEFAULT 19       7.1 Remedies; Obtaining the Collateral Upon Default 19 7.2
Remedies; Disposition of the Collateral 22 7.3 Waiver of Claims 22 7.4
Application of Proceeds 23 7.5 Remedies Cumulative 26 7.6 Discontinuance of
Proceedings 26       ARTICLE VIII INDEMNITY 27       8.1 Indemnity 27 8.2
Indemnity Obligations Secured by Collateral; Survival 28       ARTICLE IX
DEFINITIONS 28       ARTICLE X MISCELLANEOUS 34       10.1 Notices 34 10.2
Waiver; Amendment 35 10.3 Obligations Absolute 35 10.4 Successors and Assigns 36

 

ii 

 

 

TABLE OF CONTENTS
(continued)

 

    Page       10.5 Headings Descriptive 36 10.6 GOVERNING LAW; SUBMISSION TO
JURISDICTION; VENUE; WAIVER OF JURY TRIAL 36 10.7 Assignor’s Duties 37 10.8
Termination; Release 37 10.9 Counterparts 38 10.10 Severability 38 10.11 The
Collateral Agent and the other Secured Creditors 38 10.12 Additional Assignors
39 10.13 Release of Assignors 39 10.14 Agreement Among Lenders 40 10.15
Administrative Borrower 40

 

ANNEX A Schedule of Chief Executive Offices Address(es) of Chief Executive
Office     ANNEX B Schedule of Inventory and Equipment Locations     ANNEX C
Schedule of Legal Names, Type of Organization, Jurisdiction of Organization,
Location, Organizational Identification Numbers and Federal Employer
Identification Numbers     ANNEX D Schedule of Trade and Fictitious Names    
ANNEX E Description of Certain Significant Transactions Occurring Within One
Year Prior to the Date of the Security Agreement     ANNEX F-1 Schedule of
Deposit Accounts     ANNEX F-2 Schedule of Deposit Accounts Subject to Control
Agreement     ANNEX G Reserved     ANNEX H Schedule of Commercial Tort Claims  
  ANNEX I Schedule of Marks and Applications; Internet Domain Name Registrations
    ANNEX J Schedule of Patents     ANNEX K Schedule of Copyrights     ANNEX L
Grant of Security Interest in United States Trademarks     ANNEX M Grant of
Security Interest in United States Patents     ANNEX N Grant of Security
Interest in United States Copyrights

 

[Remainder of this page intentionally left blank]

 

iii 

 

 

SECURITY AGREEMENT

 

SECURITY AGREEMENT, dated as of November 23, 2015, made by each of the
undersigned assignors (each, an “Assignor” and, together with any other entity
that becomes an assignor hereunder pursuant to Section 10.12 hereof, the
“Assignors”) in favor of PNC Bank, National Association, as collateral agent
(together with any successor collateral agent, the “Collateral Agent”), for the
benefit of the Secured Creditors (as defined below). Certain capitalized terms
as used herein are defined in Article IX hereof. Except as otherwise defined
herein, all other capitalized terms used herein and defined in the Credit
Agreement (as defined below) shall be used herein as therein defined.

 

WITNESSETH:

 

WHEREAS, Global Defense & National Security Systems, Inc. (which shall be
renamed STG Group, Inc. immediately following the closing), a Delaware
corporation (“Holdings”) (whose obligations as Borrower (as defined in the
Credit Agreement) under the Credit Agreement will be immediately assumed by STG,
Inc., a Virginia corporation (“STG”) and Access Systems, Incorporated, a
Virginia corporation (“Access”) immediately upon closing), STG Group, Inc.
(which shall be renamed STG Group Holdings, Inc. immediately following the
closing), a Delaware corporation (“Parent”), the Guarantors from time to time
party thereto, the lenders from time to time party thereto (the “Lenders”), MC
Admin Co LLC, as administrative agent (together with any successor
administrative agent, the “Administrative Agent”), PNC Bank, National
Association as collateral agent (together with any successor collateral agent,
the “Collateral Agent”) have entered into a Credit Agreement, dated as of
November 23, 2015 (as amended, modified, restated and/or supplemented from time
to time, the “Credit Agreement”; defined terms used but not defined herein shall
have the respective meaning ascribed thereto in the Credit Agreement), providing
for the making of Loans to the Initial Borrower and the Borrowers, as
contemplated therein (the Lenders, the Administrative Agent and the Collateral
Agent are herein called the “Secured Creditors”);

 

WHEREAS, it is a condition precedent to the making of Loans to the Initial
Borrower and the Borrowers under the Credit Agreement that each Assignor shall
have executed and delivered to the Collateral Agent this Agreement;

 

WHEREAS, pursuant to the Holdings Guaranty, Holdings has jointly and severally
guaranteed the payment and performance when due of all Guaranteed Obligations as
described therein;

 

WHEREAS, pursuant to the Subsidiaries Guaranty, the Subsidiaries party thereto
have jointly and severally guaranteed the payment and performance when due of
all Guaranteed Obligations as described therein; and

 

WHEREAS, each Assignor will obtain benefits from the incurrence of Loans by the
Initial Borrower and the Borrowers under the Credit Agreement and, if
applicable, the entering into by the Initial Borrower and the Borrowers and/or
one or more of their Subsidiaries of Interest Rate Protection Agreements and,
accordingly, desires to enter into this Agreement in order to satisfy the
conditions described in the preceding recital and to induce the Lenders to make
Loans and enter into Interest Rate Protection Agreements for the benefit of the
Initial Borrower and the Borrowers;

 

 

 

 

NOW, THEREFORE, in consideration of the foregoing and other benefits accruing to
each Assignor, the receipt and sufficiency of which are hereby acknowledged,
each Assignor hereby makes the following representations and warranties to the
Collateral Agent for the benefit of the Secured Creditors and hereby covenants
and agrees with the Collateral Agent for the benefit of the Secured Creditors as
follows:

 

ARTICLE I

SECURITY INTERESTS

 

1.1           Grant of Security Interests. (a) As security for the prompt and
complete payment and performance when due of all of its Obligations, each
Assignor does hereby assign and transfer unto the Collateral Agent, and does
hereby pledge and grant to the Collateral Agent, in each case for the benefit of
the Secured Creditors, a continuing security interest in all of the right, title
and interest of such Assignor in, to and under all of the following personal
property and fixtures (and all rights therein) of such Assignor, or in which or
to which such Assignor has any rights, in each case whether now existing or
hereafter from time to time acquired:

 

(i)          each and every Account;

 

(ii)         all cash;

 

(iii)        the Cash Collateral Account and all monies, securities, Instruments
and other investments deposited or required to be deposited in the Cash
Collateral Account;

 

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

 

(v)         all Commercial Tort Claims (including all Commercial Tort Claims
described in Annex H hereto);

 

(vi)        all computer programs of such Assignor and all intellectual property
rights therein and all other proprietary information of such Assignor, including
but not limited to Domain Names and Trade Secret Rights;

 

(vii)       all Contracts, together with all Contract Rights arising thereunder;

 

(viii)      all Copyrights;

 

(ix)        all Equipment;

 

(x)          all Deposit Accounts and all other demand, deposit, time, savings,
cash management, passbook and similar accounts maintained by such Assignor with
any Person and all monies, securities, Instruments and other investments
deposited or required to be deposited in any of the foregoing, excluding any
Excluded Accounts;

 

 2 

 

 

(xi)        all Documents;

 

(xii)       all General Intangibles;

 

(xiii)      all Goods;

 

(xiv)      all Instruments;

 

(xv)       all Inventory;

 

(xvi)      all Investment Property;

 

(xvii)     all Promissory Notes;

 

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

 

(xix)       all Marks, together with the registrations and right to all renewals
thereof, the goodwill of the business of such Assignor symbolized by the Marks
and all causes of action arising prior to or after the date hereof for
infringement of any of the Marks or unfair competition regarding the same;

 

(xx)        all Patents, together with all causes of action arising prior to or
after the date hereof for infringement of any of the Patents or unfair
competition regarding the same;

 

(xxi)       all Permits;

 

(xxii)      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;

 

(xxiii)     all Supporting Obligations;

 

(xxiv)    all books and records relating to the items referred to in the
preceding clauses (i) through (xxiii) (including all books, databases, customer
lists, credit files, ledgers, computer programs, printouts, customer data and
records, whether tangible or electronic, and other computer materials and
records (and all media on which such data, files, programs, materials and
records are or may be stored) which contain any information relating to any of
the items referred to in the preceding clauses (i) through (xxiii)); and

 

(xxv)     all Proceeds and products of any and all of the foregoing (all of the
above, including this clause (xxv), the “Collateral”).

 

 3 

 

 

(b)          The security interest of the Collateral Agent under this Agreement
extends to all Collateral which any Assignor may acquire, or with respect to
which any Assignor may obtain rights, at any time during the term of this
Agreement.

 

(c)          Notwithstanding any of the other provisions set forth in this
Section 1 to the contrary, the term Collateral shall not include, and this
Agreement shall not constitute a grant of a security interest in any (x)
instrument, contract, license, permit or other General Intangible during the
period in which under applicable law, such instrument, contract, license, permit
or other General Intangible cannot be, or requires any consent (which has not
been obtained) to be, pledged, transferred or assigned by Assignor, or to the
extent that granting a security interest therein without a consent, waiver, or
amendment (which has not been obtained) would result in a breach or default
under, or give rise to a right by any party to terminate, the instrument,
contract, license, permit or other General Intangible (in each case after giving
effect to Sections 9-406(d), 9-407(a), 9-408(a) or 9-409 of the UCC (or any
successor provision or provisions) or any other applicable law); provided,
however, that with respect to any potential Collateral described in this clause
(c) requiring a consent, waiver or amendment prior to the effective grant of a
security interest, the affected Assignor shall have used commercially reasonable
efforts to obtain such consent, waiver or amendment and such instrument,
contract, license, permit or other General Intangible shall become part of the
Collateral immediately upon obtaining such required consent, waiver or amendment
or upon a relevant change in applicable law and provided that that Proceeds of
the such instrument, contract, license, permit or other General Intangible shall
constitute Collateral as defined in this Agreement, (y) any “intent-to-use”
application for registration of a Mark filed pursuant to Section 1(b) of the
Lanham Act, 15 U.S.C. § 1051, prior to the filing of a “Statement of Use”
pursuant to Section 1(d) of the Lanham Act or an “Amendment to Allege Use”
pursuant to Section 1(c) of the Lanham Act with respect thereto, solely to the
extent, if any, that, and solely during the period, if any, in which, the grant
of a security interest therein would impair the validity or enforceability of
any registration that issues from such intent-to-use application under
applicable federal law, or (z) any Excluded Equity Interests.

 

 4 

 

 

1.2         Grant of License. For purposes of enabling the Collateral Agent to
exercise rights and remedies under this Agreement, each Assignor hereby grants
to the Collateral Agent and its agents, representatives and designees an
irrevocable, nonexclusive, royalty free license, rent-free license and rent-free
lease (which will be binding on any successor or assignee of such Assignor) to,
after the occurrence and during the continuance of an Event of Default, have
access to and use all of such Assignor’s Collateral constituting (x) Real
Property (including the buildings and other improvements thereon), Equipment and
fixtures (whether or not considered Real Property), and (y) intellectual
property (including, without limitation, all Domain Names, Patents, Marks,
Copyrights, Trade Secrets and object code and access to all media, written or
electronic, in which any licensed items may be recorded or stored and to all
computer software and programs used for the compilation or printout thereof, as
well as an irrevocable, nonexclusive license to grant to any third party a
sub-licensable sub-license to use the foregoing rights, but excluding any source
code) for which the Collateral Agent hereby agrees to take all commercially
reasonable actions in connection with its use of such intellectual property to
protect such Assignor’s rights and interest in such intellectual property
(provided that in any event, the Collateral Agent shall not have any liability
in connection therewith), for the purpose of (i) arranging for and effecting the
sale, distribution or other disposition of Collateral located on any such Real
Property, including the manufacture, production, completion, packaging,
advertising, distribution and other preparation of such Collateral (including,
without limitation, work-in-process, raw materials and complete Inventory) for
sale, distribution or other disposition, (ii) selling (by public auction,
private sale, going out of business sale or similar sale, whether in bulk, in
lots or to customers in the ordinary course of business or otherwise and which
sale may include augmented Inventory of the same type sold in any Assignor’s
business), (iii) storing or otherwise dealing with the Collateral, (iv)
collecting all Accounts and copying, using and preserving any and all
information relating to the Collateral, and (v) otherwise dealing with the
Collateral as part of the exercise of any rights or remedies provided to the
Collateral Agent hereunder or under the other Credit Documents, in each case
without the interference by any Assignor or any Subsidiary of any Assignor and
without incurring any liability to any Assignor or any Subsidiary of any
Assignor, except any liability which is the direct result of the Collateral
Agent’s gross negligence or willful misconduct (as determined by a court of
competent jurisdiction in a final and non-appealable decision). Each Assignor
will, and will cause each of its Subsidiaries to, cooperate with the Collateral
Agent and its agents, representatives and designees in allowing the Collateral
Agent to exercise the foregoing rights. To the extent that any asset of any
Assignor in which the Collateral Agent has access or use rights as provided
above is to be sold or otherwise disposed of after the occurrence and during the
continuance of an Event of Default, such Assignor shall, if requested by the
Collateral Agent in writing, cause the buyer to agree in writing to be subject
to, and comply with the terms of, this Section 1.2. The Collateral Agent shall
have the right to bring an action to enforce its rights under this Section 1.2,
including, without limitation, an action seeking possession of the applicable
Collateral and/or specific performance of this Section 1.2.

 

1.3         Power of Attorney. (a) Each Assignor hereby constitutes and appoints
the Collateral Agent its true and lawful attorney, irrevocably, with full power
after the occurrence of and during the continuance of an Event of Default (in
the name of such Assignor or otherwise) to act, require, demand, receive,
compound and give acquittance for any and all moneys and claims for moneys due
or to become due to such Assignor under or arising out of the Collateral, to
endorse any checks or other instruments or orders in connection therewith and to
file any claims or take any action or institute any proceedings which the
Collateral Agent may deem to be necessary or advisable to protect the interests
of the Secured Creditors, which appointment as attorney is coupled with an
interest.

 

(b)          Each Assignor hereby appoints the Collateral Agent and the
Collateral Agent’s designee as such Assignor’s attorney, with power: (i) to sign
any documents or file any certificate of title, license and/or application, as
may be required pursuant to any Motor Vehicle Statutes in the applicable
jurisdiction to perfect, maintain, protect, and enforce the Liens on Motor
Vehicles in accordance with Section 3.14 hereof and (ii) to do all things
reasonably necessary to carry out this Agreement. Each Assignor ratifies and
approves all acts of such attorney. None of the Secured Creditors or the
Collateral Agent or their attorneys will be liable for any acts or omissions or
for any error of judgment or mistake of fact or law except for their gross
negligence or willful misconduct (as determined by a court of competent
jurisdiction in a final and non-appealable decision). This power, being coupled
with an interest, is irrevocable until the Credit Agreement has been terminated
and the Obligations have been fully satisfied.

 

 5 

 

 

ARTICLE II

GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS

 

Each Assignor represents, warrants and covenants, which representations,
warranties and covenants shall survive execution and delivery of this Agreement,
as follows:

 

2.1           Necessary Filings. All filings, registrations, recordings and
other actions necessary or appropriate to create, preserve and perfect the
security interest granted by such Assignor to the Collateral Agent hereby in
respect of the Collateral have been accomplished and the security interest
granted to the Collateral Agent pursuant to this Agreement in and to the
Collateral creates (or upon such filings will create) a valid and, together with
all such filings, registrations, recordings and other actions, a perfected
security interest therein to the extent a perfected security interest can be
granted therein pursuant to the laws of the United States, which perfected
security interest will be prior to the rights of all other Persons therein and
subject to no other Liens (other than Permitted Liens) and is entitled to all
the rights, priorities and benefits afforded by the UCC or other relevant law as
enacted in any relevant jurisdiction to perfected security interests, in each
case to the extent that the Collateral consists of the type of property in which
a security interest may be perfected (i) by possession or control (within the
meaning of the UCC as in effect on the date hereof in the State of New York),
(ii) by filing a financing statement under the UCC as enacted in any relevant
jurisdiction or (iii) by a filing of a Grant of Security Interest in the
respective form attached hereto in the United States Patent and Trademark Office
or in the United States Copyright Office, as the case may be.

 

2.2           No Liens. Such Assignor is, and as to all Collateral acquired by
it from time to time after the date hereof such Assignor will be, the owner of
all Collateral free from any Lien, security interest, encumbrance or other
right, title or interest of any Person (other than Permitted Liens), and such
Assignor shall defend the Collateral against all claims and demands of all
Persons at any time claiming the same or any interest therein adverse to the
Collateral Agent.

 

2.3           Other Financing Statements. As of the date hereof, there is no
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) covering or purporting to cover any interest of any
kind in the Collateral (other than financing statements filed in respect of
Permitted Liens), and so long as the Termination Date has not occurred, such
Assignor will not execute or authorize to be filed in any public office any
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) or statements relating to the Collateral, except
financing statements filed or to be filed in respect of and covering the
security interests granted hereby by such Assignor or in connection with
Permitted Liens.

 

2.4           Chief Executive Office, Record Locations. The chief executive
office of such Assignor is, on the date of this Agreement, located at the
address indicated on Annex A hereto for such Assignor. During the period of the
four calendar months preceding the date of this Agreement, the chief executive
office of such Assignor has not been located at any address other than that
indicated on Annex A in accordance with the immediately preceding sentence, in
each case unless each such other address is also indicated on Annex A hereto for
such Assignor.

 

 6 

 

 

2.5           Location of Inventory and Equipment. All Inventory and Equipment
held on the date hereof, or held at any time during the four calendar months
prior to the date hereof, by each Assignor is located at one of the locations
shown on Annex B hereto for such Assignor.

 

2.6           Legal Names; Type of Organization (and Whether a Registered
Organization); Jurisdiction of Organization; Location; Organizational
Identification Numbers; Changes Thereto; etc. As of the date hereof, the exact
legal name of each Assignor, the type of organization of such Assignor, whether
or not such Assignor is a Registered Organization, the jurisdiction of
organization of such Assignor, such Assignor’s Location, the organizational
identification number (if any) of such Assignor, is listed on Annex C hereto for
such Assignor. Such Assignor shall not change its legal name, its type of
organization, its status as a Registered Organization (in the case of a
Registered Organization), its jurisdiction of organization, its Location, or its
organizational identification number (if any) from that listed on Annex C
hereto, except that any such changes shall be permitted (so long as not in
violation of the applicable requirements of the Secured Debt Agreements and so
long as same do not involve (x) a Registered Organization ceasing to constitute
same or (y) such Assignor changing its jurisdiction of organization or Location
from the United States or a State thereof to a jurisdiction of organization or
Location, as the case may be, outside the United States or a State thereof) if
(i) it shall have given to the Collateral Agent and the Administrative Agent not
less than 15 days’ (or such shorter period as may be acceptable to the
Collateral Agent) prior written notice of each change to the information listed
on Annex C (as adjusted for any subsequent changes thereto previously made in
accordance with this sentence), together with a supplement to Annex C which
shall correct all information contained therein for such Assignor, and (ii) in
connection with such respective change or changes, it shall have taken all
action reasonably requested by the Collateral Agent or the Administrative Agent
to maintain the security interests of the Collateral Agent in the Collateral
intended to be granted hereby at all times fully perfected and in full force and
effect. In addition, to the extent that such Assignor does not have an
organizational identification number on the date hereof and later obtains one,
such Assignor shall promptly thereafter notify the Collateral Agent and the
Administrative Agent of such organizational identification number and shall take
all actions reasonably satisfactory to the Collateral Agent and the
Administrative Agent to the extent necessary to maintain the security interest
of the Collateral Agent in the Collateral intended to be granted hereby fully
perfected and in full force and effect.

 

2.7           Trade Names; Etc. Such Assignor does not have nor does it operate
in any jurisdiction under, nor in the preceding five years has it had or
operated in any jurisdiction under, any trade names, fictitious names or other
names except its legal name as specified in Annex C and such other trade or
fictitious names as are listed on Annex D hereto for such Assignor. Such
Assignor may assume or operate in any jurisdiction under any new trade,
fictitious or other name if (i) it shall have given to the Collateral Agent and
the Administrative Agent not more than 15 days’ prior written notice of any such
assumption or operation, clearly describing such new name and the jurisdictions
in which such new name will be used and providing such other information in
connection therewith as the Collateral Agent or the Administrative Agent may
reasonably request and (ii) with respect to such new name, it shall have taken
all action reasonably requested by the Collateral Agent or the Administrative
Agent to maintain the security interest of the Collateral Agent in the
Collateral intended to be granted hereby at all times fully perfected and in
full force and effect.

 

 7 

 

 

2.8           Certain Significant Transactions. During the one year period
preceding the date of this Agreement, no Person shall have merged or
consolidated with or into any Assignor, and no Person shall have liquidated
into, or transferred all or substantially all of its assets to, any Assignor, in
each case except as described in Annex E hereto. With respect to any
transactions so described in Annex E hereto, the respective Assignor shall have
furnished such information with respect to the Person (and the assets of the
Person and locations thereof) which merged with or into or consolidated with
such Assignor, or was liquidated into or transferred all or substantially all of
its assets to such Assignor, and shall have furnished to the Collateral Agent
and the Administrative Agent such UCC lien searches as may have been requested
by the Collateral Agent or the Administrative Agent with respect to such Person
and its assets, to establish that no security interest (excluding Permitted
Liens) continues perfected on the date hereof with respect to any Person
described above (or the assets transferred to the respective Assignor by such
Person), including without limitation pursuant to Section 9-316(a)(3) of the
UCC.

 

2.9           Non-UCC Property and Certificates of Title. No more than an
aggregate amount of $500,000 of all property of the Assignors of the types
described in clauses (1), (2) and (3) of Section 9-311(a) of the UCC, where the
filing of a financing statement does not perfect the security interest in such
property in accordance with the provisions of Section 9-311(a) of the UCC, shall
be owned by all Assignors (based on the aggregate fair market value thereof, as
determined by the Assignors in good faith) unless the Assignors shall provide
immediate written notice of such excess to the Collateral Agent and the
Administrative Agent and promptly (and in any event within 7 Business Days,
unless the Collateral Agent shall extend such period in its sole discretion)
take such actions (at their own cost and expense) as may be required under the
respective United States, State or other laws referenced in Section 9-311(a) of
the UCC to perfect the security interests granted herein in any such excess
property.

 

2.10         As-Extracted Collateral; Timber-to-be-Cut. On the date hereof, such
Assignor does not own, or expect to acquire, any property which constitutes, or
would constitute, As-Extracted Collateral or Timber-to-be-Cut. If at any time
after the date of this Agreement such Assignor owns, acquires or obtains rights
to any As-Extracted Collateral or Timber-to-be-Cut, such Assignor shall furnish
the Collateral Agent and the Administrative Agent with prompt written notice
thereof (which notice shall describe in reasonable detail the As-Extracted
Collateral and/or Timber-to-be-Cut and the locations thereof) and shall take all
actions as may be deemed reasonably necessary or desirable by the Collateral
Agent or the Administrative Agent to perfect the security interest of the
Collateral Agent therein.

 

2.11         Collateral in the Possession of a Bailee. No more than $500,000 of
Inventory, Equipment or other Goods may be in the possession of a third party
bailee at any time, unless such Assignor shall promptly notify the Collateral
Agent and the Administrative Agent thereof and obtain an acknowledgment from
such bailee, in form and substance reasonably satisfactory to the Collateral
Agent and the Administrative Agent, that the bailee holds such Collateral for
the benefit of the Collateral Agent and shall act upon the instructions of the
Collateral Agent, without the further consent of such Assignor. The Collateral
Agent agrees with such Assignor that the Collateral Agent shall not give any
such instructions unless an Event of Default has occurred and is continuing or
would occur after taking into account any action by the respective Assignor with
respect to any such bailee.

 

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ARTICLE III

SPECIAL PROVISIONS CONCERNING ACCOUNTS; CONTRACT RIGHTS;
INSTRUMENTS; CHATTEL PAPER AND CERTAIN OTHER COLLATERAL

 

3.1           Additional Representations and Warranties. As of the time when
each of its Accounts arises, each Assignor shall be deemed to have represented
and warranted that each such Account, and all original records, papers and
documents relating thereto (if any) are genuine and what they purport to be, and
that all papers and documents (if any) relating thereto (i) will, to the
knowledge of such Assignor, represent the genuine, legal, valid and binding
obligation of the account debtor evidencing indebtedness unpaid and owed by the
respective account debtor arising out of the performance of labor or services or
the sale or lease and delivery of the merchandise listed therein, or both,
(ii) will be the only original writings evidencing and embodying such obligation
of the account debtor named therein (other than copies created for general
accounting purposes), (iii) will evidence true and valid obligations,
enforceable in accordance with their respective terms, and (iv) will be in
compliance and will conform in all material respects with all applicable
federal, state and local laws and applicable laws of any relevant foreign
jurisdiction.

 

3.2           Maintenance of Records. Each Assignor will keep and maintain at
its own cost and expense accurate records in all material respects of its
Accounts and Contracts, including, but not limited to, records of all payments
received, all credits granted thereon, all merchandise returned and all other
dealings therewith, and such Assignor will make the same available on such
Assignor’s premises to the Collateral Agent and the Administrative Agent for
inspection as otherwise permitted by the terms of the respective Secured Debt
Agreements. Upon the occurrence and during the continuance of an Event of
Default and at the request of the Collateral Agent or the Administrative Agent,
such Assignor shall, at its own cost and expense, deliver all tangible evidence
of its Accounts and Contract Rights (including, without limitation, all
documents evidencing the Accounts and all Contracts) and such books and records
to the Collateral Agent or the Administrative Agent or to their respective
representatives (copies of which evidence and books and records may be retained
by such Assignor). Upon the occurrence and during the continuance of an Event of
Default and if the Collateral Agent so directs, such Assignor shall legend, in
form and manner satisfactory to the Collateral Agent and the Administrative
Agent, the Accounts and the Contracts, as well as books, records and documents
(if any) of such Assignor evidencing or pertaining to such Accounts and
Contracts with an appropriate reference to the fact that such Accounts and
Contracts have been assigned to the Collateral Agent and that the Collateral
Agent has a security interest therein.

 

3.3           Direction to Account Debtors; Contracting Parties; etc. Upon the
occurrence and during the continuance of an Event of Default, if the Collateral
Agent so directs any Assignor, such Assignor agrees (x) to instruct all obligors
with respect to the Accounts and Contracts to make all payments on account of
the Accounts and Contracts directly to the Cash Collateral Account, (y) that the
Collateral Agent may, at its option, directly notify the obligors with respect
to any Accounts and/or under any Contracts to make payments with respect thereto
as provided in the preceding clause (x), and (z) that the Collateral Agent may
enforce collection of any such Accounts and Contracts and may adjust, settle or
compromise the amount of payment thereof, in the same manner and to the same
extent as such Assignor. Without notice to or assent by any Assignor, the
Collateral Agent may, upon the occurrence and during the continuance of an Event
of Default, apply any or all amounts then in, or thereafter deposited in, the
Cash Collateral Account toward the payment of the Obligations in the manner
provided in Section 7.4 of this Agreement. The reasonable costs and expenses of
collection (including reasonable attorneys’ fees), whether incurred by an
Assignor or the Collateral Agent, shall be borne by the relevant Assignor. The
Collateral Agent shall deliver a copy of each notice referred to in the
preceding clause (y) to the Administrative Borrower for the relevant Assignor,
provided that (x) the failure by the Collateral Agent to so notify such Assignor
shall not affect the effectiveness of such notice or the other rights of the
Collateral Agent created by this Section 3.3 and (y) no such notice shall be
required if an Event of Default of the type described in Section 12.05 of the
Credit Agreement has occurred and is continuing.

 

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3.4           Modification of Terms; etc. Except in accordance with such
Assignor’s ordinary course of business or as is consistent with reasonable
business judgment or as permitted by Section 3.5 hereof and Section 11.12 of the
Credit Agreement, no Assignor shall rescind or cancel any indebtedness evidenced
by any Account or under any Contract, or modify any material term thereof or
make any material adjustment with respect thereto, or extend or renew the same,
or compromise or settle any material dispute, claim, suit or legal proceeding
relating thereto, or sell any Account or Contract, or interest therein, without
the prior written consent of the Collateral Agent and the Administrative Agent.
No Assignor will do anything to impair the rights of the Collateral Agent in the
Accounts or Contracts.

 

3.5           Collection. Each Assignor shall endeavor in accordance with
reasonable business practices to cause to be collected from the account debtor
named in each of its Accounts or obligor under any Contract, as and when due
(including, without limitation, amounts which are delinquent, such amounts to be
collected in accordance with generally accepted lawful collection procedures)
any and all amounts owing under or on account of such Account or Contract and
apply promptly upon receipt thereof all such amounts as are so collected to the
outstanding balance of such Account or under such Contract. Except as otherwise
directed by the Collateral Agent after the occurrence and during the
continuation of an Event of Default, any Assignor may allow in the ordinary
course of business as adjustments to amounts owing under its Accounts and
Contracts (i) an extension or renewal of the time or times of payment, or
settlement for less than the total unpaid balance, which such Assignor finds
appropriate in accordance with reasonable business judgment, and (ii) a refund
or credit due as a result of returned or damaged merchandise or improperly
performed services or for other reasons which such Assignor finds appropriate in
accordance with reasonable business judgment. The reasonable costs and expenses
(including, without limitation, reasonable attorneys’ fees) of collection,
whether incurred by an Assignor or the Collateral Agent, shall be borne by the
relevant Assignor.

 

3.6           Instruments. If any Assignor owns or acquires any Instrument in
excess of $500,000 constituting Collateral (other than checks and other payment
instruments received and collected in the ordinary course of business), such
Assignor will within 7 Business Days thereafter notify the Collateral Agent and
the Administrative Agent thereof, and upon request by the Collateral Agent will
promptly deliver such Instrument to the Collateral Agent appropriately endorsed
to the order of the Collateral Agent as further security hereunder.

 

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3.7           Assignors Remain Liable Under Accounts. Anything herein to the
contrary notwithstanding, the Assignors shall remain liable under each of the
Accounts to observe and perform all of the conditions and obligations to be
observed and performed by them thereunder, all in accordance with the terms of
any agreement giving rise to such Accounts. Neither the Collateral Agent nor any
other Secured Creditor shall have any obligation or liability under any Account
(or any agreement giving rise thereto) by reason of or arising out of this
Agreement or the receipt by the Collateral Agent or any other Secured Creditor
of any payment relating to such Account pursuant hereto, nor shall the
Collateral Agent or any other Secured Creditor be obligated in any manner to
perform any of the obligations of any Assignor under or pursuant to any Account
(or any agreement giving rise thereto), to make any payment, to make any inquiry
as to the nature or the sufficiency of any payment received by them or as to the
sufficiency of any performance by any party under any Account (or any agreement
giving rise thereto), to present or file any claim, to take any action to
enforce any performance or to collect the payment of any amounts which may have
been assigned to them or to which they may be entitled at any time or times.

 

3.8           Assignors Remain Liable Under Contracts. Anything herein to the
contrary notwithstanding, the Assignors shall remain liable under each of the
Contracts to observe and perform all of the conditions and obligations to be
observed and performed by them thereunder, all in accordance with and pursuant
to the terms and provisions of each Contract. Neither the Collateral Agent nor
any other Secured Creditor shall have any obligation or liability under any
Contract by reason of or arising out of this Agreement or the receipt by the
Collateral Agent or any other Secured Creditor of any payment relating to such
Contract pursuant hereto, nor shall the Collateral Agent or any other Secured
Creditor be obligated in any manner to perform any of the obligations of any
Assignor under or pursuant to any Contract, to make any payment, to make any
inquiry as to the nature or the sufficiency of any performance by any party
under any Contract, to present or file any claim, to take any action to enforce
any performance or to collect the payment of any amounts which may have been
assigned to them or to which they may be entitled at any time or times.

 

3.9           Deposit Accounts; Etc. (a) No Assignor maintains, or at any time
after the date of this Agreement shall establish or maintain, any demand, time,
savings, passbook or similar account, except for such accounts maintained with a
bank (as defined in Section 9-102 of the UCC) whose jurisdiction (determined in
accordance with Section 9-304 of the UCC) is within a State of the United
States. Annex F-1 hereto accurately sets forth, as of the date of this
Agreement, for each Assignor, each Deposit Account maintained by such Assignor
(including a description thereof and the respective account number), the name of
the respective bank with which such Deposit Account is maintained, and the
jurisdiction of the respective bank with respect to such Deposit Account.
Annex F-2 hereto accurately sets forth, as of the date of this Agreement, for
each Assignor, each Deposit Account (other than Excluded Accounts) maintained by
such Assignor in the United States (including a description thereof and the
respective account number). For each Deposit Account listed on Annex F-2 hereto,
the respective Assignor shall use its commercially reasonable efforts to cause
the bank with which the Deposit Account is maintained to execute and deliver to
the Collateral Agent, within 30 days after the date of this Agreement or, if
later, at the time of the establishment of the respective Deposit Account, a
“control agreement” substantially in the form as may be reasonably acceptable to
the Collateral Agent and the Administrative Agent. Except as otherwise provided
in the proviso to the immediately preceding sentence, if any bank with which a
Deposit Account listed on Annex F-2 hereto is maintained refuses to, or does
not, enter into such a “control agreement”, then, at the request of the
Collateral Agent or the Administrative Agent or the Required Lenders, the
respective Assignor shall within 30 days close the respective Deposit Account
and transfer all balances therein to the Cash Collateral Account or another
Deposit Account meeting the requirements of this Section 3.9. If any bank with
which a Deposit Account listed on Annex F-2 hereto is maintained refuses to
subordinate all its claims with respect to such Deposit Account to the
Collateral Agent’s security interest therein on terms satisfactory to the
Collateral Agent and the Administrative Agent, then the Collateral Agent, at its
option, may (x) require that such Deposit Account be terminated in accordance
with the immediately preceding sentence or (y) agree to a “control agreement”
without such subordination, provided that in such event the Collateral Agent may
at any time, at its option, subsequently require that such Deposit Account be
terminated (within 30 days after notice from the Collateral Agent) in accordance
with the requirements of the immediately preceding sentence.

 

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(b)          After the date of this Agreement, no Assignor shall establish any
new demand, time, savings, passbook or similar account, except for Deposit
Accounts established and maintained with banks and meeting the requirements of
preceding clause (a). At the time any such Deposit Account is established, the
appropriate “control agreement” shall be entered into in accordance with the
requirements of preceding clause (a) and the respective Assignor shall furnish
to the Collateral Agent a supplement to Annex F-2 hereto containing the relevant
information with respect to the respective Deposit Account and the bank with
which same is established.

 

3.10       Letter-of-Credit Rights. If any Assignor is at any time a beneficiary
under a letter of credit with a stated amount of $500,000 or more, such Assignor
shall promptly notify the Collateral Agent and the Administrative Agent thereof
and, at the request of the Collateral Agent, such Assignor shall, pursuant to an
agreement in form and substance reasonably satisfactory to the Collateral Agent
and the Administrative Agent, use its best efforts to either (i) arrange for the
issuer and any confirmer of such letter of credit to consent to an assignment to
the Collateral Agent of the proceeds of any drawing under such letter of credit
or (ii) arrange for the Collateral Agent to become the transferee beneficiary of
such letter of credit, with the Collateral Agent agreeing, in each case, that
the proceeds of any drawing under the letter of credit are to be applied as
provided in this Agreement after the occurrence and during the continuance of an
Event of Default.

 

3.11       Commercial Tort Claims. All Commercial Tort Claims of, and known to,
each Assignor in existence on the date of this Agreement are described in
Annex H hereto. If any Assignor shall at any time after the date of this
Agreement acquire a Commercial Tort Claim in an amount (taking the greater of
the aggregate claimed damages thereunder or the reasonably estimated value
thereof) of $500,000 or more, such Assignor shall promptly notify the Collateral
Agent and the Administrative Agent thereof in a writing signed by such Assignor
and describing the details thereof and shall grant to the Collateral Agent in
such writing a security interest therein and in the proceeds thereof, all upon
the terms of this Agreement, with such writing to be in form and substance
reasonably satisfactory to the Collateral Agent and the Administrative Agent.

 

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3.12       Chattel Paper. Upon the request of the Collateral Agent or the
Administrative Agent made at any time or from time to time, each Assignor shall
promptly furnish to the Collateral Agent and the Administrative Agent a list of
all Electronic Chattel Paper held or owned by such Assignor. Furthermore, if at
any time an Assignor owns Chattel Paper in an amount in the aggregate of
$500,000 or more, if requested by the Collateral Agent or the Administrative
Agent, each Assignor shall promptly take all actions which are reasonably
practicable so that the Collateral Agent has “control” of all Electronic Chattel
Paper in accordance with the requirements of Section 9-105 of the UCC. If at any
time an Assignor owns Chattel Paper in an amount in the aggregate of $500,000 or
more, such Assignor will promptly (and in any event within 10 Business Days)
following any request by the Collateral Agent or the Administrative Agent,
deliver all of its Tangible Chattel Paper to the Collateral Agent.

 

3.13       Further Actions. Each Assignor will, at its own expense, make,
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from
time to time such vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, certificates, reports
and other assurances or instruments and take such further steps, including any
and all actions as may be necessary or required under the Federal Assignment of
Claims Act, relating to its Accounts, Contracts, Instruments and other property
or rights covered by the security interest hereby granted, as the Collateral
Agent or the Administrative Agent may reasonably require. The Collateral Agent
agrees that the filing of such documentation necessary or required under the
Federal Assignment of Claims Act shall not be filed with the applicable
Governmental Authority unless an Event of Default has occurred and is
continuing.

 

3.14       Motor Vehicles. (a) As of the date hereof, subject to Section 2.9,
(i) each Assignor shall have noted the name and other necessary details in
respect of the Collateral Agent, on the certificate of title for any equipment
that is subject to any motor vehicle registration statute (or analogous
provision for serial number goods under the PPSA) in the United States or Canada
(each a “Motor Vehicle Statute”), including, without limitation, any of those
statutes described in Section 9-311(a)(2) of the UCC, as adopted in any state in
which any Assignor holds such equipment, that are owned by such Assignor (the
“Motor Vehicles”), in such manner as shall indicate that the Collateral Agent is
the lienholder of record such that a security interest has been perfected in
favor of the Collateral Agent in accordance with the Motor Vehicle Statutes
adopted in the state where such Motor Vehicles are titled, and (ii) each
Assignor shall have taken or caused to be taken all such other actions necessary
to maintain, protect, enforce and perfect, the Collateral Agent’s Liens.

 

(b)          In respect of any Motor Vehicle (x) purchased by any Assignor after
the date hereof or (y) relocated to a jurisdiction for a period of time which
would require compliance with the Motor Vehicle Statute of such jurisdiction, in
each case subject to Section 2.9, (i) each Assignor shall, within 7 Business
Days after such purchase or relocation, unless otherwise directed by the
Collateral Agent, note the name and other necessary details in respect of the
Collateral Agent, on the certificate of title for such Motor Vehicle, in such
manner as shall indicate that the Collateral Agent is the lienholder of record
such that a security interest has been perfected in favor of the Collateral
Agent in accordance with the Motor Vehicle Statutes adopted in the state where
such Motor Vehicles are titled, and (ii) each Assignor shall, within thirty (30)
days after such purchase or relocation, take or cause to be taken all other
actions necessary to maintain, protect, enforce and, with respect to the Motor
Vehicles, perfect the Liens in favor of the Collateral Agent.

 

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(c)          Notwithstanding anything in this Section 3.14 to the contrary,
actions under this Section 3.14 must be taken only for (i) an individual Motor
Vehicle for which the fair market value exceeds $150,000 or (ii) all Motor
Vehicles of the Assignors, only to the extent the aggregate fair market value of
all Motor Vehicles not otherwise in compliance with this Section 3.14 exceeds
$350,000.

 

ARTICLE IV

SPECIAL PROVISIONS CONCERNING TRADEMARKS AND DOMAIN NAMES

 

4.1         Additional Representations and Warranties. Each Assignor represents
and warrants that it is the true and lawful owner of or otherwise has the right
to use the registered Marks and Domain Names listed in Annex I hereto for such
Assignor and that said listed Marks and Domain Names include all marks and
applications for marks registered in the United States Patent and Trademark
Office and all Domain Names that such Assignor owns or uses in connection with
its business as of the date hereof. Each Assignor represents and warrants that
it owns, is licensed to use or otherwise has the right to use, all Marks and
Domain Names that are necessary for the conduct of its business. Each Assignor
further warrants that it has no knowledge of any third party claim received by
it that any aspect of such Assignor’s present or contemplated business
operations infringe or will infringe any trademark, service mark or trade name
of any other Person other than as could not, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Each
Assignor represents and warrants as of the date hereof that it is the true and
lawful owner of or otherwise has the right to use all trademark registrations
and applications and Domain Name registrations listed in Annex I hereto and that
said registrations are valid, subsisting, have not been canceled and that such
Assignor is not aware of any third-party claim that any of said registrations is
invalid or unenforceable, and is not aware that there is any reason that any of
said registrations is invalid or unenforceable, and is not aware that there is
any reason that any of said applications will not mature into registrations.
Each Assignor 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 which may be required by the United States Patent and
Trademark Office or similar registrar in order to effect an absolute assignment
of all right, title and interest in each Mark and/or Domain Name, and record the
same.

 

4.2         Licenses and Assignments. Except as otherwise permitted by the
Secured Debt Agreements, each Assignor hereby agrees not to divest itself of any
right under any material Mark or Domain Name absent prior written approval of
the Collateral Agent and the Administrative Agent.

 

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4.3           Infringements. Each Assignor agrees, promptly, and in any event
within 7 Business Days of learning thereof, to notify the Collateral Agent and
the Administrative Agent in writing of the name and address of, and to furnish
such pertinent information that may be available with respect to, any party who
such Assignor believes is, or may be, infringing or diluting or otherwise
violating any of such Assignor’s rights in and to any Mark or Domain Name in any
manner that could reasonably be expected to have a Material Adverse Effect, or
with respect to any party claiming that such Assignor’s use of any Mark or
Domain Name material to such Assignor’s business violates in any material
respect any property right of that party. Each Assignor further agrees to
prosecute diligently in accordance with reasonable business practices any Person
infringing any Mark or Domain Name in any manner that could reasonably be
expected to have a Material Adverse Effect.

 

4.4           Preservation of Marks and Domain Names. Each Assignor agrees to
use its Marks and Domain Names which are material to such Assignor’s business in
interstate commerce during the time in which this Agreement is in effect and to
take all such other actions as are reasonably necessary to preserve such Marks
as trademarks or service marks under the laws of the United States (other than
any such Marks which are no longer used or useful in its business or
operations).

 

4.5           Maintenance of Registration. Each Assignor shall, at its own
expense, diligently process all documents reasonably required to maintain all
Mark and/or Domain Name registrations, including but not limited to affidavits
of use and applications for renewals of registration in the United States Patent
and Trademark Office for all of its material registered Marks, and shall pay all
fees and disbursements in connection therewith and shall not abandon any such
filing of affidavit of use or any such application of renewal prior to the
exhaustion of all administrative and judicial remedies without prior written
consent of the Collateral Agent and the Administrative Agent, which consent
shall not be unreasonably withheld (other than with respect to registrations and
applications deemed by such Assignor in its reasonable business judgment to be
no longer prudent to pursue).

 

4.6           Future Registered Marks and Domain Names. If any Mark registration
is issued hereafter to any Assignor as a result of any application now or
hereafter pending before the United States Patent and Trademark Office or any
Domain Name is registered by any Assignor, within 30 days receipt of such
certificate or similar indicia of ownership, such Assignor shall deliver to the
Collateral Agent and the Administrative Agent a copy of such registration
certificate or similar indicia of ownership, and a grant of a security interest
in such Mark and/or Domain Name, to the Collateral Agent and at the expense of
such Assignor, confirming the grant of a security interest in such Mark and/or
Domain Name to the Collateral Agent hereunder, the form of such grant of a
security interest to be substantially in the form of Annex L hereto or in such
other form as may be reasonably satisfactory to the Collateral Agent and the
Administrative Agent.

 

4.7           Remedies. If an Event of Default shall occur and be continuing,
the Collateral Agent may, by written notice to the relevant Assignor, take any
or all of the following actions: (i) declare the entire right, title and
interest of such Assignor in and to each of the Marks and Domain Names, together
with all trademark rights and rights of protection to the same, vested in the
Collateral Agent for the benefit of the Secured Creditors, in which event such
rights, title and interest shall immediately vest, in the Collateral Agent for
the benefit of the Secured Creditors, and the Collateral Agent shall be entitled
to exercise the power of attorney referred to in Section 4.1 hereof to execute,
cause to be acknowledged and notarized and record said absolute assignment with
the applicable agency or registrar; (ii) take and use or sell the Marks or
Domain Names and the goodwill of such Assignor’s business symbolized by the
Marks or Domain Names and the right to carry on the business and use the assets
of such Assignor in connection with which the Marks or Domain Names have been
used; and (iii) direct such Assignor to refrain, in which event such Assignor
shall refrain, from using the Marks or Domain Names in any manner whatsoever,
directly or indirectly, and such Assignor shall execute such further documents
that the Collateral Agent or the Administrative Agent may reasonably request to
further confirm the foregoing and to transfer ownership of the Marks or Domain
Names and registrations and any pending trademark application in the United
States Patent and Trademark Office or applicable Domain Name registrar to the
Collateral Agent.

 

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ARTICLE V

SPECIAL PROVISIONS CONCERNING PATENTS, COPYRIGHTS AND TRADE SECRETS

 

5.1           Additional Representations and Warranties. Each Assignor
represents and warrants that it is the true and lawful owner of (i) all rights
in (w) all Trade Secret Rights, (x) the Patents listed in Annex J hereto for
such Assignor and that said Patents include all the United States patents and
applications for United States patents that such Assignor owns as of the date
hereof and (y) the Copyrights listed in Annex K hereto for such Assignor and
that said Copyrights constitute all the United States copyrights registered with
the United States Copyright Office and applications to United States copyrights
that such Assignor owns as of the date hereof and (ii) all rights in, or
otherwise has the right to use, all Trade Secrets and proprietary information
necessary to operate the business of such Assignor (“Trade Secret Rights”). Each
Assignor further warrants that it has no knowledge of any third party claim that
any aspect of such Assignor’s present or contemplated business operations
infringes or will infringe any patent of any other Person or such Assignor has
misappropriated any Trade Secret or other proprietary information which, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect. Each Assignor hereby grants to the Collateral Agent an
absolute power of attorney to sign, upon the occurrence and during the
continuance of any Event of Default, any document which may be required by the
United States Patent and Trademark Office or the United States Copyright Office
in order to effect an absolute assignment of all right, title and interest in
each Patent or Copyright, and to record the same.

 

5.2           Licenses and Assignments. Except as otherwise permitted by the
Secured Debt Agreements, each Assignor hereby agrees not to divest itself of any
right under any Patent or Copyright absent prior written approval of the
Collateral Agent and the Administrative Agent.

 

5.3           Infringements. Each Assignor agrees, promptly, and in any event
within 5 Business Days of learning thereof, to furnish the Collateral Agent and
the Administrative Agent in writing with all pertinent information available to
such Assignor with respect to any infringement, contributing infringement or
active inducement to infringe or other violation of such Assignor’s rights in
any Patent or Copyright or to any claim that the practice of any Patent or use
of any Copyright violates any property right of a third party, or with respect
to any misappropriation of any Trade Secret Right or any claim that practice of
any Trade Secret Right violates any property right of a third party, in each
case, in any manner which, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect. Each Assignor further
agrees, absent direction of the Collateral Agent and the Administrative Agent to
the contrary, to diligently prosecute any Person infringing any Patent or
Copyright or any Person misappropriating any Trade Secret Right, in each case to
the extent that such infringement or misappropriation, either individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

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5.4           Maintenance of Patents or Copyrights. At its own expense, each
Assignor shall make timely payment of all post-issuance fees required to
maintain in force its rights under each Patent or Copyright, absent prior
written consent of the Collateral Agent and the Administrative Agent (other than
any such Patents or Copyrights which are no longer used or are deemed by such
Assignor in its reasonable business judgment to no longer be useful in its
business or operations).

 

5.5           Prosecution of Patent or Copyright Applications. At its own
expense, each Assignor shall diligently prosecute all material applications for
(i) United States Patents listed in Annex J hereto and (ii) Copyrights listed on
Annex K hereto, in each case for such Assignor and shall not abandon any such
application prior to exhaustion of all administrative and judicial remedies
(other than applications deemed by such Assignor in its reasonable business
judgment to be no longer prudent to pursue or necessary in the conduct of the
Assignors’ business), absent written consent of the Collateral Agent and the
Administrative Agent, which consent shall not be unreasonably withheld.

 

5.6           Other Patents and Copyrights. Within 30 days of the acquisition or
issuance of a United States Patent, registration of a Copyright, or acquisition
of a registered Copyright, or of filing of an application for a United States
Patent or Copyright, the relevant Assignor shall deliver to the Collateral Agent
and the Administrative Agent a copy of said Copyright or Patent, or certificate
or registration of, or application therefor, as the case may be, with a grant of
a security interest as to such Patent or Copyright, as the case may be, to the
Collateral Agent and at the expense of such Assignor, confirming the grant of a
security interest, the form of such grant of a security interest to be
substantially in the form of Annex M or N hereto, as appropriate, or in such
other form as may be reasonably satisfactory to the Collateral Agent and the
Administrative Agent.

 

5.7           Remedies. If an Event of Default shall occur and be continuing,
the Collateral Agent may, by written notice to the relevant Assignor, take any
or all of the following actions: (i) declare the entire right, title, and
interest of such Assignor in each of the Patents and Copyrights vested in the
Collateral Agent for the benefit of the Secured Creditors, in which event such
right, title, and interest shall immediately vest in the Collateral Agent for
the benefit of the Secured Creditors, in which case the Collateral Agent shall
be entitled to exercise the power of attorney referred to in Section 5.1 hereof
to execute, cause to be acknowledged and notarized and to record said absolute
assignment with the applicable agency; (ii) take and practice or sell the
Patents and Copyrights; and (iii) direct such Assignor to refrain, in which
event such Assignor shall refrain, from practicing the Patents and using the
Copyrights directly or indirectly, and such Assignor shall execute such further
documents as the Collateral Agent or the Administrative Agent may reasonably
request further to confirm the foregoing and to transfer ownership of the
Patents and Copyrights to the Collateral Agent for the benefit of the Secured
Creditors.

 

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ARTICLE VI

PROVISIONS CONCERNING ALL COLLATERAL

 

6.1           Protection of Collateral Agent’s Security. Except as otherwise
permitted by the Secured Debt Agreements, each Assignor will do nothing to
impair the rights of the Collateral Agent in the Collateral. Each Assignor will
at all times maintain insurance in favor of the Collateral Agent, at such
Assignor’s own expense to the extent and in the manner provided in the Secured
Debt Agreements. Except to the extent otherwise permitted to be retained by such
Assignor or applied by such Assignor pursuant to the terms of the Secured Debt
Agreements, the Collateral Agent shall, at the time any proceeds of such
insurance are distributed to the Secured Creditors, apply such proceeds in
accordance with Section 7.4 hereof. Each Assignor assumes all liability and
responsibility in connection with the Collateral acquired by it and the
liability of such Assignor to pay the Obligations shall in no way be affected or
diminished by reason of the fact that such Collateral may be lost, destroyed,
stolen, damaged or for any reason whatsoever unavailable to such Assignor.

 

6.2           Warehouse Receipts Non-Negotiable. To the extent practicable, each
Assignor agrees that if any warehouse receipt or receipt in the nature of a
warehouse receipt is issued with respect to any of its Inventory, such Assignor
shall request that such warehouse receipt or receipt in the nature thereof shall
not be “negotiable” (as such term is used in Section 7-104 of the UCC as in
effect in any relevant jurisdiction or under other relevant law).

 

6.3           Additional Information. Each Assignor will, at its own expense,
from time to time upon the reasonable request of the Collateral Agent or the
Administrative Agent, promptly (and in any event within 7 Business Days after
its receipt of the respective request) furnish to the Collateral Agent such
information with respect to the Collateral (including with reasonable
specificity and in summary form, the identity of the Collateral or such
components thereof as may have been reasonably requested by the Collateral Agent
or the Administrative Agent, the value and location of such Collateral, etc.) as
may be reasonably requested by the Collateral Agent or the Administrative Agent.
Without limiting the forgoing, each Assignor agrees that it shall promptly (and
in any event within 7 Business Days after its receipt of the respective request)
furnish to the Collateral Agent and the Administrative Agent such updated
Annexes hereto as may from time to time be reasonably requested by the
Collateral Agent or the Administrative Agent.

 

6.4           Further Actions. Each Assignor will, at its own expense and upon
the reasonable request of the Collateral Agent or the Administrative Agent,
make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent
from time to time such lists, descriptions and designations of its Collateral,
warehouse receipts, receipts in the nature of warehouse receipts, bills of
lading, documents of title, vouchers, invoices, schedules, confirmatory
assignments, conveyances, financing statements, transfer endorsements,
certificates, reports and other assurances or instruments and take such further
steps relating to the 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 the Collateral.

 

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6.5         Financing Statements. Each Assignor agrees to authorize, execute
(where applicable) and deliver to the Collateral Agent such financing
statements, in form reasonably acceptable to the Collateral Agent and the
Administrative Agent, as the Collateral Agent may from time to time reasonably
request or as are reasonably necessary or desirable in the opinion of the
Collateral Agent to establish and maintain a valid, enforceable, perfected
security interest in the Collateral as provided herein and the other rights and
security contemplated hereby. Each Assignor will pay any applicable filing fees,
recordation taxes and related expenses relating to its Collateral. Each Assignor
hereby authorizes the Collateral Agent to file any such financing statements,
continuation statements or amendments without the signature of such Assignor
where permitted by law (and such authorization includes describing the
Collateral as “all assets” or “all personal property” of such Assignor, or words
of similar effect).

 

ARTICLE VII

REMEDIES UPON OCCURRENCE OF AN EVENT OF DEFAULT

 

7.1         Remedies; Obtaining the Collateral Upon Default. Each Assignor
agrees that, if any Event of Default shall have occurred and be continuing, then
and in every such case, 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 UCC, and such
additional rights and remedies to which a secured creditor is entitled under the
laws in effect in all relevant jurisdictions and may:

 

(i)          personally, or by agents or attorneys, immediately take possession
of the Collateral or any part thereof, from such Assignor or any other Person
who then has possession of any part thereof with or without notice or process of
law, and for that purpose may enter upon such Assignor’s premises where any of
the Collateral is located and remove the same and use in connection with such
removal any and all services, supplies, aids and other facilities of such
Assignor;

 

(ii)         instruct the obligor or obligors on any agreement, instrument or
other obligation (including, without limitation, the Accounts and the Contracts)
constituting the Collateral to make any payment required by the terms of such
agreement, instrument or other obligation directly to the Collateral Agent and
may exercise any and all remedies of such Assignor in respect of such
Collateral;

 

(iii)        instruct all depository banks which have entered into a control
agreement with the Collateral Agent to transfer all monies, securities and
instruments held by such depositary bank to the Cash Collateral Account in
accordance with the terms of the respective control agreement (including by
issuing a “Notice of Exclusive Control” in accordance with the terms thereof);

 

(iv)        withdraw all monies, securities and instruments in the Cash
Collateral Account and/or in any other Deposit Account maintained with the
Collateral Agent (whether or not such Deposit Accounts are maintained with the
Collateral Agent in its capacity as such) for application to the Obligations in
accordance with Section 7.4 hereof;

 

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(v)         sell, assign or otherwise liquidate any or all of the Collateral or
any part thereof in accordance with Section 7.2 hereof, or direct such Assignor
to sell, assign or otherwise liquidate any or all of the Collateral or any part
thereof, and, in each case, take possession of the proceeds of any such sale or
liquidation;

 

(vi)        take possession of the Collateral or any part thereof, by directing
such Assignor in writing to deliver the same to the Collateral Agent at any
reasonable place or places designated by the Collateral Agent, in which event
such Assignor shall at its own expense:

 

(x)          forthwith cause the same to be moved to the place or places so
designated by the Collateral Agent and there delivered to the Collateral Agent;

 

(y)          store and keep any Collateral so delivered to the Collateral Agent
at such place or places pending further action by the Collateral Agent as
provided in Section 7.2 hereof; and

 

(z)          while the Collateral shall be so stored and kept, provide such
security and maintenance services as shall be reasonably necessary to protect
the same and to preserve and maintain it in good condition;

 

(vii)       license or sublicense, whether on an exclusive or nonexclusive
basis, any Marks, Domain Names, Patents or Copyrights included in the Collateral
for such term and on such conditions and in such manner as the Collateral Agent
shall in its sole judgment determine;

 

(viii)      apply any monies constituting Collateral or proceeds thereof in
accordance with the provisions of Section 7.4;

 

(ix)         appoint by instrument in writing a receiver (which term as used in
this Agreement includes a receiver and manager) or agent of all or any part of
the Collateral and remove or replace from time to time any receiver or agent;

 

(x)          institute proceedings in any court of competent jurisdiction for
the appointment of a receiver of all or any part of the Collateral;

 

(xi)         institute proceedings in any court of competent jurisdiction for
sale or foreclosure of all or any part of the Collateral;

 

(xii)        file proofs of claim and other documents to establish claims to the
Collateral in any proceeding relating to any Assignor; and

 

 20 

 

 

(xiii)       take any other action as specified in clauses (1) through (5),
inclusive, of Section 9-607 of the UCC; it being understood that each Assignor’s
obligation so to deliver the Collateral is of the essence of this Agreement and
that, accordingly, upon application to a court of equity having jurisdiction,
the Collateral Agent shall be entitled to a decree requiring specific
performance by such Assignor of said obligation. By accepting the benefits of
this Agreement and each other Security Document, the Secured Creditors expressly
acknowledge and agree that this Agreement and each other Security Document may
be enforced only by the action of the Collateral Agent acting upon the
instructions of the Required Secured Creditors and that no other Secured
Creditor shall have any right individually to seek to enforce or to enforce this
Agreement or to realize upon the security to be granted hereby, it being
understood and agreed that such rights and remedies may be exercised by the
Collateral Agent or the holders of at least a majority of the outstanding Other
Obligations, as the case may be, for the benefit of the Secured Creditors upon
the terms of this Agreement and the other Security Documents.

 

In addition to the remedies set forth above in this Section 7.1 and elsewhere in
this Agreement, whenever any Event of Default shall have occurred and be
continuing, the Collateral Agent may:

 

(i)          require any Assignor, by notice in writing, to disclose to the
Collateral Agent the location or locations of the Collateral and each Assignor
agrees to promptly make such disclosure when so required;

 

(ii)         repair, process, modify, complete or otherwise deal with the
Collateral and prepare for the disposition of the Collateral, whether on the
premises of any Assignor or otherwise;

 

(iii)        redeem any prior security interest against any Collateral, procure
the transfer of such security interest to itself, or settle and pass the
accounts of the prior mortgagee, chargee or encumbrancer (any accounts to be
conclusive and binding on each Assignor);

 

(iv)        pay any liability secured by any Lien against any Collateral (and
the Assignors agree to immediately on demand reimburse the Collateral Agent for
all such payments);

 

(v)         carry on all or any part of the business of any Assignor and, to the
exclusion of all others including the Assignors, enter upon, occupy and use all
or any of the premises, buildings, and other property of or used by any Assignor
for such time as the Collateral Agent sees fit, free of charge, and the
Collateral Agent and the Secured Creditors are not liable to any Assignor for
any act, omission or negligence (other than their own gross negligence or
willful misconduct) in so doing or for any rent, charges, depreciation or
damages incurred in connection with or resulting from such action;

 

(vi)        borrow for the purpose of carrying on the business of any Assignor
or for the maintenance, preservation or protection of the Collateral and grant a
security interest in the Collateral, whether or not in priority to the security
interest created hereunder, to secure repayment; and

 

 21 

 

 

(vii)       commence, continue or defend any judicial or administrative
proceedings for the purpose of protecting, seizing, collecting, realizing or
obtaining possession or payment of the Collateral, and give good and valid
receipts and discharges in respect of the Collateral and compromise or give time
for the payment or performance of all or any part of the accounts or any other
obligation of any third party to any Assignor.

 

7.2         Remedies; Disposition of the Collateral. If any Event of Default
shall have occurred and be continuing, then any Collateral repossessed by the
Collateral Agent under or pursuant to Section 7.1 hereof and any other
Collateral whether or not so repossessed by the Collateral Agent, may be sold,
assigned, leased or otherwise disposed of under one or more contracts or as an
entirety, and without the necessity of gathering at the place of sale the
property to be sold, and in general in such manner, at such time or times, at
such place or places and on such terms as the Collateral Agent may, in
compliance with any mandatory requirements of applicable law, determine to be
commercially reasonable. Any of the Collateral may be sold, leased or otherwise
disposed of, in the condition in which the same existed when taken by the
Collateral Agent or after any overhaul or repair at the expense of the relevant
Assignor which the Collateral Agent shall determine to be commercially
reasonable. Any such sale, lease or other disposition may be effected by means
of a public disposition or private disposition, effected in accordance with the
applicable requirements (in each case if and to the extent applicable) of
Sections 9-610 through 9-613 of the UCC and/or such other mandatory requirements
of applicable law as may apply to the respective disposition. The Collateral
Agent may, without notice or publication, adjourn any public or private
disposition or cause the same to be adjourned from time to time by announcement
at the time and place fixed for the disposition, and such disposition may be
made at any time or place to which the disposition may be so adjourned. To the
extent permitted by any such requirement of law, the Collateral Agent may bid
for and become the purchaser (and may pay all or any portion of the purchase
price by crediting Obligations against the purchase price) of the Collateral or
any item thereof, offered for sale in accordance with this Section 7.2 without
accountability to the relevant Assignor. If, under applicable law, the
Collateral Agent shall be permitted to make disposition of the Collateral within
a period of time which does not permit the giving of notice to the
Administrative Borrower for the relevant Assignor as hereinabove specified, the
Collateral Agent need give the Administrative Borrower only such notice of
disposition as shall be reasonably practicable in view of such applicable law.
Each Assignor agrees to do or cause to be done all such other acts and things as
may be reasonably necessary to make such disposition or dispositions of all or
any portion of the Collateral valid and binding and in compliance with any and
all applicable laws, regulations, orders, writs, injunctions, decrees or awards
of any and all courts, arbitrators or governmental instrumentalities, domestic
or foreign, having jurisdiction over any such sale or sales, all at such
Assignor’s expense.

 

7.3         Waiver of Claims. Except as otherwise provided in this Agreement,
EACH ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE
AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT’S TAKING POSSESSION
OR THE COLLATERAL AGENT’S DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING,
WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT
REMEDY OR REMEDIES,

 

and each Assignor hereby further waives, to the extent permitted by law:

 

 22 

 

 

(i)          all damages occasioned by such taking of possession or any such
disposition except any damages which are the direct result of the Collateral
Agent’s gross negligence or willful misconduct (as determined by a court of
competent jurisdiction in a final and non-appealable decision);

 

(ii)         all other requirements as to the time, place and terms of sale or
other requirements with respect to the enforcement of the Collateral Agent’s
rights hereunder; and

 

(iii)        all rights of redemption, appraisement, valuation, stay, extension
or moratorium now or hereafter in force under any applicable law in order to
prevent or delay the enforcement of this Agreement or the absolute sale of the
Collateral or any portion thereof, and each Assignor, for itself and all who may
claim under it, insofar as it or they now or hereafter lawfully may, hereby
waives the benefit of all such laws.

 

Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the relevant Assignor therein and
thereto, and shall be a perpetual bar both at law and in equity against such
Assignor and against any and all Persons claiming or attempting to claim the
Collateral so sold, optioned or realized upon, or any part thereof, from,
through and under such Assignor.

 

7.4         Application of Proceeds. (a) All moneys collected by the Collateral
Agent upon any sale or other disposition of the Collateral (and, to the extent
either the Pledge Agreement or any other Security Document requires proceeds of
collateral under such other Security Document to be applied in accordance with
the provisions of this Agreement, all monies collected by the Pledgee or
collateral agent under such other Security Document upon any sale or other
disposition of the collateral under any such Security Document), together with
all other moneys received by the Collateral Agent hereunder and under each other
Security Document, shall be applied in accordance with the terms of the
Agreement Among Lenders. To the extent permitted to be applied to the
Obligations pursuant to the terms of the Agreement Among Lenders, such moneys
shall be applied as follows:

 

(i)          first, to the payment of all amounts owing to the Collateral Agent
of the type described in clauses (iii), (iv), (v) and (vi) of the definition of
“Obligations”;

 

(ii)         second, to the extent proceeds remain after the application
pursuant to preceding clause (i), an amount equal to the outstanding Primary
Obligations which are Credit Document Obligations shall be paid to the Secured
Creditors as provided in Section 7.4(d) hereof, with each Secured Creditor
receiving an amount equal to the outstanding Primary Obligations owing to it
which are Credit Document Obligations or, if the proceeds are insufficient to
pay in full all such Primary Obligations, its Pro Rata Share of such amount
remaining to be distributed;

 

 23 

 

 

(iii)        third, to the extent proceeds remain after the application pursuant
to preceding clauses (i) and (ii), an amount equal to the outstanding Secondary
Obligations which are Credit Document Obligations shall be paid to the Secured
Creditors as provided in Section 7.4(d) hereof, with each Secured Creditor
receiving an amount equal to the outstanding Secondary Obligations owing to it
which are Credit Document Obligations or, if the proceeds are insufficient to
pay in full all such Secondary Obligations, its Pro Rata Share of such amount
remaining to be distributed;

 

(iv)        fourth, to the extent proceeds remain after the application pursuant
to preceding clauses (i), (ii) and (iii), an amount equal to the outstanding
Primary Obligations owing to it under a Secured Hedge Agreement shall be paid to
the Secured Creditors as provided in Section 7.4(d) hereof, with each Secured
Creditor receiving an amount equal to the outstanding Primary Obligations owing
to it under a Secured Hedge Agreement or, if the proceeds are insufficient to
pay in full all such Primary Obligations, its Pro Rata Share of such amount
remaining to be distributed;

 

(v)         fifth, to the extent proceeds remain after the application pursuant
to preceding clauses (i) through (iv), inclusive, an amount equal to the
outstanding Secondary Obligations owing to it under a Secured Hedge Agreement
shall be paid to the Secured Creditors as provided in Section 7.4(d) hereof,
with each Secured Creditor receiving an amount equal to the outstanding
Secondary Obligations owing to it under a Secured Hedge Agreement or, if the
proceeds are insufficient to pay in full all such Secondary Obligations, its Pro
Rata Share of such amount remaining to be distributed; and

 

(vi)        sixth, to the extent proceeds remain after the application pursuant
to preceding clauses (i) through (v), inclusive, and following the termination
of this Agreement pursuant to Section 10.8(a) hereof, to the relevant Assignor
or to whomever may be lawfully entitled to receive such surplus.

 

(b)          For purposes of this Agreement, (x) “Pro Rata Share” shall mean,
when calculating a Secured Creditor’s portion of any distribution or amount,
that amount (expressed as a percentage) equal to a fraction the numerator of
which is the then unpaid amount of the Primary Obligations or Secondary
Obligations owing to it, as the case may be, and the denominator of which is the
then outstanding amount of all Primary Obligations or Secondary Obligations
owing to all of the applicable Secured Creditors entitled thereto, as the case
may be, (y) “Primary Obligations” shall mean all principal of, premium, fees and
interest on, all Loans, all Fees and all Other Obligations (other than
indemnities, fees (including, without limitation, attorneys’ fees) and similar
obligations and liabilities), and (z) “Secondary Obligations” shall mean all
Obligations other than Primary Obligations.

 

 24 

 

 

(c)          When payments to Secured Creditors are based upon their respective
Pro Rata Shares, the amounts received by such Secured Creditors hereunder shall
be applied (for purposes of making determinations under this Section 7.4 only)
(i) first, to the Primary Obligations owing to them and (ii) second, to the
Secondary Obligations owing to them. If any payment to any Secured Creditor of
its Pro Rata Share of any distribution would result in overpayment to such
Secured Creditor, such excess amount shall instead be distributed in respect of
the unpaid Primary Obligations or Secondary Obligations, as the case may be,
owing to the other Secured Creditors, with each Secured Creditor holding Primary
Obligations or Secondary Obligations, as the case may be, which have not been
paid in full to receive an amount equal to such excess amount multiplied by a
fraction the numerator of which is the unpaid Primary Obligations or Secondary
Obligations, as the case may be, owing to such Secured Creditor entitled to
distribution and the denominator of which is the unpaid Primary Obligations or
Secondary Obligations, as the case may be, owing to all Secured Creditors
entitled to such distribution.

 

(d)          All payments required to be made hereunder shall be made (x) if to
the Secured Creditors on account of Credit Document Obligations, to the
Collateral Agent for the account of such Secured Creditors, and (y) if to the
Secured Creditors on account of Secured Hedging Agreements, to the trustee,
paying agent or other similar representative for such Secured Creditors (the
“Representative”), or, in the absence thereof, directly to such Secured
Creditors.

 

(e)          For purposes of applying payments received in accordance with this
Section 7.4, the Collateral Agent shall be entitled to rely upon (i) the
Administrative Agent and (ii) the Representative or, in the absence of such a
Representative, upon the Secured Creditors for a determination (which the
Administrative Agent, each Representative and the Secured Creditors agree (or
shall agree) to provide upon request of the Collateral Agent) of the outstanding
Obligations owing to the Secured Creditors. Unless it has received written
notice from a Secured Creditor to the contrary, the Administrative Agent and
each Representative, in furnishing information pursuant to the preceding
sentence, and the Collateral Agent, in acting hereunder, shall be entitled to
assume that no Secondary Obligations are outstanding. Unless and until it has
consented to the entry into a Secured Hedging Agreement, the Collateral Agent,
in acting hereunder, shall be entitled to assume that no such Secured Hedging
Agreement is in existence.

 

(f)          This Agreement is made with full recourse to each Assignor and
pursuant to and upon all the warranties, representations, covenants and
agreements on the part of such Assignor contained herein, in the Secured Debt
Agreements and otherwise in writing in connection herewith or therewith. It is
understood and agreed that the Assignors shall remain jointly and severally
liable with respect to their Obligations to the extent of any deficiency between
(i) the amount of the proceeds of the Collateral pledged by them hereunder and,
without duplication, the collateral granted under the other Security Documents
and (ii) the aggregate amount of such Obligations.

 

 25 

 

 

(g)          It is understood and agreed by each Assignor and each Secured
Creditor that the Collateral Agent shall have no liability for any
determinations made by it in this Section 7.4, in each case except to the extent
resulting from the gross negligence or willful misconduct of the Collateral
Agent (as determined by a court of competent jurisdiction in a final and
non-appealable decision). Each Assignor and each Secured Creditor also agrees
that the Collateral Agent may (but shall not be required to), at any time and in
its sole discretion, and with no liability resulting therefrom, petition a court
of competent jurisdiction regarding any application of Collateral in accordance
with the requirements hereof, and the Collateral Agent shall be entitled to wait
for, and may conclusively rely on, any such determination.

 

7.5         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 Secured Debt Agreements 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 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 therein. No notice to or demand on any
Assignor 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 the amounts thereof shall be included in such
judgment.

 

7.6         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
Assignor, the Collateral Agent and each holder of any of the 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, to the
extent permitted by applicable law, as if no such proceeding had been
instituted.

 

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ARTICLE VIII

INDEMNITY

 

8.1         Indemnity. (a) Without limiting the provisions of the other Secured
Debt Agreements, the Assignors jointly and severally agrees to indemnify,
reimburse and hold the Collateral Agent, each other Secured Creditor (in its
capacity as such) and their respective successors, assigns, employees,
affiliates, advisors and agents (hereinafter in this Section 8.1 referred to
individually as “Indemnitee,” and collectively as “Indemnitees”) harmless from
any and all liabilities, obligations, losses, damages, injuries, penalties,
claims, demands, actions (including removal or remedial actions), suits,
judgments and any and all costs, expenses or disbursements (including reasonable
attorneys’ and consultants’ fees and expenses) (for the purposes of this
Section 8.1 the foregoing are collectively called “expenses”) of whatsoever kind
and nature imposed on, asserted against or incurred by any of the Indemnitees in
any way relating to or arising out of this Agreement or the enforcement of any
of the terms hereof, or the preservation of any rights hereunder, or in any way
relating to or arising out of the manufacture, ownership, ordering, purchase,
delivery, control, acceptance, lease, financing, possession, operation,
condition, sale, return or other disposition, or use of the Collateral
(including, without limitation, latent or other defects, whether or not
discoverable), the violation of the laws of any country, state or other
governmental body or unit, any tort (including, without limitation, claims
arising or imposed under the doctrine of strict liability, or for or on account
of injury to or the death of any Person (including any Indemnitee), or property
damage), or contract claim; provided that no Indemnitee shall be indemnified
pursuant to this Section 8.1(a) for losses, damages or liabilities to the extent
caused by the gross negligence or willful misconduct of such Indemnitee (as
determined by a court of competent jurisdiction in a final and non-appealable
decision). Each Assignor agrees that upon written notice by any Indemnitee of
the assertion of such a liability, obligation, damage, injury, penalty, claim,
demand, action, suit or judgment, the relevant Assignor shall assume full
responsibility for the defense thereof. Each Indemnitee agrees to use its best
efforts to promptly notify the relevant Assignor of any such assertion of which
such Indemnitee has knowledge.

 

(b)          Without limiting the application of Section 8.1(a) hereof, the
Assignors agree, jointly and severally, to pay or reimburse the Collateral Agent
for any and all reasonable fees, costs and expenses of whatever kind or nature
incurred in connection with the creation, preservation or protection of the
Collateral Agent’s Liens on, and security interest in, the Collateral,
including, without limitation, all fees and taxes in connection with the
recording or filing of instruments and documents in all applicable public
offices, payment or discharge of any taxes or Liens upon or in respect of the
Collateral, premiums for insurance with respect to the Collateral and all other
fees, costs and expenses in connection with protecting, maintaining or
preserving the Collateral and the Collateral Agent’s interest therein, whether
through judicial proceedings or otherwise, or in defending or prosecuting any
actions, suits or proceedings arising out of or relating to the Collateral.

 

(c)          Without limiting the application of Section 8.1(a) or (b) hereof,
the Assignors agree, jointly and severally, to pay, indemnify and hold each
Indemnitee harmless from and against any loss, costs, damages and expenses which
such Indemnitee may suffer, expend or incur in consequence of or growing out of
any misrepresentation by any Assignor in this Agreement or in any writing
contemplated by or made or delivered pursuant to or in connection with this
Agreement.

 

(d)          If and to the extent that the obligations of any Assignor under
this Section 8.1 are unenforceable for any reason, such Assignor hereby agrees
to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.

 

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8.2         Indemnity Obligations Secured by Collateral; Survival. Any amounts
paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement hereunder or under the other Credit Documents shall constitute
Obligations secured by the Collateral. The indemnity obligations of each
Assignor contained in this Article VIII shall continue in full force and effect
notwithstanding the full payment of all of the other Obligations and
notwithstanding the full payment of all the Notes issued, and Loans made, under
the Credit Agreement, the termination of all Secured Hedging Agreements, and the
payment of all other Obligations and notwithstanding the discharge thereof and
the occurrence of the Termination Date.

 

ARTICLE IX

DEFINITIONS

 

The following terms shall have the meanings herein specified. Such definitions
shall be equally applicable to the singular and plural forms of the terms
defined.

 

“Account” shall mean any “account” as such term is defined in the UCC as in
effect on the date hereof in the State of New York, and in any event shall
include but shall not be limited to, all rights to payment of any monetary
obligation, whether or not earned by performance, (i) for property that has been
or is to be sold, leased, licensed, assigned or otherwise disposed of, (ii) for
services rendered or to be rendered, (iii) for a policy of insurance issued or
to be issued, (iv) for a secondary obligation incurred or to be incurred,
(v) for energy provided or to be provided, (vi) for the use or hire of a vessel
under a charter or other contract, (vii) arising out of the use of a credit or
charge card or information contained on or for use with the card, or (viii) as
winnings in a lottery or other game of chance operated or sponsored by a State,
governmental unit of a State, or person licensed or authorized to operate the
game by a State or governmental unit of a State. Without limiting the foregoing,
the term “account” shall include all Health-Care-Insurance Receivables.

 

“Administrative Agent” shall have the meaning provided in the recitals of this
Agreement.

 

“Agreement” shall mean this Security Agreement as the same may be amended,
modified, restated and/or supplemented from time to time in accordance with its
terms.

 

“Agreement Among Lenders” shall have the meaning ascribed thereto in the Credit
Agreement.

 

“As-Extracted Collateral” shall mean “as-extracted collateral” as such term is
defined in the UCC as in effect on the date hereof in the State of New York.

 

“Assignor” shall have the meaning provided in the first paragraph of this
Agreement.

 

“Cash Collateral Account” shall mean a non-interest bearing cash collateral
account maintained with, and in the sole dominion and control of, the Collateral
Agent for the benefit of the Secured Creditors.

 

“Chattel Paper” shall mean “chattel paper” as such term is defined in the UCC as
in effect on the date hereof in the State of New York. Without limiting the
foregoing, the term “Chattel Paper” shall in any event include all Tangible
Chattel Paper and all Electronic Chattel Paper.

 

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“Collateral” shall have the meaning provided in Section 1.1(a) of this
Agreement.

 

“Collateral Agent” shall have the meaning provided in the first paragraph of
this Agreement.

 

“Commercial Tort Claims” shall mean “commercial tort claims” as such term is
defined in the UCC as in effect on the date hereof in the State of New York.

 

“Contract Rights” shall mean all rights of any Assignor under each Contract,
including, without limitation, (i) any and all rights to receive and demand
payments under any or all Contracts, (ii) any and all rights to receive and
compel performance under any or all Contracts, and (iii) any and all other
rights, interests and claims now existing or in the future arising in connection
with any or all Contracts.

 

“Contracts” shall mean all contracts between any Assignor and one or more
additional parties (including, without limitation, any Secured Hedging
Agreements, licensing agreements and any partnership agreements, joint venture
agreements and limited liability company agreements).

 

“Copyrights” shall mean any United States or foreign copyright now or hereafter
owned by any Assignor, including any registrations of any copyrights, in the
United States Copyright Office or any foreign equivalent office, as well as any
application for a copyright registration now or hereafter made with the United
States Copyright Office or any foreign equivalent office by any Assignor.

 

“Credit Agreement” shall have the meaning provided in the recitals of this
Agreement.

 

“Credit Document Obligations” shall have the meaning provided in the definition
of “Obligations” in this Article IX.

 

“Deposit Accounts” shall mean all “deposit accounts” as such term is defined in
the UCC as in effect on the date hereof in the State of New York.

 

“Documents” shall mean “documents” as such term is defined in the UCC as in
effect on the date hereof in the State of New York.

 

“Domain Names” shall mean all Internet domain names and associated URL addresses
in or to which any Assignor now or hereafter has any right, title or interest.

 

“Electronic Chattel Paper” shall mean “electronic chattel paper” as such term is
defined in the UCC as in effect on the date hereof in the State of New York.

 

“Equipment” shall mean any “equipment” as such term is defined in the UCC as in
effect on the date hereof in the State of New York now or hereafter owned by any
Assignor, and in any event, shall include, but shall not be limited to, all
machinery, equipment, furnishings, fixtures and vehicles now or hereafter owned
by any Assignor and any and all additions, substitutions and replacements of any
of the foregoing and all accessions thereto, wherever located, together with all
attachments, components, parts, equipment and accessories installed thereon or
affixed thereto.

 

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“Excluded Equity Interests” shall mean any voting stock in excess of 66⅔% of the
total combined voting power of all classes of Equity Interests of any Foreign
Subsidiary.

 

“Event of Default” shall mean any Event of Default (or similar term) under, and
as defined in, the Credit Agreement or any Secured Hedging Agreement entered
into with a Secured Creditor and shall in any event include, without limitation,
any payment default on any of the Obligations after the expiration of any
applicable grace period.

 

“General Intangibles” shall mean “general intangibles” as such term is defined
in the UCC as in effect on the date hereof in the State of New York.

 

“Goods” shall mean “goods” as such term is defined in the UCC as in effect on
the date hereof in the State of New York.

 

“Health-Care-Insurance Receivable” shall mean any “health-care-insurance
receivable” as such term is defined in the UCC as in effect on the date hereof
in the State of New York.

 

“Indemnitee” shall have the meaning provided in Section 8.1(a) of this
Agreement.

 

“Instrument” shall mean “instruments” as such term is defined in the UCC as in
effect on the date hereof in the State of New York.

 

“Inventory” shall mean merchandise, inventory and goods, and all additions,
substitutions and replacements thereof and all accessions thereto, wherever
located, together with all goods, supplies, incidentals, packaging materials,
labels, materials and any other items used or usable in manufacturing,
processing, packaging or shipping same, in all stages of production from raw
materials through work in process to finished goods, and all products and
proceeds of whatever sort and wherever located any portion thereof which may be
returned, rejected, reclaimed or repossessed by the Collateral Agent from any
Assignor’s customers, and shall specifically include all “inventory” as such
term is defined in the UCC as in effect on the date hereof in the State of New
York.

 

“Investment Property” shall mean “investment property” as such term is defined
in the UCC as in effect on the date hereof in the State of New York.

 

“Lenders” shall have the meaning provided in the recitals of this Agreement.

 

“Letter-of-Credit Rights” shall mean “letter-of-credit rights” as such term is
defined in the UCC as in effect on the date hereof in the State of New York.

 

“Location” of any Assignor, shall mean such Assignor’s “location” as determined
pursuant to Section 9-307 of the UCC.

 

“Marks” shall mean all right, title and interest in and to any trademarks,
service marks and trade names now held or hereafter acquired by any Assignor,
including any registration or application for registration of any trademarks and
service marks now held or hereafter acquired by any Assignor, which are
registered or filed in the United States Patent and Trademark Office or the
equivalent thereof in any state of the United States or any equivalent foreign
office or agency, as well as any unregistered trademarks and service marks used
by any Assignor and any trade dress including logos, designs, fictitious
business names and other business identifiers used by any Assignor.

 

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“Motor Vehicle Statute” shall have the meaning provided in Section 3.14(a) of
this Agreement.

 

“Motor Vehicles” shall have the meaning provided in Section 3.14(a) of this
Agreement.

 

“Obligations” shall mean and include, as to any Assignor, all of the following:

 

(i)          the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations, liabilities and
indebtedness (including, without limitation, principal, premium, interest, fees,
costs and indemnities (including, in each case, without limitation, all
interest, fees and expenses that accrue after the commencement of any case,
proceeding or other action relating to the bankruptcy, insolvency,
reorganization or similar proceeding of any Assignor or any Subsidiary thereof
at the rate provided for in the respective documentation, whether or not a claim
for post-petition interest, fee or expense is allowed in any such proceeding) of
all Credit Parties to the Secured Creditors, whether now existing or hereafter
incurred under, arising out of, or in connection with, the Credit Agreement and
the other Credit Documents (including, without limitation, in the event such
Assignor is Holdings or a Subsidiary Guarantor that becomes party hereto, all
such obligations, liabilities and indebtedness of such Assignor under the
Holdings Guaranty or the applicable Subsidiaries Guaranty, respectively) and the
due performance and compliance by all Credit Parties of and with all of the
terms, conditions and agreements contained in the Credit Agreement and in such
other Credit Documents (all such obligations, liabilities and indebtedness under
this clause (i), except to the extent consisting of obligations, liabilities or
indebtedness with respect to Secured Hedging Agreements, being herein
collectively called the “Credit Document Obligations”);

 

(ii)         the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations, liabilities and
indebtedness (including, in each case, without limitation, all interest, fees
and expenses that accrue after the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency, reorganization or similar
proceeding of any Credit Party or any of its Subsidiaries at the rate provided
for in the respective documentation, whether or not a claim for post-petition
interest, fee or expense is allowed in any such proceeding) owing by all Credit
Parties to the Secured Creditors, now existing or hereafter incurred under,
arising out of or in connection with any Secured Hedging Agreement to which such
Credit Party is a party, whether such Secured Hedging Agreement is now in
existence or hereinafter arising (including, without limitation, in the event
such Assignor is Holdings or a Subsidiary Guarantor that becomes party hereto,
all such obligations, liabilities and indebtedness of such Assignor under the
Holdings Guaranty or the applicable Subsidiaries Guaranty, respectively), and
the due performance and compliance by such Credit Parties of and with all of the
terms, conditions and agreements contained in each such Secured Hedging
Agreement (all such obligations, liabilities and indebtedness under this clause
(ii) being herein collectively called the “Other Obligations”);

 

 31 

 

 

(iii)        any and all sums advanced by the Collateral Agent in order to
preserve the Collateral (as hereinafter defined) or preserve its security
interest in the Collateral;

 

(iv)        in the event of any proceeding for the collection or enforcement of
any indebtedness, obligations, or liabilities of such Assignor referred to in
clauses (i) and (ii) above, after an Event of Default shall have occurred and be
continuing, the reasonable expenses of retaking, holding, preparing for sale or
lease, selling or otherwise disposing of or realizing on the Collateral, or of
any exercise by the Collateral Agent of its rights hereunder, together with
reasonable attorneys’ fees and court costs;

 

(v)         all amounts paid by any Indemnitee as to which such Indemnitee has
the right to reimbursement under Section 8.1 of this Agreement; it being
acknowledged and agreed that the “Obligations” shall include extensions of
credit of the types described above, whether outstanding on the date of this
Agreement or extended from time to time after the date of this Agreement; and

 

(vi)        all amounts owing to either the Collateral Agent or Administrative
Agent pursuant to any of the Credit Documents in its capacity as such.

 

“Other Obligations” shall have the meaning provided in the definition of
“Obligations”.

 

“Patents” shall mean any United States or foreign patent in or to which any
Assignor now or hereafter has any right, title or interest therein, and any
divisions, continuations (including, but not limited to, continuations-in-parts)
and improvements thereof, as well as any application for a United States or
foreign patent now or hereafter made by any Assignor.

 

“Permits” shall mean, to the extent permitted to be assigned by the terms
thereof or by applicable law, all licenses, permits, rights, orders, variances,
franchises or authorizations of or from any governmental authority or agency.

 

“Pledged Company” shall mean, each Person whose Equity Interests are pledged by
any Assignor as Collateral to the Secured Parties.

 

“Primary Obligations” shall have the meaning provided in Section 7.4(b) of this
Agreement.

 

“Pro Rata Share” shall have the meaning provided in Section 7.4(b) of this
Agreement.

 

“Promissory Note” shall mean “promissory notes” as such term is defined in the
UCC as in effect on the date hereof in the State of New York.

 

 32 

 

 

“Proceeds” shall mean all “proceeds” as such term is defined in the UCC as in
effect in the State of New York on the date hereof and, in any event, shall also
include, but not be limited to, (i) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to the Collateral Agent or any Assignor
from time to time with respect to any of the Collateral, (ii) any and all
payments (in any form whatsoever) made or due and payable to any Assignor from
time to time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Collateral by any governmental
authority (or any person acting under color of governmental authority) and
(iii) any and all other amounts from time to time paid or payable under or in
connection with any of the Collateral.

 

“Registered Organization” shall have the meaning provided in the UCC as in
effect in the State of New York.

 

“Representative” shall have the meaning provided in Section 7.4(d) of this
Agreement.

 

“Required Secured Creditors” shall mean (i) at any time when any Credit Document
Obligations are outstanding (other than contingent indemnity obligations that
are not then due and payable), the Required Lenders (or, with respect to
amendments that under Section 14.12 of the Credit Agreement require the consent
of all Lenders, all of the Lenders) and (ii) at any time after all of the Credit
Document Obligations have been paid in full in cash (other than contingent
indemnity obligations that are not then due and payable), the holders of a
majority in outstanding principal amount of the Other Obligations.

 

“Secondary Obligations” shall have the meaning provided in Section 7.4(b) of
this Agreement.

 

“Secured Creditors” shall have the meaning set forth in the recitals hereto, and
shall include any Lender or an affiliate of a Lender that is counterparty to any
Secured Hedging Agreement.

 

“Secured Debt Agreements” shall mean and include (i) this Agreement and the
other Credit Documents and (ii) the Secured Hedging Agreements entered into with
any Secured Creditor.

 

“Secured Hedging Agreements” shall mean and include any Lender-Provided Interest
Rate Protection Agreements or Lender-Provided Other Hedging Agreements.

 

“Software” shall mean “software” as such term is defined in the UCC as in effect
on the date hereof in the State of New York.

 

“Supporting Obligations” shall mean any “supporting obligation” as such term is
defined in the UCC as in effect on the date hereof in the State of New York, now
or hereafter owned by any Assignor, or in which any Assignor has any rights,
and, in any event, shall include, but shall not be limited to, all of such
Assignor’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.

 

“Tangible Chattel Paper” shall mean “tangible chattel paper” as such term is
defined in the UCC as in effect on the date hereof in the State of New York.

 

 33 

 

 

“Termination Date” shall have the meaning provided in Section 10.8(a) of this
Agreement.

 

“Timber-to-be-Cut” shall mean “timber-to-be-cut” as such term is defined in the
UCC as in effect on the date hereof in the State of New York.

 

“Trade Secret Rights” shall have the meaning provided in Section 5.1 of this
Agreement.

 

“Trade Secrets” shall mean any secretly held existing engineering or other data,
information, production procedures and other know-how relating to the design
manufacture, assembly, installation, use, operation, marketing, sale and/or
servicing of any products or business of an Assignor worldwide whether written
or not.

 

“UCC” shall mean the Uniform Commercial Code in the State of New York from time
to time; provided that all references herein to specific sections or subsections
of the UCC are references to such sections or subsections, as the case may be,
of the Uniform Commercial Code as in effect in the State of New York on the date
hereof.

 

ARTICLE X

MISCELLANEOUS

 

10.1       Notices. Except as otherwise provided herein, all notices and
communications hereunder shall be in writing (including via email, facsimile,
and other electronic communication) and mailed, emailed, faxed or otherwise
delivered and all such notices and communications shall, when mailed (certified
return receipt required), emailed, faxed, or sent by overnight courier, be
effective when deposited in the mails, delivered to the email service provider
or overnight courier, as the case may be, or sent by fax or email, except that
notices and communications to the Collateral Agent or any Assignor shall not be
effective until received by the Collateral Agent or the Administrative Borrower
on behalf of such Assignor, as the case may be. All notices and other
communications shall be in writing and addressed as follows:

 

(a)          if to any Assignor, at:

 

c/o STG, Inc.

11091 Sunset Hills Road, suite 200

Reston, VA 20190

Attention: Keith A. Lynch

Telephone No.: (703) 691-2480 x1172

Facsimile No.: (703) 691-3261                  

Email: Klynch@stg.com

 

With a copy to:

 

Morrison & Foerster LLP

250 W. 55th Street

New York, NY 10019-9601

 

 34 

 

 

Attention: Geoffrey R. Peck, Esq.

Telephone No.: (212) 336-4183

Facsimile No.: (212) 468-7900

Email: Gpeck@mofo.com

 

(b)          if to the Collateral Agent, at:

 

600 Galleria Parkway, Suite 890

Atlanta, GA 30339

Facsimile No.: (770)-953-6046

Attention: Heath J. Hayes

 

With a copy to:

 

Blank Rome LLP

The Chrysler Building

405 Lexington Avenue

New York, NY 10174-0208

Attention: Lawrence F. Flick II

Telephone No.: (212) 885-5556

Facsimile No.: (212) 832-5556

Email: Flick@blankrome.com

 

(c)          if to any Secured Creditor (other than the Collateral Agent), at
such address as such Secured Creditor shall have specified in the Credit
Agreement; or at such other address or addressed to such other individual as
shall have been furnished in writing by any Person described above to the party
required to give notice hereunder.

 

10.2       Waiver; Amendment. Except as provided in Sections 10.8 and 10.12
hereof, none of the terms and conditions of this Agreement or any other Security
Document may be changed, waived, modified or varied in any manner whatsoever
unless in writing duly signed by each Assignor directly affected thereby (it
being understood that the addition or release of any Assignor hereunder shall
not constitute a change, waiver, discharge or termination affecting any Assignor
other than the Assignor so added or released) and (in each case) the Collateral
Agent (with the written consent of the Required Secured Creditors); provided,
however, (i) that supplements to the Annexes hereto and to the other Security
Documents may be made without the consent of any Secured Creditor, other than
the Collateral Agent, as provided herein or therein, and (ii) Assignors may be
released from their obligations hereunder and under the other Security Documents
and new Assignors may be added hereto and to the other Security Documents
without the consent of any Secured Creditors other than the Collateral Agent, as
provided herein or therein (subject to Section 14.12 of the Credit Agreement).

 

10.3       Obligations Absolute. The obligations of each Assignor hereunder
shall remain in full force and effect without regard to, and shall not be
impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of such Assignor; (b) any
exercise or non-exercise, or any waiver of, any right, remedy, power or
privilege under or in respect of this Agreement or any other Secured Debt
Agreement; or (c) any amendment to or modification of any Secured Debt Agreement
or any security for any of the Obligations; whether or not such Assignor shall
have notice or knowledge of any of the foregoing.

 

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10.4         Successors and Assigns. This Agreement shall create a continuing
security interest in the Collateral and shall (i) remain in full force and
effect, subject to release and/or termination as set forth in Section 10.8
hereof, (ii) be binding upon each Assignor, its successors and assigns;
provided, however, that no Assignor shall assign any of its rights or
obligations hereunder or under the other Credit Documents without the prior
written consent of the Collateral Agent (with the prior written consent of the
Required Secured Creditors), and (iii) inure, together with the rights and
remedies of the Collateral Agent hereunder, to the benefit of the Collateral
Agent, the other Secured Creditors and their respective successors, transferees
and assigns. All agreements, statements, representations and warranties made by
each Assignor herein or in any certificate or other instrument delivered by such
Assignor or on its behalf under this Agreement shall be considered to have been
relied upon by the Secured Creditors and shall survive the execution and
delivery of this Agreement and the other Secured Debt Agreements regardless of
any investigation made by the Secured Creditors or on their behalf.

 

10.5         Headings Descriptive. The headings of the several sections of this
Agreement are inserted for convenience only and shall not in any way affect the
meaning or construction of any provision of this Agreement.

 

10.6         GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY
TRIAL. (a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF
THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT SHALL BE BROUGHT EXCLUSIVELY IN THE
COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN
DISTRICT OF NEW YORK IN EACH CASE WHICH ARE LOCATED IN THE COUNTY OF NEW YORK,
AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH ASSIGNOR HEREBY
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. EACH
ASSIGNOR HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK
PERSONAL JURISDICTION OVER SUCH ASSIGNOR, AND AGREES NOT TO PLEAD OR CLAIM IN
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
CREDIT DOCUMENT BROUGHT IN ANY OF THE AFORESAID COURTS THAT ANY SUCH COURT LACKS
PERSONAL JURISDICTION OVER SUCH ASSIGNOR. EACH ASSIGNOR FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO ANY SUCH ASSIGNOR AT ITS ADDRESS FOR NOTICES
AS PROVIDED IN SECTION 10.1 ABOVE, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS
AFTER SUCH MAILING. EACH ASSIGNOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO
SUCH SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD
OR CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER
CREDIT DOCUMENT THAT SUCH SERVICE OF PROCESS WAS IN ANY WAY INVALID OR
INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE COLLATERAL AGENT UNDER
THIS AGREEMENT, OR ANY SECURED CREDITOR, TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
ANY ASSIGNOR IN ANY OTHER JURISDICTION.

 

 36 

 

 

(b)          EACH ASSIGNOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY
FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT
THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM.

 

(c)          EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.

 

10.7       Assignor’s Duties. It is expressly agreed, anything herein contained
to the contrary notwithstanding, that, prior to the Termination Date, each
Assignor shall remain liable to perform all of the obligations, if any, assumed
by it with respect to the Collateral and, except as otherwise provided
hereunder, the Collateral Agent shall not have any obligations or liabilities
with respect to any Collateral by reason of or arising out of this Agreement,
nor shall the Collateral Agent be required or obligated in any manner to perform
or fulfill any of the obligations of any Assignor under or with respect to any
Collateral.

 

10.8       Termination; Release. (a) After the Termination Date, this Agreement
shall terminate (provided that all indemnities set forth herein including,
without limitation in Article 8 hereof, shall survive such termination) and the
Collateral Agent, at the request and expense of the respective Assignor, will
promptly execute and deliver to the Administrative Borrower on behalf of such
Assignor a proper instrument or instruments (including UCC termination
statements on form UCC-3) acknowledging the satisfaction and termination of this
Agreement, and will duly assign, transfer and deliver to such Assignor (without
recourse and without any representation or warranty) such of the Collateral as
may be in the possession of the Collateral Agent and as has not theretofore been
sold or otherwise applied or released pursuant to this Agreement. As used in
this Agreement, “Termination Date” shall mean the date upon which the
Commitments under the Credit Agreement have been terminated, all Secured Hedging
Agreements have been terminated and all Loans thereunder have been repaid in
full, and all other Obligations (other than indemnities described in the Credit
Documents, in each case which are not then due and payable) then due and payable
have been paid in full in cash in accordance with the terms thereof.

 

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(b)          In the event that any part of the Collateral is sold or otherwise
disposed of (to a Person other than a Credit Party or a Subsidiary thereof)
(x) at any time prior to the time at which all Credit Document Obligations have
been paid in full, in connection with a sale or disposition permitted by the
Secured Debt Agreements or is otherwise released at the direction of the
Required Lenders (or all the Lenders if required by the Credit Agreement) or
(y) at any time thereafter, to the extent permitted by the other Secured Debt
Agreements, and in the case of clauses (x) and (y), the proceeds of such sale or
other disposition (or from such release) are applied in accordance with the
terms of the Credit Agreement or such other Secured Debt Agreements, as the case
may be, to the extent required to be so applied, the Collateral Agent, at the
request and expense of such Assignor, will duly release from the security
interest created hereby (and will execute and deliver such documentation,
including termination or partial release statements and the like in connection
therewith) and assign, transfer and deliver to the Administrative Borrower on
behalf of such Assignor or to the applicable purchaser or transferee (if any)
specified by such Assignor (without recourse and without any representation or
warranty) such of the Collateral as is then being (or has been) so sold or
otherwise disposed of, or released, and as may be in the possession of the
Collateral Agent and has not theretofore been released pursuant to this
Agreement. Furthermore, upon the release of any Subsidiary Guarantor from the
Subsidiaries Guaranty in accordance with the provisions thereof, such Assignor
(and the Collateral at such time assigned by the respective Assignor pursuant
hereto) shall be released from this Agreement.

 

(c)          At any time that an Assignor desires that the Collateral Agent take
any action to acknowledge or give effect to any release of Collateral pursuant
to the foregoing Section 10.8(a) or (b), the Administrative Borrower shall
deliver to the Collateral Agent a certificate signed by a senior officer of such
Assignor stating that the release of the respective Collateral is permitted
pursuant to such Section 10.8(a) or (b). At any time that Holdings or the
respective Assignor desires that a Subsidiary of Holdings which has been
released from the Subsidiaries Guaranty be released hereunder as provided in the
last sentence of Section 10.8(b) hereof, it shall deliver to the Collateral
Agent a certificate signed by an authorized officer of Holdings and the
respective Assignor stating that the release of the respective Assignor (and its
Collateral) is permitted pursuant to such Section 10.8(b).

 

(d)          The Collateral Agent shall have no liability whatsoever to any
other Secured Creditor as the result of any release of Collateral by it in
accordance with (or which the Collateral Agent in the absence of gross
negligence and willful misconduct believes to be in accordance with) this
Section 10.8.

 

10.9       Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. Delivery of an executed
counterpart hereof by facsimile or electronic transmission shall be effective as
delivery of an original executed counterpart hereof.

 

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10.10     Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

10.11     The Collateral Agent and the other Secured Creditors. The Collateral
Agent will hold in accordance with this Agreement all items of the Collateral at
any time received under this Agreement. It is expressly understood and agreed
that the obligations of the Collateral Agent as holder of the Collateral and
interests therein and with respect to the disposition thereof, and otherwise
under this Agreement, are only those expressly set forth in this Agreement and
in Section 13 of the Credit Agreement. The Collateral Agent shall act hereunder
on the terms and conditions set forth herein and in Section 13 of the Credit
Agreement.

 

10.12     Additional Assignors. It is understood and agreed that any Subsidiary
Guarantor that desires to become an Assignor hereunder, or is required to
execute a counterpart of this Agreement after the date hereof pursuant to the
respective Secured Debt Agreements, shall become an Assignor hereunder by
executing a counterpart hereof and delivering same to the Collateral Agent, or
by executing a joinder to this Agreement, (y) delivering supplements to Annexes
A through F, inclusive, and H through K, inclusive, hereto as are necessary to
cause such Annexes to be complete and accurate with respect to such additional
Assignor on such date, and (z) taking all actions as specified in this Agreement
as would have been taken by such Assignor had it been an original party to this
Agreement, in each case with all documents required above to be delivered to the
Collateral Agent and with all documents and actions required above to be taken
to the reasonable satisfaction of the Collateral Agent and the Administrative
Agent.

 

10.13     Release of Assignors. If at any time all of the Equity Interests of
any Assignor owned by Holdings or any of their Subsidiaries are sold to a Person
other than a Credit Party in a transaction permitted pursuant to the Credit
Agreement (and which does not violate the terms of any other Secured Debt
Agreement then in effect), then, such Assignor shall be released as a Assignor
pursuant to this Agreement without any further action hereunder (it being
understood that the sale of all of the Equity Interests in any Person that owns,
directly or indirectly, all of the Equity Interests in any Assignor shall be
deemed to be a sale of all of the Equity Interests in such Assignor for purposes
of this Section), and the Collateral Agent is authorized and directed to execute
and deliver such instruments of release as are reasonably satisfactory to it. At
any time that Holdings desires that a Assignor be released from this Agreement
as provided in this Section 10.13, Holdings shall deliver to the Collateral
Agent a certificate signed by an authorized officer of Holdings stating that the
release of such Assignor is permitted pursuant to this Section 10.13. If
requested by Collateral Agent (although the Collateral Agent shall have no
obligation to make any such request), any of the Assignors shall furnish legal
opinions (from counsel reasonably acceptable to the Collateral Agent) to the
effect set forth in the immediately preceding sentence. The Collateral Agent
shall have no liability whatsoever to any other Secured Creditor as a result of
the release of any Assignor by it in accordance with, or which it believes to be
in accordance with, this Section 10.13.

 

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10.14       Agreement Among Lenders. Each of the undersigned Assignors hereby
acknowledges the terms and provisions of the Agreement Among Lenders and agrees
to be bound by such terms solely in relation to the application of payments or
proceeds made as set forth in the Agreement Among Lenders, including Section 7
thereof. Notwithstanding anything to the contrary contained herein or in any
other Credit Document, in the event of any conflict or inconsistency between
this Agreement and the Agreement Among Lenders, the terms of the Agreement Among
Lenders shall govern and control.

 

10.15       Administrative Borrower. Each Assignor confirms and accepts that the
provisions contained in Section 14.25 of the Credit Agreement applicable to each
Assignor are incorporated by reference herein as if contained herein, and are
applicable to each Assignor hereunder.

 

[Remainder of this page intentionally left blank; signature page follows]

 

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

 

GLOBAL DEFENSE & NATIONAL   SECURITY SYSTEMS, INC., as an Assignor       By: /s/
Damian Perl     Name: Damian Perl     Title: Chairman of the Board         STG
GROUP, INC.,   as an Assignor         By: /s/ Paul Fernandes     Name: Paul
Fernandes     Title: President         STG, INC.,   as an Assignor         By:
/s/ Paul Fernandes     Name: Paul Fernandes     Title: President         ACCESS
SYSTEMS, INCORPORATED,   as an Assignor         By: /s/ Paul Fernandes     Name:
Paul Fernandes     Title: Chief Operating Officer

 

[Signature Page to Security Agreement]

 

 

 

 

Accepted and Agreed to:       PNC BANK, NATIONAL ASSOCIATION,   as Collateral
Agent       By: /s/ Virginia L. Kiseljack     Name: Virginia L. Kiseljack    
Title: Senior Vice President  

 

[Signature Page to Security Agreement]