Exhibit 10.1

EXECUTION COPY

 

 

GUARANTEE AND COLLATERAL AGREEMENT

dated as of

October 12, 2007.

and

Amended and Restated as of December 17, 2010

among

CDW CORPORATION,

CDW LLC,

the Subsidiaries of CDW LLC

from time to time party hereto

and

MORGAN STANLEY & CO. INCORPORATED,

as Collateral Agent

 

 

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TABLE OF CONTENTS

 

         Page   ARTICLE I DEFINITIONS      2   

SECTION 1.01.

  Credit Agreement      2   

SECTION 1.02.

  Other Defined Terms      2    ARTICLE II GUARANTEE      9   

SECTION 2.01.

  Guarantee      9   

SECTION 2.02.

  Guarantee of Payment      10   

SECTION 2.03.

  No Limitations, Etc.      10   

SECTION 2.04.

  Reinstatement      11   

SECTION 2.05.

  Agreement To Pay; Subrogation      11   

SECTION 2.06.

  Information      11   

SECTION 2.07.

  Instrument for the Payment of Money      11    ARTICLE III SECURITY INTERESTS
IN PERSONAL PROPERTY      12   

SECTION 3.01.

  Security Interest      12   

SECTION 3.02.

  Representations and Warranties      14   

SECTION 3.03.

  Covenants      17   

SECTION 3.04.

  Other Actions      19   

SECTION 3.05.

  Voting Rights; Dividends and Interest, Etc.      19   

SECTION 3.06.

  Additional Covenants Regarding Patent, Trademark and Copyright Collateral     
20   

SECTION 3.07.

  Collateral Access Agreements.      21   

SECTION 3.08.

  Deposit Account Control Agreements.      21    ARTICLE IV REMEDIES      21   

SECTION 4.01.

  Pledged Collateral      21   

SECTION 4.02.

  Uniform Commercial Code and Other Remedies      22   

SECTION 4.03.

  Application of Proceeds      24   

SECTION 4.04.

  Grant of License to Use Intellectual Property      24   

SECTION 4.05.

  Securities Act, Etc.      25   

ARTICLE V INDEMNITY, SUBROGATION AND SUBORDINATION

     25   

SECTION 5.01.

  Indemnity and Subrogation      25   

SECTION 5.02.

  Contribution and Subrogation      25   

SECTION 5.03.

  Subordination      26    ARTICLE VI INTENTIONALLY DELETED.      26    ARTICLE
VII MISCELLANEOUS      26   

SECTION 7.01.

  Notices      26   

SECTION 7.02.

  Survival of Agreement      26   

 

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SECTION 7.03.

  Binding Effect; Several Agreement      27   

SECTION 7.04.

  Successors and Assigns      27   

SECTION 7.05.

  Collateral Agent’s Expenses; Indemnity      27   

SECTION 7.06.

  Collateral Agent Appointed Attorney-in-Fact      27   

SECTION 7.07.

  Applicable Law      28   

SECTION 7.08.

  Waivers; Amendment      28   

SECTION 7.09.

  WAIVER OF JURY TRIAL      29   

SECTION 7.10.

  Severability      29   

SECTION 7.11.

  Counterparts      29   

SECTION 7.12.

  Headings      30   

SECTION 7.13.

  Jurisdiction; Consent to Service of Process      30   

SECTION 7.14.

  Termination or Release      30   

SECTION 7.15.

  [RESERVED]      31   

SECTION 7.16.

  Additional Subsidiaries      31   

SECTION 7.17.

  Security Interest and Obligations Absolute      32   

SECTION 7.18.

  Effectiveness of Merger      32   

SECTION 7.19.

  Term/Note Intercreditor Agreement      32   

Schedules

 

Schedule I

  Subsidiary Guarantors

Schedule II

  Equity Interests; Pledged Debt Securities

Schedule III

  U.S. Copyrights Owned by Grantor; Patents Owned by Grantors; Trademarks/Trade
Names Owned by Grantors

Schedule IV

  UCC Filing Offices

Schedule V

  UCC Information

Schedule VI

  Locations of Collateral

Schedule VII

  Deposit Accounts

Schedule VIII

  Letter of Credit Rights and Chattel Paper

Exhibits

 

Exhibit A

  Form of Supplement

 

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GUARANTEE AND COLLATERAL AGREEMENT dated as of October 12, 2007 and amended and
restated as of December 17, 2010 (this “Agreement”), among CDW CORPORATION
(formerly known as VH Holdings, Inc.), a Delaware corporation (“Holdings”), CDW
LLC, an Illinois limited liability company (successor by merger to CDW
Corporation, successor by merger to VH MergerSub, Inc.) (the “Borrower”), the
subsidiaries of the Borrower from time to time party hereto and MORGAN STANLEY &
CO. INCORPORATED (as successor to Lehman Commercial Paper Inc.), as collateral
agent (in such capacity, the “Collateral Agent”).

PRELIMINARY STATEMENT

WHEREAS, Morgan Stanley Senior Funding, Inc. (as successor to Lehman Commercial
Paper Inc.), as administrative agent (in such capacity, the “Administrative
Agent”) and the Lenders have provided a loan facility to the Borrower pursuant
to the Term Loan Agreement dated as of October 12, 2007, as amended and restated
as of March 12, 2008, as amended by Amendment No. 1, dated as of November 4,
2009 and Amendment No. 2, dated as of December 2, 2010 (“Amendment No. 2”), and
as otherwise modified and supplemented as in effect on the date hereof (the
“Credit Agreement”), among the Borrower, Holdings, the Subsidiary Guarantors
party thereto, the lenders from time to time party thereto (the “Lenders”), the
Administrative Agent, the Collateral Agent, J.P. Morgan Securities Inc., as
joint lead arranger and joint bookrunner, Morgan Stanley Senior Funding, Inc.,
as joint bookrunner and co-syndication agent, Deutsche Bank Securities Inc., as
joint bookrunner and co-syndication agent and JPMorgan Chase Bank, N.A., as
co-syndication agent;

WHEREAS, in connection with the Credit Agreement, the Borrower, Holdings the
Subsidiary Guarantors party thereto and the Collateral Agent entered into the
Guarantee and Collateral Agreement, dated as of October 12, 2007 (the “Original
Guarantee and Collateral Agreement”);

WHEREAS, the Borrower, Holdings, the Subsidiary Guarantors party thereto, the
Administrative Agent and the Required Lenders have agreed, pursuant to Amendment
No. 2, among other things, to extend the Term Loan Maturity Date applicable to
the Extended Term Loans under the Credit Agreement and to increase the interest
rate margin payable on such Extended Term Loans;

WHEREAS, the Borrower, CDW Finance Corporation, a Delaware corporation (“CDW
Finance” and, together with the Borrower, the “Issuers”), the guarantors party
thereto and U.S. Bank National Association, as trustee (the “Note Trustee”) are
party to an Indenture dated as of December 17, 2010 (as modified and
supplemented and in effect from time to time, the “Senior Secured Note
Indenture”) pursuant to which the Issuers have issued $500,000,000 of 8.0%
Senior Secured Notes due 2018 (together with any Additional Notes and Exchange
Notes, the “Senior Secured Notes” and, collectively with the Senior Secured Note
Indenture and any other documents executed pursuant to the Senior Secured Note
Indenture, the “Senior Secured Note Documents”);

WHEREAS, the Borrower, CDW Finance, Holdings, the Subsidiary Guarantors party
thereto, the Note Trustee and the Collateral Agent are party to an intercreditor
agreement, dated as of the date hereof (“Term/Note Intercreditor Agreement”),
which governs the respective rights and remedies of the Secured Parties with
respect to the Collateral subject to this Agreement;

WHEREAS, each Guarantor is an affiliate of the Borrower, will derive substantial
benefits from the extension of the Term Loan Maturity Date applicable to the
Extended Term Loans under the Credit Agreement and the issuance of the Senior
Secured Notes and is willing to amend and restate the Original Guarantee and
Collateral Agreement by entering into this Agreement in order to induce the
Lenders to extend the Term Loan Maturity Date applicable to the Extended Term
Loans under the Credit Agreement and to induce the initial purchasers of the
Senior Secured Notes to purchase the Senior Secured Notes; and

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WHEREAS, the extension of the Term Loan Maturity Date applicable to the Extended
Term Loans and the purchase of the Senior Secured Notes are each conditioned
upon, among other things, the execution and delivery of this Agreement by the
Borrower and each Guarantor.

NOW, THEREFORE, in consideration of the premises and mutual covenants contained
herein and for good and valuable consideration, the receipt and sufficiency of
which the parties hereby acknowledge, parties hereto agrees that on the
Amendment No. 2 Closing Date the Original Guarantee and Collateral Agreement
shall be amended and restated to read as follows:

ARTICLE I

Definitions

SECTION 1.01. Credit Agreement.

(a) Capitalized terms used in this Agreement and not otherwise defined herein
have the meanings set forth in the Credit Agreement as in effect on the date
hereof. All capitalized terms defined in the New York UCC (as such term is
defined herein) and not defined in this Agreement have the meanings specified
therein. All references to the Uniform Commercial Code shall mean the New York
UCC unless the context requires otherwise.

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

(c) As used herein, “date of this Agreement” and “date hereof” shall mean
October 12, 2007.

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

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

“Additional Notes” shall have the meaning assigned to such term in the Senior
Secured Note Indenture.

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

“After-Acquired Intellectual Property” shall have the meaning assigned to such
term in Section 3.06(d).

“Agreement” shall have the meaning assigned to such term in the preamble.

“Amendment No. 2” shall have the meaning assigned to such term in the
preliminary statement.

 

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“Bankruptcy Default” shall mean an Event of Default of the type described in
(i) Sections 7.01(g) and (h) of the Credit Agreement, (ii) Section 6.01(7) of
the Senior Secured Note Indenture and (iii) any comparable provision of any
Other Pari Passu Lien Obligations Agreement.

“Borrower” shall have the meaning assigned to such term in the preamble.

“Claiming Guarantor” shall have the meaning assigned to such term in
Section 5.02.

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

“Collateral Access Agreement” means any landlord waiver or other agreement, in
form and substance reasonably satisfactory to the Collateral Agent, between the
Collateral Agent and any third party (including any bailee, consignee, customs
broker or other similar Person) in possession of any Collateral or any landlord
of any Grantor for any real property where any Collateral is located, as such
landlord waiver or other agreement may be amended, restated or otherwise
modified from time to time.

“Collateral Agent” shall have the meaning assigned to such term in the preamble.

“Contributing Guarantor” shall have the meaning assigned to such term in
Section 5.02.

“Copyright License” shall mean any written agreement, now or hereafter in
effect, granting any right to any third person (other than an agreement with any
Person who is an affiliate or a subsidiary of any Grantor) under any Copyright
now or hereafter owned by any Grantor or that such Grantor otherwise has the
right to license, or granting any right to any Grantor under any copyright now
or hereafter owned by any third party, and all rights of such Grantor under any
such agreement.

“Copyrights” shall mean all of the following now owned or hereafter acquired by
any Grantor: (a) all copyright rights in any work subject to the copyright laws
of the United States, whether as author, assignee, transferee or otherwise,
(b) all registrations and applications for registration of any such copyright in
the United States, including registrations, recordings, supplemental
registrations, renewals, extensions and pending applications for registration in
the United States Copyright Office (or any successor office), including those
copyrights listed on Schedule III, and (c) all causes of action arising prior
to, on or after the date hereof for infringement of any Copyright or unfair
competition regarding the same and all other rights whatsoever accruing
thereunder or pertaining thereto.

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

“Default” shall have the meaning assigned to such term in (i) the Credit
Agreement, (ii) the Senior Secured Note Indenture and (iii) if applicable, each
Other Pari Passu Lien Obligations Agreement.

“Deposit Account Control Agreement” means an agreement, in form and substance
reasonably satisfactory to the Collateral Agent, among any Grantor, a banking
institution holding such Grantor’s funds, and the Collateral Agent with respect
to collection and control of all deposits and balances held in a deposit account
maintained by any Grantor with such banking institution.

“Domain Names” shall mean all Internet domain names and associated URL addresses
in or to which any Grantor now owns or hereafter acquires.

 

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“Event of Default” shall have the meaning assigned to such term in (i) the
Credit Agreement, (ii) the Senior Secured Note Indenture and (iii) if
applicable, each Other Pari Passu Lien Obligations Agreement.

“Exchange Notes” shall have the meaning assigned to such term in the Senior
Secured Note Indenture.

“Excluded Collateral” shall mean:

(a) all vehicles the perfection of a security interest in which is excluded from
the New York UCC in the relevant jurisdiction;

(b) any General Intangible or other rights arising under contracts, Instruments,
licenses, license agreements (including Licenses) or other documents, to the
extent (and only to the extent) that the grant of a security interest would
(i) constitute a violation of a restriction in favor of a third party on such
grant, unless and until any required consents shall have been obtained,
(ii) give any other party the right to terminate its obligations thereunder or
(iii) violate any law, provided, however, that (1) any portion of any such
General Intangible or other right shall cease to constitute Excluded Collateral
pursuant to this clause (b) at the time and to the extent that the grant of a
security interest therein does not result in any of the consequences specified
above and (2) the limitation set forth in this clause (b) above shall not
affect, limit, restrict or impair the grant by a Grantor of a security interest
pursuant to this Agreement in any such General Intangible or other right, to the
extent that an otherwise applicable prohibition or restriction on such grant is
rendered ineffective by any applicable law, including the New York UCC;

(c) [Intentionally Omitted];

(d) Investment Property consisting of voting Equity Interests of any Foreign
Subsidiary in excess of 65% of the Equity Interests representing the total
combined voting power of all classes of Equity Interests of such Foreign
Subsidiary entitled to vote;

(e) as to which the Collateral Agent and the Borrower reasonably determine that
the costs of obtaining a security interest in any specifically identified assets
or category of assets (or perfecting the same) are excessive in relation to the
benefit to the Secured Parties of the security afforded thereby;

(f) Equipment owned by any Grantor on the date hereof or hereafter acquired that
is subject to a Lien securing a purchase money obligation or Capitalized Lease
Obligation permitted to be incurred pursuant to the Credit Agreement, the Senior
Secured Note Indenture and each Other Pari Passu Lien Obligations Agreement, for
so long as the contract or other agreement in which such Lien is granted (or the
documentation providing for such purchase money obligation or Capitalized Lease
Obligation) validly prohibits the creation of any other Lien on such Equipment;

(g) any interest in joint ventures and non-wholly owned subsidiaries which
cannot be pledged without the consent of one or more third parties;

(h) applications filed in the United States Patent and Trademark Office to
register trademarks or service marks on the basis of any Grantor’s “intent to
use” such trademarks or service marks unless and until the filing of a
“Statement of Use” or “Amendment to Allege Use” has been filed and accepted,
whereupon such applications shall be automatically subject to the Lien granted
herein and deemed included in the Collateral;

 

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(i) all assets subject to a certificate of title statute, Farm Products and
As-Extracted Collateral;

(j) any property to the extent that such grant of a security interest is
prohibited by any Requirements of Law of a Governmental Authority, requires a
consent not obtained of any Governmental Authority pursuant to such Requirement
of Law or is prohibited by, or constitutes a breach or default under or results
in the termination of or requires any consent not obtained under, any contract,
license, agreement, instrument or other document evidencing or giving rise to
such property or, in the case of any Investment Property or any Pledged
Security, any applicable shareholder or similar agreement, except to the extent
that such Requirement of Law or the term in such contract, license, agreement,
instrument or other document or shareholder or similar agreement providing for
such prohibition, breach, default or termination or requiring such consent is
ineffective under applicable law, including the New York UCC;

(k) [Intentionally Omitted];

(l) any assets to the extent a security interest in such assets would result in
adverse tax consequences as reasonably determined by the Borrower;

(m) Equity Interests in Unrestricted Subsidiaries, Immaterial Subsidiaries and
captive insurance companies; and

(n) any direct Proceeds, substitutions or replacements of any of the foregoing,
but only to the extent such Proceeds, substitutions or replacements would
otherwise constitute Excluded Collateral.

Furthermore, no term used in the definition of Collateral (or any component
definition thereof) shall be deemed to include any Excluded Collateral.

“Excluded Deposit Accounts” means, collectively, (i) payroll and payroll taxes
accounts, workers’ compensation accounts and other employee wage and benefit
payment accounts and petty cash accounts, (ii) trust accounts and (iii) deposit
accounts other than Collection Accounts and Collateral Deposit Accounts (as each
such term is defined in the Revolving Credit Agreement), so long as the
aggregate amount on deposit in all such deposit accounts does not exceed
$2,500,000 in the aggregate at any time.

“Excluded Note Collateral” shall have the meaning assigned to such term in
Section 3.01(b).

“Federal Securities Laws” shall have the meaning assigned to such term in
Section 4.05.

“Fraudulent Conveyance” shall have the meaning assigned to such term in
Section 2.01.

“Grantors” shall mean the Borrower and the Guarantors.

“Guarantors” shall mean Holdings and the Subsidiary Guarantors.

“Holdings” shall have the meaning assigned to such term in the preamble.

 

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“Intellectual Property” shall mean all intellectual and similar property of any
Grantor of every kind and nature now owned or hereafter acquired by such
Grantor, including all of the following that are owned or hereafter acquired by
such Grantor (i) Patents, Copyrights, Licenses and Trademarks, (ii) all
inventions, processes, production methods, trade secrets, confidential or
proprietary technical and business information, know how and databases and all
other proprietary information, (iii) Domain Names, (iv) all improvements with
respect to any of the foregoing, and (v) all causes of action, claims, and
warranties now or hereafter owned or a acquired by any Grantor with respect of
any of the foregoing.

“Investment Property” shall mean (a) all “investment property” as such term is
defined in the New York UCC (other than Excluded Collateral) and (b) whether or
not constituting “investment property” as so defined, all Pledged Debt
Securities and Pledged Stock.

“Issuers” shall have the meaning assigned to such term in the preamble.

“License” shall mean any Patent License, Trademark License, Copyright License or
other license or sublicense agreement relating to Intellectual Property to which
any Grantor is a party.

“Loan Documents” shall have the meaning assigned to such term in the Credit
Agreement.

“Loan Obligations” shall mean the unpaid principal of and interest on the Loans
and all other obligations and liabilities of the Borrower or any other Loan
Party to the Administrative Agent, the Collateral Agent or any Lender, whether
direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in connection
with, the Credit Agreement, any other Loan Document and whether on account of
principal, interest, fees, indemnities, costs, expenses (including all fees,
charges and disbursements of counsel to the Administrative Agent, the Collateral
Agent or any Lender that are required to be paid pursuant to the Credit
Agreement or any other Loan Document and including interest accruing after the
maturity of the Loans and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to a Loan Party, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) or otherwise.

“Loan Secured Parties” shall mean (a) the Lenders, (b) the Administrative Agent,
(c) the Collateral Agent, (d) the beneficiaries of each indemnification
obligation undertaken by any Loan Party under any Loan Document, and (e) the
permitted successors and assigns of each of the foregoing.

“Loans” shall mean all Term Loans under, and as defined in, the Credit
Agreement.

“Merger Sub” shall mean VH Mergersub, Inc.

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

“Note Trustee” shall have the meaning assigned to such term in the preliminary
statement.

“Note Obligations” shall mean the principal of and interest on the Senior
Secured Notes and all other amounts from time to time owing by the Issuers or
any other Grantor to the Note Trustee or to any Senior Secured Note Holder
whether direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in connection
with, the Senior Secured Note Indenture, any other Senior Secured Note Document
and whether on account of

 

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principal, interest, fees, indemnities, costs, expenses (including all fees,
charges and disbursements of counsel to the Note Trustee or any Senior Secured
Note Holder that are required to be paid pursuant to the Senior Secured Note
Indenture or any other Senior Secured Note Document and including interest
accruing after the maturity of the Senior Secured Notes and interest accruing
after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to a Grantor, whether or
not a claim for post-filing or post-petition interest is allowed in such
proceeding) or otherwise.

“Note Secured Parties” shall mean (a) the Note Trustee, (b) the Senior Secured
Note Holders, (c) any Other Pari Passu Obligations Agent, holders of Other Pari
Passu Obligations, (e) the beneficiaries of each indemnification obligation
undertaken by any Grantor under any Senior Secured Note Document or Other Pari
Passu Lien Obligations Agreement, and (f) the permitted successors and assigns
of each of the foregoing.

“Obligations” shall mean the Loan Obligations, the Note Obligations and the
Other Pari Passu Lien Obligations.

“Original Guarantee and Collateral Agreement” shall have the meaning assigned to
such term in the preliminary statement.

“Other Pari Passu Lien Obligations” means indebtedness or other obligations of
Issuers or the Guarantors issued following the date of this Agreement to the
extent (a) such indebtedness is not prohibited by the terms of the Loan
Documents, the Senior Secured Note Documents and each then extant Other Pari
Passu Lien Obligations Agreement from being secured by Liens on the Collateral
ranking pari passu with the Liens securing the Obligations, (b) the Grantors
have granted Liens, consistent with clause (a), on the Collateral to secure the
obligations in respect of such indebtedness, (c) such indebtedness or other
obligations constitute “Other Pari Passu Lien Obligations” as defined in the
Senior Secured Note Indenture on the date hereof, and (d) the Other Pari Passu
Lien Obligations Agent, for the holders of such indebtedness has entered into a
joinder agreement hereto on behalf of the holders under such agreement
acknowledging that such holders shall be bound by the terms hereof applicable to
Note Secured Parties.

“Other Pari Passu Lien Obligations Agent” means the Person appointed to act as
trustee, agent or representative for the holders of Other Pari Passu Lien
Obligations pursuant to any Other Pari Passu Lien Obligations Agreement.

“Other Pari Passu Lien Obligations Agreement” means any indenture, credit
agreement or other agreement under which any Other Pari Passu Lien Obligations
are incurred.

“Patent License” shall mean any written agreement, now or hereafter in effect,
granting to any third person (other than an agreement with any Person who is an
affiliate or a subsidiary of any Grantor) any right to make, use or sell any
invention on which a Patent, now or hereafter owned by any Grantor or that any
Grantor otherwise has the right to license, is in existence, or granting to any
Grantor any right to make, use or sell any invention on which a patent, now or
hereafter owned by any third person, is in existence, and all rights of any
Grantor under any such agreement.

“Patents” shall mean all of the following now owned or hereafter acquired by any
Grantor: (a) all letters patent of the United States, all registrations and
recordings thereof, and all applications for letters patent of the United
States, including registrations, recordings and pending applications in the
United States Patent and Trademark Office (or any successor), including those
listed on Schedule III, (b) all reissues, continuations, divisions,
continuations-in-part, renewals or extensions thereof, and the inventions
disclosed or claimed therein, including the right to make, use and/or sell the

 

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inventions disclosed or claimed therein and (c) all income, royalties, damages
and payments now or hereafter due and/or payable with respect thereto, all
damages and payments for past or present future infringements thereof and rights
to sue therefor, and all rights corresponding thereto throughout the world.

“Permitted Liens” shall have the meaning assigned to such term in the Credit
Agreement to the extent such Permitted Liens are not prohibited to be incurred
pursuant to the Senior Secured Note Indenture or any Other Pari Passu Lien
Obligations Agreement.

“Pledged Collateral” shall mean (a) the Pledged Stock, (b) the Pledged Debt
Securities, (c) subject to Section 3.05, all payments of principal or interest,
dividends, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of, in exchange for or upon the
conversion of, and all other Proceeds received in respect of, the securities
referred to in clauses (a) and (b) above, (d) subject to Section 3.05, all
rights of such Grantor with respect to the securities and other property
referred to in clauses (a), (b) and (c) above and (e) all Proceeds of any of the
foregoing.

“Pledged Debt Securities” shall mean (a) the debt securities and promissory
notes held by any Grantor on the date hereof (including all such debt securities
and promissory notes listed opposite the name of such Grantor on Schedule II),
(b) any debt securities or promissory notes in the future issued to such Grantor
and (c) any other instruments evidencing the debt securities described above, if
any.

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

“Pledged Stock” shall mean (a) (i) the Equity Interests owned by any Grantor on
the date hereof (including all such Equity Interests listed on Schedule II) and
(ii) thereafter, any other Equity Interest obtained in the future by such
Grantor, in the case of each of clauses (i) and (ii), to the extent that the
same do not constitute Excluded Collateral and (b) the certificates, if any,
representing all such Equity Interests.

“Pricing Certificate” shall mean a certificate delivered pursuant to
Section 5.04(c) of the Credit Agreement.

“Receivables” means the Accounts, Chattel Paper, Documents, Investment Property,
Instruments and any other rights or claims to receive money which are General
Intangibles or which are otherwise included as Collateral.

“SEC” shall mean the United States Securities and Exchange Commission and any
successor thereto.

“Secured Parties” shall mean the Loan Secured Parties and the Note Secured
Parties.

“Security Interest” shall mean the pledge and security interest confirmed and
granted pursuant to Section 3.01.

“Senior Secured Note Holders” means Holders (as such term is defined in the
Senior Secured Note Indenture).

“Senior Secured Notes” shall have the meaning assigned to such term in the
preliminary statement.

 

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“Senior Secured Note Documents” shall have the meaning assigned to such term in
the preliminary statement.

“Senior Secured Note Indenture” shall have the meaning assigned to such term in
the preliminary statement.

“Subsidiary Guarantor” shall mean any of the following: (a) the Subsidiaries
identified on Schedule I hereto as Subsidiary Guarantors and (b) each other
subsidiary that becomes a party to this Agreement as a Subsidiary Guarantor
after the Closing Date, excluding (i) any Excluded Subsidiary and (ii) any
Foreign Subsidiary.

“Termination Date” shall mean the date upon which all of the Loans, Senior
Secured Notes, together with all interest, fees and other non-contingent
Obligations shall have been paid in full in cash.

“Trademark License” shall mean any written agreement, now or hereafter in
effect, granting to any third person (other than an agreement with any Person
who is an affiliate or a subsidiary of any Grantor) any right to use any
trademark now or hereafter owned by any Grantor or that any Grantor otherwise
has the right to license, or granting to any Grantor any right to use any
trademark now or hereafter owned by any third person, and all rights of any
Grantor under any such agreement.

“Trademarks” shall mean all of the following now owned or hereafter acquired by
any Grantor: (a) all trademarks, service marks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, trade
dress, logos, other source or business identifiers, designs and general
intangibles of like nature, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all registration and recording
applications filed in connection therewith, including registrations and
registration applications in the United States Patent and Trademark Office (or
any successor office), and all extensions or renewals thereof, including those
registrations and applications listed on Schedule III, (b) all goodwill
associated therewith or symbolized thereby, (c) all other assets, rights and
interests that uniquely reflect or embody such goodwill and (d) all causes of
action arising prior to or after the date hereof for infringement of any
trademark or unfair competition regarding the same.

“Transaction Documents” shall mean the Credit Agreement, the other Loan
Documents, the Senior Secured Note Indenture and the other Senior Secured Note
Documents.

ARTICLE II

Guarantee

SECTION 2.01. Guarantee. Each Guarantor confirms its guarantee under Article II
of the Original Guarantee and Collateral Agreement and absolutely, irrevocably
and unconditionally guarantees to the Loan Secured Parties, jointly with the
other Guarantors and severally, as a primary obligor and not merely as a surety,
the due and punctual payment and performance of the Loan Obligations. Each
Guarantor further agrees that the Loan Obligations may be extended or renewed,
in whole or in part, without notice to or further assent from it, and that it
will remain bound upon its guarantee notwithstanding any extension or renewal of
any Loan Obligation. Each Guarantor waives (to the extent permitted by
applicable law) presentment to, demand of payment from and protest to the
Borrower or any other Grantor of any Loan Obligation, and also waives notice of
acceptance of its guarantee and notice of protest for nonpayment. Each Guarantor
hereby further jointly and severally agrees that if the Borrower shall fail to
pay in full when due (whether at stated maturity, by acceleration

 

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or otherwise) any of the Loan Obligations, such Guarantor will promptly pay the
same, without any demand or notice whatsoever, and that in the case of any
extension of time of payment or renewal of any of the Loan Obligations, the same
will be promptly paid in full when due (whether at extended maturity, by
acceleration or otherwise) in accordance with the terms of such extension or
renewal.

Notwithstanding any provision of this Agreement to the contrary, it is intended
that this Agreement, and any Liens granted hereunder by each Guarantor to secure
the obligations and liabilities arising pursuant to this Agreement, not
constitute a “Fraudulent Conveyance” (as defined below). Consequently, each
Guarantor agrees that if this Agreement, or any Liens securing the obligations
and liabilities arising pursuant to this Agreement, would, but for the
application of this sentence and taking into account the provisions of
Section 5.02, constitute a Fraudulent Conveyance, this Agreement and each such
Lien shall be valid and enforceable only to the maximum extent that would not
cause this Agreement or such Lien to constitute a Fraudulent Conveyance, and
this Agreement shall automatically be deemed to have been amended accordingly at
all relevant times. For purposes hereof, “Fraudulent Conveyance” means a
fraudulent conveyance or fraudulent transfer under Section 548 of the Bankruptcy
Code or a fraudulent conveyance or fraudulent transfer under the provisions of
any applicable fraudulent conveyance or fraudulent transfer law or similar law
of any state, nation or other governmental unit, as in effect from time to time.

SECTION 2.02. Guarantee of Payment. Each Guarantor further agrees that its
guarantee hereunder constitutes a guarantee of payment when due and payable and
not of collection, and waives any right (except such as shall be required by
applicable law and cannot be waived) to require that any resort be had by the
Collateral Agent or any other Loan Secured Party to any security held for the
payment of the Loan Obligations or to any balance of any Deposit Account or
credit on the books of the Collateral Agent or any other Secured Party in favor
of the Borrower or any other person.

SECTION 2.03. No Limitations, Etc.

(a) Except for termination of a Guarantor’s obligations hereunder as expressly
provided in Section 7.14, the obligations of each Guarantor hereunder shall not
be subject to any reduction, limitation, impairment or termination for any
reason, including any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense or setoff, counterclaim,
recoupment or termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Loan Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each Guarantor hereunder shall
not be discharged or impaired or otherwise affected by (i) the failure of the
Collateral Agent or any other Loan Secured Party to assert any claim or demand
or to enforce any right or remedy under the provisions of any Loan Document or
otherwise, (ii) any rescission, waiver, amendment or modification of, or any
release from any of the terms or provisions of, any Loan Document (other than
pursuant to the terms of a waiver, amendment, modification or release of this
Agreement in accordance with the terms hereof) or any other agreement, including
with respect to the release of any other Guarantor under this Agreement and so
long as any such amendment, modification or waiver of any Loan Document is made
in accordance with Section 9.08 of the Credit Agreement, (iii) the release of,
or any impairment of or failure to perfect any Lien on or security interest in,
any security held by the Collateral Agent or any other Loan Secured Party for
the Loan Obligations, (iv) any default, failure or delay, willful or otherwise,
in the performance of the Loan Obligations, or (v) any other act or omission
that may or might in any manner or to any extent vary the risk of any Guarantor
or otherwise operate as a discharge of any Guarantor as a matter of law or
equity (other than the occurrence of the Termination Date). Each Guarantor
expressly authorizes the Collateral Agent, in accordance with the Credit
Agreement and applicable law, to take and hold security for the payment and
performance of the Loan Obligations, to exchange, waive or release any or all
such security (with or without consideration), to enforce or apply such security
and direct the order and manner of any sale thereof in its sole discretion or to
release or substitute any one or more other guarantors or obligors upon or in
respect of the Loan Obligations, all without affecting the obligations of any
Guarantor hereunder.

 

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(b) To the fullest extent permitted by applicable law, each Guarantor waives any
defense (other than payment or performance of the Loan Obligations (other than
contingent obligations), in full) based on or arising out of any defense of the
Borrower or any other Grantor or the unenforceability of the Loan Obligations or
any part thereof from any cause, or the cessation from any cause of the
liability of the Borrower or any other Grantor, other than the occurrence of the
Termination Date. The Collateral Agent and the other Loan Secured Parties may,
in accordance with the Credit Agreement and applicable law, at their election,
foreclose on any security held by one or more of them by one or more judicial or
nonjudicial sales, accept an assignment of any such security in lieu of
foreclosure, compromise or adjust any part of the Loan Obligations, make any
other accommodation with the Borrower or any other Grantor or exercise any other
right or remedy available to them against the Borrower or any other Grantor,
without affecting or impairing in any way the liability of any Guarantor
hereunder except to the extent the Termination Date has occurred. To the fullest
extent permitted by applicable law, each Guarantor waives any defense arising
out of any such election even though such election operates, pursuant to
applicable law, to impair or to extinguish any right of reimbursement or
subrogation or other right or remedy of such Guarantor against the Borrower or
any other Grantor, as the case may be, or any security.

SECTION 2.04. Reinstatement. Each Guarantor agrees that its guarantee hereunder
shall continue to be effective or shall be automatically reinstated, as the case
may be, if at any time and for any reason payment, or any part thereof, of any
Loan Obligation is rescinded or must otherwise be restored by the Collateral
Agent or any other Loan Secured Party whether upon the bankruptcy or
reorganization of the Borrower, any other Grantor, or otherwise, notwithstanding
the occurrence of the Termination Date.

SECTION 2.05. Agreement To Pay; Subrogation. In furtherance of the foregoing and
not in limitation of any other right that the Collateral Agent or any other Loan
Secured Party has at law or in equity against any Guarantor by virtue hereof,
upon the failure of the Borrower or any other Grantor to pay any Loan Obligation
when and as the same shall become due and payable, whether at maturity, by
acceleration, after notice of prepayment or otherwise, each Guarantor hereby
jointly and severally promises to and will promptly pay, or cause to be paid, to
the Collateral Agent for distribution to the Loan Secured Parties in cash the
amount of such unpaid Loan Obligation (other than payment of any contingent
obligations). Upon payment by any Guarantor of any sums to the Collateral Agent
as provided above, all rights of such Guarantor against the Borrower or any
other Guarantor arising as a result thereof by way of right of subrogation,
contribution, reimbursement, indemnity or otherwise shall in all respects be
subject to Article V.

SECTION 2.06. Information. Each Guarantor assumes all responsibility for being
and keeping itself reasonably informed of the Borrower’s and each other
Grantor’s financial condition and assets and of all other circumstances bearing
upon the risk of nonpayment of the Loan Obligations and the nature, scope and
extent of the risks that such Guarantor assumes and incurs hereunder, and agrees
that neither the Collateral Agent nor any other Loan Secured Party will have any
duty to advise such Guarantor of information known to it or any of them
regarding such circumstances or risks.

SECTION 2.07. Instrument for the Payment of Money. Each Guarantor hereby
acknowledges that the guarantee in this Section 2 constitutes an instrument for
the payment of money, and consents and agrees that any Loan Secured Party, at
its sole option, in the event of a dispute by such Guarantor in the payment of
any moneys due hereunder, shall have the right to bring motion-action under New
York CPLR Section 3213.

 

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ARTICLE III

Security Interests in Personal Property

SECTION 3.01. Security Interest.

(a) As security for the payment or performance, as the case may be, in full when
due (whether at stated maturity, by acceleration or otherwise) of the Loan
Obligations (other than contingent obligations), each Grantor hereby confirms
the pledge and grant to the Collateral Agent, its successors and permitted
assigns of the security interest of the Original Guarantee and Collateral
Agreement, for the ratable benefit of the Loan Secured Parties, and as security
for the payment or performance, as the case may be, in full when due (whether at
stated maturity, by acceleration or otherwise) of the Obligations (other than
contingent obligations), each Grantor hereby pledges and grants to the
Collateral Agent, its successors and permitted assigns, for the ratable benefit
of the Secured Parties, a security interest in all right, title or interest in
or to any and all of the following assets and properties in each case whether
tangible or intangible, wherever located, and now owned or at any time hereafter
acquired by such Grantor or in which such Grantor now has or at any time in the
future may acquire any right, title or interest (but excluding any Excluded
Collateral, collectively, the “Collateral”):

(i) all Accounts;

(ii) the Cash Collateral Account (as defined in the Revolving Credit Agreement)
and all cash, securities, Instruments and other property deposited or required
to be deposited therein;

(iii) all Chattel Paper;

(iv) all Documents;

(v) all Equipment;

(vi) all General Intangibles;

(vii) all Goods;

(viii) all Instruments, including all Pledged Securities;

(ix) all Inventory or documents of title, customs receipts, insurance
certificates, shipping documents and other written materials related to the
purchase or import of any Inventory;

(x) all Investment Property;

(xi) all Intellectual Property;

(xii) all Pledged Collateral;

(xiii) all Records and all books and records pertaining to the Collateral;

(xiv) all letters of credit under which such Grantor is the beneficiary and
Letter of Credit Rights;

 

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(xv) all Supporting Obligations;

(xvi) all cash and cash equivalents;

(xvii) all Deposit Accounts and Securities Accounts, including all cash,
marketable securities, securities entitlements, financial assets and other funds
held in or on deposit in any of the foregoing;

(xviii) all other personal property whatsoever of such Grantor; and

(xix) to the extent not otherwise included, all Proceeds, all accessions to and
substitutions and replacements for and products of any and all of the foregoing
and all offsprings, rents profits and products of any of the foregoing and all
collateral security and guarantees given by any person with respect to any of
the foregoing.

(b) Notwithstanding anything to the contrary in this Agreement or any other
Senior Secured Note Document, the Equity Interests and other securities of any
direct or indirect subsidiary of Holdings that are owned by any Grantor will
constitute Collateral securing Note Obligations for the benefit of Senior
Secured Note Holders only to the extent that such Equity Interests and other
securities can secure the Senior Secured Notes and/or the guarantees in respect
thereof without Rule 3-10 or Rule 3-16 of Regulation S-X under the Securities
Act (or any other law, rule or regulation) requiring separate financial
statements of such subsidiary to be filed with the SEC (or any other
governmental agency). In the event that Rule 3-10 or Rule 3-16 of Regulation S-X
under the Securities Act requires or is amended, modified or interpreted by the
SEC to require (or is replaced with another rule or regulation, or any other
law, rule or regulation is adopted, which would require) the filing with the SEC
(or any other governmental agency) of separate financial statements of any
subsidiary of Holdings due to the fact that such subsidiary’s Equity Interests
and other securities secure the Senior Secured Notes and/or the related
guarantees, then the Equity Interests and other securities of such subsidiary
shall automatically be deemed not to be part of the Collateral securing the Note
Obligations in favor of the Note Secured Parties (but only to the extent
necessary to not be subject to such requirement) (any such Equity Interests or
other securities, “Excluded Note Collateral”). In such event, the Security
Documents may be amended or modified, without the consent of the Note Trustee,
the Collateral Agent, any Senior Secured Note Holder or any holder of Other Pari
Passu Lien Obligations, to the extent necessary to release the first-priority
security interests in the shares of Equity Interests and other securities that
are so deemed to no longer constitute part of the Collateral securing the Note
Obligations in favor of the Note Secured Parties. For the avoidance of doubt,
any such Equity Interests shall remain Collateral securing the Loan Obligations
for the benefit of the Loan Secured Parties in accordance with the terms of the
Credit Agreement and this Agreement.

In the event that Rule 3-10 or Rule 3-16 of Regulation S-X under the Securities
Act is amended, modified or interpreted by the SEC to permit (or is replaced
with another rule or regulation, or any other law, rule or regulation is
adopted, which would permit) such subsidiary’s Equity Interests and other
securities to secure the Senior Secured Notes and/or the related guarantees in
excess of the amount then pledged without the filing with the SEC (or any other
governmental agency) of separate financial statements of such subsidiary, then
the Equity Interests and other securities of such subsidiary shall automatically
be deemed to be a part of the Collateral securing the Note Obligations in favor
of the Note Secured Parties (but only to the extent necessary to not be subject
to any such financial statement requirement). In such event, the Security
Documents may be amended or modified, without the consent of the Note Trustee,
the Collateral Agent, any Senior Secured Note Holder or any holder of Other Pari
Passu Lien Obligations, to the extent necessary to subject to the Liens under
the Security Documents such additional Equity Interests and other securities.

 

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This Section 3.01(b) shall apply mutatis mutandis to Other Pari Passu Lien
Obligations.

(c) Each Grantor hereby authorizes the Collateral Agent at any time and from
time to time to file in any relevant jurisdiction any financing statements
(including fixture filings) with respect to the Collateral or any part thereof
and amendments thereto that (i) indicate the Collateral as “all assets” of such
Grantor or words of similar effect, and (ii) contain the information required by
Article 9 of the Uniform Commercial Code of each applicable jurisdiction for the
filing of any financing statement or amendment, including (x) whether such
Grantor is an organization, the type of organization and any organizational
identification number issued to such Grantor and (y) in the case of a financing
statement filed as a fixture filing, a sufficient description of the real
property to which such Collateral relates. Each Grantor agrees to provide such
information to the Collateral Agent promptly upon written request. The
Collateral Agent agrees, upon request by the Borrower and at the Borrower’s
expense, to promptly furnish copies of such filings to the Borrower.

(d) The Collateral Agent is further authorized to file with the United States
Patent and Trademark Office or United States Copyright Office (or any successor
office) such documents as may be necessary for the purpose of perfecting,
confirming, continuing, enforcing or protecting the Security Interest granted by
each Grantor, without the signature of any Grantor, and naming any Grantor or
the Grantors as debtors and the Collateral Agent as secured party. The
Collateral Agent agrees, upon request by the Borrower and at the Borrower’s
expense, to promptly furnish copies of such filings to the Borrower.

(e) The Security Interest is granted as security only and, except as otherwise
required by applicable law, shall not subject the Collateral Agent or any other
Secured Party to, or in any way alter or modify, any obligation or liability of
any Grantor with respect to or arising out of the Collateral. Nothing contained
in this Agreement shall be construed to make the Collateral Agent or any other
Secured Party liable as a member of any limited liability company or as a
partner of any partnership, neither the Collateral Agent nor any other Secured
Party by virtue of this Agreement or otherwise (except as referred to in the
following sentence) shall have any of the duties, obligations or liabilities of
a member of any limited liability company or as a partner in any partnership.
The parties hereto expressly agree that, unless the Collateral Agent shall
become the owner of Pledged Collateral consisting of a limited liability company
interest or a partnership interest pursuant hereto, this Agreement shall not be
construed as creating a partnership or joint venture among the Collateral Agent,
any other Secured Party, any Grantor and/or any other Person.

SECTION 3.02. Representations and Warranties. Each Grantor represents and
warrants to the Collateral Agent and the Secured Parties that:

(a) In executing and delivering this Agreement, each Grantor has (i) adequate
means to obtain from the Issuers on a continuing basis information concerning
the Issuers; (ii) full and complete access to the Transaction Documents and any
other documents executed in connection with the Transaction Documents; and
(iii) not relied and will not rely upon any representations or warranties of any
Secured Party not embodied herein or any acts heretofore or hereafter taken by
any Secured Party (including but not limited to any review by any Secured Party
of the affairs of the Borrower).

(b) Each Grantor has sole beneficial ownership of the Collateral (other than
with respect to Intellectual Property Licenses) and good and valid rights in and
title to the Collateral with respect to which it has purported to grant a
Security Interest hereunder, has full power and authority to grant to the
Collateral Agent (for the ratable benefit of the Secured Parties to the extent
herein provided), the Security Interest in such Collateral pursuant hereto and
to execute,

 

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deliver and perform its obligations in accordance with the terms of this
Agreement, and no Lien exists upon the Collateral (and no right or option to
acquire the same exists in favor of any other Person) other than (i) the
security interest created or provided for herein, which security interest
constitutes a valid first and prior perfected Lien on the Collateral and
(ii) Liens expressly permitted by the Credit Agreement and the Senior Secured
Note Indenture.

(c)(i) Uniform Commercial Code financing statements (including fixture filings,
as applicable) or other appropriate filings, recordings or registrations
containing a description of the Collateral have been prepared by the Collateral
Agent based upon the information provided to the Collateral Agent and the
Secured Parties by the Grantors for filing in each governmental, municipal or
other office specified on Schedule IV hereof (or specified by notice from the
Borrower to the Collateral Agent after the date hereof in the case of filings,
recordings or registrations required by Section 5.09 of the Credit Agreement or
after the Amendment No. 2 Closing Date in the case of filings, recordings or
registrations required by any comparable provision of the Senior Secured Note
Indenture or any Other Pari Passu Lien Obligations Agreement), which are all the
filings, recordings and registrations (other than filings required to be made in
the United States Patent and Trademark Office and the United States Copyright
Office in order to perfect the Security Interest in the Collateral consisting of
United States Patents, Trademarks and Copyrights) that are necessary as of the
date hereof (or after the date hereof, in the case of filings, recordings or
registrations required by Section 5.09 of the Credit Agreement or after the
Amendment No. 2 Closing Date in the case of filings, recordings or registrations
required by any comparable provision of the Senior Secured Note Indenture or any
Other Pari Passu Lien Obligations Agreement) to publish notice of and protect
the validity of and to establish a legal, valid and perfected security interest
in favor of the Collateral Agent (for the ratable benefit of the Secured Parties
to the extent provided herein) in respect of all Collateral in which the
Security Interest may be perfected by filing, recording or registration in the
United States (or any political subdivision thereof) and its territories and
possessions, and no further or subsequent filing, refiling, recording,
rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing
of continuation statements. (ii) Notwithstanding the foregoing, each Grantor
represents and warrants that a fully executed agreement in the form hereof or,
alternatively, each applicable short form security agreement in the form
attached to the Credit Agreement as Exhibits F-1, F-2 and F-3, and containing a
description of all Collateral consisting of Intellectual Property that is
material to the conduct of such Grantor’s business with respect to United States
Patents and United States federally registered Trademarks (and Trademarks for
which United States federal registration applications are pending) and United
States federally registered Copyrights has been or will be delivered to the
Collateral Agent for recording by the United States Patent and Trademark Office
and the United States Copyright Office pursuant to 35 U.S.C. § 261, 15 U.S.C.
§ 1060 or 17 U.S.C. § 205 and the regulations thereunder, as applicable to
protect the validity of and to establish a legal, valid and perfected security
interest in favor of the Collateral Agent) in respect of all such Collateral in
which a security interest may be perfected by filing, recording or registration
in the United States, and no further or subsequent filing, refiling, recording,
rerecording, registration or reregistration is necessary (other than filings
described in Section 3.02(c)(i), and other than such actions as are necessary to
perfect the Security Interest with respect to any Collateral consisting of
United States Patents, United States federally registered Trademarks and United
States federally registered Copyrights (and applications therefor) that are
material to the conduct of such Grantor’s business and that are acquired or
developed after the date hereof).

 

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(d) The Security Interest constitutes (i) a legal and valid security interest in
(x) all Collateral securing the payment and performance of the Loan Obligations
and (y) all Collateral other than the Excluded Note Collateral securing the
payment and performance of the Note Obligations, (ii) subject to the filings
described in Section 3.02(c), a perfected security interest in all Collateral in
which a security interest may be perfected by filing, recording or registering a
financing statement or analogous document in the United States (or any state
thereof) pursuant to the Uniform Commercial Code and (iii) subject to the
filings described in Section 3.02(c), a security interest that shall be
perfected in all Collateral in which a security interest may be perfected upon
the receipt and recording of this Agreement (or the applicable short form
security agreement) with the United States Patent and Trademark Office and the
United States Copyright Office, as applicable, within the 3-month period
(commencing as of the date hereof) pursuant to 35 U.S.C. § 261 or 15 U.S.C. §
1060 or the 1-month period (commencing as of the date hereof) pursuant to 17
U.S.C. § 205. The Security Interest is and shall be prior to any other Lien on
any of the Collateral, other than Permitted Liens.

(e) Schedule II correctly sets forth as of the Amendment No. 2 Closing Date the
percentage of the issued and outstanding shares or units of each class of the
Equity Interests of the issuer thereof represented by the Pledged Stock and
includes all Equity Interests, debt securities and promissory notes required to
be pledged hereunder.

(f) The Pledged Stock and Pledged Debt Securities have been duly and validly
authorized and issued by the issuers thereof and (i) in the case of Pledged
Stock issued by a corporation, are fully paid and nonassessable and (ii) in the
case of Pledged Debt Securities, are legal, valid and binding obligations of the
issuers thereof, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other loss affecting creditors’ rights generally and general
principles of equity or at law.

(g) Schedule V correctly sets forth as of the Amendment No. 2 Closing Date
(i) the exact legal name of each Grantor, as such name appears in its respective
certificate or articles of incorporation or formation, (ii) the jurisdiction of
organization of each Grantor, (iii) the mailing address of each Grantor,
(iv) the organizational identification number, if any, issued by the
jurisdiction of organization of each Grantor, (v) the identity or type of
organization of each Grantor and (vi) the Federal Taxpayer Identification
Number, if any, of each Grantor. The Borrower agrees to update the information
required pursuant to the preceding sentence as provided in Section 5.06 of the
Credit Agreement and any comparable provision of the Senior Secured Note
Indenture or any Other Pari Passu Lien Obligations Agreement.

(h) No Grantor has (a) within the period of four months prior to the Amendment
No. 2 Closing Date, changed its location (as defined in Section 9-307 of the New
York UCC), (b) except as specified in Schedule V, heretofore changed its name,
or (c) become a “new debtor” (as defined in Section 9-102(a)(56) of the New York
UCC) with respect to a currently effective security agreement previously entered
into by any other Person.

(i) Notwithstanding the foregoing or anything else in this Agreement to the
contrary, no representation, warranty or covenant is made with respect to the
creation or perfection of a security interest in (i) Collateral consisting of
Intellectual Property that is not material to the conduct of the Grantor’s
business, and (ii) Collateral to the extent such creation or perfection would
require (A) any filing other than a filing in the United States or America, any
state thereof and the District of Columbia or (B) other action under the laws of
any jurisdiction other than the United States of America, any state thereof and
the District of Columbia.

 

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(j) Each Grantor represents and warrants that the Trademarks, Patents and
Copyrights listed on Schedule III include all United States federal
registrations and pending applications for Trademarks, Patents and Copyrights,
all as in effect as of the Amendment No. 2 Closing Date, that such Grantor owns
and that are material to the conduct of its business as of the Amendment No. 2
Closing Date.

(k) As of the Amendment No. 2 Closing Date, all of Grantors’ locations where
Collateral constituting Inventory is located (other than (i) Collateral in
transit or out for repair or maintenance or (ii) locations where the value of
Inventory located at any such location does not exceed $2,000,000 and the
aggregate value of Inventory located at all such locations does not exceed
$10,000,000) are listed on Schedule VI. All of said locations are owned by the
Grantors except for locations (i) which are leased by the Grantors as lessees
and designated in Part B(ii) of Schedule VI and (ii) at which Inventory is held
in a public warehouse or is otherwise held by a bailee or on consignment as
designated in Part B(iii) of Schedule VI.

(l) All of such Grantor’s Deposit Accounts are listed on Schedule VII.

(m) Schedule VIII lists all Letter-of-Credit Rights and Chattel Paper of such
Grantor having an individual fair market value in excess of $250,000.

(n) With respect to Accounts and Chattel Paper, the information with respect to
the Accounts and Chattel Paper (including without limitation the names of
obligors, amounts owing and due dates) is and will be correctly stated in all
material respects in all records of the Grantors relating thereto and in all
invoices with respect thereto furnished to the Collateral Agent by the Grantors
from time to time.

SECTION 3.03. Covenants.

(a) Subject to Section 3.02(i), each Grantor shall, at its own expense, take all
commercially reasonable actions necessary to defend title to the Collateral
against all persons and to defend the Security Interest of the Collateral Agent
in the Collateral and the priority thereof against any Lien which does not
constitute a Permitted Lien.

(b) Subject to Section 3.02(i), each Grantor agrees, upon written request by the
Collateral Agent and at its own expense, to execute, acknowledge, deliver and
cause to be duly filed all such further instruments and documents and take all
such actions as the Collateral Agent may from time to time reasonably deem
necessary to obtain, preserve, protect and perfect the Security Interest and the
rights and remedies created hereby, including the payment of any fees and Taxes
required in connection with the execution and delivery of this Agreement, the
granting of the Security Interest and the filing of any financing or
continuation statements (including fixture filings) or other documents in
connection herewith or therewith.

(c) At its option, but only following 5 Business Days’ written notice to each
Grantor of its intent to do so unless an Event of Default shall have occurred
and be continuing, the Collateral Agent may discharge past due Taxes,
assessments, charges, fees or Liens at any time levied or placed on the
Collateral which do not constitute a Permitted Lien, and may pay for the
maintenance and preservation of the Collateral to the extent any Grantor fails
to do so as required by the Credit Agreement and the Senior Secured Note
Indenture, and each Grantor agrees to reimburse the Collateral Agent within 30
days after written demand for any reasonable out-of-pocket payment made or any
reasonable out-of-pocket expense incurred by the Collateral Agent pursuant to
the foregoing authorization; provided, however, that nothing in this paragraph
shall be interpreted as excusing any Grantor from the performance of, or
imposing any obligation on the Collateral Agent or any Secured Party to cure or
perform, any covenants or other promises of any Grantor with respect to Taxes,
assessments, charges, fees or Liens and maintenance as set forth herein or in
the other Transaction Documents.

 

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(d) Each Grantor shall remain liable to observe and perform all conditions and
obligations to be observed and performed by it under each contract, agreement or
instrument relating to the Collateral, all in accordance with the terms and
conditions thereof.

(e) In the case of each Grantor, such Grantor shall, promptly upon obtaining
knowledge thereof, give notice to the Collateral Agent of any Commercial Tort
Claim of such Grantor in which the damages being sought exceeds $1,000,000 and
shall grant to the Collateral Agent, for the ratable benefit of the Secured
Parties, a first priority security interest in such Commercial Tort Claim. After
such grant, such commercial tort claim shall be deemed to constitute Collateral
for purposes of this Agreement.

(f) Subject to the following sentence, the Grantors will not (i) maintain any
Inventory (other than such Collateral in transit) at any location other than
those locations listed on Schedule VI (except for locations where the fair
market value of Inventory at any such location does not exceed $2,000,000 and
the aggregate fair market value of Inventory at all such locations does not
exceed $10,000,000), (ii) otherwise change, or add to, such locations, or
(iii) change their respective principal places of business or chief executive
offices from the location identified on Schedule VI. Each Grantor will give the
Collateral Agent at least ten (10) days prior written notice (or such shorter
notice to which the Collateral Agent has consented in writing) of any new
principal place of business or chief executive office or any new location for
any of its Inventory, except for locations where the market value of Inventory
stored or warehoused at any such new location does not exceed $2,000,000 and the
aggregate market value of Inventory, stored or warehoused at all such new
locations (together with all other locations not listed on Schedule VI) does not
exceed $10,000,000 (such locations, “Excluded Locations”). With respect to any
such new location (excluding Excluded Locations), such Grantor will execute such
documents and take such actions as the Collateral Agent reasonably deems
necessary to perfect and protect the Liens granted under the Collateral
Documents and, if requested by the Collateral Agent, will use commercially
reasonable efforts to obtain a Collateral Access Agreement for each such
location.

(g) Receivables.

(i) The Grantors will deliver to the Collateral Agent promptly upon its request
after the occurrence and during the continuation of an Event of Default
duplicate invoices with respect to each Account bearing such language of
assignment as the Collateral Agent shall specify.

(ii) Upon the request of the Collateral Agent, the Grantors shall take all steps
reasonably necessary to grant the Collateral Agent “control” (within the meaning
of set forth in Section 9-105 of the Uniform Commercial Code) of all electronic
chattel paper in accordance with the Uniform Commercial Code. Unless an Event of
Default has occurred and is continuing, the requirement in the preceding
sentence shall not apply to electronic chattel paper to the extent that all
amounts payable evidenced by such electronic chattel paper in which the
Collateral Agent has not been vested “control” does not exceed $1,000,000 in the
aggregate for all Grantors.

 

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

(a) Instruments. Upon the occurrence and during the continuation of an Event of
Default, if any Grantor shall at any time hold or acquire any Instruments in
excess of $1,000,000 individually, such Grantor shall promptly endorse, assign
and deliver the same to the Collateral Agent, accompanied by such undated
instruments of endorsement, transfer or assignment duly executed in blank as the
Collateral Agent may from time to time reasonably specify.

(b) Investment Property. Subject to the terms hereof, if any Grantor shall at
any time hold or acquire any Certificated Securities, to the extent the same do
not constitute Excluded Collateral, such Grantor shall promptly endorse, assign
and deliver the same to the Collateral Agent, accompanied by such undated
instruments of transfer or assignment duly executed in blank as the Collateral
Agent may from time to time reasonably specify. Each delivery of Pledged
Securities shall be accompanied by a schedule describing the securities, which
schedule shall be attached hereto as Schedule II and made a part hereof and
supplement any prior schedule so delivered; provided that failure to attach any
such schedule hereto shall not affect the validity of such pledge of such
Pledged Securities and shall not in and of itself result in any Default or Event
of Default. Each certificate representing an interest in any limited liability
company or limited partnership controlled by any Grantor and pledged under
Section 3.01 shall be physically delivered to the Collateral Agent in accordance
with the terms of the Credit Agreement and endorsed to the Collateral Agent or
endorsed in blank.

(c) Security Interests in Property of Account Debtors. If at any time any
Grantor shall take a security interest in any property of an Account Debtor or
any other Person the value of which equals or exceeds $250,000 to secure payment
of an Account, such Grantor shall promptly assign such security interest to the
Collateral Agent for the benefit of the Secured Parties. Such assignment need
not be filed of public record unless necessary to continue the perfected status
of the security interest against creditors of and transferees from the Account
Debtor or other Person granting the security interest.

(d) Letter-of-Credit Rights. If any Grantor is or becomes the beneficiary of a
letter of credit having an individual face amount in an amount in excess of
$250,000, the applicable Grantor shall promptly, and in any event within ten
(10) Business Days after becoming a beneficiary, notify the Collateral Agent
thereof and, if requested to do so by the Collateral Agent, use commercially
reasonable efforts to cause the issuer and/or confirmation bank to (i) consent
to the assignment of any Letter-of-Credit Rights to the Collateral Agent and
(ii) agree to direct all payments thereunder to a Deposit Account of the
Collateral Agent or subject to a Deposit Account Control Agreement, all in form
and substance reasonably satisfactory to the Collateral Agent. Unless requested
by the Collateral Agent following the occurrence and during the continuation of
an Event of Default, the actions in the preceding sentence shall not be required
to the extent that the amount of any such letter of credit, together with the
aggregate amount of all other letters of credit for which the actions described
above in clause (i) and (ii) have not been taken, does not exceed $1,000,000 in
the aggregate for all Grantors.

SECTION 3.05. Voting Rights; Dividends and Interest, Etc. Unless and until an
Event of Default shall have occurred and be continuing and, except in the case
of a Bankruptcy Default, the Collateral Agent shall have given the Grantors
prior written notice of its intent to exercise its rights under this Agreement:

(a) Each Grantor shall be entitled to exercise any and all voting and/or other
consensual rights and powers inuring to an owner of the Pledged Collateral or
any part thereof for any purpose consistent with the terms of this Agreement and
the other Transaction Documents and applicable law and no notice of any such
voting or exercise of any consensual rights and powers need be given to the
Collateral Agent.

 

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

(c) Each Grantor shall be entitled to receive and retain any and all dividends,
interest, principal and other distributions paid on or distributed in respect of
the Pledged Collateral to the extent and only to the extent that such dividends,
interest, principal and other distributions are not prohibited by, and otherwise
paid or distributed in accordance with, the terms and conditions of the
Transaction Documents and applicable law; provided that any noncash dividends,
interest, principal or other distributions that would constitute Pledged
Collateral shall be and become part of the Pledged Collateral, and, if received
by any Grantor, shall be held in trust for the benefit of the Collateral Agent
and the Secured Parties and shall be delivered to the Collateral Agent in the
same form as so received (with any necessary endorsement reasonably requested by
the Collateral Agent) on or prior to the later to occur of (i) 30 days following
the receipt thereof and (ii) the earlier of the date of the required delivery of
the Pricing Certificate following the receipt of such items and the date which
is 45 days after the end of the most recently ended fiscal quarter (or such
longer period as to which the Collateral Agent may consent).

SECTION 3.06. Additional Covenants Regarding Patent, Trademark and Copyright
Collateral.

(a) Except as could not reasonably be expected to have a Material Adverse
Effect, each Grantor agrees that it will not do any act, or omit to do any act,
whereby any Patent that is material to the conduct of such Grantor’s business
may become invalidated or dedicated to the public, other than the expiration of
such Patent at the end of its natural term, subject to such Grantor’s reasonable
business judgment.

(b) Except as could not reasonably be expected to have a Material Adverse
Effect, each Grantor (either itself or through its licensees or its
sublicensees) will, for each registered Trademark that is material to the
conduct of such Grantor’s business, use commercially reasonable efforts to
maintain such Trademark registration in full force free from any legally binding
determination of abandonment or invalidity of such Trademark registration due to
nonuse, subject to such Grantor’s reasonable business judgment.

(c) Except to the extent failure to act could not reasonably be expected to have
a Material Adverse Effect, and subject to each Grantor’s reasonable business
judgment, each Grantor will take all reasonable and necessary steps that are
consistent with the practice in any proceeding before the United States Patent
and Trademark Office, and the United States Copyright Office, to maintain and
pursue each material application relating to the Patents, Trademarks and/or
Copyrights (and to obtain the relevant grant or registration) and to maintain
each issued Patent and each registration of the Trademarks and Copyrights that
is material to the conduct of any Grantor’s business, including timely filings
of applications for renewal, affidavits of use, affidavits of incontestability
and payment of maintenance fees, and, if consistent with good business judgment,
to initiate opposition, interference and cancellation proceedings against third
parties.

(d) Each Grantor agrees that, should it obtain an ownership interest in any
Intellectual Property (other than any Excluded Collateral) after the date
hereof, to the extent that such Intellectual Property would be a part of the
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owned by such Grantor as of the date hereof, (“After-Acquired Intellectual
Property”), (i) the provisions of this Agreement shall automatically apply
thereto, and (ii) any such After-Acquired Intellectual Property and, in the case
of Trademarks, the goodwill symbolized thereby shall automatically become part
of the Collateral, subject to the terms and conditions of this Agreement. Within
90 days after the end of each calendar year (or such longer period as to which
the Collateral Agent may consent), the relevant Grantor shall sign and deliver
to the Collateral Agent an appropriate Intellectual Property Security Agreement
with respect to all applicable United States federally registered (or
application for United States federally registered) After-Acquired Intellectual
Property owned by it as of the last day of applicable fiscal quarter, to the
extent that such Intellectual Property becomes part of the Collateral and to the
extent that it is not covered by any previous Intellectual Property Security
Agreement so signed and delivered by it.

SECTION 3.07. Collateral Access Agreements.

If requested by the Collateral Agent, each Grantor shall use commercially
reasonable efforts to obtain a Collateral Access Agreement, from the lessor of
each leased property, mortgagee of owned property or bailee or consignee with
respect to any warehouse, processor or converter facility or other location
where Inventory are stored or located (except for such locations where the value
of Inventory stored or located at any such location does not exceed $2,000,000
so long as the aggregate value of Inventory does not exceed $10,000,000 for all
such locations).

SECTION 3.08. Deposit Account Control Agreements.

Each Grantor will provide to the Collateral Agent within 60 days of the
Collateral Agent’s request (or such longer period as to which the Collateral
Agent may consent), a Deposit Account Control Agreement duly executed on behalf
of each financial institution holding a deposit account (other than an Excluded
Deposit Account) of such Grantor as set forth in this Agreement.

ARTICLE IV

Remedies

SECTION 4.01. Pledged Collateral.

(a) Upon the occurrence and during the continuance of an Event of Default and
with prior written notice to the Borrower, the Collateral Agent, on behalf of
the Secured Parties, shall have the right (in its sole and absolute discretion)
to hold the Pledged Securities in its own name as pledgee, the name of its
nominee (as pledgee or as sub-agent) or the name of the applicable Grantor,
endorsed or assigned in blank or in favor of the Collateral Agent. Subject to
the Term/Revolving Intercreditor Agreement and Section 4.06 with respect to the
ABL Priority Collateral (as therein defined), upon the occurrence and during the
continuance of an Event of Default and with prior written notice to the relevant
Grantor, the Collateral Agent shall at all times have the right to exchange the
certificates representing any Pledged Securities for certificates of smaller or
larger denominations for any purpose consistent with this Agreement.

(b) Upon the occurrence and during the continuance of an Event of Default, all
rights of any Grantor to dividends, interest, principal or other distributions
that such Grantor is authorized to receive pursuant to paragraph (c) of
Section 3.05 shall cease, and all such rights shall thereupon become vested in
the Collateral Agent, which shall have the sole and exclusive right and
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retain such dividends, interest, principal or other distributions. All
dividends, interest, principal or other distributions received by any Grantor
contrary to the provisions of Section 3.05 shall be held in trust for the
benefit of the Collateral Agent, shall be segregated from other property or
funds of such Grantor and shall be promptly delivered to the Collateral Agent
upon written demand in the same form as so received (with any necessary
endorsement or instrument of assignment). Any and all money and other property
paid over to or received by the Collateral Agent pursuant to the provisions of
this paragraph (b) shall be retained by the Collateral Agent in an account to be
established by the Collateral Agent upon receipt of such money or other property
and shall be applied in accordance with the provisions of Section 4.03. After
all Events of Default have been cured or waived, the Collateral Agent shall
promptly repay to each applicable Grantor (without interest) all dividends,
interest, principal or other distributions that such Grantor would otherwise be
permitted to retain pursuant to the terms of paragraph (c) of Section 3.05 and
that remain in such account.

(c) Upon the occurrence and during the continuance of an Event of Default, all
rights of any Grantor to exercise the voting and consensual rights and powers it
is entitled to exercise pursuant to paragraph (a) of Section 3.05, and the
obligations of the Collateral Agent under paragraph (b) of Section 3.05, shall
cease, and all such rights shall thereupon become vested in the Collateral
Agent, which shall have the sole and exclusive right and authority to exercise
such voting and consensual rights and powers; provided, however, that unless
otherwise directed by the Required Lenders and Required Noteholders, the
Collateral Agent shall have the right from time to time following and during the
continuance of an Event of Default and the provision of the notice referred to
above to permit the Grantors to exercise such rights. To the extent the notice
referred to in the first sentence of this paragraph (c) has been given, after
all Events of Default have been cured or waived, each Grantor shall have the
exclusive right to exercise the voting and/or consensual rights and powers that
such Grantor would otherwise be entitled to exercise pursuant to the terms of
paragraph (a) of Section 3.05, and the Collateral Agent shall again have the
obligations under paragraph (b) of Section 3.05.

(d) Notwithstanding anything to the contrary contained in this Section 4.01, if
a Bankruptcy Default shall have occurred and be continuing, the Collateral Agent
shall not be required to give any notice referred to in Section 3.05 or this
Section 4.01 in order to exercise any of its rights described in said Sections,
and the suspension of the rights of each of the Grantors under said Sections
shall be automatic upon the occurrence of such Bankruptcy Default.

SECTION 4.02. Uniform Commercial Code and Other Remedies. Upon the occurrence
and during the continuance of an Event of Default, each Grantor agrees to
deliver each item of Collateral to the Collateral Agent on written demand, and
it is agreed that the Collateral Agent shall have the right to take any of or
all the following actions at the same or different times: (a) with respect to
any Collateral consisting of Intellectual Property, on written demand, to cause
the Security Interest to become an assignment, transfer and conveyance of any of
or all such Collateral (provided that such assignment, transfer or conveyance of
any Collateral consisting of Trademarks includes an assignment, transfer or
conveyance of the goodwill associated with such Trademarks) by the applicable
Grantor to the Collateral Agent, or to license or sublicense, whether general,
special or otherwise, and whether on an exclusive or nonexclusive basis, any
such Collateral throughout the world on such terms and conditions and in such
manner as the Collateral Agent shall determine (other than in violation of any
then-existing licensing arrangements), (b) with or without legal process and
with or without prior notice or demand for performance, to take possession of
the Collateral without breach of the peace, and subject to the terms of any
related lease agreement, to enter any premises where the Collateral may be
located for the purpose of taking possession of or removing the Collateral, and
(c) generally, to exercise any and all rights afforded to a secured party under
the Uniform Commercial Code, whether or not the Uniform Commercial Code is in
effect in the applicable jurisdiction, or other applicable law. Without limiting
the generality of the foregoing, each Grantor agrees that the Collateral Agent
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requirements of applicable law, to sell or otherwise dispose of all or any part
of the Collateral at a public or private sale or at any broker’s board or on any
securities exchange upon such commercially reasonable terms and conditions as it
may deem necessary, for cash, upon credit or for future delivery as the
Collateral Agent shall deem appropriate. The Collateral Agent shall be
authorized at any such sale (if it deems it necessary to do so) to restrict the
prospective bidders or purchasers to persons who will represent and agree that
they are purchasing the Collateral for their own account for investment and not
with a view to the distribution or sale thereof, and upon consummation of any
such sale the Collateral Agent shall have the right to assign, transfer and
deliver to the purchaser or purchasers thereof the Collateral so sold. Each such
purchaser at any such sale shall hold the property sold absolutely, free from
any claim or right on the part of any Grantor, and each Grantor hereby waives
(to the extent permitted by law) all rights of redemption, stay and appraisal
which such Grantor now has or may at any time in the future have under any rule
of law or statute now existing or hereafter enacted.

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

 

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Until the Termination Date, each Grantor irrevocably makes, constitutes and
appoints the Collateral Agent (and all officers, employees or agents designated
in writing by the Collateral Agent) as such Grantor’s true and lawful agent (and
attorney-in-fact) for the purpose, upon the occurrence and during the
continuance of an Event of Default, of making, settling and adjusting claims in
respect of Collateral under policies of insurance, endorsing the name of such
Grantor on any check, draft, instrument or other item of payment for the
proceeds of such policies of insurance and for making all determinations and
decisions with respect thereto. Upon the occurrence and during the continuance
of an Event of Default, in the event that any Grantor at any time or times shall
fail to obtain or maintain any of the policies of insurance required under the
Credit Agreement or the Senior Secured Note Indenture or to pay any premium in
whole or part relating thereto, the Collateral Agent may upon prior written
notice to such Grantor, without waiving or releasing any obligation or liability
of any Grantor hereunder or any Default or Event of Default, in its sole
discretion, obtain and maintain such policies of insurance and pay such premium
and take any other actions with respect thereto as the Collateral Agent deems
necessary. All sums disbursed by the Collateral Agent in connection with this
paragraph, including attorneys’ fees, court costs, expenses and other charges
relating thereto, shall be payable, upon written demand as provided in
Section 9.05 of the Credit Agreement or any comparable provision of the Senior
Secured Note Indenture or any Other Pari Passu Lien Obligations Agreement, by
the Grantors to the Collateral Agent and shall be additional Obligations secured
hereby.

SECTION 4.03. Application of Proceeds. If an Event of Default shall have
occurred and be continuing the Collateral Agent shall apply the proceeds of any
collection, sale, foreclosure or other realization upon any Collateral in
accordance with the Term/Note Intercreditor Agreement or, (i) if the Loan
Obligations have been paid in full (other than contingent obligations) but only
one class of Note Obligations or Other Pari Passu Lien Obligations remains
outstanding, in accordance with the Senior Secured Notes Indenture or applicable
Other Pari Passu Lien Obligations Agreement, as applicable, or (ii) if the Note
Obligations and Other Pari Passu Lien Obligations have been paid in full (other
than contingent obligations) but the Loan Obligations remain outstanding, in
accordance with the Section 2.17 of the Credit Agreement. Upon any sale of
Collateral by the Collateral Agent (including pursuant to a power of sale
granted by statute or under a judicial proceeding), the receipt of the
Collateral Agent or of the officer making the sale shall be a sufficient
discharge to the purchaser or purchasers of the Collateral so sold and such
purchaser or purchasers shall not be obligated to see to the application of any
part of the purchase money paid over to the Collateral Agent or such officer or
be answerable in any way for the misapplication thereof.

SECTION 4.04. Grant of License to Use Intellectual Property. For the purpose of
enabling the Collateral Agent to exercise its rights and remedies in this
Article IV at such time as the Collateral Agent shall be lawfully entitled to
exercise such rights and remedies, each Grantor hereby grants to the Collateral
Agent (until the termination of this Agreement and subject to Section 7.14) an
irrevocable nonexclusive license (exercisable without payment of royalty or
other compensation to the Grantors), subject in all respects to any Licenses to
use, license or sublicense any of the Collateral consisting of know how,
Patents, Copyrights and Trademarks, now owned or hereafter acquired by such
Grantor, and wherever the same may be located, and including in such license
access to all media in which any of the licensed items may be recorded or stored
and to all computer software and programs used for the compilation or printout
thereof. The use of such license by the Collateral Agent may be exercised, at
the option of the Collateral Agent, only upon the occurrence and during the
continuation of an Event of Default; provided, however, that any license or
sublicense entered into by the Collateral Agent with a third party in accordance
with this Section 4.04 shall be binding upon each Grantor notwithstanding any
subsequent cure of an Event of Default, except to the extent that such license
or sublicense would invalidate or render unenforceable any such Grantor’s
Intellectual Property.

 

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SECTION 4.05. Securities Act, Etc. In view of the position of the Grantors in
relation to the Pledged Collateral, or because of other current or future
circumstances, a question may arise under the U.S. Securities Act of 1933, as
now or hereafter in effect, or any similar statute hereafter enacted analogous
in purpose or effect (such Act and any such similar statute as from time to time
in effect being called the “Federal Securities Laws”) with respect to any
disposition of the Pledged Collateral permitted hereunder. Each Grantor
understands that compliance with the Federal Securities Laws might very strictly
limit the course of conduct of the Collateral Agent if the Collateral Agent were
to attempt to dispose of all or any part of the Pledged Collateral, and might
also limit the extent to which or the manner in which any subsequent transferee
of any Pledged Collateral could dispose of the same. Similarly, there may be
other legal restrictions or limitations affecting the Collateral Agent in any
attempt to dispose of all or part of the Pledged Collateral under applicable
“blue sky” or other state securities laws or similar laws analogous in purpose
or effect. Each Grantor recognizes that to the extent such restrictions and
limitations apply to any proposed sale of Pledged Collateral, the Collateral
Agent may, with respect to any sale of such Pledged Collateral, limit the
purchasers to those who will agree, among other things, to acquire such Pledged
Collateral for their own account, for investment, and not with a view to the
distribution or resale thereof. Each Grantor acknowledges and agrees that to the
extent such restrictions and limitations apply to any proposed sale of Pledged
Collateral, the Collateral Agent, in its sole and absolute discretion (a) may
proceed to make such a sale whether or not a registration statement for the
purpose of registering such Pledged Collateral or part thereof shall have been
filed under the Federal Securities Laws and (b) may approach and negotiate with
a limited number of potential purchasers (including a single potential
purchaser) to effect such sale. Each Grantor acknowledges and agrees that any
such sale might result in prices and other terms less favorable to the seller
than if such sale were a public sale without such restrictions. In the event of
any such sale, the Collateral Agent shall incur no responsibility or liability
for selling all or any part of the Pledged Collateral at a price that the
Collateral Agent, in its sole and absolute discretion, may in good faith deem
reasonable under the circumstances, notwithstanding the possibility that a
substantially higher price might have been realized if the sale were deferred
until after registration as aforesaid or if more than a limited number of
purchasers (or a single purchaser) were approached. The provisions of this
Section 4.05 will apply notwithstanding the existence of a public or private
market upon which the quotations or sales prices may exceed substantially the
price at which the Collateral Agent sells.

ARTICLE V

Indemnity, Subrogation and Subordination

SECTION 5.01. Indemnity and Subrogation. In addition to all such rights of
indemnity and subrogation as the Guarantors may have under applicable law (but
subject to Section 5.03), the Borrower agrees that (a) in the event a payment
shall be made by any Guarantor under this Agreement, the Borrower shall
indemnify such Guarantor for the full amount of such payment and such Guarantor
shall be subrogated to the rights of the person to whom such payment shall have
been made to the extent of such payment and (b) in the event any assets of any
Guarantor shall be sold pursuant to this Agreement or any other Security
Document to satisfy in whole or in part a claim of any Secured Party, the
Borrower shall indemnify such Guarantor in an amount equal to the greater of the
book value or the fair market value of the assets so sold.

SECTION 5.02. Contribution and Subrogation. Each Guarantor (a “Contributing
Guarantor”) agrees (subject to Section 5.03) that, in the event a payment shall
be made by any other Guarantor hereunder in respect of any Loan Obligation, or
assets of any other Guarantor shall be sold pursuant to any Security Document to
satisfy any Loan Obligation owed to any Loan Secured Party, and such other
Guarantor (the “Claiming Guarantor”) shall not have been fully indemnified by
the Borrower as provided in Section 5.01, the Contributing Guarantor shall
indemnify the Claiming Guarantor in an

 

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amount equal to (i) the amount of such payment or (ii) the greater of the book
value or the fair market value of such assets, as the case may be, in each case
multiplied by a fraction of which the numerator shall be the net worth of the
Contributing Guarantor on the date hereof and the denominator shall be the
aggregate net worth of all the Guarantors on the date hereof (or, in the case of
any Guarantor becoming a party hereto pursuant to Section 7.16, the date of the
supplement hereto executed and delivered by such Guarantor). Any Contributing
Guarantor making any payment to a Claiming Guarantor pursuant to this
Section 5.02 shall be subrogated to the rights of such Claiming Guarantor under
Section 5.01 to the extent of such payment.

SECTION 5.03. Subordination. Notwithstanding any provision of this Agreement to
the contrary, all rights of the Guarantors under Sections 5.01 and 5.02 and all
other rights of indemnity, contribution or subrogation under applicable law or
otherwise shall be fully subordinated to the Loan Obligations until the
Termination Date; provided, that if any amount shall be paid to such Guarantors
on account of such subrogation rights at any time prior to the Termination Date,
such amount shall be held in trust for the benefit of the Loan Secured Parties
and shall promptly be paid to the Collateral Agent to be credited and applied
against the Loan Obligations, whether matured or unmatured, in accordance with
Section 2.17 of the Credit Agreement. No failure on the part of the Borrower or
any Guarantor to make the payments required by Sections 5.01 and 5.02 (or any
other payments required under applicable law or otherwise) shall in any respect
limit the obligations and liabilities of any Guarantor with respect to its
obligations hereunder, and each Guarantor shall remain liable for the full
amount of its obligations hereunder.

ARTICLE VI

Intentionally Deleted.

ARTICLE VII

Miscellaneous

SECTION 7.01. Notices. All communications and notices hereunder shall (except as
otherwise expressly permitted herein) be in writing and given as provided in
Section 9.01 of the Credit Agreement or after the Loan Obligations have been
paid in full, in accordance with the Term/Note Intercreditor Agreement or, if
only one class of Note Obligations or Other Pari Passu Lien Obligations remains
outstanding, in accordance with the Senior Secured Notes Indenture or applicable
Other Pari Passu Lien Obligations Agreement, as applicable. All communications
and notices hereunder to any Subsidiary Guarantor shall be given to it in care
of the Borrower as provided in Section 9.01 of the Credit Agreement.

SECTION 7.02. Survival of Agreement. All covenants, agreements, representations
and warranties made by the Grantors herein or in any other Transaction Document
shall be considered to have been relied upon by the Lenders, the Senior Secured
Noteholders and the holders of Other Pari Passu Lien Obligations and shall
survive the making by the Lenders of any Loans and the extension of credit or
purchase by the Senior Secured Note Holders and holders of Other Pari Passu Lien
Obligations, regardless of any investigation made by any Lender, any such Senior
Secured Note Holder or any such holder of Other Pari Passu Lien Obligations on
their behalf and notwithstanding that the Collateral Agent, any Lender or any
such Senior Secured Note Holder may have had notice or actual knowledge of any
Default at the time of the making of such Loans or such extension or purchase,
as applicable, and shall continue in full force and effect until the Termination
Date.

 

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SECTION 7.03. Binding Effect; Several Agreement. This Agreement shall become
effective when it shall have been executed by the Grantors and the Collateral
Agent and when the Collateral Agent shall have received counterparts hereof
which, when taken together, bear the signatures of each of the other parties
hereto. This Agreement shall be construed as a separate agreement with respect
to each Grantor and may be amended, modified, supplemented, waived or released
with respect to any Grantor without the approval of any other Grantor and
without affecting the obligations of any other Grantor hereunder.

SECTION 7.04. Successors and Assigns. Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
permitted successors and assigns of such party; and all covenants, promises and
agreements by or on behalf of any Grantor or the Collateral Agent that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns.

SECTION 7.05. Collateral Agent’s Expenses; Indemnity.

(a) The parties hereto agree that the Collateral Agent shall be entitled to
reimbursement of its reasonable out-of-pocket expenses incurred hereunder as
provided in Section 9.05 of the Credit Agreement and any comparable provision of
the Senior Secured Note Indenture and any Other Pari Passu Lien Obligations
Agreement, as applicable.

(b) Without limitation of its indemnification obligations under the other
Transaction Documents, each Grantor agrees to indemnify the Collateral Agent and
the other Indemnitees as provided in Section 9.05 of the Credit Agreement and
any comparable provision of the Senior Secured Note Indenture and any Other Pari
Passu Lien Obligations Agreement, as applicable.

(c) Any such amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 7.05 shall survive the Termination Date.

SECTION 7.06. Collateral Agent Appointed Attorney-in-Fact.

(a) Until the Termination Date, each Grantor hereby appoints the Collateral
Agent as the attorney-in-fact of such Grantor for the purpose of, upon the
occurrence and during the continuance of an Event of Default, carrying out the
provisions of this Agreement and taking any action and executing any instrument
that the Collateral Agent may deem necessary to accomplish the purposes hereof,
which appointment is irrevocable and coupled with an interest. Without limiting
the generality of the foregoing, the Collateral Agent shall have the right, upon
the occurrence and during the continuance of an Event of Default, with full
power of substitution either in the Collateral Agent’s name or in the name of
such Grantor (i) to receive, endorse, assign and/or deliver any and all notes,
acceptances, checks, drafts, money orders or other evidences of payment relating
to the Collateral or any part thereof, (ii) to demand, collect, receive payment
of, give receipt for and give discharges and releases of all or any of the
Collateral, (iii) to sign the name of any Grantor on any invoice or bill of
lading relating to any of the Collateral, (iv) to send verifications of Accounts
to any Account Debtor, (v) to commence and prosecute any and all suits, actions
or proceedings at law or in equity in any court of competent jurisdiction to
collect or otherwise realize on all or any of the Collateral or to enforce any
rights in respect of any Collateral, (vi) to settle, compromise, compound,
adjust or defend any actions, suits or proceedings relating to all or any of the
Collateral, (vii) to notify, or to require any Grantor to notify, Account
Debtors to make payment directly to the Collateral Agent, (viii) to use, sell,
assign, transfer, pledge, make any agreement with respect to or otherwise deal
with all or any of the Collateral (provided that any sale, assignment or
transfer of Collateral consisting of Trademarks includes a sale, assignment or
transfer of the goodwill associated

 

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with such Trademarks), (ix) to apply the proceeds of any Obligations as provided
in Article IV, (x) to exercise all of such Grantor’s rights and remedies with
respect to the collection of the Receivables and any other Collateral, (xi) to
prepare, file and sign such Grantor’s name on a proof of claim in bankruptcy or
similar document against any Account Debtor of such Grantor, (xii) to prepare,
file and sign such Grantor’s name on any notice of Lien, assignment or
satisfaction of Lien or similar document in connection with the Receivables,
(xiii) to change the address for delivery of mail addressed to such Grantor to
such Address as the Collateral Agent may designate and to receive, open and
dispose of all mail addressed to such Grantor and (ix) to do all other acts and
things necessary to carry out the purposes of this Agreement in accordance with
its terms, as fully and completely as though the Collateral Agent were the
absolute owner of the Collateral for all purposes; provided, however, that
nothing herein contained shall be construed as requiring or obligating the
Collateral Agent to make any commitment or to make any inquiry as to the nature
or sufficiency of any payment received by the Collateral Agent, or to present or
file any claim or notice, or to take any action with respect to the Collateral
or any part thereof or the moneys due or to become due in respect thereof or any
property covered thereby. The Collateral Agent and the Secured Parties shall be
accountable only for amounts actually received as a result of the exercise of
the powers granted to them herein, and neither they nor their officers,
directors, employees or agents shall be responsible to any Grantor for any act
or failure to act hereunder, except for their own gross negligence, willful
misconduct, fraud or bad faith. The foregoing powers of attorney being coupled
with an interest, are irrevocable until the Security Interest shall have
terminated in accordance with the terms hereof.

(b) All acts of said attorney or designee are hereby ratified and approved. The
powers conferred on the Collateral Agent, for the benefit of the Collateral
Agent and the other Secured Parties, under this Section 7.06 are solely to
protect the Collateral Agent’s interests in the Collateral and shall not impose
any duty upon the Collateral Agent or any other Secured Party to exercise any
such powers.

(c) Following the occurrence and continuance of an Event of Default, the
Collateral Agent may, in the Collateral Agent’s own name or in the name of a
nominee of the Collateral Agent, communicate (by mail, telephone, facsimile or
otherwise) with the Account Debtors of such Grantors, parties to contracts with
the Grantors and obligors in respect of Instruments of the Grantors to verify
with such Persons, to the Collateral Agent’s reasonable satisfaction, the
existence, amount, terms of, and any other matter relating to, Accounts,
Instruments, Chattel Paper, payment intangibles and/or other Receivables.

SECTION 7.07. Applicable Law. THIS AGREEMENT (OTHER THAN AS EXPRESSLY SET FORTH
IN OTHER TRANSACTION DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

SECTION 7.08. Waivers; Amendment.

(a) No failure or delay by the Collateral Agent or any other Secured Party in
exercising any right or power hereunder or under any other Transaction Document
shall operate as a waiver hereof or thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Collateral Agent and the other Secured Parties hereunder and under the other
Transaction Documents are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of this Agreement or any
other Transaction Document or consent to any departure by any Secured Party
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section 7.08, and then such waiver or consent shall be
effective only in the specific instance and for the

 

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purpose for which given. Without limiting the generality of the foregoing,
neither the extension of the Term Loan Maturity Date nor the purchase of the
Senior Secured Notes shall be construed as a waiver of any Default, regardless
of whether the Collateral Agent or any other Secured Party may have had notice
or knowledge of such Default at the time. Except as otherwise provided herein,
no notice or demand on any Grantor in any case shall entitle any Grantor to any
other or further notice or demand in similar or other circumstances.

(b) Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into
by the Collateral Agent and the Grantors that are party thereto and are affected
by such waiver, amendment or modification, subject to Section 9.08 of the Credit
Agreement and any comparable provision of the Senior Secured Note Indenture and
any Other Pari Passu Lien Obligations Agreement, as applicable. Notwithstanding
the foregoing, (i) any Other Pari Passu Lien Obligations Agent, on behalf of
itself and holders of Other Pari Passu Lien Obligations, may become party to
this Agreement, without any further action by any other party hereto, upon
execution and delivery by the Borrower and such Other Pari Passu Lien
Obligations Agent of a properly completed joinder agreement hereto (which shall
be in form and substance reasonably satisfactory to the Collateral Agent) and
(ii) technical modifications may be made to this Agreement to facilitate the
inclusion of Other Pari Passu Lien Obligations without any further action by any
other party hereto to the extent such Other Pari Passu Lien Obligations are
permitted to be incurred under the Loan Documents and the Senior Secured Note
Documents.

SECTION 7.09. WAIVER OF JURY TRIAL. EACH PARTY HERETO (AND EACH OTHER SECURED
PARTY BY ITS ACCEPTANCE OF THE BENEFITS HEREOF) HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS. EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS, AS APPLICABLE, BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.09.

SECTION 7.10. Severability. In the event any one or more of the provisions
contained in this Agreement or in any other Transaction Document should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby (it being understood that the
invalidity of a particular provision in a particular jurisdiction shall not in
and of itself affect the validity of such provision in any other jurisdiction).
The parties shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.

SECTION 7.11. Counterparts. This Agreement may be executed in counterparts (and
by different parties hereto on different counterparts), each of which shall
constitute an original but all of which when taken together shall constitute a
single contract, and shall become effective as provided in Section 7.03.
Delivery of an executed signature page to this Agreement by facsimile, PDF or
other electronic transmission shall be as effective as delivery of a manually
signed counterpart of this Agreement.

 

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SECTION 7.12. Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.

SECTION 7.13. Jurisdiction; Consent to Service of Process.

(a) Each of the parties hereto and the Secured Parties, by their acceptance of
the benefits of this Agreement, hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of any New York
State court or Federal court of the United States of America, sitting in New
York City, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement or the other Transaction Documents,
or for recognition or enforcement of any judgment, and each of the parties
hereto and the Secured Parties, by their acceptance of the benefits of this
Agreement hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such New
York State or, to the extent permitted by law, in such Federal court. Each of
the parties hereto and the Secured Parties, by their acceptance of the benefits
of this Agreement agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that any Secured Party may otherwise have to bring any action
or proceeding relating to this Agreement or the other Transaction Documents
against any Grantor or its properties in the courts of any jurisdiction.

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

(c) Each party hereto and the Secured Parties, by their acceptance of the
benefits of this Agreement irrevocably consents to service of process in the
manner provided for notices in Section 7.01. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.

SECTION 7.14. Termination or Release.

(a) This Agreement, the Guarantees made herein, the Security Interest, the
pledge of the Pledged Collateral and all other security interests granted hereby
(including, without limitation, the licenses granted by the Grantors and the
Collateral Agent pursuant to Section 4.04) shall automatically terminate on the
Termination Date. The Security Interest in the Collateral securing the
applicable Note Obligations shall also be released on the terms set forth in the
Senior Secured Note Indenture or the applicable Other Pari Passu Lien
Obligations Agreement, as applicable.

(b) Any Guarantor shall automatically be released from its obligations hereunder
and the Security Interests created hereunder in the Collateral of such Guarantor
shall be automatically released upon the consummation of any transaction
permitted by the Credit Agreement and the Senior Secured Note Indenture as a
result of which such Guarantor ceases to be a Guarantor under Section 2.01 and a
guarantor of the Note Obligations.

 

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(c) Upon any sale or other transfer by any Grantor of any Collateral that is
permitted under the Credit Agreement, the Senior Secured Note Indenture and each
Other Pari Passu Lien Obligations Agreement to any person that is not a Grantor,
or, upon the effectiveness of any written consent to the release of the Security
Interest granted hereby in any Collateral pursuant to Section 4.08 of the
Term/Note Intercreditor Agreement or, (i) if the Loan Obligations have been paid
in full (other than contingent obligations) but only one class of Note
Obligations or Other Pari Passu Lien Obligations remains outstanding, in
accordance with the Senior Secured Notes Indenture or applicable Other Pari
Passu Lien Obligations Agreement, as applicable, or (ii) if the Note Obligations
and the Other Pari Passu Lien Obligations have been paid in full (other than
contingent obligations) but the Loan Obligations remain outstanding, in
accordance with the Section 9.08 of the Credit Agreement, the Security Interest
in such Collateral shall be automatically released, and the licenses granted by
the Grantors and the Collateral Agent pursuant to Section 4.04 shall be
automatically terminated.

(d) In connection with any termination or release pursuant to paragraph (a),
(b) or (c) above, the Collateral Agent shall promptly execute and deliver to any
Grantor, at such Grantor’s expense, all Uniform Commercial Code termination
statements and similar documents that such Grantor shall reasonably request to
evidence such termination or release. Any execution and delivery of documents
pursuant to this Section 7.14 shall be without recourse to or representation or
warranty by the Collateral Agent (other than any representation and warranty
that the Collateral Agent has the authority to execute and deliver such
documents) or any Secured Party. Without limiting the provisions of
Section 7.05, the Borrower shall reimburse the Collateral Agent upon written
demand for all reasonable out-of-pocket costs and expenses, including the fees,
charges and expenses of counsel, incurred by it in connection with any action
contemplated by this Section 7.14 as provided in Section 9.05 of the Credit
Agreement and any comparable provision of the Senior Secured Note Indenture and
any Other Pari Passu Lien Obligations Agreement, as applicable.

(e) At any time that the respective Grantor desires that the Collateral Agent
take any action described in preceding paragraph (d) above, it shall, upon the
reasonable request of the Collateral Agent, deliver to the Collateral Agent an
officer’s certificate certifying that the release of the respective Collateral
is permitted pursuant to paragraph (a), (b) or (c). The Collateral Agent shall
have no liability whatsoever to any Secured Party as the result of any release
of Collateral by it as permitted (or which the Collateral Agent in good faith
believes to be permitted) by this Section 7.14.

SECTION 7.15. [RESERVED]

SECTION 7.16. Additional Subsidiaries. Pursuant to Section 5.09 of the Credit
Agreement and any comparable provision of the Senior Secured Note Indenture and
any Other Pari Passu Lien Obligations Agreement, as applicable, each wholly
owned Restricted Subsidiary (other than a Foreign Subsidiary, an Excluded
Subsidiary, or a Domestic Subsidiary that is a disregarded entity for United
States federal income tax purposes owned by a non-disregarded non-United States
entity) that was not in existence or not a subsidiary on the date hereof is
required to enter into this Agreement as a Subsidiary Guarantor and a Grantor
upon becoming such a subsidiary. Upon execution and delivery by the Collateral
Agent and such subsidiary of a supplement in the form of Exhibit A hereto, such
subsidiary shall become a Subsidiary Guarantor and a Grantor hereunder with the
same force and effect as if originally named as a Subsidiary Guarantor and a
Grantor herein. The execution and delivery of any such instrument shall not
require the consent of any other Grantor hereunder. The rights and obligations
of each Grantor hereunder shall remain in full force and effect notwithstanding
the addition of any new Grantor as a party to this Agreement.

 

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SECTION 7.17. Security Interest and Obligations Absolute. Subject to
Section 7.14 hereof, all rights of the Collateral Agent hereunder, the Security
Interest, the grant of a security interest in the Pledged Collateral and all
obligations of each Grantor hereunder shall be absolute and unconditional
irrespective of (a) any lack of validity or enforceability of the Credit
Agreement, the Senior Secured Note Indenture, any other Transaction Document,
any agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Obligations,
or any other amendment or waiver of or any consent to any departure from the
Credit Agreement, the Senior Secured Note Indenture, any other Transaction
Document, or any other agreement or instrument (so long as the same are made in
accordance with the terms of Section 9.08 of the Credit Agreement and any
comparable provision of the Senior Secured Note Indenture and any Other Pari
Passu Lien Obligations Agreement, as applicable), (c) any exchange, release or
non-perfection of any Lien on other collateral, or any release or amendment or
waiver of or consent under or departure from any guarantee, securing or
guaranteeing all or any of the Obligations or (d) any other circumstance that
might otherwise constitute a defense available to, or a discharge of, any
Grantor in respect of the Obligations or this Agreement other than payment of
the Obligations (other than contingent obligations), in full.

SECTION 7.18. Effectiveness of Merger. Upon the consummation of the Merger, the
Borrower shall succeed to all the rights and obligations of Merger Sub under
this Agreement, without any further action by any Person.

SECTION 7.19. Term/Note Intercreditor Agreement. The provisions of this
Agreement shall be subject to the provisions of the Term/Note Intercreditor
Agreement. In the event of any conflict between this Agreement and the Term/Note
Intercreditor Agreement, the provisions of the Term/Note Intercreditor Agreement
shall control and govern.

[Remainder of page intentionally left blank]

 

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

 

CDW CORPORATION By:  

/s/ Robert J. Welyki

  Name:   Robert J. Welyki   Title:   Vice President, Treasurer and Assistant
Secretary CDW LLC By:  

/s/ Robert J. Welyki

  Name:   Robert J. Welyki   Title:   Vice President, Treasurer and Assistant
Secretary

SIGNATURE PAGE TO GUARANTEE AND COLLATERAL AGREEMENT

--------------------------------------------------------------------------------

 

CDW DIRECT, LLC By:  

/s/ Robert J. Welyki

  Name:   Robert J. Welyki   Title:   Vice President, Treasurer and Assistant
Secretary CDW GOVERNMENT, LLC By:  

/s/ Robert J. Welyki

  Name:   Robert J. Welyki   Title:   Vice President, Treasurer and Assistant
Secretary CDW LOGISTICS, INC. By:  

/s/ Robert J. Welyki

  Name:   Robert J. Welyki   Title:   Vice President, Treasurer and Assistant
Secretary CDW TECHNOLOGIES, INC. By:  

/s/ Robert J. Welyki

  Name:   Robert J. Welyki   Title:   Vice President, Treasurer and Assistant
Secretary

SIGNATURE PAGE TO GUARANTEE AND COLLATERAL AGREEMENT

--------------------------------------------------------------------------------

 

MORGAN STANLEY & CO. INCORPORATED., as Collateral Agent By:  

/s/ Stephen B. King

  Name:   Stephen B. King   Title:   Executive Director

SIGNATURE PAGE TO GUARANTEE AND COLLATERAL AGREEMENT