Exhibit 10.5

Execution Version

 

 

 

AMENDED AND RESTATED SECURITY AGREEMENT

by

ALERIS INTERNATIONAL, INC.,

ALERIS ROLLED PRODUCTS, INC.,

ALERIS ROLLED PRODUCTS, LLC,

ALERIS ROLLED PRODUCTS SALES CORPORATION,

IMCO RECYCLING OF OHIO, LLC,

ALERIS OHIO MANAGEMENT, INC.

and

NICHOLS ALUMINUM, LLC,

as Pledgors,

THE OTHER PLEDGORS PARTY HERETO,

and

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

 

 

Dated as of June 25, 2018

 

 

 

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TABLE OF CONTENTS

 

         Page  

ARTICLE I DEFINITIONS AND INTERPRETATION

     2  

SECTION 1.1

  Definitions      2  

SECTION 1.2

  Interpretation      9  

SECTION 1.3

  Resolution of Drafting Ambiguities      9  

SECTION 1.4

  Perfection Certificate      9  

ARTICLE II GRANT OF SECURITY AND SECURED OBLIGATIONS

     9  

SECTION 2.1

  Grant of Security Interest      9  

SECTION 2.2

  Filings      11  

ARTICLE III PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES; USE OF COLLATERAL

     13  

SECTION 3.1

  Delivery of Certificated Securities Collateral      13  

SECTION 3.2

  Perfection of Uncertificated Securities Collateral      13  

SECTION 3.3

  Financing Statements and Other Filings; Maintenance of Perfected Security
Interest      14  

SECTION 3.4

  Other Actions      14  

SECTION 3.5

  Joinder of Additional Pledgors      18  

SECTION 3.6

  Supplements; Further Assurances      18  

ARTICLE IV REPRESENTATIONS, WARRANTIES AND COVENANTS

     19  

SECTION 4.1

  Title      19  

SECTION 4.2

  Validity of Security Interest      19  

SECTION 4.3

  Defense of Claims; Transferability of Collateral      20  

SECTION 4.4

  Other Financing Statements      20  

SECTION 4.5

  Pledged Securities      21  

SECTION 4.6

  Due Authorization and Issuance      21  

SECTION 4.7

  Consents, etc.      21  

SECTION 4.8

  Collateral      21  

SECTION 4.9

  Insurance      21  

SECTION 4.10

  Post-Closing Collateral Matters      22  

SECTION 4.11

  Notice of Changes      22  

SECTION 4.12

  No Impairment of the Security Interests      23  

SECTION 4.13

  Letter-of-Credit Rights      23  

SECTION 4.14

  Federal, State or Municipal Claims      23  

SECTION 4.15

  No Interference      24  

SECTION 4.16

  Collateral Access Agreements      24  

SECTION 4.17

  Deposit Account Control Agreements      24  

SECTION 4.18

  ULC/Partnership Interests      24  

 

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         Page  

ARTICLE V CERTAIN PROVISIONS CONCERNING SECURITIES COLLATERAL

     25  

SECTION 5.1

  Pledge of Additional Securities Collateral      25  

SECTION 5.2

  Voting Rights; Distributions; etc.      26  

SECTION 5.3

  Defaults, etc.      27  

SECTION 5.4

  Certain Agreements of Pledgors As Holders of Equity Interests      27  

ARTICLE VI CERTAIN PROVISIONS CONCERNING INTELLECTUAL PROPERTY COLLATERAL

     28  

SECTION 6.1

  Grant of Intellectual Property License      28  

SECTION 6.2

  Protection of Administrative Agent’s Security      28  

SECTION 6.3

  After-Acquired Property      29  

SECTION 6.4

  Litigation      30  

ARTICLE VII COLLECTION AND APPLICATION OF COLLATERAL PROCEEDS; DEPOSIT ACCOUNTS

     30  

SECTION 7.1

  Collection of Receivables      30  

SECTION 7.2

  Covenant Regarding New Deposit Accounts; Lock Boxes      31  

SECTION 7.3

  Application of Proceeds; Deficiency      31  

ARTICLE VIII TRANSFERS

     32  

SECTION 8.1

  Transfers of Collateral      32  

ARTICLE IX REMEDIES

     32  

SECTION 9.1

  Remedies      32  

SECTION 9.2

  Pledgor’s Obligations Upon Event of Default      34  

SECTION 9.3

  Notice of Sale      35  

SECTION 9.4

  Waiver of Notice and Claims      35  

SECTION 9.5

  Certain Sales of Collateral      36  

SECTION 9.6

  No Waiver; Cumulative Remedies      37  

SECTION 9.7

  Certain Additional Actions Regarding Intellectual Property      37  

ARTICLE X ACCOUNT VERIFICATION; ATTORNEY IN FACT; PROXY

     38  

SECTION 10.1

  Account Verification      38  

SECTION 10.2

  Authorization for Administrative Agent to Take Certain Actions      38  

ARTICLE XI MISCELLANEOUS

     39  

SECTION 11.1

  Concerning Administrative Agent      39  

SECTION 11.2

  Administrative Agent May Perform; Administrative Agent Appointed
Attorney-in-Fact      41  

SECTION 11.3

  Continuing Security Interest; Assignment      42  

SECTION 11.4

  Termination; Release      43  

 

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         Page  

SECTION 11.5

 

Modification in Writing

     43  

SECTION 11.6

 

Notices

     44  

SECTION 11.7

 

Governing Law; Waiver of Jury Trial

     44  

SECTION 11.8

 

Severability of Provisions

     44  

SECTION 11.9

 

Execution in Counterparts

     44  

SECTION 11.10

 

Business Days

     44  

SECTION 11.11

 

Taxes and Expenses

     44  

SECTION 11.12

 

No Claims Against Administrative Agent

     45  

SECTION 11.13

 

No Release

     45  

SECTION 11.14

 

Obligations Absolute

     45  

SECTION 11.15

 

Reserved

     46  

SECTION 11.16

 

Survival of Representations

     46  

SECTION 11.17

 

Specific Performance

     46  

SECTION 11.18

 

Headings

     46  

SECTION 11.19

 

Indemnity

     47  

SECTION 11.20

 

Effect of Amendment and Restatement

     47  

SECTION 11.21

 

ABL Intercreditor Agreement

     47  

ARTICLE XII THE ADMINISTRATIVE AGENT

     48  

 

SCHEDULE 1

   Pledged Securities

EXHIBIT 1

   Form of Issuer’s Acknowledgment

EXHIBIT 2

   Form of Securities Pledge Amendment

EXHIBIT 3

   Form of Joinder Agreement

EXHIBIT 4

   Form of Copyright Security Agreement

EXHIBIT 5

   Form of Patent Security Agreement

EXHIBIT 6

   Form of Trademark Security Agreement

EXHIBIT 7

   Form of Perfection Certificate

 

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AMENDED AND RESTATED SECURITY AGREEMENT

This Amended and Restated Security Agreement dated as of June 25, 2018 (as
amended, amended and restated, supplemented or otherwise modified from time to
time in accordance with the provisions hereof, this “Agreement”) made by ALERIS
INTERNATIONAL, INC., a Delaware corporation (the “Company”), ALERIS ROLLED
PRODUCTS, INC., a Delaware corporation, ALERIS ROLLED PRODUCTS, LLC, a Delaware
limited liability company, ALERIS ROLLED PRODUCTS SALES CORPORATION, a Delaware
corporation, IMCO RECYCLING OF OHIO, LLC, a Delaware limited liability company,
ALERIS OHIO MANAGEMENT, INC., a Delaware corporation, NICHOLS ALUMINUM, LLC, a
Delaware limited liability company (collectively the “Domestic Borrowers”), any
additional entities which become parties hereto, in each case as pledgors,
assignors and debtors (such additional entities, together with the Domestic
Borrowers, the “Pledgors,” and each, a “Pledgor”), in favor of JPMORGAN CHASE
BANK, N.A., in its capacity as administrative agent pursuant to the Credit
Agreement (as hereinafter defined), as pledgee, assignee and secured party (in
such capacities and together with any successors in such capacities, the
“Administrative Agent”).

R E C I T A L S:

A. The Domestic Borrowers, Aleris Aluminum Duffel BVBA, Aleris Rolled Products
Germany GmbH, Aleris Casthouse Germany GmbH, Aleris Switzerland GmbH
(collectively, the “Borrowers”), the Administrative Agent, J.P. Morgan Europe
Limited, as European agent (in such capacity, the “European Agent”), and the
Lenders are parties to that certain Credit Agreement dated as of June 15, 2015
(as amended, restated, amended and restated, supplemented or otherwise modified
from time to time, including without limitation, pursuant to the Fourth
Amendment (as defined below), the “Credit Agreement”).

B. On the date hereof, the Borrowers, the Administrative Agent, the European
Agent and the Lenders are entering into that certain Amendment No. 4 to Credit
Agreement (the “Fourth Amendment”).

C. Reference is made to that certain Pledge and Security Agreement dated as of
June 15, 2015 (as amended, supplemented or modified prior to the date hereof,
the “Original Security Agreement”), pursuant to which the Pledgors granted a
Lien in certain of their assets to the Administrative Agent, for the benefit of
the Secured Parties, as security for the Secured Obligations.

D. In order to induce the Administrative Agent and the Lenders to enter into the
Fourth Amendment, the Pledgors have agreed to amend and restate in its entirety
the Original Security Agreement and pledge all of their rights, title and
interest in the Collateral (as hereinafter defined) to the Administrative Agent,
for the benefit of the Secured Parties, as security for the Secured Obligations.

A G R E E M E N T:

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

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ARTICLE I

DEFINITIONS AND INTERPRETATION

SECTION 1.1 Definitions

(a) Unless otherwise defined herein or in the Credit Agreement, capitalized
terms used herein that are defined in the UCC shall have the meanings assigned
to them in the UCC; provided that in any event, the following terms shall have
the meanings assigned to them in the UCC:

“Bank”; “Chattel Paper”; “Commercial Tort Claims”; “Commodity Account”;
“Contracts”; “Control”; “Documents”; “Equipment”; “Fixtures”; “General
Intangibles”; “Goods,” “Inventory”; “Letter-of-Credit Rights”; “Letters of
Credit”; “Money”; “Proceeds”; “ Records”; “Software”; and “Supporting
Obligations.”

(b) Terms used but not otherwise defined herein that are defined in the Credit
Agreement shall have the meanings given to them in the Credit Agreement.

(c) The following terms shall have the following meanings:

“ABL Intercreditor Agreement” means that certain ABL Intercreditor Agreement,
dated as of June 25, 2018, between the Administrative Agent, as ABL Facility
Agent and Applicable ABL Obligations Representative in respect of the ABL
Obligations (each as defined therein), Deutsche Bank AG New York Branch, as
First Lien Facility Agent, Applicable First Lien Agent and First Lien/Junior
Lien Intercreditor Representative (each as defined therein), U.S. Bank National
Association, as Junior Lien Facility Agent and Applicable Junior Lien Agent
(each as defined therein), and the other parties from time to time party
thereto, and acknowledged by the Company and certain of its Subsidiaries as it
may be amended, restated, amended and restated, supplemented or otherwise
modified from time to time in accordance with the Credit Agreement.

“ABL Priority Collateral” shall have the meaning assigned to the term “ABL
Priority Collateral” in the ABL Intercreditor Agreement.

“Account” shall have the meaning set forth in Article 9 of the UCC and in any
event shall include but shall not be limited to any and all rights to payment
for the sale or lease of goods, or rendition of services, whether or not they
have been earned by performance, and any and all Supporting Obligations in
respect thereof.

“Account Debtor” means any Person obligated on an Account.

“Administrative Agent” shall have the meaning assigned to such term in the
Preamble hereof.

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

“CFC” shall mean any Subsidiary of the Company that is a “controlled foreign
corporation” within the meaning of Section 957 of the Code.

 

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“CFC Holdco” shall mean any Subsidiary of the Company that owns, directly or
indirectly, no material assets other than equity interests (or equity interests
and indebtedness) of one or more CFCs.

“Collateral” shall have the meaning assigned to such term in Section 2.1 hereof.

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

“Collateral Deposit Account” shall have the meaning set forth in Section 7.1(a).

“Collateral Report” means any certificate (including any Borrowing Base
Certificate), report or other informational document delivered by any Pledgor to
the Administrative Agent or any Lender with respect to the ABL Priority
Collateral pursuant to any Loan Document.

“Collection Account” shall have the meaning set forth in Section 7.1(b).

“Company” shall have the meaning assigned to such term in the Preamble hereof.

“Copyright Security Agreement” shall mean an agreement substantially in the form
of Exhibit 4 hereto.

“Copyrights” shall mean, collectively, with respect to each Pledgor, all
copyrights (whether statutory or common law, whether established or registered
in the United States or any other country or any political subdivision thereof,
whether registered or unregistered and whether published or unpublished) and all
copyright registrations and applications made by such Pledgor, together with any
and all (i) rights and privileges arising under applicable law with respect to
the foregoing, (ii) renewals, supplements and extensions thereof and amendments
thereto, (iii) income, fees, royalties, damages, claims and payments now or
hereafter due and/or payable with respect thereto, including damages and
payments for past, present or future infringements thereof, (iv) rights
corresponding thereto throughout the world and (v) rights to sue for past,
present or future infringements thereof.

“Deposit Accounts” shall mean, collectively, with respect to each Pledgor,
(i) all “deposit accounts” as such term is defined in the UCC and in any event
shall include all accounts and sub-accounts relating to any of the foregoing
accounts and (ii) all cash, funds, checks, notes and instruments from time to
time on deposit in any of the accounts or sub-accounts described in clause (i)
of this definition.

“Discharge” shall have the meaning ascribed thereto in the ABL Intercreditor
Agreement.

 

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

“Excluded Deposit Accounts” means any zero balance disbursement accounts, any
accounts solely holding withheld taxes or sales tax proceeds, any holding
accounts in respect of employee benefit plans, payroll accounts, escrow,
defeasance and redemption accounts, fiduciary or trust accounts, other similar
accounts, in each case, solely to the extent such accounts are used exclusively
for such purpose, and all assets held in or credited to any such accounts.

“Excluded Assets” shall mean the following assets of the Pledgors:

(a) any owned real property not constituting Mortgaged Property and any
leasehold interest in real property where any Pledgor is a tenant;

(b) motor vehicles or other movable goods the perfection of which would require
notation upon or delivery of a certificate of title or similar documentation or
registration;

(c) (1) any rights or interests in any contract, lease, permit, license, charter
or license agreement, covering real or personal property, as such, if under the
terms of such contract, lease, permit, license, or charter or license agreement,
or applicable law with respect thereto, the valid grant of a security interest
or Lien therein to the Administrative Agent is prohibited or restricted and such
prohibition or restriction has not been or is not waived, or if consent of
another party or a governmental agency with respect to such contract, lease,
permit, license, or charter or license agreement, is required and has not been
or is not otherwise obtained or under applicable law such prohibition cannot be
waived, or (2) any other asset if pursuant to applicable law with respect
thereto the valid grant of a security interest or Lien therein to the
Administrative Agent is prohibited or restricted and such prohibition or
restriction has not been or is not waived, or if consent of a governmental
agency with respect to such asset is required and has not been or is not
otherwise obtained or under applicable law such prohibition cannot be waived,
provided that the foregoing exclusions pursuant to subclauses (1) and (2) shall
not apply if any such prohibition is ineffective or unenforceable under Sections
9-406, 9-407, 9-408 or 9-409 of the UCC or other applicable law or so as to
limit, impair or otherwise affect the Administrative Agent’s unconditional
continuing security interests in and Liens upon any rights or interests of the
Pledgors in or to monies due or to become due under any such contract, lease,
permit, license, or charter or license agreement, or with respect to such asset;

(d) any Equity Interests in any Foreign Subsidiary that is a CFC or any
Subsidiary that is a CFC Holdco in excess of 100% of the outstanding non-voting
stock (if any) and 65% of the outstanding voting stock of any such Foreign
Subsidiary or CFC Holdco;

(e) Equity Interests in any joint venture or non-wholly owned Subsidiary, in
each case, with a third party that is not an Affiliate, to the extent a pledge
of such Equity Interests is prohibited or restricted by the documents covering
such joint venture or non-wholly owned Subsidiary; provided that the foregoing
exclusion shall not apply if any such prohibition is ineffective or
unenforceable under Sections 9-406, 9-407, 9-408 or 9-409 of the UCC or other
applicable law;

 

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(f) any property subject to a Capital Lease Obligation, a purchase money
security interest or a Sale and Lease-Back Transaction that is permitted under
the Credit Agreement;

(g) any United States intent-to-use trademark application prior to the filing
and acceptance by the United States Patent and Trademark Office of a “Statement
of Use” or “Amendment to Allege Use” with respect thereto to the extent that the
grant or perfection of a Lien under the Security Documents will constitute or
result in the abandonment, invalidation or rendering unenforceable of any right,
title or interest of any Pledgor therein; provided that such property or asset
will be an Excluded Asset only to the extent and for so long as the consequences
specified above will result and will cease to be an Excluded Asset and will
become part of the Collateral immediately and automatically, at such time as
such consequences will no longer result;

(h) margin stock (as defined in Regulation U of the Board of Governors of the
Federal Reserve System), Equity Interests in any immaterial Subsidiary (to the
extent a Lien thereon cannot be perfected by the filing of a UCC financing
statement) and Equity Interests in any Unrestricted Subsidiary, any captive
insurance company or any not-for-profit Subsidiary;

(i) Excluded Deposit Accounts; and

(j) any asset to the extent that the adverse tax consequences of providing a
security interest therein are excessive in relation to the benefit afforded
thereby as reasonably determined by the First Lien/Junior Lien Intercreditor
Representative and the Company (with respect to Non-ABL Priority Collateral) or
the Administrative Agent and the Company (with respect to ABL Priority
Collateral) and so long as such asset is not subject to a Lien securing any
Non-ABL Obligations;

provided that no asset that is subject (or purported to be subject) to a Lien
securing any Non-ABL Obligations shall constitute an Excluded Asset.

“First Lien/Junior Lien Intercreditor Representative” shall have the meaning
ascribed thereto in the ABL Intercreditor Agreement.

“Fourth Amendment Effective Date” shall mean June 25, 2018.

“Governmental Authority” means the government of the United States, Belgium,
Germany, Switzerland or any other nation or any political subdivision thereof,
whether state, provincial, territorial or local, and any agency, authority,
instrumentality, regulatory body, court, central bank or other entity (including
any European supranational body) exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government, including the European Central Bank and the Council of Ministers of
the European Union.

 

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“Instruments” shall mean, collectively, with respect to each Pledgor, all
“instruments,” as such term is defined in Article 9, rather than Article 3, of
the UCC, and shall include all promissory notes, drafts, bills of exchange or
acceptances.

“Intellectual Property Collateral” shall mean, collectively, all Patents,
Trademarks, Copyrights, Technology and Intellectual Property Licenses of each
Pledgor, whether now or hereafter owned, licensed or acquired.

“Intellectual Property Licenses” shall mean, collectively, with respect to each
Pledgor, all license and distribution agreements with, and covenants not to sue,
any other party concerning Intellectual Property or Intellectual Property
Collateral, whether such Pledgor is a licensor or licensee, distributor or
distributee under any such license or distribution agreement, together with any
and all (i) renewals, supplements, and amendments thereof, (ii) income, fees,
royalties, damages, claims and payments now and hereafter due and/or payable
thereunder and with respect thereto including damages and payments for past,
present or future infringements, breaches or violations thereof, (iii) rights to
sue for past, present and future infringements, breaches or violations thereof
and (iv) other rights to use, exploit or practice any or all of the Intellectual
Property or Intellectual Property Collateral.

“Joinder Agreement” shall mean an agreement substantially in the form of
Exhibit 3 hereto.

“Lock Boxes” shall have the meaning set forth in Section 7.1(a).

“Lock Box Agreements” shall have the meaning set forth in Section 7.1(a).

“Mortgaged Property” means, collectively, (a) the owned real property and
improvements listed on Schedule 7(a) to the Perfection Certificate and (b) the
owned real property and improvements acquired after the Fourth Amendment
Effective Date by a Pledgor in fee simple with an individual fair market value
(measured at the time of acquisition thereof and based on any of (i) an
appraisal, (ii) the valuations set forth in the most recently available tax
assessments for such property or (iii) any other method that the Company
believes reasonable in its good faith judgment) in excess of $5,000,000, if any,
except for any portion of real property that contains improvements located in an
area identified by the Federal Emergency Management Agency (or a successor
agency) as a “special flood hazard area,” encumbered by a Mortgage delivered
after the Fourth Amendment Effective Date pursuant to Section 5.20 of the Credit
Agreement.

“Non-ABL Obligations” shall have the meaning assigned to such term in the ABL
Intercreditor Agreement.

“Non-ABL Obligations Documents” shall have the meaning assigned to such term in
the ABL Intercreditor Agreement.

“Non-ABL Priority Collateral” shall have the meaning assigned to such term in
the ABL Intercreditor Agreement.

“Notes Facility Agent” has the meaning assigned to the term “Junior Lien Notes
Collateral Agent” in the ABL Intercreditor Agreement.

 

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“Organizational Documents” shall mean, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; (c) with respect to any
partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity; and (d) in each case, all shareholder or other
equity holder agreements, voting trusts and similar arrangements to which such
Person is a party or which is applicable to its Equity Interests and all other
arrangements relating to the control or management of such Person.

“Patents” shall mean, collectively, with respect to each Pledgor, all patents
and all patent applications (whether issued, applied for or allowed in the
United States or any other country or any political subdivision thereof),
together with any and all (i) rights and privileges arising under applicable law
with respect to such Pledgor’s rights with respect to the foregoing,
(ii) inventions, discoveries, designs and improvements described or claimed
therein, (iii) reissues, divisions, continuations, reexaminations, extensions
and continuations-in-part thereof and amendments thereto, (iv) income, fees,
royalties, damages, claims and payments now or hereafter due and/or payable
thereunder and with respect thereto including damages and payments for past,
present or future infringements thereof, (v) rights corresponding thereto
throughout the world and (vi) rights to sue for past, present or future
infringements thereof.

“Patent Security Agreement” shall mean an agreement substantially in the form of
Exhibit 5 hereto.

“Perfection Certificate” shall mean that certain perfection certificate to be
executed and delivered by the Pledgors in connection with the execution and
delivery of the Fourth Amendment, to be dated on or about the Fourth Amendment
Effective Date and substantially identical to the form attached hereto as
Exhibit 7.

“Pledge Amendment” shall have the meaning assigned to such term in Section 5.1
hereof.

“Pledged Securities” shall mean, collectively, with respect to each Pledgor,
(i) all issued and outstanding Equity Interests (other than any Equity Interests
that are Excluded Assets) of each issuer set forth on Schedule 1 hereto as being
owned by such Pledgor and all options, warrants, rights, agreements and
additional Equity Interests of whatever class of any such issuer acquired by
such Pledgor (including by issuance), together with all rights, privileges,
authority and powers of such Pledgor relating to such Equity Interests in each
such issuer or under any Organizational Document of each such issuer, and the
certificates, instruments and agreements representing such Equity Interests and
any and all interest of such Pledgor in the entries on the books of any
financial intermediary pertaining to such Equity Interests, (ii) all Equity
Interests (other than any Equity Interests that are Excluded Assets) of any
issuer, which Equity Interests are hereafter acquired by such Pledgor (including
by issuance) and all options, warrants, rights, agreements and additional Equity
Interests of whatever class of any such issuer acquired by such

 

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Pledgor (including by issuance), together with all rights, privileges, authority
and powers of such Pledgor relating to such Equity Interests or under any
Organizational Document of any such issuer, and the certificates, instruments
and agreements representing such Equity Interests and any and all interest of
such Pledgor in the entries on the books of any financial intermediary
pertaining to such Equity Interests, from time to time acquired by such Pledgor
in any manner, and (iii) all Equity Interests (other than any Equity Interests
that are Excluded Assets) issued in respect of the Equity Interests referred to
in clause (i) or (ii) upon any consolidation or merger of any issuer of such
Equity Interests.

“Pledgor” shall have the meaning assigned to such term in the Preamble hereof.

“Receivables” means the Accounts and other Collateral relating thereto that
constitute rights or claims to receive money.

“Securities Collateral” shall mean, collectively, the Pledged Securities and the
Distributions.

“Technology” shall mean, collectively, all trade secrets, know how, technology
(whether patented or not), rights in Software (including source code and object
code), rights in data and databases, rights in Internet web sites, customer and
supplier lists, proprietary information, methods, procedures, formulae,
descriptions, compositions, technical data, drawings, specifications, name
plates, catalogs, confidential information and the right to limit the use or
disclosure thereof by any person, pricing and cost information, business and
marketing plans and proposals, together with any and all (i) rights and
privileges arising under applicable law with respect to the foregoing,
(ii) income, fees, royalties, damages and payments now and hereafter due and/or
payable thereunder and with respect thereto, including damages, claims and
payments for past, present or future misappropriations or violations thereof,
(iii) rights corresponding thereto throughout the world and (iv) rights to sue
for past, present and future misappropriations or violations thereof.

“Term Loan Facility Agent” has the meaning ascribed to the term “First Lien
Facility Agent” in the ABL Intercreditor Agreement.

“Trademarks” shall mean, collectively, with respect to each Pledgor, all
trademarks (including service marks), slogans, logos, certification marks, trade
dress, uniform resource locators (URLs), domain names, corporate names, brand
names, and trade names and other identifiers of source or goodwill, whether
registered or unregistered, and all registrations and applications for the
foregoing (whether statutory or common law and whether established or registered
or applied for in the United States or any other country or any political
subdivision thereof), together with any and all (i) rights and privileges
arising under applicable law with respect to any of the foregoing,
(ii) extensions and renewals thereof and amendments thereto, (iii) income, fees,
royalties, damages and payments now and hereafter due and/or payable thereunder
and with respect thereto, including damages, claims and payments for past,
present or future infringements, dilutions or violations thereof, (iv) rights
corresponding thereto throughout the world and (v) rights to sue for past,
present and future infringements, dilutions or violations thereof.

 

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“Trademark Security Agreement” shall mean an agreement substantially in the form
of Exhibit 6 hereto.

“UCC” shall mean the Uniform Commercial Code as in effect from time to time in
the State of New York; provided, however, that, at any time, if by reason of
mandatory provisions of law, any or all of the perfection or priority of the
Administrative Agent’s and the Secured Parties’ security interest in any item or
portion of the Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than the State of New York, the term “UCC” shall
mean the Uniform Commercial Code as in effect, at such time, in such other
jurisdiction for purposes of the provisions hereof relating to such perfection
or priority and for purposes of definitions relating to such provisions.

“ULC/Partnership” shall mean any unlimited company, unlimited liability company
or unlimited liability corporation or any similar entity existing under the laws
of any province or territory of Canada and any successor to any such entity.

“ULC/Partnership Interest” shall mean means a Pledgor’s shares of or other
equity interest in any ULC/Partnership or its interest as a general partner in
any ULC/Partnership.

SECTION 1.2 Interpretation

The rules of interpretation specified in the Credit Agreement (including
Section 1.03 thereof) shall be applicable to this Agreement.

SECTION 1.3 Resolution of Drafting Ambiguities

Each Pledgor acknowledges and agrees that it was represented by counsel in
connection with the execution and delivery hereof, that it and its counsel
reviewed and participated in the preparation and negotiation hereof and that any
rule of construction to the effect that ambiguities are to be resolved against
the drafting party (i.e., the Administrative Agent) shall not be employed in the
interpretation hereof.

SECTION 1.4 Perfection Certificate.

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

ARTICLE II

GRANT OF SECURITY AND SECURED OBLIGATIONS

SECTION 2.1 Grant of Security Interest

(a) As collateral security for the payment and performance in full of all the
Secured Obligations, each Pledgor hereby pledges and grants to the
Administrative Agent for the benefit of the Secured Parties a Lien on and
security interest in all of the right, title and interest of such Pledgor in, to
and under the following property, wherever located, and whether now existing or
hereafter arising or acquired from time to time (collectively, the
“Collateral”):

(i) all Securities Collateral and Investment Property;

 

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(ii) all Equipment, Goods, Inventory and Fixtures;

(iii) all Intellectual Property Collateral;

(iv) all Accounts;

(v) all General Intangibles

(vi) all Instruments, Documents and Chattel Paper;

(vii) the Commercial Tort Claims described on Schedule 12 to the Perfection
Certificate;

(viii) all Money and all Deposit Accounts;

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

(x) all Supporting Obligations;

(xi) all books and records relating to the Collateral; and

(xii) all Proceeds and products of each of the foregoing and all accessions to,
substitutions and replacements for, and rents, profits and products of, each of
the foregoing, any and all Proceeds of any insurance, indemnity, warranty or
guaranty payable to such Pledgor from time to time with respect to any of the
foregoing.

Notwithstanding anything to the contrary contained in clauses (i) through (x)
above, subject to Section 2.1(b), the security interest created by this
Agreement shall not extend to, and the term “Collateral” shall not include, any
Excluded Assets.

(b) Notwithstanding anything to the contrary herein, the Pledgors may elect at
any time to include in Collateral any asset (whether an Excluded Asset or
otherwise) that would not have constituted Collateral on the Fourth Amendment
Effective Date; provided that (i) the applicable Pledgor may amend this
Agreement or enter into security agreements, pledges, collateral assignments,
mortgages or other instruments to create and perfect a security interest in
favor of the Administrative Agent for the benefit of the Secured Parties in such
asset which are on customary terms (and accompanied by customary ancillary
documentation, including, but not limited to, opinions of counsel), in each case
pursuant to documentation reasonably acceptable to each of the Company and the
Administrative Agent, and (ii) the granting of such Lien to the Administrative
Agent over such additional asset(s) shall not trigger a default under the ABL
Intercreditor Agreement and shall be in compliance with the requirements of the
Credit Agreement. Prior to delivery of any such additional documentation, the
Administrative Agent shall have the opportunity to request and receive an
Officers’ Certificate certifying that such documentation (i) will cause no
default under the ABL Intercreditor Agreement and (ii) is in compliance with the
terms of the Credit Agreement.    

 

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(c) Notwithstanding anything to the contrary herein, no Pledgor shall be
required to make any filings with respect to Patents, Trademarks and Copyrights
other than UCC financing statements and filings in the United States Patent and
Trademark Office and the United States Copyright Office.

(d) Notwithstanding anything to the contrary herein, no actions in any
jurisdiction outside the United States will be required by any Pledgor in order
to create any security interests in assets of any Pledgor located or titled
outside of the United States, or to perfect any security interests in such
assets, including any intellectual property registered in any jurisdiction
outside the United States. Furthermore, no pledgor will be required to (a) enter
into control agreements or otherwise perfect any security interest by “control”
(other than as specifically required by this Agreement with respect to the
Collateral Deposit Accounts and Lock Boxes, and the delivery of stock
certificates or other certificates, if any, constituting Collateral representing
equity interests of the Pledgors (other than the Company) and their respective
Subsidiaries to the extent possession of such certificates perfects a security
interest therein and intercompany notes (other than between Loan Parties) and
other notes in excess of $5,000,000); or (b) perfect security interests in
(x) letter-of-credit rights or (y) commercial tort claims with a value less than
$5,000,000, except in the case of letter-of-credit rights to the extent such
security can be perfected solely by filing of a UCC-1 financing statement. In
addition, there will be no security agreements or pledge agreements governed
under the laws of any jurisdiction outside the United States required to be
executed by any Pledgor.

(e) Notwithstanding anything to the contrary herein, in no event shall the
Administrative Agent be required to register in any foreign jurisdiction or
pursuant to any foreign local law, and the Pledgors shall not be required to
perfect the security interest in any Collateral that would require the
Administrative Agent to make such registration. For the avoidance of doubt,
nothing herein shall be construed to limit, hinder or affect the creation of any
Lien in favor of the Administrative Agent or the European Agent, as applicable,
or the ability of the Administrative Agent or the European Agent, as applicable,
to perfect its Lien therein, with respect to any collateral of the European Loan
Parties.    

(f) The Pledgors shall not be required to perfect the security interest in any
item of Non-ABL Priority Collateral as to which the First Lien/Junior Lien
Intercreditor Representative and the Company shall determine in their reasonable
discretion that the costs of perfecting a security interest in such item are
excessive in relation to the value of such security being perfected thereby.

SECTION 2.2 Filings

(a) Each Pledgor hereby irrevocably authorizes the Administrative Agent at any
time and from time to time to file in any relevant jurisdiction any financing
statements (including fixture filings) and amendments thereto that contain the
information required by Article 9 of the Uniform Commercial Code of each
applicable jurisdiction for the filing of any financing statement or amendment
relating to the Collateral, including (i) whether such Pledgor is an

 

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organization, the type of organization and any organizational identification
number issued to such Pledgor, (ii) any financing or continuation statements or
other documents without the signature of such Pledgor where permitted by law,
including the filing of a financing statement describing the Collateral as “all
assets now owned or hereafter acquired by the Pledgor or in which Pledgor
otherwise has rights” and (iii) in the case of a financing statement filed as a
fixture filing or covering Collateral constituting minerals or the like to be
extracted or timber to be cut, a sufficient description of the real property to
which such Collateral relates. Each Pledgor agrees to provide all information
described in the immediately preceding sentence to the Administrative Agent
promptly upon request by the Administrative Agent.

(b) Each Pledgor hereby ratifies its authorization for the Administrative Agent
to file in any relevant jurisdiction any financing statements relating to the
Collateral if filed prior to the date hereof.

(c) Each Pledgor hereby further authorizes the Administrative Agent to file
filings with the United States Patent and Trademark Office or United States
Copyright Office (or any successor office), including this Agreement, the
Copyright Security Agreement, the Patent Security Agreement and the Trademark
Security Agreement, or other documents for the purpose of perfecting,
confirming, continuing, enforcing or protecting the security interest granted by
such Pledgor hereunder, without the signature of such Pledgor, and naming such
Pledgor, as debtor, and the Administrative Agent, as secured party.

(d) Notwithstanding the foregoing authorizations, in no event shall the
Administrative Agent be obligated to prepare or file any financing statements or
make any filings with the United States Patent and Trademark Office and/or the
United States Copyright Office (or any successor office or any similar office in
any other country) whatsoever, or to maintain the perfection of the security
interest granted hereunder. Each Pledgor agrees to prepare, record and file, at
its own expense, financing statements (and continuation statements when
applicable), the Copyright Security Agreement, the Patent Security Agreement and
the Trademark Security Agreement (and/or any other similar documents) with
respect to the Collateral now existing or hereafter created meeting the
requirements of applicable federal or state law in such manner and in such
jurisdictions as are necessary to perfect and maintain perfected the
Administrative Agent’s Lien on and security interest in the Collateral, and to
deliver a file-stamped copy of each such financing statement or other evidence
of filing to the Administrative Agent. Regardless of the terms of any other
provision of this Agreement or any of the related documents, neither the Trustee
nor the Administrative Agent shall be under any obligation whatsoever to file
the Copyright Security Agreement, the Patent Security Agreement, the Trademark
Security Agreement or any other similar documents (with regard to currently
existing or after-acquired Intellectual Property Collateral) or any financing or
continuation statements or to make any other filing under the UCC in connection
with this Agreement (or have any liability arising from the making of or the
failure to make such filings).

 

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ARTICLE III

PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES;

USE OF COLLATERAL

SECTION 3.1 Delivery of Certificated Securities Collateral

Each Pledgor represents and warrants that, except as set forth in
Section 4.10(d), all certificates, agreements or instruments representing or
evidencing the Securities Collateral in existence on the date hereof have been
delivered to the Administrative Agent or its bailee in suitable form for
transfer by delivery or accompanied by duly executed instruments of transfer or
assignment in blank, and that the Administrative Agent has a perfected third
priority security interest therein subject only to Liens permitted under
Section 6.02 of the Credit Agreement and to the Liens of the Term Loan Facility
Agent and the Notes Facility Agent. Each Pledgor hereby agrees that all
certificates representing or evidencing Securities Collateral acquired by such
Pledgor after the date hereof shall promptly (but in any event within forty-five
(45) days after receipt thereof by such Pledgor or, prior to the date of the
Discharge of Non-ABL Obligations, such later date as First Lien/Junior Lien
Intercreditor Representative may specify under a provision that exists in
substantially the same form under the applicable Non-ABL Obligations Documents)
be delivered to and held by or on behalf of the Administrative Agent or its
bailee pursuant hereto. All certificated Securities Collateral shall be in
suitable form for transfer by delivery or shall be accompanied by duly executed
instruments of transfer or assignment in blank. The Administrative Agent shall
have the right (subject to the terms of the ABL Intercreditor Agreement), at any
time upon the occurrence and during the continuance of any Event of Default, to
endorse, assign or otherwise transfer to or to register in the name of the
Administrative Agent or any of its nominees or endorse for negotiation any or
all of the Securities Collateral, without any indication that such Securities
Collateral is subject to the security interest hereunder.

SECTION 3.2 Perfection of Uncertificated Securities Collateral

(a) Each Pledgor represents and warrants that the Administrative Agent has a
perfected third priority security interest (subject to Liens permitted under
Section 6.02 of the Credit Agreement having priority under applicable law and
the Liens of the Term Loan Facility Agent and the Notes Facility Agent) in all
uncertificated Pledged Securities pledged by it hereunder that are in existence
on the date hereof. Each Pledgor hereby agrees that if any of the Pledged
Securities are at any time not evidenced by certificates of ownership, then each
applicable Pledgor shall, to the extent permitted by applicable law, (i) cause
the issuer of Pledged Securities that is not a party to this Agreement to
execute and deliver to the Administrative Agent an acknowledgment of the pledge
of such Pledged Securities substantially in the form of Exhibit 1 hereto,
(ii) if necessary or desirable to perfect a security interest in such Pledged
Securities, cause such pledge to be recorded on the equityholder register or the
books of such issuer, execute any customary pledge forms or other documents
necessary or appropriate to complete the pledge and give the Administrative
Agent the right to transfer such Pledged Securities under the terms hereof, and
(iii) subject to the terms of the ABL Intercreditor Agreement, after the
occurrence and during the continuance of any Event of Default, upon request by
the Administrative Agent, (A) cause the Organizational Documents of each such
issuer that is a Subsidiary of the Company to be amended to provide that such
Pledged Securities shall be treated as “securities” for purposes of the UCC and
(B) cause such Pledged Securities to become certificated and delivered to the
Administrative Agent or its bailee in accordance with the provisions of
Section 3.1.

 

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(b) In the case of each Pledgor which is an issuer of Securities Collateral,
such Pledgor agrees (i) to be bound by the terms of this Agreement relating to
the Securities Collateral issued by it and will comply with such terms insofar
as such terms are applicable to it, (ii) promptly to note on its books the
security interests granted to the Administrative Agent and confirmed under this
Agreement and (iii) that it will, subject to the terms of the ABL Intercreditor
Agreement, comply with instructions of the Administrative Agent with respect to
the applicable Securities Collateral (including all Equity Interests of such
issuer) without further consent by the applicable Pledgor.

SECTION 3.3 Financing Statements and Other Filings; Maintenance of Perfected
Security Interest

Each Pledgor represents and warrants that all financing statements, agreements,
instruments and other documents necessary to perfect the security interest
granted by it to the Administrative Agent in respect of the Collateral have been
delivered to the Administrative Agent in completed and, to the extent necessary
or appropriate, duly executed form for filing in each governmental, municipal or
other office specified in Schedule 6 to the Perfection Certificate. Each Pledgor
agrees that at the sole cost and expense of the Pledgors, such Pledgor will
maintain the security interest created by this Agreement in the Collateral as a
perfected (x) first priority security interest in the ABL Priority Collateral
(subject to Liens permitted by Section 6.02 of the Credit Agreement having
priority under applicable law), and (y) third priority security interest in the
Non-ABL Priority Collateral (subject to Liens permitted by Section 6.02 of the
Credit Agreement having priority under applicable law and the Liens of the Term
Loan Facility Agent and the Notes Facility Agent) and authorizes the
Administrative Agent to file all UCC-3 continuations statements necessary to
continue the perfection of the security interest created by this Agreement.

SECTION 3.4 Other Actions

In order to further ensure the attachment, perfection and priority of, and the
ability of the Administrative Agent to enforce, the Administrative Agent’s
security interest in the Collateral, each Pledgor represents and warrants (as to
itself) as follows and agrees, in each case at such Pledgor’s own expense, to
take the following actions with respect to the following Collateral:

(a) [Reserved].

(b) Commercial Tort Claims. As of the date hereof, each Pledgor hereby
represents and warrants that it holds no Commercial Tort Claims other than those
listed in Schedule 12 to the Perfection Certificate. If any Pledgor shall at any
time hold or acquire a Commercial Tort Claim in excess of $5,000,000, such
Pledgor shall promptly notify the Administrative Agent in writing signed by such
Pledgor of the brief details thereof and grant to the Administrative Agent in
such writing a security interest therein and in the Proceeds thereof, all upon
the terms of this Agreement, with such writing to be in such form and substance
as is reasonably necessary to grant a security interest in such Commercial Tort
Claim.

 

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(c) Accounts and Chattel Paper.

(i) The names of the obligors, amounts owing, due dates and other information
with respect to each Pledgor’s Accounts and Chattel Paper are and will be
correctly stated in all records of such Pledgor relating thereto and in all
invoices and Collateral Reports with respect thereto furnished to the
Administrative Agent by such Pledgor from time to time. As of the time when each
Account or each item of Chattel Paper arises, such Pledgor shall be deemed to
have represented and warranted that such Account or Chattel Paper, as the case
may be, and all records relating thereto, are genuine and in all respects what
they purport to be.

(ii) With respect to each Pledgor’s Accounts, except as specifically disclosed
on the most recent Collateral Report or arising out of facts or circumstances
occurring after the date of the most recent Collateral Report, (i) all Accounts
are Eligible Accounts; (ii) all Accounts represent bona fide sales of Inventory
or rendering of services to Account Debtors in the ordinary course of such
Pledgor’s business and are not evidenced by a judgment, Instrument or Chattel
Paper; (iii) there are no setoffs, claims or disputes existing or asserted with
respect thereto and such Pledgor has not made any agreement with any Account
Debtor for any extension of time for the payment thereof, any compromise or
settlement for less than the full amount thereof, any release of any Account
Debtor from liability therefor, or any deduction therefrom except a discount or
allowance allowed by such Pledgor in the ordinary course of its business and
consistent with reasonable business judgment; (iv) to such Pledgor’s knowledge,
there are no facts, events or occurrences which impair the validity or
enforceability thereof in any material respect or could reasonably be expected
to reduce the amount payable thereunder as shown on such Pledgor’s books and
records and any invoices, statements and Collateral Reports with respect thereto
in any material respect; (v) such Pledgor has not received any notice of
proceedings or actions which are threatened or pending against any Account
Debtor which might result in any materially adverse change in such Account
Debtor’s financial condition; and (vi) such Pledgor has no knowledge that any
Account Debtor has become insolvent or is generally unable to pay its debts as
they become due.

(iii) In addition, with respect to all of each Pledgor’s Accounts, (i) the
amounts shown on all invoices, statements and Collateral Reports with respect
thereto are actually owing to such Pledgor as indicated thereon and are not in
any way contingent; (ii) no payments have been or shall be made thereon except
payments immediately delivered to a Lock Box or a Collateral Deposit Account as
required pursuant to Section 7.1; and (iii) to such Pledgor’s knowledge, all
Account Debtors have the capacity to contract.

(d) Inventory.

(i) With respect to any of a Pledgor’s Inventory scheduled or listed on the most
recent Collateral Report, (a) such Inventory (other than Inventory in transit or
being processed by a third party) is located at one of such Pledgor’s locations
set forth on Schedule 14 to the Perfection Certificate, (b) no Inventory (other
than Inventory in transit or being processed by a third party) is now, or shall
at any time or times hereafter be stored

 

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at any other location except as permitted by Section 3.4(h), (c) such Pledgor
has good, indefeasible and merchantable title to such Inventory and such
Inventory is not subject to any Lien or security interest or document whatsoever
except for Liens permitted under Section 6.02 of the Credit Agreement,
(d) except as specifically disclosed in the most recent Collateral Report, such
Inventory is Eligible Inventory, (e) such Inventory is not subject to any
licensing, patent, royalty, trademark, trade name or copyright agreements with
any third parties which would require any consent of any third party upon sale
or disposition of that Inventory or the payment of any monies to any third party
upon such sale or other disposition, (f) such Inventory has been produced in
compliance in all material respects with the Federal Fair Labor Standards Act of
1938, as amended, and all rules, regulations and orders thereunder and (g) the
completion of manufacture, sale or other disposition of such Inventory by the
Administrative Agent following an Event of Default shall not require the consent
of any Person and shall not constitute a breach or default under any contract or
agreement to which such Pledgor is a party or to which such property is subject.

(ii) Each Pledgor will do all things necessary to maintain, preserve, protect
and keep its Inventory in working and saleable condition, except for damaged or
defective goods arising in the ordinary course of such Pledgor’s business.

(iii) If an Account Debtor returns any Inventory to a Pledgor when no Event of
Default exists, then such Pledgor shall promptly determine the reason for such
return and shall promptly report each such event or circumstance on the
Borrowing Base Certificates submitted by it in the manner required with respect
to such Borrowing Base Certificate. In the event any Account Debtor returns
Inventory to such Pledgor when an Event of Default exists, such Pledgor, upon
the request of the Administrative Agent, shall: (i) hold the returned Inventory
in trust for the Administrative Agent; (ii) segregate all returned Inventory
from all of its other property; (iii) dispose of the returned Inventory solely
according to the Administrative Agent’s written instructions; and (iv) not issue
any credits or allowances with respect thereto without the Administrative
Agent’s prior written consent. All returned Inventory shall be subject to the
Administrative Agent’s Liens thereon. Whenever any Inventory is returned, the
related Account shall be deemed ineligible to the extent of the amount owing by
the Account Debtor with respect to such returned Inventory and such returned
Inventory shall not be Eligible Inventory.

(iv) Each Pledgor will conduct a physical count of its Inventory at least once
per fiscal year, and after and during the continuation of an Event of Default,
at such other times as the Administrative Agent requests. Such Pledgor, at its
own expense, shall deliver to the Administrative Agent the results of each
physical verification, which such Pledgor has made, or has caused any other
Person to make on its behalf, of all or any portion of its Inventory. Such
Pledgor will maintain a perpetual inventory reporting system at all times.

(v) Each Pledgor shall (i) maintain any Equipment necessary for the conduct of
its business in good working order, ordinary wear and tear excepted and
(ii) promptly inform the Administrative Agent of any additions to or deletions
from its Equipment which individually or in the aggregate exceed $25,000,000.

 

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(e) Receivables.

(i) No Pledgor will make or agree to make any discount, credit, rebate or other
reduction in the original amount owing on a Receivable or accept in satisfaction
of a Receivable less than the original amount thereof, except that, prior to the
occurrence of an Event of Default, such Pledgor may reduce the amount of
Accounts arising from the sale of Inventory in accordance with its reasonable
commercial judgment and in the ordinary course of business.

(ii) Except as otherwise provided in this Agreement, each Pledgor will collect
and enforce, at such Pledgor’s sole expense, all amounts due or hereafter due to
such Pledgor under the Receivables owned by it, in accordance with reasonable
business practices.

(iii) Each Pledgor will deliver to the Administrative Agent promptly upon its
request after the occurrence and during the continuation of an Event of Default
duplicate invoices with respect to each Account owned by it bearing such
language of assignment as the Administrative Agent shall specify.

(iv) If (i) any discount, credit or agreement to make a rebate or to otherwise
reduce the amount owing on any Receivable owned by any Pledgor exists or
(ii) if, to the knowledge of any Pledgor, any dispute, setoff, claim,
counterclaim or defense exists or has been asserted or threatened with respect
to any such Receivable, such Pledgor shall promptly report each such event or
circumstance on the Borrowing Base Certificates submitted by it in the manner
required with respect to such Borrowing Base Certificate.

(v) Each Pledgor shall take all steps necessary to grant the Administrative
Agent Control of all electronic chattel paper in accordance with the UCC and all
“transferable records” as defined in each of the Uniform Electronic Transactions
Act and the Electronic Signatures in Global and National Commerce Act.

(f) Collateral Records. Each Pledgor will maintain complete and accurate books
and records with respect to the Collateral owned by it.

(g) Instruments, Documents and Tangible Chattel Paper. As of the date hereof, no
Collateral is evidenced by any Instrument, Document or Tangible Chattel Paper
other than such Instruments, Documents and Tangible Chattel Paper listed in
Schedule 10 to the Perfection Certificate. Each Instrument and each item of
Tangible Chattel Paper listed in Schedule 10 to the Perfection Certificate has
been properly endorsed, assigned and delivered to the Administrative Agent,
accompanied by instruments of transfer or assignment duly executed in blank. If
any amount then payable under or in connection with any of the Collateral shall
be evidenced by any Instrument or Tangible Chattel Paper, and such amount,
together with all amounts payable evidenced by any Instrument or Tangible
Chattel Paper not previously delivered to the Administrative Agent or its
bailee, exceeds $5,000,000 in the aggregate for all Pledgors, the Pledgor
acquiring such Instrument or Tangible Chattel Paper shall promptly (but in any
event within five (5) days after receipt thereof or, in the case of such
Collateral constituting Non-ABL Priority Collateral, and prior to the date of
the Discharge of Non-ABL Obligations, such later date

 

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as First Lien/Junior Lien Intercreditor Representative may specify under a
provision that exists in substantially the same form under the applicable
Non-ABL Obligations Documents) endorse, assign and deliver the same to the
Administrative Agent, or its bailee accompanied by such instruments of transfer
or assignment duly executed in blank as the Administrative Agent may from time
to time specify. Promptly upon the Administrative Agent’s reasonable request,
Pledgors shall deliver to the Administrative Agent or its bailee (and thereafter
hold in trust for the Administrative Agent upon receipt and immediately deliver
to the Administrative Agent or its bailee) any Document evidencing or
constituting Collateral.

(h) Locations. Such Pledgor will not (i) maintain any ABL Priority Collateral
owned by it in excess of $2,000,000 in value at any location other than those
locations listed on Schedule 14 to the Perfection Certificate, or (ii) otherwise
change, or add to, such locations unless such Pledgor promptly notifies the
Administrative Agent and is in compliance with Section 4.16.

SECTION 3.5 Joinder of Additional Pledgors

The Pledgors shall cause each Subsidiary of the Company which, from time to
time, after the date hereof shall be required to pledge any assets to the
Administrative Agent for the benefit of the Secured Parties pursuant to the
provisions of the Credit Agreement, to execute and deliver to the Administrative
Agent (i) a Joinder Agreement substantially in the form of Exhibit 3 hereto and
(ii) a Perfection Certificate, in each case, within forty-five (45) days of the
date on which it was acquired or created and, in each case, upon such execution
and delivery, such Subsidiary shall constitute a “Pledgor” for all purposes
hereunder with the same force and effect as if originally named as a Pledgor
herein. The execution and delivery of such Joinder Agreement shall not require
the consent of any Pledgor hereunder. The rights and obligations of each Pledgor
hereunder shall remain in full force and effect notwithstanding the addition of
any new Pledgor as a party to this Agreement.

SECTION 3.6 Supplements; Further Assurances

Each Pledgor shall take such further actions, and execute and/or deliver to the
Administrative Agent such additional financing statements, amendments,
assignments, agreements, supplements, powers and instruments, as is reasonably
necessary or appropriate in order to create, perfect, preserve and protect the
security interest in the Collateral as provided herein and the rights and
interests granted to the Administrative Agent hereunder, to carry into effect
the purposes hereof or better to assure and confirm the validity, enforceability
and priority of the Administrative Agent’s security interest in the Collateral
or permit the Administrative Agent to exercise and enforce its rights, powers
and remedies hereunder with respect to any Collateral, including the filing of
financing statements, continuation statements and other documents (including
this Agreement) under the Uniform Commercial Code (or other similar laws) in
effect in any jurisdiction with respect to the security interest created hereby
and in such offices (including the United States Patent and Trademark Office and
the United States Copyright Office) wherever required by law to perfect,
continue and maintain the validity, enforceability and priority of the security
interest in the Collateral as provided herein and to preserve the other rights
and interests granted to the Administrative Agent hereunder, as against third
parties, with respect to the Collateral; provided that such amendments,
assignments, agreements, supplements, powers and instruments shall (i) be in
customary form and accompanied by customary ancillary documents

 

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reasonably satisfactory to Administrative Agent, (ii) not cause a default under
any Intercreditor Agreement, (iii) be in compliance with the Credit Agreement
and (iv) contain such provisions regarding the duties, liabilities, obligations,
indemnities, benefits and protections of the Administrative Agent as are
reasonably acceptable to the Administrative Agent. Without limiting the
generality of the foregoing, each Pledgor shall make, execute, endorse,
acknowledge, file or refile and/or deliver to the Administrative Agent from time
to time upon reasonable request by the Administrative Agent such lists,
schedules, descriptions and designations of the Collateral, copies of warehouse
receipts, receipts in the nature of warehouse receipts, bills of lading,
documents of title, vouchers, invoices, schedules, confirmatory assignments,
supplements, additional security agreements, conveyances, financing statements,
transfer endorsements, powers of attorney, certificates, reports and other
assurances or instruments as the Administrative Agent shall reasonably request.
If an Event of Default has occurred and is continuing, subject to the terms of
the ABL Intercreditor Agreement, the Administrative Agent may institute and
maintain, in its own name or in the name of any Pledgor, such suits and
proceedings as the Administrative Agent may be advised by counsel shall be
necessary or expedient to prevent any impairment of the security interest in or
the perfection thereof in the Collateral. All of the foregoing shall be at the
sole cost and expense of the Pledgors.

ARTICLE IV

REPRESENTATIONS, WARRANTIES AND COVENANTS

Each Pledgor represents, warrants and covenants as follows:

SECTION 4.1 Title

Except for the security interest granted to the Administrative Agent for the
benefit of the Secured Parties pursuant to this Agreement and Liens permitted by
Section 6.02 of the Credit Agreement, such Pledgor owns and has rights and, as
to Collateral acquired by it from time to time after the date hereof, will own
and have rights in each item of Collateral pledged by it hereunder, and has the
power to transfer the Collateral, free and clear of any and all Liens or claims
of others (other than licenses granted in the ordinary course of business). Such
Pledgor has the corporate or other organizational power and authority to grant
to the Administrative Agent the security interest in the Collateral pursuant
hereto. In addition, no Liens or claims exist on the Securities Collateral,
other than as permitted by Section 6.02 of the Credit Agreement. Schedules 11(a)
through 11(d) of the Perfection Certificate set forth a true, correct and
complete list of all Patents, Trademarks and Copyrights registered or applied
for in the United States Patent and Trademark Office or the United States
Copyright Office, as applicable, that is owned by each such Pledgor and all
Intellectual Property Licenses under which such Pledgor exclusively licenses
Copyrights from a third party (each such Intellectual Property License, an
“Exclusive Copyright License”).

SECTION 4.2 Validity of Security Interest

The security interest in and Lien on the Collateral granted to the
Administrative Agent for the benefit of the Secured Parties hereunder
constitutes (a) a legal and valid security interest in all the Collateral
securing the payment and performance of the Secured Obligations, and (b) subject
to the filings and other actions described in Schedule 6 to the Perfection
Certificate (to

 

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the extent required to be listed on the schedules to the Perfection Certificate
as of the date this representation is made or deemed made) and intellectual
property filings with the United States Patent and Trademark Office and the
United States Copyright Office, a perfected security interest in all the
Collateral to the extent required to be perfected hereunder. The security
interest and Lien granted to the Administrative Agent for the benefit of the
Secured Parties pursuant to this Agreement in and on the Collateral will at all
times constitute a perfected, continuing security interest therein, prior to all
other Liens on the Collateral except for Liens permitted by Section 6.02 of the
Credit Agreement. Without limiting the foregoing, this Agreement constitutes a
legal valid and binding obligation of each Pledgor, enforceable against such
Pledgor, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors’ rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or at law.

SECTION 4.3 Defense of Claims; Transferability of Collateral

Each Pledgor shall, at its own cost and expense, defend title to the ABL
Priority Collateral pledged by it hereunder and the security interest therein
and Lien thereon granted to the Administrative Agent and the priority thereof
against all claims and demands of all persons, at its own cost and expense, at
any time claiming any interest therein adverse to the Administrative Agent or
any other Secured Party other than Liens permitted under Section 6.02 of the
Credit Agreement. Each Pledgor shall, at its own cost and expense, use
commercially reasonable efforts to defend title to the Non-ABL Priority
Collateral pledged by it hereunder and the security interest therein and Lien
thereon granted to the Administrative Agent and the priority thereof against all
claims and demands of all persons, at its own cost and expense, at any time
claiming any interest therein materially adverse to the Administrative Agent or
any other Secured Party other than Liens permitted under Section 6.02 of the
Credit Agreement. There is no agreement, order, judgment or decree, and, except
as permitted under the Credit Agreement, no Pledgor shall enter into any
agreement or take any other action, that would restrict the transferability of
any of the Collateral or otherwise impair or conflict with such Pledgor’s
obligations or the rights of the Administrative Agent hereunder.

SECTION 4.4 Other Financing Statements

It has not filed, nor authorized any third party to file (nor will it file or
authorize), any valid or effective financing statement (or similar statement,
instrument of registration or public notice under the law of any jurisdiction)
covering or purporting to cover any interest of any kind in the Collateral,
except such as have been filed in favor of the Administrative Agent pursuant to
this Agreement or in favor of any holder of a Lien permitted under Section 6.02
of the Credit Agreement with respect to such Lien or financing statements or
public notices relating to the termination statements listed on Schedule 8 to
the Perfection Certificate. No Pledgor shall execute or authorize in any public
office any financing statement (or similar statement, instrument of registration
or public notice under the law of any jurisdiction) relating to any Collateral,
except financing statements and other statements and instruments filed or to be
filed in respect of and covering the security interests granted by such Pledgor
to the holder of a Lien permitted under Section 6.02 of the Credit Agreement.

 

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SECTION 4.5 Pledged Securities

Attached hereto as Schedule 1 is, as of the Fourth Amendment Effective Date, a
true and correct list of all of the issued and outstanding stock, partnership
interests, limited liability company membership interests or other equity
interests owned by any Pledgor (other than Excluded Assets).

SECTION 4.6 Due Authorization and Issuance

All of the Pledged Securities existing on the date hereof have been, and to the
extent any Pledged Securities are hereafter issued, such Pledged Securities will
be, upon such issuance, duly authorized, validly issued and fully paid and
(other than in the case of the ULC/Partnership Interests) non-assessable to the
extent applicable. There is no amount or other obligation owing by any Pledgor
to any issuer of the Pledged Securities in exchange for or in connection with
the issuance of the Pledged Securities or any Pledgor’s status as a partner or a
member of any issuer of the Pledged Securities.

SECTION 4.7 Consents, etc

In the event that the Administrative Agent desires to exercise any remedies,
voting or consensual rights or attorney-in-fact powers set forth in this
Agreement and determines it necessary to obtain any approvals or consents of any
Governmental Authority or any other person therefor, then, upon the reasonable
request of the Administrative Agent, such Pledgor agrees to use its commercially
reasonable efforts to assist and aid the Administrative Agent to obtain as soon
as practicable any necessary approvals or consents for the exercise of any such
remedies, rights and powers.

SECTION 4.8 Collateral

All information set forth herein, including the schedules hereto, and all
information contained in any documents, schedules and lists heretofore delivered
to any Secured Party, including the Perfection Certificate and the schedules
thereto, in connection with this Agreement, in each case, relating to the
Collateral, is accurate and complete in all material respects. The Collateral
described on the schedules to the Perfection Certificate constitutes all of the
property of such type of Collateral owned or held by the Pledgors.

SECTION 4.9 Insurance

(a) In the event that the proceeds of any insurance claim are paid to any
Pledgor after the Administrative Agent has exercised its right to foreclose
after an Event of Default, such Net Loss Proceeds shall be held in trust for the
benefit of the Administrative Agent and immediately after receipt thereof shall,
subject to the terms of the ABL Intercreditor Agreement, be paid to the
Administrative Agent for application in accordance with the Credit Agreement.

(b) In the event any Collateral is located in any area that has been designated
by the Federal Emergency Management Agency as a “Special Flood Hazard Area”,
such Pledgor shall purchase and maintain flood insurance on such Collateral
(including any personal property which is located on any real property leased by
such Loan Party within a “Special Flood Hazard Area”). The amount of flood
insurance required by this Section shall be in an amount equal to the lesser of
the total Commitment or the total replacement cost value of the improvements.

 

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(c) Pledgors’ insurance policies shall name the Administrative Agent (for the
benefit of the Administrative Agent and the Lenders) as an additional insured or
as lender loss payee, as applicable, and shall contain lender loss payable
clauses, through endorsements in form and substance reasonably satisfactory to
the Administrative Agent.

(d) All premiums on any such insurance shall be paid when due by such Pledgor,
and upon the request of Administrative Agent, copies of the policies shall be
delivered to the Administrative Agent. If such Pledgor fails to obtain any
insurance as required by Section 5.10 of the Credit Agreement reasonably
promptly after notice of such failure, the Administrative Agent may obtain such
insurance at the Borrower’s expense. By purchasing such insurance, the
Administrative Agent shall not be deemed to have waived any Default arising from
the Pledgor’s failure to maintain such insurance or pay any premiums therefor.

SECTION 4.10 Post-Closing Collateral Matters

(a) [Reserved].

(b) [Reserved].

(c) Each Pledgor agrees that, in the event such Pledgor takes any action to
grant or perfect a Lien in favor of the Term Loan Facility Agent or the Notes
Facility Agent in any assets, such Pledgor shall (i) notify the Administrative
Agent contemporaneously therewith, and (ii) upon the Administrative Agent’s
request, also take such action to grant or perfect a Lien (subject to the terms
of the ABL Intercreditor Agreement) in favor of the Administrative Agent to
secure the Secured Obligations.

(d) The Company shall, within thirty (30) days after the Closing Date (or, prior
to the Discharge of Non-ABL Obligations, such later date as the First
Lien/Junior Lien Intercreditor Representative may specify under a provision that
exists in substantially the same form under the applicable Non-ABL Obligations
Documents), deliver to the Administrative Agent or its bailee the certificates
evidencing the Pledged Securities in Aleris Rolled Products Canada ULC.

The Administrative Agent undertakes no any responsibility whatsoever to
determine whether any of the foregoing covenants in this Section 4.10 have been
satisfied, and shall not have any liability whatsoever arising out of the
failure of the Company or any of the Pledgors to satisfy such post-closing
requirements.

SECTION 4.11 Notice of Changes

Without limiting the restrictions on mergers involving the Pledgors contained in
the Credit Agreement, if any Pledgor shall effect any change in (i) its legal
name, (ii) the location of its chief executive office, principal place of
business, mailing address, corporate offices or warehouses or locations at which
Collateral is held or stored, or the location of its records concerning the
Collateral as set forth in this Agreement, (iii) its identity or organizational
structure,

 

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(iv) its organizational identification number, if any, or (v) its jurisdiction
of organization, (A) it shall give the Administrative Agent at least ten
(10) Business Days prior written notice thereof and the Administrative Agent
shall have acknowledged in writing that either (1) such change will not
adversely affect the validity, perfection or priority of the Administrative
Agent’s security interest in the Collateral, or (2) any reasonable action
requested by the Administrative Agent in connection therewith has been completed
or taken (including any action to continue the perfection of any Liens in favor
of the Administrative Agent, on behalf of the Secured Parties, in any
Collateral), provided that, any new location with respect to ABL Priority
Collateral shall be in the continental U.S. No Pledgor shall change its fiscal
year, which currently ends on December 31.

SECTION 4.12 No Impairment of the Security Interests

No Pledgor shall take any action, or knowingly or negligently omit to take any
action, which action or omission would have the result of materially impairing
the security interest with respect to the Collateral.

SECTION 4.13 Letter-of-Credit Rights

(a) Schedule 16 to the Perfection Certificate lists all Letter-of-Credit Rights
constituting ABL Priority Collateral of such Pledgor. All action by such Pledgor
necessary or desirable to protect and perfect the Administrative Agent’s Lien on
each item listed on Schedule 16 to the Perfection Certificate (including the
delivery of all originals) has been duly taken. Upon the taking of such actions,
the Administrative Agent will have a fully perfected first priority security
interest in the Collateral listed on Schedule 16 to the Perfection Certificate,
subject only to Liens permitted under Section 6.02 of the Credit Agreement.

(b) If any Pledgor is or becomes the beneficiary of a letter of credit
constituting Collateral in excess of $5,000,000 in face amount, it shall
promptly, and in any event within two (2) Business Days after becoming a
beneficiary, notify the Administrative Agent thereof and (i) undertake
commercially reasonable efforts to cause the Company and/or confirmation bank to
consent to the assignment of any Letter-of-Credit Rights to the Administrative
Agent and (ii) subject to the terms of the ABL Intercreditor Agreement, use
commercially reasonable efforts to cause the Company and/or confirmation bank to
agree to direct all payments thereunder to a Deposit Account at the
Administrative Agent for application to the Secured Obligations, in accordance
with Section 10.1 hereof, all in form and substance reasonably satisfactory to
the Administrative Agent.

SECTION 4.14 Federal, State or Municipal Claims

Such Pledgor will promptly notify the Administrative Agent of any Collateral
which constitutes a claim against the United States government or any state or
local government or any instrumentality or agency thereof, the assignment of
which claim is restricted by federal, state or municipal law.

 

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SECTION 4.15 No Interference

Such Pledgor agrees that it will not interfere with any right, power and remedy
of the Administrative Agent provided for in this Agreement or now or hereafter
existing at law or in equity or by statute or otherwise, or the exercise or
beginning of the exercise by the Administrative Agent of any one or more of such
rights, powers or remedies.

SECTION 4.16 Collateral Access Agreements

Such Pledgor 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 Collateral in excess of $2,000,000 in
value is stored or located. With respect to such locations or warehouse space
leased as of the Fourth Amendment Effective Date and thereafter, if the
Administrative Agent has not received a Collateral Access Agreement as of the
Fourth Amendment Effective Date (or, if later, as of the date such location is
acquired or leased), the Borrower’s Eligible Inventory at that location shall be
subject to such Reserves as may be established by the Administrative Agent.
After the Fourth Amendment Effective Date, either (x) no real property or
warehouse space shall be leased by such Pledgor and no Inventory shall be
shipped to a processor or converter under arrangements established after the
Fourth Amendment Effective Date, unless and until a satisfactory Collateral
Access Agreement shall first have been obtained with respect to such location,
or (y) if a satisfactory Collateral Access Agreement has not been obtained, the
Borrower’s Eligible Inventory at that location shall be subject to the
establishment of Reserves acceptable to the Administrative Agent. Such Pledgor
shall timely and fully pay and perform in all material respects its obligations
under all leases and other agreements with respect to each leased location or
third party warehouse where any Collateral is or may be located.

SECTION 4.17 Deposit Account Control Agreements

Such Pledgor will provide to the Administrative Agent promptly upon the
Administrative Agent’s request, a Deposit Account Control Agreement duly
executed on behalf of each financial institution holding a deposit account
constituting ABL Priority Collateral of such Pledgor as set forth in this
Agreement.

SECTION 4.18 ULC/Partnership Interests

Notwithstanding any provisions to the contrary contained in this Agreement or
any other document or agreement among all or some of the parties hereto, each
Pledgor shall remain registered as the sole registered and beneficial owner of
all ULC/Partnership Interests and will remain as registered and beneficial owner
until such time as such ULC/Partnership Interests are effectively transferred
into the name of the Administrative Agent or any other Person on the books and
records of such ULC/Partnership upon the exercise of rights to sell or otherwise
dispose of ULC/Partnership Interests following the occurrence and during the
continuance of an Event of Default. Accordingly, such Pledgor shall be entitled
to receive and retain for its own account any dividends, property or other
distributions, if any, in respect of such ULC/Partnership Interests (except
insofar as the Pledgor has granted a security interest in such dividends,
property or other distributions, and any shares which are ULC/Partnership
Interests shall be delivered to the Administrative Agent to hold as collateral
hereunder) and shall have the right to vote such ULC/Partnership Interests and
to control the direction, management and policies of the issuer of such
ULC/Partnership Interests to the same extent as the Pledgor would if such
ULC/Partnership

 

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Interests were not pledged to the Collateral Agent pursuant hereto. Nothing in
this Agreement is intended to or shall constitute the Administrative Agent, any
other Secured Party, or any other Person other than such Pledgor as a
shareholder or member of any ULC/Partnership for the purposes of any applicable
law until such time as notice is given to such ULC/Partnership (which has not
been withdrawn) and further steps are taken thereunder so as to register the
Administrative Agent or any Person as the holder of the ULC/Partnership
Interests of such ULC/Partnership upon the exercise of rights to sell or
otherwise dispose of ULC/Partnership Interests following the occurrence and
during the continuance of an Event of Default. To the extent any provision
hereof would have the effect of constituting the Administrative Agent or any
other Secured Party as a shareholder or member of a ULC/Partnership prior to
such time, such provision shall be severed therefrom and ineffective with
respect to the ULC/Partnership Interests of such ULC/Partnership without
otherwise invalidating or rendering unenforceable this Agreement or invalidating
or rendering unenforceable such provision insofar as it relates to Securities
Collateral which are not ULC/Partnership Interests. Except upon the exercise of
rights to sell or otherwise dispose of ULC/Partnership Interests following the
occurrence and during the continuance of an Event of Default, no Pledgor shall
cause or permit, or enable any ULC/Partnership in which it holds ULC/Partnership
Interests to cause or permit, the Administrative Agent to: (a) be registered as
a shareholder or member of such ULC/Partnership; (b) have any notation entered
in its favor in the share register of such ULC/Partnership; (c) be held out as a
shareholder or member of such ULC/Partnership; (d) receive, directly or
indirectly, any dividends, property or other distributions from such
ULC/Partnership by reason of the Administrative Agent holding a security
interest in such ULC/Partnership Interests; or (e) act as a shareholder or
member of such ULC/Partnership, or exercise any rights of a shareholder or
member of such ULC/Partnership including the right to attend a meeting of, or to
vote the shares of, such ULC/Partnership.

ARTICLE V

CERTAIN PROVISIONS CONCERNING SECURITIES COLLATERAL

SECTION 5.1 Pledge of Additional Securities Collateral

Each Pledgor shall, upon obtaining any Pledged Securities of any person, accept
the same in trust for the benefit of the Administrative Agent or its bailee and
promptly (but in any event within forty-five (45) days after receipt thereof or,
prior to the Discharge of the Non-ABL Obligations, such later dates as the First
Lien/Junior Lien Intercreditor Representative may specify under a provision that
exists in the substantially same form under the applicable Non-ABL Obligations
Documents) deliver to the Administrative Agent a pledge amendment, duly executed
by such Pledgor, in substantially the form of Exhibit 2 hereto (each, a “Pledge
Amendment”), and the certificates and other documents required under Section 3.1
and Section 3.2 hereof in respect of the additional Pledged Securities which are
to be pledged pursuant to this Agreement, and confirming the attachment of the
Lien hereby created on and in respect of such additional Pledged Securities.
Each Pledgor hereby authorizes the Administrative Agent to attach each Pledge
Amendment to this Agreement and agrees that all Pledged Securities listed on any
Pledge Amendment delivered to the Administrative Agent shall for all purposes
hereunder be considered Collateral.

 

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SECTION 5.2 Voting Rights; Distributions; etc

(a) Subject to the terms of the ABL Intercreditor Agreement, so long as no Event
of Default shall have occurred and be continuing:

(i) each Pledgor shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Securities Collateral or any part thereof
for any purpose not inconsistent with the terms or purposes hereof, the Credit
Agreement or any other document evidencing the Secured Obligations.

(ii) each Pledgor shall be entitled to receive and retain, and to utilize free
and clear of the Lien hereof, any and all Distributions, but only if and to the
extent made in accordance with the provisions of the Credit Agreement; provided,
however, that any and all such Distributions consisting of rights or interests
in the form of securities shall be forthwith delivered to the Administrative
Agent to hold as Collateral and shall, if received by any Pledgor, be received
in trust for the benefit of the Administrative Agent, be segregated from the
other property or funds of such Pledgor and be promptly (but in any event within
forty-five (45) days after receipt thereof or, prior to the Discharge of the
Non-ABL Obligations, such later dates as the First Lien/Junior Lien
Intercreditor Representative may specify under a provision that exists in the
substantially same form under the applicable Non-ABL Obligations Documents)
delivered to the Administrative Agent as Collateral in the same form as so
received (with any necessary endorsement).

(b) So long as no Event of Default shall have occurred and be continuing, the
Administrative Agent shall be deemed without further action or formality to have
granted to each Pledgor all necessary consents relating to voting rights and
shall, if necessary, upon written request of any Pledgor and at the sole cost
and expense of the Pledgors, from time to time execute and deliver (or cause to
be executed and delivered) to such Pledgor all such instruments as such Pledgor
may reasonably request in order to permit such Pledgor to exercise the voting
and other rights which it is entitled to exercise pursuant to Section 5.2(a)(i)
hereof and to receive the Distributions which it is authorized to receive and
retain pursuant to Section 5.2(a)(ii) hereof.

(c) Upon the occurrence and during the continuance of any Event of Default,
following one day’s notice by the Administrative Agent to the Company and the
Pledgors (provided that with respect to any default under Article VII(a), (b),
(h), (i) or (j) of the Credit Agreement, such notice shall have automatically,
and without further action, been deemed to have been delivered), subject to the
terms of the ABL Intercreditor Agreement:

(i) all rights of each Pledgor set forth in such notice to exercise the voting
and other consensual rights it would otherwise be entitled to exercise pursuant
to Section 5.2(a)(i) hereof shall immediately cease, and all such rights shall
thereupon immediately become vested in the Administrative Agent, which shall
thereupon have the sole right to exercise such voting and other consensual
rights; and

(ii) all rights of each Pledgor to receive Distributions which it would
otherwise be authorized to receive and retain pursuant to Section 5.2(a)(ii)
hereof shall immediately cease and all such rights shall thereupon become vested
in the Administrative Agent, which shall thereupon have the sole right to
receive and hold as Collateral such Distributions; and

 

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(iii) the Administrative Agent may take possession of and sell the Collateral or
any part thereof in accordance with the terms of this Agreement and the other
Security Documents.

(d) Each Pledgor shall, at its sole cost and expense, from time to time during
the continuance of an Event of Default, execute and deliver to the
Administrative Agent appropriate instruments as the Administrative Agent may
request in order to permit the Administrative Agent to exercise the voting and
other rights which it may be entitled to exercise pursuant to Section 5.2(c)(i)
hereof and to receive all Distributions which it may be entitled to receive
under Section 5.2(c)(ii) hereof.

(e) All Distributions which are received by any Pledgor contrary to the
provisions of Section 5.2(a)(ii) hereof shall be received in trust for the
benefit of the Administrative Agent, shall be segregated from other funds of
such Pledgor and shall immediately be paid over to the Administrative Agent as
Collateral in the same form as so received (with any necessary endorsement).

SECTION 5.3 Defaults, etc

Each Pledgor hereby represents and warrants that (i) such Pledgor is not in
default in the payment of any portion of any mandatory capital contribution, if
any, required to be made under any agreement to which such Pledgor is a party
relating to the Pledged Securities pledged by it, and such Pledgor is not in
violation of any other provisions of any such agreement to which such Pledgor is
a party, or otherwise in default or violation thereunder, (ii) no Securities
Collateral pledged by such Pledgor is subject to any defense, offset or
counterclaim, nor have any of the foregoing been asserted or alleged against
such Pledgor by any person with respect thereto, and (iii) as of the date
hereof, there are no certificates, instruments, documents or other writings
(other than the Organizational Documents and certificates representing such
Pledged Securities that have been delivered to the Administrative Agent) which
evidence any Pledged Securities of such Pledgor.

SECTION 5.4 Certain Agreements of Pledgors As Holders of Equity Interests

In the case of each Pledgor which is a partner, shareholder or member, as the
case may be, in a partnership, limited liability company or other entity, such
Pledgor hereby consents to the extent required by the applicable Organizational
Document to the pledge by each other Pledgor, pursuant to the terms hereof, of
the Pledged Securities in such partnership, limited liability company or other
entity and, upon the occurrence and during the continuance of an Event of
Default, to the transfer of such Pledged Securities to the Administrative Agent
or its nominee and to the substitution of the Administrative Agent or its
nominee as a substituted partner, shareholder or member in such partnership,
limited liability company or other entity with all the rights, powers and duties
of a general partner, limited partner, shareholder or member, as the case may
be.

 

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ARTICLE VI

CERTAIN PROVISIONS CONCERNING INTELLECTUAL

PROPERTY COLLATERAL

SECTION 6.1 Grant of Intellectual Property License

(a) For the purpose of enabling the Administrative Agent, during the continuance
of an Event of Default, to exercise rights and remedies under Article IX hereof
at such time as the Administrative Agent shall be lawfully entitled to exercise
such rights and remedies, and for no other purpose, each Pledgor hereby grants
to the Administrative Agent, an irrevocable, non-exclusive, worldwide,
royalty-free (and free of any other obligation or payment) license to use,
assign, license or sublicense any of the Intellectual Property Collateral now
owned, licensed or hereafter acquired by such Pledgor, wherever the same may be
located, subject in the case of Trademarks to reasonably sufficient rights to
quality control and inspection in favor of such Pledgor to avoid the risk of
invalidation of its Trademarks. Such license shall include access to all media
in which any of the licensed items may be recorded or stored and to all computer
programs used for the compilation or printout thereof. With respect to
Inventory, each Pledgor irrevocably agrees that the Administrative Agent may
sell any of such Pledgor’s Inventory directly to any person, including without
limitation persons who have previously purchased the Pledgor’s Inventory from
such Pledgor and in connection with any such sale or other enforcement of the
Administrative Agent’s rights under this Agreement, may sell Inventory which
bears any Trademark owned by or licensed to such Pledgor and any Inventory that
is covered by any Copyright owned by or licensed to such Pledgor and the
Administrative Agent may finish any work in process and affix any Trademark
owned by or licensed to such Pledgor and sell such Inventory as provided herein.

(b) Such Pledgor will use its best efforts to secure all material consents and
approvals necessary or appropriate for the assignment to or benefit of the
Administrative Agent of any Intellectual Property License held by such Pledgor
and to enforce the security interests granted hereunder.

SECTION 6.2 Protection of Administrative Agent’s Security

On a continuing basis, each Pledgor shall, at its sole cost and expense,
(i) promptly following its becoming aware thereof, notify the Administrative
Agent of any adverse determination in any proceeding or the institution of any
proceeding in any federal, state or local court or administrative body or in the
United States Patent and Trademark Office or the United States Copyright Office
regarding any material Intellectual Property Collateral, such Pledgor’s right to
register such material Intellectual Property Collateral or its right to keep and
maintain such registration and prosecute applications in full force and effect
(excluding, in each case, typical communications in the ordinary course of
prosecution, such as office actions and the like), (ii) consistent with
commercially reasonable business judgment, maintain, protect and enforce all
material Intellectual Property Collateral as presently used and operated,
(iii) not permit to lapse or become abandoned any material Intellectual Property
Collateral, and not settle or compromise any pending or future litigation or
administrative proceeding with respect to any such material Intellectual
Property Collateral, in either case except as shall be consistent with
commercially

 

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reasonable business judgment, (iv) upon such Pledgor obtaining knowledge
thereof, promptly notify the Administrative Agent in writing of any event which
may be reasonably expected to materially and adversely affect the value or
utility of any material Intellectual Property Collateral to such Pledgor or the
Administrative Agent’s Lien on and security interest therein, including a levy
or threat of levy or any legal process against any material Intellectual
Property Collateral, (v) not license any Intellectual Property Collateral, or
otherwise disclose any confidential Technology or source code, other than
licenses or under nondisclosure agreements (as applicable) entered into by such
Pledgor in, or incidental to, the ordinary course of business, (vi) amend or
permit the amendment of any of the licenses in a manner that materially and
adversely affects the right to receive payments thereunder, or in any manner
that would materially impair the value of any Intellectual Property Collateral
to such Pledgor or the Administrative Agent’s Lien on and security interest
therein, in each case, except as shall be consistent with commercially
reasonable business judgment, (vii) diligently keep adequate records respecting
all Intellectual Property Collateral and (viii) furnish to the Administrative
Agent from time to time upon the Administrative Agent’s request therefor
reasonably detailed statements and amended schedules further identifying and
describing the Intellectual Property Collateral and such other materials
evidencing or reports pertaining to any Intellectual Property Collateral as the
Administrative Agent may from time to time request.

SECTION 6.3 After-Acquired Property

If any Pledgor shall at any time after the date hereof (i) obtain any rights to
any additional Intellectual Property Collateral or (ii) become entitled to the
benefit of any additional Intellectual Property Collateral or any renewal or
extension thereof, including any reissue, division, continuation, or
continuation-in-part of any Intellectual Property Collateral, or any improvement
on any Intellectual Property Collateral, or if any intent-to use trademark
application is no longer subject to clause (g) of the definition of “Excluded
Assets,” the provisions hereof shall automatically apply thereto and any such
item enumerated in the preceding clause (i) or (ii) shall automatically
constitute Intellectual Property Collateral as if such would have constituted
Intellectual Property Collateral at the time of execution hereof and be subject
to the Lien and security interest created by this Agreement without further
action by any party. Each Pledgor shall concurrently with the delivery of annual
financial statements under Section 5.01(a) of the Credit Agreement provide to
the Administrative Agent written notice of any newly filed or acquired Patent,
Trademark, Copyright, or Exclusive Copyright License (in each case filed with
the United States Copyright Office or the United States Patent and Trademark
Office) and confirm the attachment of the Lien and security interest created by
this Agreement to any rights described in clauses (i) and (ii) above by
execution of an instrument which shall contain such provisions regarding the
duties, liabilities, obligations, indemnities, benefits and protections of the
Administrative Agent as are reasonably acceptable to it and shall promptly file
and record with the United States Patent and Trademark Office or United States
Copyright Office, as applicable, such instrument as shall be reasonably
necessary to create, preserve, protect or perfect the Administrative Agent’s
security interest in such Intellectual Property Collateral.

 

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SECTION 6.4 Litigation

Unless there shall occur and be continuing any Event of Default, each Pledgor
shall have the right to commence and prosecute in its own name, as the party in
interest, for its own benefit and at the sole cost and expense of the Pledgors,
such applications for protection of the Intellectual Property Collateral and
suits, proceedings or other actions to prevent the infringement, counterfeiting,
unfair competition, dilution, diminution in value or other damage as are
necessary to protect the Intellectual Property Collateral. Upon the occurrence
and during the continuance of any Event of Default, subject to the terms of the
ABL Intercreditor Agreement, the Administrative Agent shall have the right but
shall in no way be obligated to file applications for protection of the
Intellectual Property Collateral and/or bring suit in the name of any Pledgor,
the Administrative Agent or the Secured Parties to enforce the Intellectual
Property Collateral and any license thereunder. In the event of such suit, each
Pledgor shall, at the reasonable request of the Administrative Agent, do any and
all lawful acts and execute any and all documents reasonably requested by the
Administrative Agent in aid of such enforcement and the Pledgors shall promptly
reimburse and indemnify the Administrative Agent for all costs and expenses
incurred by the Administrative Agent in the exercise of its rights under this
Section 6.4 in accordance with Section 9.03 of the Credit Agreement. In the
event that the Administrative Agent shall elect not to bring such suit to
enforce the Intellectual Property Collateral, each Pledgor agrees, at the
reasonable request of the Administrative Agent, to take all commercially
reasonable actions necessary, whether by suit, proceeding or other action, to
prevent the infringement, counterfeiting, unfair competition, dilution,
diminution in value of or other damage to any of the Intellectual Property
Collateral by any person.

ARTICLE VII

COLLECTION AND APPLICATION OF COLLATERAL PROCEEDS; DEPOSIT ACCOUNTS

SECTION 7.1 Collection of Receivables.

(a) On or before the Closing Date, each Pledgor shall (a) execute and deliver to
the Administrative Agent Deposit Account Control Agreements for each Deposit
Account maintained by such Pledgor into which all cash, checks or other similar
payments relating to or constituting payments made in respect of Receivables
will be deposited (each, a “Collateral Deposit Account”), which Collateral
Deposit Accounts are identified as such on Schedule 15 to the Perfection
Certificate, and (b) establish lock box service (the “Lock Boxes”) with the
bank(s) set forth Schedule 15 to the Perfection Certificate, which Lock Boxes
shall be subject to irrevocable lockbox agreements in the form provided by or
otherwise reasonably acceptable to the Administrative Agent and shall be
accompanied by an acknowledgment by the bank where the Lock Box is located of
the Lien of the Administrative Agent granted hereunder and of irrevocable
instructions to wire all amounts collected therein to the Collection Account
(each, a “Lock Box Agreement”). After the Closing Date, each Pledgor will comply
with the terms of Section 7.2.

(b) Each Pledgor shall direct all of its Account Debtors to forward payments
directly to Lock Boxes subject to Lock Box Agreements. The Administrative Agent
shall have sole access to the Lock Boxes at all times and each Pledgor shall
take all actions necessary to grant the Administrative Agent such sole access.
At no time shall any Pledgor remove any item from a Lock Box or a Collateral
Deposit Account without the Administrative Agent’s prior written consent. If any
Pledgor should refuse or neglect to notify any Account Debtor to forward
payments directly to a Lock Box subject to a Lock Box Agreement after notice
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Agent, the Administrative Agent shall, notwithstanding the language set forth in
Section 10.2(b) be entitled to make such notification directly to such Account
Debtor. If notwithstanding the foregoing instructions, any Pledgor receives any
proceeds of any Receivables, such Pledgor shall receive such payments as the
Administrative Agent’s trustee, and shall immediately deposit all cash, checks
or other similar payments related to or constituting payments made in respect of
Receivables received by it to a Collateral Deposit Account. All funds deposited
into any Lock Box subject to a Lock Box Agreement or a Collateral Deposit
Account will be swept on a daily basis into a collection account maintained by
such Pledgor with the Administrative Agent (the “Collection Account”). The
Administrative Agent shall hold and apply funds received into the Collection
Account as provided by the terms of Section 7.3.

SECTION 7.2 Covenant Regarding New Deposit Accounts; Lock Boxes.

(a) Before opening or replacing any Collateral Deposit Account or other Deposit
Account (other than Excluded Accounts), or establishing a new Lock Box, each
Pledgor shall (a) obtain the Administrative Agent’s consent in writing to the
opening of such Collateral Deposit Account or other Deposit Account (other than
Excluded Accounts) or establishing of such Lock Box, and (b) cause each bank or
financial institution in which it seeks to open (i) a Collateral Deposit Account
or other Deposit Account (other than Excluded Accounts), to enter into a Deposit
Account Control Agreement with the Administrative Agent in order to give the
Administrative Agent Control of such Collateral Deposit Account or other Deposit
Account and provide for a daily sweep into the Collection Account, or (ii) a
Lock Box, to enter into a Lock Box Agreement with the Administrative Agent in
order to give the Administrative Agent Control of the Lock Box and provide for a
daily sweep into the Collection Account. In the case of Deposit Accounts or Lock
Boxes maintained with Lenders, the terms of such letter shall be subject to the
provisions of the Credit Agreement regarding setoffs.

SECTION 7.3 Application of Proceeds; Deficiency.

(a) All amounts deposited in the Collection Account shall, during any Cash
Dominion Period but subject to the terms of the ABL Intercreditor Agreement, be
deemed received by the Administrative Agent in accordance with Section 2.18 of
the Credit Agreement and shall, after having been credited to the Collection
Account, be applied (and allocated) by Administrative Agent in accordance with
Section 2.10(b) of the Credit Agreement; provided that, so long as no Cash
Dominion Period is then in effect, collections which are received into the
Collection Account shall be deposited into the Borrower’s Funding Account rather
than being used to reduce amounts owing under the Credit Agreement. During any
Cash Dominion Period, the Administrative Agent shall require all other cash
proceeds of the Collateral, which are not required to be applied to the
Obligations pursuant to Section 2.11 of the Credit Agreement, to be deposited in
a special non-interest bearing cash collateral account with the Administrative
Agent and held there as security for the Secured Obligations. During any Cash
Dominion Period, no Pledgor shall have any control whatsoever over said cash
collateral account. During any Cash Dominion Period, any such proceeds of the
Collateral shall, subject to the terms of the ABL Intercreditor Agreement be
applied in the order set forth in Section 2.18 of the Credit Agreement unless a
court of competent jurisdiction shall otherwise direct, and the balance, if any,
after all of the Secured Obligations have been satisfied, shall be deposited by
the Administrative Agent into such Pledgor’s general operating account with the
Administrative Agent. The Pledgors shall remain liable, jointly and severally,
for any deficiency if the proceeds of any sale or disposition of the Collateral
are insufficient to pay all Secured Obligations, including any attorneys’ fees
and other expenses incurred by Administrative Agent or any other Secured Party
to collect such deficiency.

 

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ARTICLE VIII

TRANSFERS

SECTION 8.1 Transfers of Collateral

No Pledgor shall sell, convey, assign or otherwise dispose of, or grant any
option with respect to, any of the Collateral pledged by it hereunder except as
not prohibited by the Credit Agreement.

ARTICLE IX

REMEDIES

SECTION 9.1 Remedies

(a) Upon the occurrence and during the continuance of any Event of Default
(subject to the terms of the ABL Intercreditor Agreement), the Administrative
Agent may, but shall not be obligated to, from time to time exercise in respect
of the Collateral, in addition to the other rights and remedies provided for
herein or otherwise available to it, the following remedies:

(i) personally, or by agents or attorneys, immediately take possession of the
Collateral or any part thereof, from any Pledgor or any other person who then
has possession of any part thereof with or without notice or process of law, and
for that purpose may enter upon any Pledgor’s premises where any of the
Collateral is located, for purposes of collecting, assembling, processing,
removing or otherwise dealing with such Collateral, and may remain present at
such premises to receive copies of all communications and remittances relating
to the Collateral and use in connection with such purposes any and all services,
supplies, aids and other facilities of any Pledgor;

(ii) demand, sue for, collect or receive any money or property at any time
payable or receivable in respect of the Collateral including instructing the
obligor or obligors on any agreement, instrument or other obligation
constituting part of the Collateral to make any payment required by the terms of
such agreement, instrument or other obligation directly to the Administrative
Agent, and in connection with any of the foregoing, compromise, settle, extend
the time for payment and make other modifications with respect thereto;
provided, however, that in the event that any such payments are made directly to
any Pledgor, prior to receipt by any such obligor of such instruction, such
Pledgor shall segregate all amounts received pursuant thereto in trust for the
benefit of the Administrative Agent and shall promptly (but in no event later
than one (1) Business Day after receipt thereof) pay such amounts to the
Administrative Agent;

 

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

(iv) take possession of the Collateral or any part thereof, by directing any
Pledgor in writing to deliver the same to the Administrative Agent at any place
or places so designated by the Administrative Agent, in which event such Pledgor
shall at its own expense: (A) forthwith cause the same to be moved to the place
or places designated by the Administrative Agent and therewith delivered to the
Administrative Agent, (B) store and keep any Collateral so delivered to the
Administrative Agent at such place or places pending further action by the
Administrative Agent and (C) while the Collateral shall be so stored and kept,
provide such security and maintenance services as shall be necessary to protect
the same and to preserve and maintain them in good condition. Each Pledgor’s
obligation to deliver the Collateral as contemplated in this Section 9.1(a)(iv)
is of the essence hereof. Upon application to a court of equity having
jurisdiction, the Administrative Agent shall be entitled to a decree requiring
specific performance by any Pledgor of such obligation;

(v) (i) withdraw all moneys, instruments, securities and other property in any
bank, financial securities, deposit or other account of any Pledgor constituting
Collateral for application to the Secured Obligations as provided in the Credit
Agreement, or (ii) give notice of sole control or any other instruction under
any Deposit Account Control Agreement or and other control agreement with any
securities intermediary and take any action therein with respect to such
Collateral;

(vi) retain and apply the Distributions to the Secured Obligations in accordance
with the Credit Agreement;

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

(viii) exercise all the rights and remedies of a secured party available under
the UCC (whether or not the UCC applies to the affected Collateral) or under any
other applicable law (including, without limitation, any law governing the
exercise of a bank’s right of setoff or bankers’ lien), and the Administrative
Agent may also in its sole discretion, without notice except as specified in
Section 9.2 hereof, sell, assign or grant a license to use the Collateral or any
part thereof in one or more parcels at public or private sale, at any exchange,
broker’s board or at any of the Administrative Agent’s offices or elsewhere, for
cash, on credit or for future delivery, and at such price or prices and upon
such other terms as are commercially reasonable. The Administrative Agent or any
other Secured Party or any of their respective Affiliates may be the purchaser,
licensee, assignee or recipient of the Collateral or any part thereof at any
such sale and shall be entitled, for the purpose of bidding and making
settlement or payment of the purchase price for all or any portion of the
Collateral sold, assigned or licensed at such sale, to use and apply any of the
Secured Obligations owed to such person as a credit on account of the purchase
price of the Collateral or any part thereof payable by such person at such sale.
Each purchaser, assignee, licensee or recipient at any such sale shall acquire
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licensed absolutely free from any claim or right on the part of any Pledgor, and
each Pledgor hereby waives, to the fullest extent permitted by law, all rights
of redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
The Administrative Agent shall not be obligated to make any sale of the
Collateral or any part thereof regardless of notice of sale having been given.
The Administrative Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. Each Pledgor hereby waives, to the fullest extent permitted by law,
any claims against the Administrative Agent arising by reason of the fact that
the price at which the Collateral or any part thereof may have been sold,
assigned or licensed at such a private sale was less than the price which might
have been obtained at a public sale, even if the Administrative Agent accepts
the first offer received and does not offer such Collateral to more than one
offeree.

(ix) Until the Administrative Agent is able to effect a sale, lease, or other
disposition of Collateral, the Administrative Agent shall have the right to hold
or use Collateral, or any part thereof, to the extent that it deems appropriate
for the purpose of preserving Collateral or its value or for any other purpose
deemed appropriate by the Administrative Agent. The Administrative Agent may, if
it so elects, seek the appointment of a receiver or keeper to take possession of
Collateral and to enforce any of the Administrative Agent’s remedies (for the
benefit of the Administrative Agent and the other Secured Parties), with respect
to such appointment without prior notice or hearing as to such appointment.

(x) If, after the Credit Agreement has terminated by its terms and all of the
Obligations have been paid in full, there remain Swap Agreement Obligations
outstanding, the Required Secured Parties may exercise the remedies provided in
this Section 9.1 upon the occurrence of any event which would allow or require
the termination or acceleration of any Swap Agreement Obligations pursuant to
the terms of the Swap Agreement.

SECTION 9.2 Pledgor’s Obligations Upon Event of Default

Upon the request of the Administrative Agent after the occurrence of an Event of
Default, each Pledgor will:

(a) assemble and make available to the Administrative Agent the Collateral and
all books and records relating thereto at any place or places specified by the
Administrative Agent, whether at such Pledgor’s premises or elsewhere, and
undertake each of the other obligations set forth in Section 9.1(a)(iv);

(b) permit the Administrative Agent, by the Administrative Agent’s
representatives and agents, to enter, occupy and use any premises where all or
any part of the Collateral, or the books and records relating thereto, or both,
are located, to take possession of all or any part of the Collateral or the
books and records relating thereto, or both, to remove all or any part of the
Collateral or the books and records relating thereto, or both, and to conduct
sales of the Collateral, without any obligation to pay the Pledgor for such use
and occupancy;

 

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(c) at its own expense, cause the independent certified public accountants then
engaged by each Pledgor to prepare and deliver to the Administrative Agent and
each Lender, at any time, and from time to time, promptly upon the
Administrative Agent’s request, the following reports with respect to the
applicable Pledgor: (i) a reconciliation of all Accounts; (ii) an aging of all
Accounts; (iii) trial balances; and (iv) a test verification of such Accounts.

SECTION 9.3 Notice of Sale

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

SECTION 9.4 Waiver of Notice and Claims

Each Pledgor hereby waives, to the fullest extent permitted by applicable law,
notice or judicial hearing in connection with the Administrative Agent’s taking
possession or the Administrative Agent’s disposition of the Collateral or any
part thereof, including any and all prior notice and hearing for any prejudgment
remedy or remedies and any such right which such Pledgor would otherwise have
under law, and each Pledgor hereby further waives, to the fullest extent
permitted by applicable law: (i) all damages occasioned by such taking of
possession, (ii) all other requirements as to the time, place and terms of sale
or other requirements with respect to the enforcement of the Administrative
Agent’s rights hereunder, (iii) all rights of redemption, appraisal, valuation,
stay, extension or moratorium now or hereafter in force under any applicable
law, and (iv) any and all rights or defenses it may have as a surety now or
hereafter existing which, but for this provision, might be applicable to the
sale of any Collateral made under the judgment, order or decree of any court, or
privately under the power of sale conferred by this Agreement, or otherwise. The
Administrative Agent shall not be liable for any incorrect or improper payment
made pursuant to this Article IX in the absence of gross negligence or willful
misconduct on the part of the Administrative Agent as finally determined by a
court of competent jurisdiction. Except as otherwise specifically provided
herein, each Pledgor hereby waives presentment, demand, protest or any notice
(to the maximum extent permitted by applicable law) of any kind in connection
with this Agreement or any Collateral. Any sale of, or the grant of options to
purchase, or any other realization upon, any Collateral shall operate to divest
all right, title, interest, claim and demand, either at law or in equity, of the
applicable Pledgor therein and thereto, and shall be a perpetual bar both at law
and in equity against such Pledgor and against any and all persons claiming or
attempting to claim the Collateral so sold, optioned or realized upon, or any
part thereof, from, through or under such Pledgor.

 

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SECTION 9.5 Certain Sales of Collateral

(a) Each Pledgor recognizes that, by reason of certain prohibitions contained in
law, rules, regulations or orders of any Governmental Authority, the
Administrative Agent may be compelled, with respect to any sale of all or any
part of the Collateral, to limit purchasers to those who meet the requirements
of such Governmental Authority. Each Pledgor acknowledges that any such sales
may be at prices and on terms less favorable to the Administrative Agent than
those obtainable through a public sale without such restrictions, and,
notwithstanding such circumstances, agrees that any such restricted sale shall
be deemed to have been made in a commercially reasonable manner and that, except
as may be required by applicable law, the Administrative Agent shall have no
obligation to engage in public sales.

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

(c) Notwithstanding the foregoing, each Pledgor shall, upon the occurrence and
during the continuance of any Event of Default, at the reasonable request of the
Administrative Agent, for the benefit of the Administrative Agent, cause any
registration, qualification under or compliance with any Federal or state
securities law or laws to be effected with respect to all or any part of the
Securities Collateral as soon as practicable and at the sole cost and expense of
the Pledgors. Each Pledgor will use its commercially reasonable efforts to cause
such registration to be effected (and be kept effective) and will use its
commercially reasonable efforts to cause such qualification and compliance to be
effected (and be kept effective) as may be so requested and as would permit or
facilitate the sale and distribution of such Securities Collateral including
registration under the Securities Act (or any similar statute then in effect),
appropriate qualifications under applicable blue sky or other state securities
laws and appropriate compliance with all other requirements of any Governmental
Authority. Each Pledgor shall use its commercially reasonable efforts to cause
the Administrative Agent to be kept advised in writing as to the progress of
each such registration, qualification or compliance and as to the completion
thereof, shall furnish to the Administrative Agent such number of prospectuses,
offering circulars or other documents incident thereto as the Administrative
Agent from time to time may request, and shall indemnify and shall cause the
Company of the Securities Collateral to indemnify the Administrative Agent and
all others participating in the distribution of such Securities Collateral
against all claims, losses, damages and liabilities caused by any untrue
statement (or alleged untrue statement) of a material fact contained therein (or
in any related registration statement, notification or the like) or by any
omission (or alleged omission) to state therein (or in any related registration
statement, notification or the like) a material fact required to be stated
therein or necessary to make the statements therein not misleading.

 

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(d) If the Administrative Agent determines, subject to the terms of the ABL
Intercreditor Agreement, to exercise its right to sell any or all of the
Securities Collateral, upon written request, the applicable Pledgor shall
determine and inform the Administrative Agent of the number of securities
included in the Securities Collateral which may be sold by the Administrative
Agent as exempt transactions under the Securities Act and the rules of the
Securities and Exchange Commission thereunder, as the same are from time to time
in effect.

(e) Each Pledgor further agrees that a breach of any of the covenants contained
in this Section 9.4 will cause irreparable injury to the Administrative Agent
and the other Secured Parties, that the Administrative Agent and the other
Secured Parties have no adequate remedy at law in respect of such breach and, as
a consequence, that each and every covenant contained in this Section 9.4 shall
be specifically enforceable against such Pledgor, and such Pledgor hereby waives
and agrees not to assert any defenses against an action for specific performance
of such covenants except for a defense that no Event of Default has occurred and
is continuing.

SECTION 9.6 No Waiver; Cumulative Remedies

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

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

SECTION 9.7 Certain Additional Actions Regarding Intellectual Property

If any Event of Default shall have occurred and be continuing (but subject to
the terms of the ABL Intercreditor Agreement), upon the written demand of the
Administrative Agent, each Pledgor shall execute and deliver to the
Administrative Agent an assignment or assignments of the registered and applied
for Intellectual Property Collateral and such other documents as are necessary
or appropriate to carry out the intent and purposes hereof.

 

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ARTICLE X

ACCOUNT VERIFICATION; ATTORNEY IN FACT; PROXY

SECTION 10.1 Account Verification

If Aggregate Availability is less than $112,500,000, the Administrative Agent
may at any time, in the Administrative Agent’s own name, in the name of a
nominee of the Administrative Agent, or in the name of any Pledgor communicate
(by mail, telephone, facsimile or otherwise) with the Account Debtors of any
such Pledgor, parties to contracts with any such Pledgor and obligors in respect
of Instruments of any such Pledgor to verify with such Persons, to the
Administrative Agent’s satisfaction, the existence, amount, terms of, and any
other matter relating to, Accounts, Instruments, Chattel Paper, payment
intangibles and/or other Receivables.

SECTION 10.2 Authorization for Administrative Agent to Take Certain Actions

(a) Each Pledgor irrevocably authorizes the Administrative Agent at any time and
from time to time in the sole discretion of the Administrative Agent and
appoints the Administrative Agent as its attorney in fact (i) to execute on
behalf of such Pledgor as debtor and to file financing statements necessary or
desirable in the Administrative Agent’s reasonable discretion to perfect and to
maintain the perfection and priority of the Administrative Agent’s security
interest in the Collateral, (ii) to, at any time during the continuation of an
Event of Default, endorse and collect any cash proceeds of the Collateral,
(iii) to file a carbon, photographic or other reproduction of this Agreement or
any financing statement with respect to the Collateral as a financing statement
and to file any other financing statement or amendment of a financing statement
(which does not add new collateral or add a debtor) in such offices as the
Administrative Agent in its reasonable discretion deems necessary or desirable
to perfect and to maintain the perfection and priority of the Administrative
Agent’s security interest in the Collateral, (iv) [reserved], (v) at any time
during a Cash Dominion Period, to apply the proceeds of any Collateral received
by the Administrative Agent to the Secured Obligations as provided in
Section 7.3, (vi) to discharge past due taxes, assessments, charges, fees or
Liens on the Collateral (except for such Liens that are Permitted Encumbrances),
(vii) to contact Account Debtors for any reason if Aggregate Availability is
less than $112,500,000, (viii) at any time during the continuation of an Event
of Default, to demand payment or enforce payment of the Receivables in the name
of the Administrative Agent or such Pledgor and to endorse any and all checks,
drafts, and other instruments for the payment of money relating to the
Receivables, (ix) at any time during the continuation of an Event of Default, to
sign such Pledgor’s name on any invoice or bill of lading relating to the
Receivables, drafts against any Account Debtor of the Pledgor, assignments and
verifications of Receivables, (x) at any time during the continuation of an
Event of Default, to exercise all of such Pledgor’s rights and remedies with
respect to the collection of the Receivables and any other Collateral, (xi) at
any time during the continuation of an Event of Default, to settle, adjust,
compromise, extend or renew the Receivables, (xii) at any time during the
continuation of an Event of Default, to settle, adjust or compromise any legal
proceedings brought to collect Receivables, (xiii) to prepare, file and sign
such Pledgor’s name on a proof of claim in bankruptcy or similar document
against any Account Debtor of such Pledgor, (xiv) at any time during the
continuation of an Event of Default, to prepare, file and sign such Pledgor’s
name on any notice of Lien, assignment or satisfaction of Lien or similar
document in connection with the Receivables,

 

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(xv) at any time during the continuation of an Event of Default, to change the
address for delivery of mail addressed to such Pledgor to such address as the
Administrative Agent may designate and to receive, open and dispose of all mail
addressed to such Pledgor, and (xvi) to do all other acts and things necessary
to carry out this Agreement; and such Pledgor agrees to reimburse the
Administrative Agent on demand for any payment made or any expense incurred by
the Administrative Agent in connection with any of the foregoing; provided that,
this authorization shall not relieve such Pledgor of any of its obligations
under this Agreement or under the Credit Agreement.

(b) All acts of said attorney or designee pursuant to and in accordance with
Section 10.2(a) are hereby ratified and approved. The powers conferred on the
Administrative Agent, for the benefit of the Administrative Agent and the other
Secured Parties, under this Section 10.2 are solely to protect the
Administrative Agent’s interests in the Collateral and shall not impose any duty
upon the Administrative Agent or any other Secured Party to exercise any such
powers.

ARTICLE XI

MISCELLANEOUS

SECTION 11.1 Concerning Administrative Agent

(a) [Reserved].

(b) The Administrative Agent shall have no obligation to clean-up or otherwise
prepare the Collateral for sale. The Administrative Agent and each other Secured
Party shall use reasonable care with respect to the Collateral in its possession
or under its control. Neither the Administrative Agent nor any other Secured
Party shall have any other duty as to any Collateral in its possession or
control or in the possession or control of any agent or nominee of the
Administrative Agent or such other Secured Party, or any income thereon or as to
the preservation of rights against prior parties or any other rights pertaining
thereto. The Administrative Agent shall be deemed to have exercised reasonable
care in the custody and preservation of the Collateral in its possession if such
Collateral is accorded treatment substantially equivalent to that which the
Administrative Agent, in its individual capacity, accords its own property
consisting of similar instruments or interests, it being understood that neither
the Administrative Agent nor any of the Secured Parties shall have
responsibility for (i) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relating to any
Securities Collateral, whether or not the Administrative Agent or any other
Secured Party has or is deemed to have knowledge of such matters or (ii) taking
any necessary steps to preserve rights against any person with respect to any
Collateral.

(c) To the extent that applicable law imposes duties on the Administrative Agent
to exercise remedies in a commercially reasonable manner, each Pledgor
acknowledges and agrees that it is commercially reasonable for the
Administrative Agent (i) to fail to incur expenses deemed significant by the
Administrative Agent to prepare Collateral for disposition or otherwise to
transform raw material or work in process into finished goods or other finished
products for disposition, (ii) to fail to obtain third party consents for access
to Collateral to be disposed of, or to obtain or, if not required by other law,
to fail to obtain governmental or third party consents for

 

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the collection or disposition of Collateral to be collected or disposed of,
(iii) to fail to exercise collection remedies against Account Debtors or other
Persons obligated on Collateral or to remove Liens on or any adverse claims
against Collateral, (iv) to exercise collection remedies against Account Debtors
and other Persons obligated on Collateral directly or through the use of
collection agencies and other collection specialists, (v) to advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature, (vi) to contact other
Persons, whether or not in the same business as such Pledgor, for expressions of
interest in acquiring all or any portion of the Collateral, (vii) to hire one or
more professional auctioneers to assist in the disposition of Collateral,
whether or not the Collateral is of a specialized nature, (viii) to dispose of
Collateral by utilizing internet sites that provide for the auction of assets of
the types included in the Collateral or that have the reasonable capacity of
doing so, or that match buyers and sellers of assets, (ix) to dispose of assets
in wholesale rather than retail markets, (x) to disclaim disposition warranties,
such as title, possession or quiet enjoyment, (xi) to purchase insurance or
credit enhancements to insure the Administrative Agent against risks of loss,
collection or disposition of Collateral or to provide to the Administrative
Agent a guaranteed return from the collection or disposition of Collateral, or
(xii) to the extent deemed appropriate by the Administrative Agent, to obtain
the services of other brokers, investment bankers, consultants and other
professionals to assist the Administrative Agent in the collection or
disposition of any of the Collateral. Each Pledgor acknowledges that the purpose
of this Section 11.1(c) is to provide non-exhaustive indications of what actions
or omissions by the Administrative Agent would be commercially reasonable in the
Administrative Agent’s exercise of remedies against the Collateral and that
other actions or omissions by the Administrative Agent shall not be deemed
commercially unreasonable solely on account of not being indicated in this
Section 11.1(c). Without limitation upon the foregoing, nothing contained in
this Section 11.1(c) shall be construed to grant any rights to any Pledgor or to
impose any duties on the Administrative Agent that would not have been granted
or imposed by this Agreement or by applicable law in the absence of this
Section 11.1(c).

(d) The Pledgors and the Administrative Agent recognize that setoffs,
counterclaims, defenses and other claims may be asserted by obligors with
respect to certain of the Receivables, that certain of the Receivables may be or
become uncollectible in whole or in part and that the expense and probability of
success in litigating a disputed Receivable may exceed the amount that
reasonably may be expected to be recovered with respect to a Receivable. In view
of the foregoing, each Pledgor agrees that the Administrative Agent may at any
time and from time to time, if an Event of Default has occurred and is
continuing, compromise with the obligor on any Receivable, accept in full
payment of any Receivable such amount as the Administrative Agent in its sole
discretion shall determine or abandon any Receivable, and any such action by the
Administrative Agent shall be commercially reasonable so long as the
Administrative Agent acts in good faith based on information known to it at the
time it takes any such action.

(e) No Pledgor is authorized to sell or otherwise dispose of the Collateral
except as set forth in Section 8.1 and notwithstanding any course of dealing
between any Pledgor and the Administrative Agent or other conduct of the
Administrative Agent, no authorization to sell or otherwise dispose of the
Collateral (except as set forth in Section 8.1) shall be binding upon the
Administrative Agent or the other Secured Parties unless such authorization is
in writing signed by the Administrative Agent with the consent or at the
direction of the Required Secured Parties.

 

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

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

(h) Anything herein contained to the contrary notwithstanding, (i) each Pledgor
shall remain liable under this Agreement and under each of the underlying
contracts to which such Pledgor is a party described herein to perform all of
its duties and obligations thereunder to the same extent as if this Agreement
had not been executed, (ii) the exercise by the Administrative Agent or the
Holders of any of their rights, remedies or powers hereunder shall not release
any Pledgor from any of its duties or obligations under this Agreement or such
underlying contracts described herein and (iii) neither the Trustee or the
Administrative Agent shall have any obligation or liability under such
underlying contracts by reason of or arising out of this Agreement, nor shall
the Holders, the Trustee or the Administrative Agent be obligated to perform any
of the obligations or duties of any of the Pledgors hereunder or under any of
the contracts described herein.

(i) The Administrative Agent shall not be responsible for the existence,
genuineness or value of any of the Collateral or for the validity, perfection,
priority or enforceability of the Liens in any of the Collateral, whether
impaired by operation of law or by reason of any action or omission to act on
its part hereunder, except to the extent such action or omission constitutes
gross negligence or willful misconduct on the part of the Administrative Agent.
Nor shall the Administrative Agent be responsible for the validity or
sufficiency of the Collateral or any agreement or assignment contained therein,
for the validity of the title of the Pledgors to the Collateral, for insuring
the Collateral or for the payment of taxes, charges, assessments or Liens upon
the Collateral or otherwise as to the maintenance of the Collateral.

(j) In acting under and by virtue of this Agreement, the Administrative Agent
shall have all of the rights, protections and immunities granted to the
Administrative Agent and the Trustee under the Credit Agreement (including, but
not limited to, the right to be indemnified under Section 9.03 of the Credit
Agreement), and all such rights, protections and immunities are incorporated by
reference herein, mutatis mutandis.

SECTION 11.2 Administrative Agent May Perform; Administrative Agent Appointed
Attorney-in-Fact

If any Pledgor shall fail to perform any covenants contained in this Agreement
during the continuance of any Event of Default (including such Pledgor’s
covenants to (i) pay the premiums in respect of all required insurance policies
hereunder, (ii) pay and discharge any taxes, assessments and special
assessments, levies, fees and governmental charges imposed upon or

 

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assessed against, and landlords’, carriers’, mechanics’, workmen’s, repairmen’s,
laborers’, materialmen’s, suppliers’ and warehousemen’s Liens and other claims
arising by operation of law against, all or any portion of the Collateral,
(iii) make repairs, (iv) discharge Liens or (v) pay or perform any obligations
of such Pledgor under any Collateral), subject to the terms of the ABL
Intercreditor Agreement, the Administrative Agent may (but shall not be
obligated to and shall have no liability to such Pledgor or any third party for
failure to so do or take action) do the same or cause it to be done, and may
expend funds for such purpose; provided, however, that the Administrative Agent
shall in no event be bound to inquire into the validity of any tax, Lien,
imposition or other obligation which such Pledgor fails to pay or perform as and
when required hereby and which such Pledgor does not contest in accordance with
the provisions of the Credit Agreement. Any and all amounts so expended by the
Administrative Agent shall be paid by the Pledgors in accordance with the
provisions of Section 6.06 of the Credit Agreement. Neither the provisions of
this Section 11.2 nor any action taken by the Administrative Agent pursuant to
the provisions of this Section 11.2 shall prevent any such failure to observe
any covenant contained in this Agreement from constituting an Event of Default.
Each Pledgor hereby appoints the Administrative Agent its attorney-in-fact, with
full power and authority in the place and stead of such Pledgor and in the name
of such Pledgor, or otherwise, from time to time in the Administrative Agent’s
discretion to take any action and to execute any instrument consistent with the
terms of the Credit Agreement, this Agreement and the other Security Documents
which the Administrative Agent may deem necessary or advisable to accomplish the
purposes hereof (but the Administrative Agent shall not be obligated to and
shall have no liability to such Pledgor or any third party for failure to so do
or take action). The foregoing grant of authority is a power of attorney coupled
with an interest and such appointment shall be irrevocable for the term hereof.
Each Pledgor hereby ratifies all that such attorney shall lawfully do or cause
to be done by virtue hereof.

SECTION 11.3 Continuing Security Interest; Assignment

This Agreement shall create a continuing security interest in the Collateral and
shall (i) be binding upon the Pledgors, their respective successors and assigns,
except that no Pledgor shall have the right to assign its rights or delegate its
obligations under this Agreement or any interest herein, without the prior
written consent of the Administrative Agent and (ii) inure, together with the
rights and remedies of the Administrative Agent hereunder, to the benefit of the
Administrative Agent and the other Secured Parties and each of their respective
successors, transferees and assigns. No other Persons (including any other
creditor of any Pledgor) shall have any interest herein or any right or benefit
with respect hereto. Without limiting the generality of the foregoing clause
(ii), any Secured Party may assign or otherwise transfer any indebtedness held
by it secured by this Agreement to any other person, and such other person shall
thereupon become vested with all the benefits in respect thereof granted to such
Secured Party, herein or otherwise, subject however, to the provisions of the
Credit Agreement. Each of the Pledgors agrees that its obligations hereunder and
the security interest created hereunder shall continue to be effective or be
reinstated, as applicable, if at any time payment, or any part thereof, of all
or any part of the Secured Obligations is rescinded or must otherwise be
restored by the Secured Party upon the bankruptcy or reorganization of any
Pledgor or otherwise.

 

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SECTION 11.4 Termination; Release

(a) When (i) the Credit Agreement has terminated pursuant to its express terms
and (ii) all of the Secured Obligations have been indefeasibly paid and
performed in full (or with respect to any outstanding Letters of Credit, a cash
deposit has been delivered to the Administrative Agent as required by the Credit
Agreement) other than contingent indemnification obligations as to which no
claim has been made and no commitments of the Administrative Agent or the other
Secured Parties which would give rise to any Secured Obligations are
outstanding, this Agreement shall terminate and the Collateral shall be
automatically and without further action released from the Liens in favor of the
Administrative Agent and the other Secured Parties created hereby, and all
obligations (other than those expressly stated to survive such termination) of
each Pledgor to the Administrative Agent or any other Secured Party hereunder
shall terminate, all without delivery of any instrument or performance of any
act by any party. At the sole expense of any Pledgor following any such
termination, the Administrative Agent shall deliver such documents as such
Pledgor shall reasonably request to evidence such release and termination.

(b) If any of the Collateral shall be (i) sold, transferred or otherwise
disposed of by any Pledgor in a sale, transfer or other disposition permitted by
the Credit Agreement, other than with respect to a sale, transfer or other
disposition to another Pledgor, or (ii) be or become an Excluded Asset pursuant
to a transaction not prohibited by the Credit Agreement, then, in each case such
Collateral shall be automatically and without further action released from the
security interests created by this Agreement. If a Pledgor is disposed of
pursuant to a transaction permitted by the Credit Agreement or is otherwise
released from its guarantee pursuant to (and to the extent permitted by) the
Credit Agreement, such Pledgor shall be automatically and without further action
released from its obligations under this Agreement. In either case, the
Administrative Agent, at the request and sole expense of such Pledgor, shall
execute and deliver to such Pledgor all releases or other documents reasonably
necessary or desirable for the termination and release of the Liens created
hereby on Collateral of such Pledgor, or such Pledgor, as applicable, subject
to, if reasonably requested by the Administrative Agent, the Administrative
Agent’s receipt of an Officers’ Certificate from the Company stating that such
transaction is in compliance with the Credit Agreement.

(c) The Liens securing the Secured Obligations with respect to Non-ABL Priority
Collateral shall be released when required pursuant to the terms of the ABL
Intercreditor Agreement, following the request of the applicable party or
parties thereto, in accordance with Section 9.02(c) of the Credit Agreement.

SECTION 11.5 Modification in Writing

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

 

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SECTION 11.6 Notices

Unless otherwise provided herein or in the Credit Agreement, any notice or other
communication herein required or permitted to be given shall be given in the
manner and become effective as set forth in the Credit Agreement, as to any
Pledgor, addressed to it at the address of the Company set forth in the Credit
Agreement, and as to the Administrative Agent, addressed to it at the address
set forth in the Credit Agreement, or in each case at such other address as
shall be designated by such party in a written notice to the other party
complying as to delivery with the terms of this Section 12.6.

SECTION 11.7 Governing Law; Waiver of Jury Trial

Section 9.09 and 9.10 of the Credit Agreement are incorporated herein, mutatis
mutandis, as if a part hereof.

SECTION 11.8 Severability of Provisions

Any provision hereof which is invalid, illegal or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity, illegality or unenforceability without invalidating the
remaining provisions hereof or affecting the validity, legality or
enforceability of such provision in any other jurisdiction.

SECTION 11.9 Execution in Counterparts

This Agreement and any amendments, waivers, consents or supplements hereto may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original, but all such counterparts together shall constitute
one and the same agreement. Delivery of an executed counterpart of a signature
page of this Agreement by facsimile or other electronic transmission shall be
effective as delivery of a manually executed counterpart of this Agreement.

SECTION 11.10 Business Days

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

SECTION 11.11 Taxes and Expenses

Any taxes (including income taxes) payable or ruled payable by Federal or State
authority in respect of this Agreement shall be paid by the Pledgors, together
with interest and penalties, if any. The Pledgors shall reimburse the
Administrative Agent for any and all reasonable and documented out-of-pocket
expenses (including reasonable attorneys’, auditors’ and accountants’ fees and
reasonable time charges of attorneys, paralegals, auditors and accountants

 

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who may be employees of the Administrative Agent) paid or incurred by the
Administrative Agent in connection with the preparation, execution, delivery,
administration, collection and enforcement of this Agreement and in the audit,
analysis, administration, collection, preservation or sale of the Collateral
(including the expenses and charges associated with any periodic or special
audit of the Collateral). Any and all costs and expenses incurred by the
Pledgors in the performance of actions required pursuant to the terms hereof
shall be borne solely by the Pledgors.

SECTION 11.12 No Claims Against Administrative Agent

Nothing contained in this Agreement shall constitute any consent or request by
the Administrative Agent, express or implied, for the performance of any labor
or services or the furnishing of any materials or other property in respect of
the Collateral or any part thereof, nor as giving any Pledgor any right, power
or authority to contract for or permit the performance of any labor or services
or the furnishing of any materials or other property in such fashion as would
permit the making of any claim against the Administrative Agent in respect
thereof or any claim that any Lien based on the performance of such labor or
services or the furnishing of any such materials or other property is prior to
the Lien hereof.

SECTION 11.13 No Release

Nothing set forth in this Agreement or any other Security Document, nor the
exercise by the Administrative Agent of any of the rights or remedies hereunder,
shall relieve any Pledgor from the performance of any term, covenant, condition
or agreement on such Pledgor’s part to be performed or observed under or in
respect of any of the Collateral or from any liability to any person under or in
respect of any of the Collateral or shall impose any obligation on the
Administrative Agent or any other Secured Party to perform or observe any such
term, covenant, condition or agreement on such Pledgor’s part to be so performed
or observed or shall impose any liability on the Administrative Agent or any
other Secured Party for any act or omission on the part of such Pledgor relating
thereto or for any breach of any representation or warranty on the part of such
Pledgor contained in this Agreement, the Credit Agreement, the other Loan
Documents, or under or in respect of the Collateral or made in connection
herewith or therewith. Anything herein to the contrary notwithstanding, neither
the Administrative Agent nor any other Secured Party shall have any obligation
or liability under any contracts, agreements and other documents included in the
Collateral by reason of this Agreement, nor shall the Administrative Agent or
any other Secured Party be obligated to perform any of the obligations or duties
of any Pledgor thereunder or to take any action to collect or enforce any such
contract, agreement or other document included in the Collateral hereunder. The
obligations of each Pledgor contained in this Section 11.13 shall survive the
termination hereof and the discharge of such Pledgor’s other obligations under
this Agreement, the Credit Agreement and the other Loan Documents.

SECTION 11.14 Obligations Absolute

All obligations of each Pledgor hereunder shall be absolute and unconditional
irrespective of:

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

 

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

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

(iv) any pledge, exchange, release or non-perfection of any other collateral, or
any release or amendment or waiver of or consent to any departure from any
guarantee, for all or any of the Secured Obligations;

(v) any exercise, non-exercise or waiver of any right, remedy, power or
privilege under or in respect hereof, the Credit Agreement or any other Loan
Document, or any other agreement or instrument relating thereto, except as
specifically set forth in a waiver granted pursuant to the provisions of
Section 11.5 hereof; or

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

SECTION 11.15 Reserved

SECTION 11.16 Survival of Representations

All representations and warranties of the Pledgors contained in this Agreement
shall survive the execution and delivery of this Agreement.

SECTION 11.17 Specific Performance

Without limiting the express references in this Agreement to authorizations for
the Administrative Agent to seek and obtain specific performance of covenants
set forth herein, each Pledgor further acknowledges and agrees that a breach of
any of the covenants contained in Sections 3.4(b), 3.4(g), 3.4(i), 4.9, 4.11,
4.13, 4.14, 4.16, 4.17, 6.1(b), Article VII, 8.1, 9.2, 9.6, 11.5 will cause
irreparable injury to the Administrative Agent and the other Secured Parties,
that the Administrative Agent and the other Secured Parties have no adequate
remedy at law in respect of such breaches and therefore agrees, without limiting
the right of the Administrative Agent or the other Secured Parties to seek and
obtain specific performance of other obligations of the Pledgors contained in
this Agreement, that the covenants of the Pledgors contained in the Sections
referred to in this Section 11.17 shall be specifically enforceable against the
Pledgors.

SECTION 11.18 Headings

The title of and section headings in this Agreement are for convenience of
reference only, and shall not govern the interpretation of any of the terms and
provisions of this Agreement.

 

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SECTION 11.19 Indemnity

Each Pledgor hereby agrees to indemnify the Administrative Agent and the other
Secured Parties, and their respective successors, assigns, agents and employees,
from and against any and all liabilities, damages, penalties, suits, fees,
costs, and expenses of any kind and nature (including, without limitation, all
expenses of litigation or preparation therefor whether or not the Administrative
Agent or any other Secured Party is a party thereto) imposed on, incurred by or
asserted against the Administrative Agent or the other Secured Parties, or their
respective successors, assigns, agents and employees, in any way relating to or
arising out of this Agreement, or the manufacture, purchase, acceptance,
rejection, ownership, delivery, lease, possession, use, operation, condition,
sale, return or other disposition of any Collateral (including, without
limitation, latent and other defects, whether or not discoverable by the
Administrative Agent or the other Secured Parties or any Pledgor, and any claim
for Patent, Trademark or Copyright infringement) in each case in accordance with
Section 9.03 of the Credit Agreement.

SECTION 11.20 Effect of Amendment and Restatement

This Agreement is entered into as an amendment and restatement of the Original
Security Agreement. All security interests, pledges, liens, and collateral
assignments granted to the Administrative Agent under the Original Security
Agreement are hereby renewed and continued in full force and effect, and
hereafter will be governed by this Agreement. Without limiting the foregoing,
each Pledgor hereby reaffirms its pledge, assignment and grant of a Lien on the
Collateral to the Administrative Agent, for the benefit of the Secured Parties.

SECTION 11.21 ABL Intercreditor Agreement

(a) Notwithstanding anything in this Agreement to the contrary, prior to the
Discharge of Non-ABL Obligations, the requirements of this Agreement to deliver
any Non-ABL Priority Collateral and any certificates, instruments, chattel paper
or documents in relation thereto to the Administrative Agent shall be deemed
satisfied by delivery of such Collateral and such certificates, instruments,
chattel paper or documents in relation thereto to the First Lien/Junior Lien
Intercreditor Representative (as bailee for the Administrative Agent pursuant to
the terms of the ABL Intercreditor Agreement).

(b) Notwithstanding anything herein to the contrary, this Agreement and each
other Loan Document are subject to the terms and conditions set forth in the ABL
Intercreditor Agreement in all respects and, in the event of any conflict
between the terms of the ABL Intercreditor Agreement and this Agreement, the
terms of the ABL Intercreditor Agreement shall govern. Notwithstanding anything
herein to the contrary, (i) the priority of the Lien on and security interest in
the Non-ABL Priority Collateral granted to the Administrative Agent for the
benefit of the Secured Parties pursuant to any Loan Document are expressly
subject and subordinate to the Lien on and security interest in the Non-ABL
Priority Collateral granted to the Term Loan Facility Administrative Agent
pursuant to the Term Loan Facility, and (ii) the exercise of any right or remedy
in respect of the Collateral by the Administrative Agent hereunder or under any
other Loan Document is subject to the provisions of the ABL Intercreditor
Agreement.

 

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ARTICLE XII

THE ADMINISTRATIVE AGENT

JPMorgan Chase Bank, N.A. has been appointed Administrative Agent for the other
Secured Parties hereunder pursuant to Article VIII of the Credit Agreement. It
is expressly understood and agreed by the parties to this Agreement that any
authority conferred upon the Administrative Agent hereunder is subject to the
terms of the delegation of authority made by the Secured Parties to the
Administrative Agent pursuant to the Credit Agreement, and that the
Administrative Agent has agreed to act (and any successor Administrative Agent
shall act) as such hereunder only on the express conditions contained in such
Article VIII. Any successor Administrative Agent appointed pursuant to Article
VIII of the Credit Agreement shall be entitled to all the rights, interests and
benefits of the Administrative Agent hereunder.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]

 

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

 

PLEDGORS: ALERIS INTERNATIONAL, INC., a Delaware Corporation By:  

/s/ Eric M. Rychel

  Name: Eric M. Rychel   Title: Executive Vice President, Chief Financial
          Officer and Treasurer ALERIS ROLLED PRODUCTS, INC., a Delaware
Corporation By:  

/s/ Eric M. Rychel

  Name: Eric M. Rychel   Title: President ALERIS ROLLED PRODUCTS, LLC, a
Delaware Limited Liability Company By:  

/s/ Eric M. Rychel

  Name: Eric M. Rychel   Title: President ALERIS ROLLED PRODUCTS SALES
CORPORATION, a Delaware Corporation By:  

/s/ Eric M. Rychel

  Name: Eric M. Rychel   Title: President

[Signature Page to Amended and Restated Security Agreement]

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

IMCO RECYCLING OF OHIO, LLC, a Delaware Limited Liability Company By:  

/s/ Eric M. Rychel

  Name: Eric M. Rychel   Title: President ALERIS OHIO MANAGEMENT, INC., a
Delaware Corporation By:  

/s/ Eric M. Rychel

  Name: Eric M. Rychel   Title: President NICHOLS ALUMINUM LLC, a Delaware
Limited Liability Company By:  

/s/ Eric M. Rychel

  Name: Eric M. Rychel   Title: President

[Signature Page to Amended and Restated Security Agreement]

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

JPMORGAN CHASE BANK, N.A, as Administrative Agent By:  

/s/ Eric B. Bergeson

  Name: Eric B. Bergeson   Title: Authorized Officer

[Signature Page to Amended and Restated Security Agreement]

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EXHIBIT 1

[Form of]

ISSUER’S ACKNOWLEDGMENT

The undersigned hereby (i) acknowledges receipt of the Amended and Restated
Security Agreement (as amended, amended and restated, supplemented or otherwise
modified from time to time, the “Agreement”; capitalized terms used but not
otherwise defined herein shall have the meanings assigned to such terms in the
Agreement), dated as of June 25, 2018, made by Aleris International, Inc., a
Delaware corporation, as Company, the other Pledgors party thereto and JPMorgan
Chase Bank, N.A., as Administrative Agent (in such capacity and together with
any successors in such capacity, the “Administrative Agent”), (ii) agrees
promptly to note on its books the security interests granted to the
Administrative Agent and confirmed under the Agreement, (iii) agrees that it
will comply with instructions of the Administrative Agent with respect to the
applicable Securities Collateral (including all Equity Interests of the
undersigned) without further consent by the applicable Pledgor, (iv) agrees to
notify the Administrative Agent upon obtaining knowledge of any interest in
favor of any person in the applicable Securities Collateral that is adverse to
the interest of the Administrative Agent therein and (v) waives any right or
requirement at any time hereafter to receive a copy of the Agreement in
connection with the registration of any Securities Collateral thereunder in the
name of the Administrative Agent or its nominee or the exercise of voting rights
by the Administrative Agent or its nominee.

 

[                    ] By:  

             

  Name:   Title:

 

Exh. 6

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EXHIBIT 2

[Form of]

SECURITIES PLEDGE AMENDMENT

This Securities Pledge Amendment, dated as of [                ], is delivered
pursuant to Section 5.1 of the Amended and Restated Security Agreement (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the “Agreement”; capitalized terms used but not otherwise defined herein
shall have the meanings assigned to such terms in the Agreement), dated as of
June 25, 2018, made by Aleris International, Inc., as Company, the other
Pledgors party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent
(in such capacity and together with any successors in such capacity, the
“Administrative Agent”). The undersigned hereby agrees that this Securities
Pledge Amendment may be attached to the Agreement and that the Pledged
Securities listed on this Securities Pledge Amendment shall be deemed to be and
shall become part of the Collateral and shall secure all Secured Obligations.

PLEDGED SECURITIES

 

ISSUER

  

CLASS OF

STOCK OR

INTERESTS

  

PAR

VALUE

  

CERTIFICATE

NO(S).

  

NUMBER OF

SHARES

OR

INTERESTS

  

PERCENTAGE OF

ALL ISSUED CAPITAL

OR OTHER EQUITY

INTERESTS OF ISSUER

                             

 

Exh. 2-1

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

[                     ], as Pledgor By:  

             

  Name:   Title:

 

AGREED TO AND ACCEPTED:

JPMorgan Chase Bank, N.A.,

as Administrative Agent

By:  

                 

  Name:   Title:

 

Exh. 2-2

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

EXHIBIT 3

[Form of]

JOINDER AGREEMENT

[Date]

Reference is made to the Amended and Restated Security Agreement (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
“Agreement”; capitalized terms used but not otherwise defined herein shall have
the meanings assigned to such terms in the Agreement), dated as of June 25,
2018, made by Aleris International, Inc., a Delaware corporation (the
“Company”), the other Pledgors party thereto and JPMorgan Chase Bank, N.A., in
its capacity as Administrative Agent pursuant to the Credit Agreement (in such
capacity and together with any successors in such capacity, the “Administrative
Agent”).

This Joinder Agreement supplements the Agreement and is delivered by the
undersigned, [                ] (the “New Pledgor”), pursuant to Section 3.5 of
the Agreement. The New Pledgor hereby agrees to be bound as a Pledgor and as a
Pledgor party to the Agreement by all of the terms, covenants and conditions set
forth in the Agreement to the same extent that it would have been bound if it
had been a signatory to the Agreement on the date of the Agreement. The New
Pledgor also hereby agrees to be bound as a party by all of the terms, covenants
and conditions applicable to it set forth in the Credit Agreement to the same
extent that it would have been bound if it had been a signatory to the Credit
Agreement on the execution date of the Credit Agreement. Without limiting the
generality of the foregoing, the New Pledgor hereby grants and pledges to the
Administrative Agent, as collateral security for the full, prompt and complete
payment and performance when due (whether at stated maturity, by acceleration or
otherwise) of the Secured Obligations, a Lien on and security interest in, all
of its right, title and interest in, to and under the Collateral and expressly
assumes all obligations and liabilities of a Pledgor thereunder. The New Pledgor
hereby makes each of the representations and warranties and agrees to each of
the covenants applicable to the Pledgors contained in the Agreement.

Annexed hereto are supplements to each of the schedules to the Perfection
Certificate with respect to the New Pledgor.

This Joinder Agreement and any amendments, waivers, consents or supplements
hereto may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed to be an original, but all such counterparts together shall
constitute one and the same agreement. Delivery of an executed counterpart of a
signature page of this Joinder Agreement by facsimile or other electronic
transmission shall be effective as delivery of a manually executed counterpart
of this Agreement.

Sections 9.09 and 9.10 of the Credit Agreement are incorporated herein, mutatis
mutandis, as if a part hereof.

[Signature page follows]

 

Exh. 3-1

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

IN WITNESS WHEREOF, the New Pledgor has caused this Joinder Agreement to be
executed and delivered by its duly authorized officer as of the date first above
written.

 

[NEW PLEDGOR] By:  

             

  Name:   Title:

AGREED TO AND ACCEPTED:

JPMorgan Chase Bank, N.A.,

as Administrative Agent

By:  

                 

  Name:   Title:

[Schedules to be attached]

 

Exh. 3-2

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

EXHIBIT 4

[Form of]

COPYRIGHT SECURITY AGREEMENT

Copyright Security Agreement, dated as of [                ], by
[                ] and [                ] (individually, a “Pledgor,” and,
collectively, the “Pledgors”), in favor of JPMorgan Chase Bank, N.A., in its
capacity as Administrative Agent pursuant to the Credit Agreement (in such
capacity, the “Administrative Agent”).

W I T N E S S E T H:

WHEREAS, the Pledgors are party to an Amended and Restated Security Agreement
dated as of June 25, 2018 (as amended, amended and restated, supplemented or
otherwise modified from time to time, the “Agreement”) in favor of the
Administrative Agent pursuant to which the Pledgors are required to execute and
deliver this Copyright Security Agreement;

NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent, for the benefit of the Secured Parties, to enter into the
Credit Agreement, the Pledgors hereby agree with the Administrative Agent as
follows:

SECTION 1. Defined Terms. Unless otherwise defined herein, terms defined in the
Agreement and used herein have the meaning given to them in the Agreement.

SECTION 2. Grant of Security Interest in Copyright Collateral. Each Pledgor
hereby pledges and grants to the Administrative Agent for the benefit of the
Secured Parties a Lien on and security interest in and to all of its right,
title and interest in, to and under all the following Collateral of such Pledgor
(the “Copyright Collateral”):

(a) Copyrights and Exclusive Copyright Licenses of such Pledgor, including those
listed on Schedule I attached hereto; and

(b) all Proceeds of any and all of the foregoing (other than Excluded Assets).

SECTION 3. Agreement. The security interest granted pursuant to this Copyright
Security Agreement is granted in conjunction with the security interest granted
to the Administrative Agent pursuant to the Agreement and the Pledgors hereby
acknowledge and affirm that the rights and remedies of the Administrative Agent
with respect to the security interest in the Copyright Collateral made and
granted hereby are more fully set forth in the Agreement, the terms and
provisions of which are incorporated by reference herein as if fully set forth
herein. In the event that any provision of this Copyright Security Agreement is
deemed to conflict with the Agreement, the provisions of the Agreement shall
control unless the Administrative Agent shall otherwise determine.

 

Exh. 4-1

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

SECTION 4. Termination. Upon the payment in full of the Secured Obligations,
termination of all Commitments, and termination of the Agreement, the
Administrative Agent shall execute, acknowledge, and deliver to the Pledgors an
instrument in writing in recordable form releasing the collateral pledge, grant,
assignment, Lien and security interest in the Copyright Collateral under this
Copyright Security Agreement.

SECTION 5. Counterparts. This Copyright Security Agreement may be executed in
any number of counterparts, all of which shall constitute one and the same
instrument, and any party hereto may execute this Copyright Security Agreement
by signing and delivering one or more counterparts. Delivery of an executed
counterpart of a signature page of this Copyright Security Agreement by
facsimile or other electronic transmission shall be effective as delivery of a
manually executed counterpart of this Copyright Security Agreement.

SECTION 6. Governing Law. This Copyright Security Agreement and the transactions
contemplated hereby, and all disputes between the parties under or relating to
this Copyright Security Agreement or the facts or circumstances leading to its
execution, whether in contract, tort or otherwise, shall be construed in
accordance with and governed by the laws (including statutes of limitation) of
the State of New York, without regard to conflicts of law principles that would
require the application of the laws of another jurisdiction.

[signature page follows]

 

Exh. 4-2

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

IN WITNESS WHEREOF, each Pledgor has caused this Copyright Security Agreement to
be executed and delivered by its duly authorized officer as of the date first
set forth above.

 

Very truly yours, [PLEDGORS] By:  

                 

  Name:   Title:

 

Accepted and Agreed:

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

By:  

             

  Name:   Title:

 

Exh. 4-3

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

SCHEDULE I

to

COPYRIGHT SECURITY AGREEMENT

COPYRIGHT REGISTRATIONS AND COPYRIGHT APPLICATIONS

Copyright Registrations:

 

OWNER

  

REGISTRATION

NUMBER

  

TITLE

           

Copyright Applications:

 

OWNER

  

TITLE

     

Exclusive Copyright Licenses:

 

Exh. 4-4

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

EXHIBIT 5

[Form of]

PATENT SECURITY AGREEMENT

Patent Security Agreement, dated as of [                ], by [                ]
and [                ] (individually, a “Pledgor,” and, collectively, the
“Pledgors”), in favor of JPMorgan Chase Bank, N.A., in its capacity as
Administrative Agent pursuant to the Credit Agreement (in such capacity, the
“Administrative Agent”).

W I T N E S S E T H:

WHEREAS, the Pledgors are party to an Amended and Restated Security Agreement
dated as of June 25, 2018 (as amended, amended and restated, supplemented or
otherwise modified from time to time, the “Agreement”) in favor of the
Administrative Agent pursuant to which the Pledgors are required to execute and
deliver this Patent Security Agreement;

NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent, for the benefit of the Secured Parties, to enter into the
Credit Agreement, the Pledgors hereby agree with the Administrative Agent as
follows:

SECTION 1. Defined Terms. Unless otherwise defined herein, terms defined in the
Agreement and used herein have the meaning given to them in the Agreement.

SECTION 2. Grant of Security Interest in Patent Collateral. Each Pledgor hereby
pledges and grants to the Administrative Agent for the benefit of the Secured
Parties a Lien on and security interest in and to all of its right, title and
interest in, to and under all the following Collateral of such Pledgor (the
“Patent Collateral”):

(a) Patents of such Pledgor, including those listed on Schedule I attached
hereto; and

(b) all Proceeds of any and all of the foregoing (other than Excluded Assets).

SECTION 3. Agreement. The security interest granted pursuant to this Patent
Security Agreement is granted in conjunction with the security interest granted
to the Administrative Agent pursuant to the Agreement and the Pledgors hereby
acknowledge and affirm that the rights and remedies of the Administrative Agent
with respect to the security interest in the Patent Collateral made and granted
hereby are more fully set forth in the Agreement, the terms and provisions of
which are incorporated by reference herein as if fully set forth herein. In the
event that any provision of this Patent Security Agreement is deemed to conflict
with the Agreement, the provisions of the Agreement shall control unless the
Administrative Agent shall otherwise determine.

 

Exh. 5-1

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

SECTION 4. Termination. Upon the payment in full of the Secured Obligations, the
termination of all Commitments, and termination of the Agreement, the
Administrative Agent shall execute, acknowledge, and deliver to the Pledgors an
instrument in writing in recordable form releasing the collateral pledge, grant,
assignment, Lien and security interest in the Patent Collateral under this
Patent Security Agreement.

SECTION 5. Counterparts. This Patent Security Agreement may be executed in any
number of counterparts, all of which shall constitute one and the same
instrument, and any party hereto may execute this Patent Security Agreement by
signing and delivering one or more counterparts. Delivery of an executed
counterpart of a signature page of this Patent Security Agreement by facsimile
or other electronic transmission shall be effective as delivery of a manually
executed counterpart of this Patent Security Agreement.

SECTION 6. Governing Law. This Patent Security Agreement and the transactions
contemplated hereby, and all disputes between the parties under or relating to
this Patent Security Agreement or the facts or circumstances leading to its
execution, whether in contract, tort or otherwise, shall be construed in
accordance with and governed by the laws (including statutes of limitation) of
the State of New York, without regard to conflicts of law principles that would
require the application of the laws of another jurisdiction.

[signature page follows]

 

Exh. 5-2

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

IN WITNESS WHEREOF, each Pledgor has caused this Patent Security Agreement to be
executed and delivered by its duly authorized officer as of the date first set
forth above.

 

Very truly yours, [PLEDGORS] By:  

             

  Name:   Title:

 

Accepted and Agreed:

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

By:  

                 

  Name:   Title:

 

Exh. 5-3

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

SCHEDULE I

to

PATENT SECURITY AGREEMENT

PATENT REGISTRATIONS AND PATENT APPLICATIONS

Patent Registrations:

 

OWNER

  

REGISTRATION

NUMBER

  

NAME

           

Patent Applications:

 

OWNER

  

APPLICATION

NUMBER

  

NAME

           

 

Exh. 5-4

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

EXHIBIT 6

[Form of]

TRADEMARK SECURITY AGREEMENT

Trademark Security Agreement, dated as of [                ], by
[                ] and [                ] (individually, a “Pledgor,” and,
collectively, the “Pledgors”), in favor of JPMorgan Chase Bank, N.A., in its
capacity as Administrative Agent pursuant to the Credit Agreement (in such
capacity, the “Administrative Agent”).

W I T N E S S E T H:

WHEREAS, the Pledgors are party to an Amended and Restated Security Agreement
dated as of June 25, 2018 (as amended, amended and restated, supplemented or
otherwise modified from time to time, the “Agreement”) in favor of the
Administrative Agent pursuant to which the Pledgors are required to execute and
deliver this Trademark Security Agreement;

NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent, for the benefit of the Secured Parties, to enter into the
Credit Agreement, the Pledgors hereby agree with the Administrative Agent as
follows:

SECTION 1. Defined Terms. Unless otherwise defined herein, terms defined in the
Agreement and used herein have the meaning given to them in the Agreement.

SECTION 2. Grant of Security Interest in Trademark Collateral. Each Pledgor
hereby pledges and grants to the Administrative Agent for the benefit of the
Secured Parties a Lien on and security interest in and to all of its right,
title and interest in, to and under all the following Collateral of such Pledgor
(the “Trademark Collateral”):

(a) Trademarks of such Pledgor, including those listed on Schedule I attached
hereto, but excluding any Trademarks that are Excluded Assets;

(b) all goodwill associated with such Trademarks; and

(c) all Proceeds of any and all of the foregoing (other than Excluded Assets).

SECTION 3. Agreement. The security interest granted pursuant to this Trademark
Security Agreement is granted in conjunction with the security interest granted
to the Administrative Agent pursuant to the Agreement and the Pledgors hereby
acknowledge and affirm that the rights and remedies of the Administrative Agent
with respect to the security interest in the Trademark Collateral made and
granted hereby are more fully set forth in the Agreement, the terms and
provisions of which are incorporated by reference herein as if fully set forth
herein. In the event that any provision of this Trademark Security Agreement is
deemed to conflict with the Agreement, the provisions of the Agreement shall
control unless the Administrative Agent shall otherwise determine.

 

Exh. 6-1

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

SECTION 4. Termination. Upon the payment in full of the Secured Obligations, the
termination of all Commitments, and termination of the Agreement, the
Administrative Agent shall execute, acknowledge, and deliver to the Pledgors an
instrument in writing in recordable form releasing the collateral pledge, grant,
assignment, Lien and security interest in the Trademark Collateral under this
Trademark Security Agreement.

SECTION 5. Counterparts. This Trademark Security Agreement may be executed in
any number of counterparts, all of which shall constitute one and the same
instrument, and any party hereto may execute this Trademark Security Agreement
by signing and delivering one or more counterparts. Delivery of an executed
counterpart of a signature page of this Trademark Security Agreement by
facsimile or other electronic transmission shall be effective as delivery of a
manually executed counterpart of this Trademark Security Agreement.

SECTION 6. Governing Law. This Trademark Security Agreement and the transactions
contemplated hereby, and all disputes between the parties under or relating to
this Trademark Security Agreement or the facts or circumstances leading to its
execution, whether in contract, tort or otherwise, shall be construed in
accordance with and governed by the laws (including statutes of limitation) of
the State of New York, without regard to conflicts of law principles that would
require the application of the laws of another jurisdiction.

[signature page follows]

 

Exh. 6-2

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

IN WITNESS WHEREOF, each Pledgor has caused this Trademark Security Agreement to
be executed and delivered by its duly authorized officer as of the date first
set forth above.

 

Very truly yours, [PLEDGORS] By:  

             

  Name:   Title:

 

Accepted and Agreed:

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

By:  

             

  Name:   Title:

 

Exh. 6-3

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

SCHEDULE I

to

TRADEMARK SECURITY AGREEMENT

TRADEMARK REGISTRATIONS AND TRADEMARK APPLICATIONS

Trademark Registrations:

 

OWNER

  

REGISTRATION

NUMBER

  

TRADEMARK

           

Trademark Applications:

 

OWNER

  

APPLICATION

NUMBER

  

TRADEMARK

           

 

Exh. 6-4

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

EXHIBIT 7

[Form of]

PERFECTION CERTIFICATE