Exhibit 10.3

Execution Version

 

U.S. REVOLVING GUARANTY AND SECURITY AGREEMENT

Dated as of February 27, 2015

by

ALERIS RECYCLING, INC. TO BE KNOWN AS

REAL ALLOY RECYCLING, INC.,

as a U.S. Borrower,

and

EACH OTHER U.S. BORROWER AND GRANTOR

FROM TIME TO TIME PARTY HERETO

in favor of

GENERAL ELECTRIC CAPITAL CORPORATION,

as Agent

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TABLE OF CONTENTS

 

         Page  

ARTICLE I DEFINED TERMS

     2   

Section 1.1

  Definitions      2   

Section 1.2

  Certain Other Terms      6   

ARTICLE II GUARANTY

     8   

Section 2.1

  Guaranty      8   

Section 2.2

  Limitation of Guaranty      8   

Section 2.3

  Contribution      8   

Section 2.4

  Authorization; Other Agreements      9   

Section 2.5

  Guaranty Absolute and Unconditional      9   

Section 2.6

  Waivers      10   

Section 2.7

  Reliance      11   

ARTICLE III GRANT OF SECURITY INTEREST

     11   

Section 3.1

  Collateral      11   

Section 3.2

  Grant of Security Interest in Collateral      12   

Section 3.3

  Intercreditor Agreement      12   

ARTICLE IV REPRESENTATIONS AND WARRANTIES

     13   

Section 4.1

  Title; No Other Liens      13   

Section 4.2

  Perfection and Priority      14   

Section 4.3

  Pledged Collateral      14   

Section 4.4

  Instruments and Tangible Chattel Paper Formerly Accounts      15   

Section 4.5

  Intellectual Property      15   

Section 4.6

  Commercial Tort Claims      15   

Section 4.7

  Specific Collateral      15   

Section 4.8

  Enforcement      16   

Section 4.9

  Representations and Warranties of the Credit Agreement      16   

ARTICLE V COVENANTS

     16   

Section 5.1

  Maintenance of Perfected Security Interest; Further Documentation and Consents
     16   

Section 5.2

  Pledged Collateral      17   

Section 5.3

  Accounts      18   

Section 5.4

  Commodity Contracts      19   

Section 5.5

  Delivery of Instruments and Tangible Chattel Paper and Control of Investment
Property, Letter-of-Credit Rights and Electronic Chattel Paper      19   

Section 5.6

  Intellectual Property      19   

Section 5.7

  Notices      20   

Section 5.8

  Notice of Commercial Tort Claims      21   

Section 5.9

  Controlled Securities Account      21   

ARTICLE VI REMEDIAL PROVISIONS

     21   

Section 6.1

  Code and Other Remedies      21   

 

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TABLE OF CONTENTS

(continued)

 

         Page  

Section 6.2

  Accounts and Payments in Respect of General Intangibles      24   

Section 6.3

  Pledged Collateral      25   

Section 6.4

  Proceeds to be Turned over to and Held by Agent      26   

Section 6.5

  Sale of Pledged Collateral      27   

Section 6.6

  Deficiency      27   

ARTICLE VII AGENT

     27   

Section 7.1

  Agent’s Appointment as Attorney-in-Fact      27   

Section 7.2

  Authorization to File Financing Statements      29   

Section 7.3

  Authority of Agent      30   

Section 7.4

  Duty; Obligations and Liabilities      30   

ARTICLE VIII MISCELLANEOUS

     31   

Section 8.1

  Reinstatement      31   

Section 8.2

  Release of Collateral      31   

Section 8.3

  Independent Obligations      32   

Section 8.4

  No Waiver by Course of Conduct      32   

Section 8.5

  Amendments in Writing      32   

Section 8.6

  Additional Grantors; Additional Pledged Collateral      32   

Section 8.7

  Notices      33   

Section 8.8

  Successors and Assigns      33   

Section 8.9

  Counterparts      33   

Section 8.10

  Severability      33   

Section 8.11

  Governing Law      33   

Section 8.12

  Waiver of Jury Trial      33   

Section 8.13

  ULC Limitation      33   

 

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ANNEXES AND SCHEDULES

 

Annex 1

Form of Pledge Amendment

Annex 2

Form of Joinder Agreement

Annex 3

Form of Intellectual Property Security Agreement

Schedule 1

Commercial Tort Claims

Schedule 2

Filings

Schedule 3

Pledged Collateral

 

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This U.S. REVOLVING GUARANTY AND SECURITY AGREEMENT (including all exhibits,
annexes and schedules hereto, as the same may be amended, modified and/or
restated from time to time, this “Agreement”), dated as of February 27, 2015, by
Aleris Recycling, Inc., a Delaware corporation, to be known as Real Alloy
Recycling, Inc., a Delaware corporation, on the Closing Date, Aleris Recycling
Bens Run, LLC, a Delaware limited liability company, to be known as Real Alloy
Bens Run, LLC, a Delaware limited liability company, on the Closing Date, Aleris
Specialty Products, Inc., a Delaware corporation, to be known as Real Alloy
Specialty Products, Inc., a Delaware corporation, on the Closing Date, Aleris
Specification Alloys, Inc., a Delaware corporation, to be known as Real Alloy
Specification, Inc., a Delaware corporation, on the Closing Date, and ETS
Schaefer, LLC, an Ohio limited liability company (collectively, the “U.S.
Borrowers”) and each of the other entities listed on the signature pages hereof
or that becomes a party hereto pursuant to Section 8.6 (together with the U.S.
Borrowers, the “Grantors” and each, a “Grantor”), in favor of General Electric
Capital Corporation (“GE Capital”), in its capacity as administrative agent (in
such capacity, together with its successors and permitted assigns, “Agent”) for
the Lenders, the L/C Issuers and each other Secured Party (each as defined in
the Credit Agreement referred to below).

W I T N E S S E T H:

WHEREAS, pursuant to the Revolving Credit Agreement dated as of the date hereof
(as the same may be amended, refinanced, replaced, restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”) by and among the
U.S. Borrowers, Aleris Specification Alloy Products Canada Company (the
“Canadian Borrower”; together with the U.S. Borrowers, the “Borrowers”), the
other Credit Parties from time to time party thereto, the Lenders, the L/C
Issuers from time to time party thereto and GE Capital, as Agent, the Lenders
and the L/C Issuers have severally agreed to make extensions of credit to the
Borrowers upon the terms and subject to the conditions set forth therein;

WHEREAS, each Grantor has agreed to guaranty the Obligations (as defined in the
Credit Agreement, and including the Canadian Obligations);

WHEREAS, each Grantor will derive substantial direct and indirect benefits from
the making of the extensions of credit under the Credit Agreement; and

WHEREAS, it is a condition precedent to the obligation of the Lenders and the
L/C Issuers to make their respective extensions of credit to the Borrowers under
the Credit Agreement that the Grantors shall have executed and delivered this
Agreement to Agent.

NOW, THEREFORE, in consideration of the premises and to induce the Lenders, the
L/C Issuers and Agent to enter into the Credit Agreement and to induce the
Lenders and the L/C Issuers to make their respective extensions of credit to the
Borrowers thereunder, each Grantor hereby agrees with Agent as follows:

 

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ARTICLE I

DEFINED TERMS

Section 1.1 Definitions. (a) Capitalized terms used herein without definition
are used as defined in the Credit Agreement.

(b) The following terms have the meanings given to them in the UCC and terms
used herein without definition that are defined in the UCC have the meanings
given to them in the UCC (such meanings to be equally applicable to both the
singular and plural forms of the terms defined): “account debtor”, “as-extracted
collateral”, “certificated security”, “chattel paper”, “commercial tort claim”,
“commodity contract”, “deposit account”, “electronic chattel paper”,
“equipment”, “farm products”, “fixture”, “general intangible”, “goods”,
“health-care-insurance receivable”, “instruments”, “investment property”,
“letter-of-credit right”, “money”, “proceeds”, “record”, “securities account”,
“security”, “supporting obligation” and “tangible chattel paper”.

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

“Acquisition Agreement” shall mean the Purchase and Sale Agreement, dated as of
October 17, 2014, by and among Aleris Corporation, a Delaware corporation,
Aleris International, Inc., a Delaware corporation, Aleris Holding Canada
Limited, a New Brunswick corporation, Aleris Aluminum Netherlands B.V., a
limited liability company organized under the laws of the Netherlands, Aleris
Deutschland Holding GmbH, a limited liability company organized under the laws
of Germany, Dutch Aluminum C.V., a limited partnership organized under the laws
of the Netherlands, and Aleris Deutschland Vier GmbH Co KG, a limited
partnership organized under the laws of Germany, SGH Acquisition Holdco, Inc., a
Delaware corporation, Evergreen Holding Germany GmbH, a limited liability
company organized under the laws of Germany and Signature Group Holdings, Inc.,
a Delaware corporation.

“Agent” has the meaning given such term in the preamble to this Agreement.

“Agreement” has the meaning given such term in the preamble to this Agreement.

“Applicable IP Office” means the United States Patent and Trademark Office, the
United States Copyright Office or any similar office or agency within or outside
the United States.

“Borrowers” has the meaning given such term in the preamble to this Agreement.

 

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“Cash Collateral Account” means a deposit account or securities account subject,
in each instance, to a Control Agreement, other than accounts established to
cash collateralize L/C Reimbursement Obligations.

“Collateral” has the meaning specified in Section 3.1.

“Controlled Securities Account” means each securities account (including all
financial assets held therein and all certificates and instruments, if any,
representing or evidencing such financial assets) that is the subject of an
effective Control Agreement.

“Discharge of Notes Obligations” has the meaning given such term in the
Intercreditor Agreement.

“Excluded Equity” means (a) with respect to any Excluded Foreign Subsidiary
directly owned by a Grantor, all Voting Stock in excess of 65% of the
outstanding Voting Stock of such Foreign Subsidiary, (b) with respect to all
other Excluded Foreign Subsidiaries, all Voting Stock of such Foreign
Subsidiaries and (c) with respect to Excluded Domestic Subsidiaries, all capital
stock of such Domestic Subsidiaries; provided, however, that Voting Stock of the
Canadian Borrower or any other Foreign Subsidiary directly owned by a Grantor
shall not constitute, or be deemed or construed to constitute, “Excluded Equity”
for purposes of securing any Grantor’s Guaranty of Canadian Obligations (as
defined in Section 2.1 below) to the extent such Voting Stock constitutes
Remaining Canadian Pledged Stock.

“Excluded Property” means, collectively, (i) Excluded Equity, (ii) any permit or
license or any Contractual Obligation entered into by any Grantor (A) that
prohibits or requires the consent of any Person other than a Grantor or its
Affiliates which has not been obtained as a condition to the creation by such
Grantor of a Lien on any right, title or interest in such permit, license or
Contractual Obligation or any Stock or Stock Equivalent related thereto or
(B) to the extent that any Requirement of Law applicable thereto prohibits the
creation of a Lien thereon, but only, with respect to the prohibition in (A) and
(B), to the extent, and for as long as, such prohibition is not terminated or
rendered unenforceable or otherwise deemed ineffective by the UCC or any other
Requirement of Law, (iii) Property owned by any Grantor that is subject to a
purchase money Lien or a Capital Lease permitted under the Credit Agreement if
the Contractual Obligation pursuant to which such Lien is granted (or in the
document providing for such Capital Lease) prohibits or requires the consent of
any Person other than a Grantor or its Affiliates which has not been obtained as
a condition to the creation of any other Lien on such Property, (iv) any “intent
to use” Trademark applications for which a statement of use has not been filed
(but only until such statement is filed), (v) assets and properties of the
Excluded Subsidiary and (vi) the partnership interests in the Excluded
Subsidiary, to the extent the pledge of such partnership interests would violate
the Excluded Subsidiary’s partnership agreement or require the consent of Magna
Aluminum, Inc., a California corporation (or any subsequent holder of such
partnership interests other than Real Alloy Acquisition and Real Alloy
Recycling) that has not been obtained; provided, however, “Excluded Property”
shall not include any proceeds, products, substitutions or replacements of
Excluded Property (unless such proceeds, products, substitutions or replacements
would otherwise constitute Excluded Property).

 

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“Excluded Subsidiary” means IMSAMET of Arizona, an Arizona general partnership,
70% of whose partnership interests are owned by Aleris Recycling, Inc., a
Delaware corporation, and 30% of whose partnership interests are owned by Magna
Aluminum, Inc., a California corporation.

“Fraudulent Transfer Laws” has the meaning set forth in Section 2.2.

“GE Capital” has the meaning given such term in the preamble to this Agreement.

“Grantors” has the meaning given such term in the preamble to this Agreement.

“Guaranteed Obligations” has the meaning set forth in Section 2.1.

“Guarantor” means each Grantor.

“Guaranty” means the guaranty of the Guaranteed Obligations made by the
Guarantors as set forth in this Agreement.

“Guaranty of Canadian Obligations” has the meaning set forth in Section 2.1.

“Indenture Documents” has the meaning given such term in the Credit Agreement.

“Insurance” shall mean (i) all insurance policies covering any or all of the
Collateral (regardless of whether or not Agent is the loss payee thereof) and
(ii) any key man life insurance policies.

“Internet Domain Name” means all right, title and interest (and all related IP
Ancillary Rights) arising under any Requirement of Law in or relating to
Internet domain names.

“Material Intellectual Property” means Intellectual Property that is owned by or
licensed to a Grantor and material to the conduct of any Grantor’s business.

“Notes Collateral Agent” has the meaning given such term in the Credit
Agreement.

“Notes Obligations” has the meaning given such term in the Credit Agreement.

 

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“Notes Priority Collateral” has the meaning given such term in the Credit
Agreement.

“Pledged Certificated Stock” means all certificated securities and any other
Stock or Stock Equivalent of any Person evidenced by a certificate, instrument
or other similar document (as defined in the UCC), in each case owned by any
Grantor, and any distribution of property made on, in respect of or in exchange
for the foregoing from time to time, including all Stock and Stock Equivalents
listed on Schedule 3 to this Agreement. Pledged Certificated Stock excludes any
Excluded Property and any Cash Equivalents that are not held in Controlled
Securities Accounts to the extent permitted by Section 5.9 hereof.

“Pledged Collateral” means, collectively, the Pledged Stock and the Pledged Debt
Instruments.

“Pledged Debt Instruments” means all right, title and interest of any Grantor in
instruments evidencing any Indebtedness owed to such Grantor or other
obligations owed to such Grantor, and any distribution of property made on, in
respect of or in exchange for the foregoing from time to time, including all
Indebtedness described on Schedule 3 to this Agreement, issued by the obligors
named therein. Pledged Debt Instruments excludes any Cash Equivalents that are
not held in Controlled Securities Accounts to the extent permitted by
Section 5.9 hereof.

“Pledged Investment Property” means any investment property of any Grantor, and
any distribution of property made on, in respect of or in exchange for the
foregoing from time to time, other than any Pledged Stock or Pledged Debt
Instruments. Pledged Investment Property excludes Excluded Equity and any Cash
Equivalents that are not held in Controlled Securities Accounts to the extent
permitted by Section 5.9 hereof.

“Pledged Stock” means all Pledged Certificated Stock and all Pledged
Uncertificated Stock.

“Pledged ULC Shares” shall mean the Pledged Stock which are shares in the
capital stock of a ULC.

“Pledged Uncertificated Stock” means any Stock or Stock Equivalent of any Person
that is not Pledged Certificated Stock, including all right, title and interest
of any Grantor as a limited or general partner in any partnership not
constituting Pledged Certificated Stock or as a member of any limited liability
company, all right, title and interest of any Grantor in, to and under any
Organization Document of any partnership or limited liability company to which
it is a party, and any distribution of property made on, in respect of or in
exchange for the foregoing from time to time, including in each case those
interests set forth on Schedule 3 to this Agreement, to the extent such
interests are not certificated. Pledged Uncertificated Stock excludes any
Excluded Property and any Cash Equivalents that are not held in Controlled
Securities Accounts to the extent permitted by Section 5.9 hereof.

 

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“Remaining Canadian Pledged Stock” means (a) all Voting Stock of the Canadian
Borrower in excess of 65% of the outstanding Voting Stock of the Canadian
Borrower and (b) with respect to any Excluded Foreign Subsidiary directly owned
by a Grantor, all Voting Stock in excess of 65% of the outstanding Voting Stock
of each Foreign Subsidiary.

“Secured Obligations” has the meaning given such term in Section 3.2 hereof.

“Software” means (a) all computer programs, including source code and object
code versions, (b) all data, databases and compilations of data, whether machine
readable or otherwise, and (c) all documentation, training materials and
configurations related to any of the foregoing.

“Specified Assigned Agreement” shall mean the Acquisition Agreement, as such
agreement may be amended, supplemented or otherwise modified from time to time.

“UCC” means the Uniform Commercial Code as from time to time in effect in the
State of New York; provided, however, that, in the event that, by reason of
mandatory provisions of any applicable Requirement of Law, any of the
attachment, perfection or priority of Agent’s or any other Secured Party’s
security interest in any Collateral is governed by the Uniform Commercial Code
of a jurisdiction other than the State of New York, “UCC” shall mean the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such attachment, perfection or priority and for
purposes of the definitions related to or otherwise used in such provisions.

“ULC” 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.

“U.S. Borrowers” has the meaning given such term in the preamble to this
Agreement.

“Vehicles” means all vehicles covered by a certificate of title law of any
state.

“Voting Stock” means, with respect to any issuer, the issued and outstanding
shares of each class of Stock of such issuer entitled to vote (within the
meaning of Treasury Regulations § 1.956-2(c)(2)).

Section 1.2 Certain Other Terms.

 

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(a) The meanings given to terms defined herein shall be equally applicable to
both the singular and plural forms of such terms. The terms “herein”, “hereof”
and similar terms refer to this Agreement as a whole and not to any particular
Article, Section or clause in this Agreement. References herein to an Annex,
Schedule, Article, Section or clause refer to the appropriate Annex or Schedule
to, or Article, Section or clause in this Agreement. Where the context requires,
provisions relating to any Collateral when used in relation to a Grantor shall
refer to such Grantor’s Collateral or any relevant part thereof.

(b) Other Interpretive Provisions.

(i) Defined Terms. Unless otherwise specified herein or therein, all terms
defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto.

(ii) The Agreement. The words “hereof”, “herein”, “hereunder” and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.

(iii) Certain Common Terms. The term “including” is not limiting and means
“including without limitation.”

(iv) Performance; Time. Whenever any performance obligation hereunder (other
than a payment obligation) shall be stated to be due or required to be satisfied
on a day other than a Business Day, such performance shall be made or satisfied
on the next succeeding Business Day. In the computation of periods of time from
a specified date to a later specified date, the word “from” means “from and
including”; the words “to” and “until” each mean “to but excluding”, and the
word “through” means “to and including.” If any provision of this Agreement
refers to any action taken or to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be interpreted to encompass any and
all means, direct or indirect, of taking, or not taking, such action.

(v) Contracts. Unless otherwise expressly provided herein, references to
agreements and other contractual instruments, including this Agreement and the
other Loan Documents, shall be deemed to include all subsequent amendments,
thereto, restatements and substitutions thereof and other modifications and
supplements thereto which are in effect from time to time, but only to the
extent such amendments and other modifications are not prohibited by the terms
of any Loan Document.

(vi) Laws. References to any statute or regulation are to be construed as
including all statutory and regulatory provisions related thereto or
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.

 

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ARTICLE II

GUARANTY

Section 2.1 Guaranty. To induce the Lenders to make the Loans, the L/C Issuers
to Issue Letters of Credit and each other Secured Party to make credit available
to or for the benefit of one or more Grantors, each Guarantor hereby, jointly
and severally, absolutely, unconditionally and irrevocably guarantees, as
primary obligor and not merely as surety, the full and punctual payment when
due, whether at stated maturity or earlier, by reason of acceleration, mandatory
prepayment or otherwise in accordance with any Loan Document, of all the
Obligations, including all the Canadian Obligations, in any case, whether
existing on the date hereof or hereinafter incurred or created (such guaranty of
the Canadian Obligations, the “Guaranty of Canadian Obligations” and all
Obligations, generally, the “Guaranteed Obligations”). This Guaranty by each
Guarantor hereunder constitutes a guaranty of payment and not of collection.

Section 2.2 Limitation of Guaranty. Any term or provision of this Guaranty or
any other Loan Document to the contrary notwithstanding, the maximum aggregate
amount for which any Guarantor shall be liable hereunder shall not exceed the
maximum amount for which such Guarantor can be liable without rendering this
Guaranty or any other Loan Document, as it relates to such Guarantor, subject to
avoidance under applicable Requirements of Law relating to fraudulent conveyance
or fraudulent transfer (including the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act and Section 548 of Title 11 of the United States
Code or any applicable provisions of comparable Requirements of Law)
(collectively, “Fraudulent Transfer Laws”). Any analysis of the provisions of
this Guaranty for purposes of Fraudulent Transfer Laws shall take into account
the right of contribution established in Section 2.3 and, for purposes of such
analysis, give effect to any discharge of intercompany debt as a result of any
payment made under the Guaranty.

Section 2.3 Contribution. To the extent that any Guarantor shall be required
hereunder to pay any portion of any Guaranteed Obligation exceeding the greater
of (a) the amount of the economic benefits actually received by such Guarantor
and its Subsidiaries from the Loans, the Letter of Credit Obligations and other
Obligations and (b) the amount such Guarantor would otherwise have paid if such
Guarantor had paid the aggregate amount of the Guaranteed Obligations (excluding
the amount thereof repaid by a Borrower that received the benefit of the funds
advanced that constituted Guaranteed Obligations and Holdings) in the same
proportion as such Guarantor’s net worth on the date enforcement is sought
hereunder bears to the aggregate net worth of all the Guarantors on such date,
then such Guarantor shall be reimbursed by such other Guarantors for the amount
of such excess, pro rata, based on the respective net worth of such other
Guarantors on such date.

 

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Section 2.4 Authorization; Other Agreements. The Secured Parties are hereby
authorized, without notice to or demand upon any Guarantor and without
discharging or otherwise affecting the obligations of any Guarantor hereunder
and without incurring any liability hereunder, from time to time, to do each of
the following:

(a) (i) subject to compliance, if applicable, with Section 9.1 of the Credit
Agreement, modify, amend, supplement or otherwise change, (ii) accelerate or
otherwise change the time of payment or (iii) waive or otherwise consent to
noncompliance with, any Guaranteed Obligation or any Loan Document;

(b) apply to the Guaranteed Obligations any sums by whomever paid or however
realized to any Guaranteed Obligation in such order as provided in the Loan
Documents;

(c) refund at any time any payment received by any Secured Party in respect of
any Guaranteed Obligation;

(d) (i) sell, exchange, enforce, waive, substitute, liquidate, terminate,
release, abandon, fail to perfect, subordinate, accept, substitute, surrender,
exchange, affect, impair or otherwise alter or release any Collateral for any
Guaranteed Obligation or any other guaranty therefor in any manner,
(ii) receive, take and hold additional Collateral to secure any Guaranteed
Obligation, (iii) add, release or substitute any one or more other Guarantors,
makers or endorsers of any Guaranteed Obligation or any part thereof and
(iv) otherwise deal in any manner with a Borrower or any other Guarantor, maker
or endorser of any Guaranteed Obligation or any part thereof; and

(e) settle, release, compromise, collect or otherwise liquidate the Guaranteed
Obligations.

The Guarantors agree that the Secured Parties may take any action or refrain
from taking any action specified in the Canadian Revolving Guaranty and Security
Agreement (including without limitation Section 2.3 thereof) without discharging
or otherwise affecting the obligations of any Guarantor hereunder.

Section 2.5 Guaranty Absolute and Unconditional. Each Guarantor hereby waives
and agrees not to assert any defense, whether arising in connection with or in
respect of any of the following or otherwise, and hereby agrees that its
obligations under this Guaranty are irrevocable, absolute and unconditional and
shall not be discharged as a result of or otherwise affected by any of the
following (which may not be pleaded and evidence of which may not be introduced
in any proceeding with respect to this Guaranty, in each case except as
otherwise agreed in writing by Agent):

(a) the invalidity or unenforceability of any obligation of a Borrower or any
other Guarantor under any Loan Document or any other agreement or instrument
relating thereto (including any amendment, consent or waiver thereto), or any
security for, or other guaranty of, any Guaranteed Obligation or any part
thereof, or the lack of perfection or continuing perfection or failure of
priority of any security for the Guaranteed Obligations or any part thereof;

 

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(b) the absence of (i) any attempt to collect any Guaranteed Obligation or any
part thereof from a Borrower or any other Guarantor or other action to enforce
the same or (ii) any action to enforce any Loan Document or any Lien thereunder;

(c) the failure by any Person to take any steps to perfect and maintain any Lien
on, or to preserve any rights with respect to, any Collateral;

(d) any workout, insolvency, bankruptcy proceeding, reorganization, arrangement,
liquidation or dissolution by or against a Borrower, any other Guarantor or any
of a Borrower’s other Subsidiaries or any procedure, agreement, order,
stipulation, election, action or omission thereunder, including any discharge or
disallowance of, or bar or stay against collecting, any Guaranteed Obligation
(or any interest thereon) in or as a result of any such proceeding;

(e) any foreclosure, whether or not through judicial sale, and any other sale or
other disposition of any Collateral or any election following the occurrence of
an Event of Default by any Secured Party to proceed separately against any
Collateral in accordance with such Secured Party’s rights under any applicable
Requirement of Law;

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

(g) any other defense, setoff, counterclaim or any other circumstance that might
otherwise constitute a legal or equitable discharge of a Borrower, any other
Guarantor or any other Subsidiary of a Borrower, in each case other than the
payment in full of the Guaranteed Obligations; or

(h) any of the items specified in Section 2.4 of the Canadian Revolving Guaranty
and Security Agreement.

Section 2.6 Waivers. Each Guarantor hereby unconditionally and irrevocably
waives and agrees not to assert any claim, defense, setoff or counterclaim based
on diligence, promptness, presentment, requirements for any demand or notice
hereunder including any of the following: (a) any demand for payment or
performance and protest and notice of protest; (b) any notice of acceptance;
(c) any presentment, demand, protest or further notice or other requirements of
any kind with respect to any Guaranteed Obligation (including any accrued but
unpaid interest thereon) becoming immediately due and payable; and (d) any other
notice in respect of any Guaranteed Obligation or any part thereof, and any
defense arising by reason of any disability or other defense of a Borrower or
any other Guarantor. Each Guarantor further unconditionally and irrevocably
agrees not to (x) enforce or otherwise exercise any right of subrogation or any
right of reimbursement or contribution or similar right against a

 

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Borrower or any other Guarantor by reason of any Loan Document or any payment
made thereunder or (y) assert any claim, defense, setoff or counterclaim it may
have against any other Credit Party or set off any of its obligations to such
other Credit Party against obligations of such Credit Party to such Guarantor.
No obligation of any Guarantor hereunder shall be discharged other than by
complete performance. Each Guarantor further waives any right such Guarantor may
have under any applicable Requirement of Law to require any Secured Party to
seek recourse first against any Borrower or any other Person, or to realize upon
any Collateral for any of the Obligations, as a condition precedent to enforcing
such Guarantor’s liability and obligations under this Guaranty.

Section 2.7 Reliance. Each Guarantor hereby assumes responsibility for keeping
itself informed of the financial condition of each Borrower, each other
Guarantor and any other guarantor, maker or endorser of any Guaranteed
Obligation or any part thereof, and of all other circumstances bearing upon the
risk of nonpayment of any Guaranteed Obligation or any part thereof that
diligent inquiry would reveal, and each Guarantor hereby agrees that no Secured
Party shall have any duty to advise any Guarantor of information known to it
regarding such condition or any such circumstances. In the event any Secured
Party, in its sole discretion, undertakes at any time or from time to time to
provide any such information to any Guarantor, such Secured Party shall be under
no obligation to (a) undertake any investigation not a part of its regular
business routine, (b) disclose any information that such Secured Party, pursuant
to accepted or reasonable commercial finance or banking practices, wishes to
maintain confidential or (c) make any future disclosures of such information or
any other information to any Guarantor.

ARTICLE III

GRANT OF SECURITY INTEREST

Section 3.1 Collateral. For the purposes of this Agreement, all of the following
property now owned or at any time hereafter acquired by a Grantor or in which a
Grantor now has or at any time in the future may acquire any right, title or
interests is collectively referred to as the “Collateral”:

(a) all Accounts, chattel paper, deposit accounts, documents (as defined in the
UCC), equipment, general intangibles, instruments, Insurance, Inventory,
investment property, letter of credit rights, money and any supporting
obligations related to any of the foregoing;

(b) the commercial tort claims described on Schedule 1 to this Agreement and on
any supplement thereto received by Agent pursuant to Section 5.8;

(c) all books and records pertaining to the other property described in this
Section 3.1;

 

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(d) Specified Assigned Agreement;

(e) all property of such Grantor held by any Secured Party, including all
property of every description, in the custody of or in transit to such Secured
Party for any purpose, including safekeeping, collection or pledge, for the
account of such Grantor or as to which such Grantor may have any right or power,
including but not limited to cash;

(f) all other goods (including but not limited to fixtures) and personal
property of such Grantor, whether tangible or intangible and wherever located;
and

(g) to the extent not otherwise included, all proceeds, products, accessions,
rents and profits of or in respect of any of the foregoing.

Section 3.2 Grant of Security Interest in Collateral. Each Grantor, as
collateral security for the prompt and complete payment and performance when due
(whether at stated maturity, by acceleration or otherwise) of all the
Obligations of such Grantor or any or all of the other Grantors, including the
Guaranty of Canadian Obligations (collectively, the “Secured Obligations”),
hereby mortgages, pledges and hypothecates to Agent, for the benefit of the
Secured Parties, and grants to Agent, for the benefit of the Secured Parties a
Lien on and security interest in, all of its right, title and interest in, to
and under the Collateral of such Grantor; provided, however, notwithstanding the
foregoing, no Lien or security interest is hereby granted on any Excluded
Property; provided, further, that if and when any property shall cease to be
Excluded Property, a Lien on and security interest in such property shall be
deemed granted therein; provided, further, the foregoing grant of security
interest in Collateral is expressly intended to include, and does include, a
grant of a security interest in, pledge of and Lien on all Remaining Canadian
Pledged Stock but only to secure the Grantors’ Guaranty of Canadian Obligations.
In the interest of certainty, all Remaining Canadian Pledged Stock shall be and
hereby is pledged solely to secure the Guaranty of Canadian Obligations and
shall not in any event secure or be deemed to secure any U.S. Obligation or any
other Obligation of a U.S. Credit Party. Each Grantor hereby represents and
warrants that the Excluded Property, when taken as a whole, is not material to
the business operations or financial condition of the Grantors, taken as a
whole.

Section 3.3 Intercreditor Agreement. (a) Notwithstanding anything herein to the
contrary, the Liens granted to Agent under this Agreement and the exercise of
the rights and remedies of Agent hereunder and under any other Loan Document are
subject to the provisions of the Intercreditor Agreement. Notwithstanding
anything to the contrary herein, Agent acknowledges and agrees that no Grantor
shall be required to take or refrain from taking any action with respect to the
Collateral if such action or inaction would be inconsistent with the terms of
the Intercreditor Agreement.

 

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(b) Subject to the foregoing, to the extent the provisions of this Agreement (or
any other Collateral Documents) require the delivery of, or control over, Notes
Priority Collateral to be granted to Agent, the notation of any Lien on any
certificate of title, bill of lading or other document, the giving of any notice
to any bailee or other Person, the provision of voting rights or the obtaining
of any consent of any Person, in each case, in connection with any Notes
Priority Collateral, at any time prior to the Discharge of Notes Obligations,
such requirements shall be satisfied by delivery of such Notes Priority
Collateral (or control with respect thereto (and any related approval or consent
rights)) to the Notes Collateral Agent or, with respect to such notation, giving
of notice, provision of voting rights or obtaining consent, compliance with the
applicable provisions of the Indenture Documents, to be held in accordance with
the Indenture Documents and subject to the terms of the Intercreditor Agreement.
Furthermore, at all times prior to the Discharge of Notes Obligations, Agent is
authorized by the parties hereto to effect transfers of Notes Priority
Collateral at any time in its possession (and any “control” or similar
agreements with respect to the Notes Priority Collateral) to the Notes
Collateral Agent.

(c) Notwithstanding anything to the contrary herein, but subject to the terms of
the Intercreditor Agreement, in the event the Indenture Documents provide for
the grant of a security interest or pledge over the assets of any Grantor and
such assets do not otherwise constitute Collateral (or are not required to be
perfected) under this Agreement or any other Loan Document, such Grantor shall
(i) promptly grant a security interest in or pledge such assets to secure the
Secured Obligations, (ii) promptly take any actions necessary to perfect such
security interest or pledge to the same extent required in the Indenture
Documents and (iii) take all other steps reasonably requested by Agent in
connection with the foregoing.

(d) Except as otherwise provided in this Section 3.3 or in the Intercreditor
Agreement, nothing contained in the Intercreditor Agreement shall be deemed to
modify any of the provisions of this Agreement, which, as among the Grantors and
Agent shall remain in full force and effect in accordance with its terms.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

To induce the Lenders, the L/C Issuers and Agent to enter into the Loan
Documents, each Grantor hereby represents and warrants each of the following to
Agent, the Lenders, the L/C Issuers and the other Secured Parties:

Section 4.1 Title; No Other Liens. Except for the Lien granted to Agent pursuant
to this Agreement and other Permitted Liens under any Loan Document (including
Section 4.2), such Grantor owns each item of the Collateral free and clear of
any and all Liens or claims of others. Such Grantor (a) is the record and
beneficial owner of the Collateral pledged by it hereunder constituting
instruments or certificates and (b) has rights in or the power to transfer each
other item of Collateral in which a Lien is granted by it hereunder, free and
clear of any other Lien.

 

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Section 4.2 Perfection and Priority. The security interest granted pursuant to
this Agreement constitutes a valid and continuing perfected security interest in
favor of Agent in all Collateral subject, for the following Collateral, to the
occurrence of the following: (a) in the case of all Collateral in which a
security interest may be perfected by filing a financing statement under the
UCC, the completion of the filings and other actions specified on Schedule 2 to
this Agreement (which, in the case of all filings and other documents referred
to on such schedule, have been delivered to Agent in completed and duly
authorized form), (b) with respect to any deposit, securities, commodity or
similar account other than Excluded Accounts, the execution of Control
Agreements, (c) in the case of all Copyrights, Trademarks and Patents for which
UCC filings are insufficient, all appropriate filings having been made with the
United States Copyright Office or the United States Patent and Trademark Office,
as applicable, (d) in the case of letter-of-credit rights that are not
supporting obligations of Collateral, the execution of a Contractual Obligation
granting control to Agent over such letter-of-credit rights, (e) in the case of
electronic chattel paper, the completion of all steps necessary to grant control
to Agent over such electronic chattel paper and (f) in the case of Vehicles, the
actions required under Section 5.1(e). Such security interest shall be prior to
all other Liens on the Collateral except for (x) Permitted Liens having priority
over Agent’s Lien by operation of law or permitted pursuant to Section 5.1(e),
5.1(g), 5.1(h), 5.1(i) or 5.1(k) of the Credit Agreement upon (i) in the case of
all Pledged Certificated Stock, Pledged Debt Instruments and Pledged Investment
Property, the delivery thereof to Agent (or the Notes Collateral Agent pursuant
to the Intercreditor Agreement) of such Pledged Certificated Stock, Pledged Debt
Instruments and Pledged Investment Property consisting of instruments and
certificates, in each case properly endorsed for transfer to Agent (or the Notes
Collateral Agent pursuant to the Intercreditor Agreement) or in blank, (ii) in
the case of all Pledged Investment Property not in certificated form, the
execution of Control Agreements with respect to such investment property and
(iii) in the case of all other instruments and tangible chattel paper that are
not Pledged Certificated Stock, Pledged Debt Instruments or Pledged Investment
Property, the delivery to Agent (or the Notes Collateral Agent pursuant to the
Intercreditor Agreement) of such instruments and tangible chattel paper and
(y) subject to the terms of the Intercreditor Agreement, Liens granted to the
Notes Collateral Agent on the Notes Priority Collateral pursuant to the
Indenture Documents or to any other agent or trustee pursuant to any Permitted
Refinancing in respect of the Notes Obligations. Except as set forth in this
Section 4.2, all actions by each Grantor necessary or desirable to protect and
perfect the Lien granted hereunder on the Collateral have been duly taken.

Section 4.3 Pledged Collateral. (a) The Pledged Stock (i) pledged by such
Grantor hereunder (A) is listed on Schedule 3 to this Agreement and constitutes
that percentage of the issued and outstanding equity of all classes of each
issuer thereof as set forth on such Schedule 3 and (B) has been duly authorized,
validly issued and is fully paid and nonassessable (other than Pledged Stock in
limited liability companies and partnerships) and (ii) the pledge thereof
constitutes the legal, valid and binding obligation of the obligor with respect
thereto, enforceable in accordance with its terms.

 

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(b) As of the Closing Date, all Pledged Collateral (other than Pledged
Uncertificated Stock) and all Pledged Investment Property consisting of
instruments and certificates has been delivered to the Notes Collateral Agent in
accordance with Section 5.2(a).

(c) Subject to Section 8.13, upon the occurrence and during the continuance of
an Event of Default, Agent shall be entitled to exercise all of the rights of
the Grantor granting the security interest in any Pledged Stock, and a
transferee or assignee of such Pledged Stock shall become a holder of such
Pledged Stock to the same extent as such Grantor and be entitled to participate
in the management of the issuer of such Pledged Stock and, upon the transfer of
the entire interest of such Grantor, such Grantor shall, by operation of law,
cease to be a holder of such Pledged Stock.

Section 4.4 Instruments and Tangible Chattel Paper Formerly Accounts. No amount
payable to such Grantor under or in connection with any account is evidenced by
any instrument or tangible chattel paper that has not been delivered to Agent,
properly endorsed for transfer, to the extent delivery is required by
Section 5.5(a).

Section 4.5 Intellectual Property. On the Closing Date, all Material
Intellectual Property owned by such Grantor is valid, in full force and effect,
subsisting, unexpired and enforceable, and no Material Intellectual Property has
been abandoned. No breach or default of any material IP License shall be caused
by any of the following, and none of the following shall limit or impair the
ownership, use, validity or enforceability of, or any rights of such Grantor in,
any Material Intellectual Property: (i) the consummation of the transactions
contemplated by any Loan Document or (ii) any holding, decision, judgment or
order rendered by any Governmental Authority prior to the date hereof. There are
no pending (or, to the knowledge of such Grantor, threatened) actions,
investigations, suits, proceedings, audits, claims, demands, orders or disputes
challenging the ownership, use, validity, enforceability of, or such Grantor’s
rights in, any Material Intellectual Property of such Grantor. To such Grantor’s
knowledge, no Person has been or is infringing, misappropriating, diluting,
violating or otherwise impairing any Intellectual Property of such Grantor. Such
Grantor, and to such Grantor’s knowledge each other party thereto, is not in
material breach or default of any material IP License.

Section 4.6 Commercial Tort Claims. The only commercial tort claims of any
Grantor existing on the date hereof (regardless of whether the amount, defendant
or other material facts can be determined and regardless of whether such
commercial tort claim has been asserted, threatened or has otherwise been made
known to the obligee thereof or whether litigation has been commenced for such
claims) are those listed on Schedule 1 to this Agreement, which sets forth such
information separately for each Grantor.

Section 4.7 Specific Collateral. None of the Collateral is or is proceeds or
products of farm products, as-extracted collateral, health-care-insurance
receivables or timber to be cut.

 

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Section 4.8 Enforcement. No Permit, notice to or filing with any Governmental
Authority or any other Person or any consent from any Person is required for the
exercise by Agent of its rights (including voting rights) provided for in this
Agreement or the enforcement of remedies in respect of the Collateral pursuant
to this Agreement, including the transfer of any Collateral, except as may be
required in connection with the disposition of any portion of the Pledged
Collateral by laws affecting the offering and sale of securities generally or
any approvals that may be required to be obtained from any bailees or landlords
to collect the Collateral.

Section 4.9 Representations and Warranties of the Credit Agreement. The
representations and warranties as to such Grantor and its Subsidiaries made in
Article III (Representations and Warranties) of the Credit Agreement are true
and correct on each date as required by Section 2.2 of the Credit Agreement.

ARTICLE V

COVENANTS

Each Grantor agrees with Agent to the following, as long as any Obligation or
Commitment remains outstanding (other than contingent indemnification
Obligations to the extent no claim giving rise thereto has been asserted):

Section 5.1 Maintenance of Perfected Security Interest; Further Documentation
and Consents. (a) Generally. Such Grantor shall (i) not use or permit any
Collateral to be used unlawfully or in violation of any provision of any Loan
Document, any Related Agreement, any Requirement of Law or any policy of
insurance covering the Collateral and (ii) not enter into any Contractual
Obligation or undertaking restricting the right or ability of such Grantor or
Agent to sell, assign, convey or transfer any Collateral if such restriction
would reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.

(b) Such Grantor shall maintain the security interest created by this Agreement
as a perfected security interest having at least the priority described in
Section 4.2 and shall defend such security interest and such priority against
the claims and demands of all Persons.

(c) Such Grantor shall furnish to Agent from time to time statements and
schedules further identifying and describing the Collateral and such other
documents in connection with the Collateral, in each case as Agent may
reasonably request, all in reasonable detail and in form and substance
satisfactory to Agent.

(d) At any time and from time to time, upon the written request of Agent, such
Grantor shall, for the purpose of obtaining or preserving the full benefits of
this Agreement and of the rights and powers herein granted, (i) promptly and
duly execute and deliver, and have recorded, such further documents, including
an

 

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authorization to file (or, as applicable, the filing of) any financing statement
or amendment under the UCC (or other filings under similar Requirements of Law)
in effect in any jurisdiction with respect to the security interest created
hereby and (ii) take such further action as Agent may reasonably request,
including (A) using commercially reasonable efforts to secure all approvals
necessary or appropriate for the assignment to or for the benefit of Agent of
any Contractual Obligation, including any IP License, held by such Grantor and
to enforce the security interests granted hereunder and (B) executing and
delivering any Control Agreements with respect to deposit accounts, securities,
commodity or similar accounts.

(e) If reasonably requested by Agent during the continuance of an Event of
Default, the Grantor shall arrange for Agent’s first priority security interest
to be noted on the certificate of title of each Vehicle and shall file any other
necessary documentation in each jurisdiction that Agent shall deem advisable to
perfect its security interests in any Vehicle.

(f) To ensure that a Lien and security interest is granted on any of the
Excluded Property set forth in clause (ii) of the definition of “Excluded
Property”, such Grantor shall use commercially reasonable efforts to obtain any
required consents from any Person other than a Borrower and its Affiliates with
respect to any permit or license or any Contractual Obligation with such Person
entered into by such Grantor that requires such consent as a condition to the
creation by such Grantor of a Lien on any right, title or interest in such
permit, license or Contractual Obligation or any Stock or Stock Equivalent
related thereto.

Section 5.2 Pledged Collateral. (a) Delivery of Pledged Collateral. Such Grantor
shall (i) deliver to Agent, in suitable form for transfer and in form and
substance satisfactory to Agent, (A) all Pledged Certificated Stock, (B) all
Pledged Debt Instruments and (C) all certificates and instruments evidencing
Pledged Investment Property and (ii) maintain all other Pledged Investment
Property in a Controlled Securities Account.

(b) Event of Default. During the continuance of an Event of Default, Agent shall
have the right, at any time in its discretion and without notice to the Grantor,
to (i) transfer to or to register in its name or in the name of its nominees any
Pledged Collateral or any Pledged Investment Property and (ii) exchange any
certificate or instrument representing or evidencing any Pledged Collateral or
any Pledged Investment Property for certificates or instruments of smaller or
larger denominations.

(c) Cash Distributions with respect to Pledged Collateral. Except as provided in
Article VI and subject to the limitations set forth in the Credit Agreement,
such Grantor shall be entitled to receive all cash distributions paid in respect
of the Pledged Collateral.

 

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(d) Voting Rights. Except as provided in Article VI, such Grantor shall be
entitled to exercise all voting, consent and corporate, partnership, limited
liability company and similar rights with respect to the Pledged Collateral;
provided, however, that no vote shall be cast, consent given or right exercised
or other action taken by such Grantor that would impair the Collateral or be
inconsistent with or result in any violation of any provision of any Loan
Document.

(e) Foreign Pledge Stock. If any issuer of any Pledged Stock is organized under
a jurisdiction outside of the United States, each Grantor shall take such
additional actions, including, without limitation, causing the issuer to
register the pledge on its books and records or making such filings or
recordings, in each case as may be reasonably necessary or advisable, under the
laws of such issuer’s jurisdiction to ensure the validity, perfection and
priority of the security interest of Agent in such Pledged Stock.

(f) Pledged Stock. With respect to any Pledged Stock constituting partnership
interests or limited liability company interests included in the Collateral, if
the Grantors collectively own less than 100% of the equity interests in any
issuer of such Pledged Stock, Grantors shall use their commercially reasonable
efforts to obtain the consent of each other holder of partnership interest or
limited liability company interests in such issuer to the security interest of
Agent hereunder and following an Event of Default, the transfer of such Pledged
Stock to Agent or its designee, and to the substitution of Agent or its designee
as a partner or member with all the rights and powers related thereto. Each
Grantor consents to the grant by each other Grantor of a Lien in all Collateral
to Agent and without limiting the generality of the foregoing consents to the
transfer of any Pledged Stock to Agent or its designee following and during the
continuance of an Event of Default and to the substitution of Agent or its
designee as a partner in any partnership or as a member in any limited liability
company with all the rights and powers related thereto.

Section 5.3 Accounts.

(a) Such Grantor shall not, other than in the Ordinary Course of Business,
(i) grant any extension of the time of payment of any account, (ii) compromise
or settle any account for less than the full amount thereof, (iii) release,
wholly or partially, any Person liable for the payment of any account,
(iv) allow any credit or discount on any account or (v) amend, supplement or
modify any account in any manner that could adversely affect the value thereof.

(b) So long as an Event of Default is continuing, Agent shall have the right to
make test verifications of the Accounts in any manner and through any medium
that it reasonably considers advisable, and such Grantor shall furnish all such
assistance and information as Agent may reasonably require in connection
therewith. At any time and from time to time, upon Agent’s reasonable request
during an Event of Default, such Grantor shall cause independent public
accountants or others satisfactory to Agent to furnish to Agent reports showing
reconciliations, aging and test verifications of, and trial balances for, the
Accounts.

 

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Section 5.4 Commodity Contracts. Such Grantor shall not have any commodity
contract unless subject to a Control Agreement.

Section 5.5 Delivery of Instruments and Tangible Chattel Paper and Control of
Investment Property, Letter-of-Credit Rights and Electronic Chattel Paper.
(a) If any amount payable under or in connection with any Collateral owned by
such Grantor shall be or become evidenced by an instrument or tangible chattel
paper other than such instrument delivered in accordance with Section 5.2(a) and
in the possession of Agent, such Grantor shall mark all such instruments and
tangible chattel paper with the following legend: “This writing and the
obligations evidenced or secured hereby are subject to the security interest of
General Electric Capital Corporation, as Agent” and, at the request of Agent,
shall immediately deliver such instrument or tangible chattel paper to Agent,
duly indorsed in a manner satisfactory to Agent.

(b) Such Grantor shall not grant “control” (within the meaning of such term
under Article 9-106 of the UCC) over any investment property of such Grantor to
any Person other than Agent and the Notes Collateral Agent.

(c) If such Grantor is or becomes the beneficiary of a letter of credit that is
not a supporting obligation of any Collateral, such Grantor shall promptly, and
in any event within 2 Business Days after becoming a beneficiary, notify Agent
thereof and enter into a Contractual Obligation with Agent, the issuer of such
letter of credit or any nominated person with respect to the letter-of-credit
rights under such letter of credit. Such Contractual Obligation shall assign
such letter-of-credit rights to Agent and such assignment shall be sufficient to
grant control for the purposes of Section 9-107 of the UCC (or any similar
section under any equivalent UCC). Such Contractual Obligation shall also direct
all payments thereunder to a Cash Collateral Account. The provisions of the
Contractual Obligation shall be in form and substance reasonably satisfactory to
Agent.

(d) If any amount payable under or in connection with any Collateral owned by
such Grantor shall be or become evidenced by electronic chattel paper, such
Grantor shall take all steps necessary to grant Agent control of all such
electronic chattel paper for the purposes of Section 9-105 of the UCC (or any
similar section under any equivalent 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.

Section 5.6 Intellectual Property. (a) Within 30 days after any change to
Schedule 3.16 to the Credit Agreement for such Grantor, such Grantor shall
provide Agent notification thereof and the short-form intellectual property
agreements and assignments as described in this Section 5.6 and any other
documents that Agent reasonably requests with respect thereto.

 

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(b) Such Grantor shall (and shall cause all its licensees to) (i) (1) continue
to use each Trademark included in the Material Intellectual Property in order to
maintain such Trademark in full force and effect with respect to each class of
goods for which such Trademark is currently used, free from any claim of
abandonment for non-use, (2) maintain at least the same standards of quality of
products and services offered under such Trademark as are currently maintained,
(3) use such Trademark with the appropriate notice of registration and all other
notices and legends required by applicable Requirements of Law, (4) not adopt or
use any other Trademark that is confusingly similar or a colorable imitation of
such Trademark unless Agent shall obtain a perfected security interest in such
other Trademark pursuant to this Agreement and (ii) not do any act or omit to do
any act whereby (w) such Trademark (or any goodwill associated therewith) may
become destroyed, invalidated, impaired or harmed in any way, (x) any Patent
included in the Material Intellectual Property may become forfeited, misused,
unenforceable, abandoned or dedicated to the public, (y) any portion of the
Copyrights included in the Material Intellectual Property may become
invalidated, otherwise impaired or fall into the public domain or (z) any Trade
Secret that is Material Intellectual Property may become publicly available or
otherwise unprotectable.

(c) Such Grantor shall notify Agent immediately if it knows, or has reason to
know, that any application or registration relating to any Material Intellectual
Property may become forfeited, misused, unenforceable, abandoned or dedicated to
the public, or of any adverse determination or development regarding the
validity or enforceability or such Grantor’s ownership of, interest in, right to
use, register, own or maintain any Material Intellectual Property (including the
institution of, or any such determination or development in, any proceeding
relating to the foregoing in any Applicable IP Office). Such Grantor shall take
all actions that are necessary or reasonably requested by Agent to maintain and
pursue each application (and to obtain the relevant registration or recordation)
and to maintain each registration and recordation included in the Material
Intellectual Property.

(d) Such Grantor shall not knowingly do any act or omit to do any act to
infringe, misappropriate, dilute, violate or otherwise impair the Intellectual
Property of any other Person. In the event that any Material Intellectual
Property of such Grantor is or has been infringed, misappropriated, violated,
diluted or otherwise impaired by a third party, such Grantor shall take such
action as it reasonably deems appropriate under the circumstances in response
thereto, including (if reasonably deemed appropriate by such Grantor) promptly
bringing suit and recovering all damages therefor.

(e) Such Grantor shall execute and deliver to Agent in form and substance
reasonably acceptable to Agent and suitable for (i) filing in the Applicable IP
Office the short-form intellectual property security agreements in the form
attached hereto as Annex 3 for all Copyrights, Trademarks, Patents and IP
Licenses of such Grantor and (ii) recording with the appropriate Internet domain
name registrar, a duly executed form of assignment for all Internet Domain Names
of such Grantor (together with appropriate supporting documentation as may be
requested by Agent).

Section 5.7 Notices. Such Grantor shall promptly notify Agent in writing of its
acquisition of any interest hereafter in property that is of a type where a
security interest or lien must be or may be registered, recorded or filed under,
or notice thereof given under, any federal statute or regulation.

 

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Section 5.8 Notice of Commercial Tort Claims. Such Grantor agrees that, if it
shall acquire any interest in any commercial tort claim (whether from another
Person or because such commercial tort claim shall have come into existence),
(i) such Grantor shall, immediately upon such acquisition, deliver to Agent, in
each case in form and substance satisfactory to Agent, a notice of the existence
and nature of such commercial tort claim and a supplement to Schedule 1 to this
Agreement containing a specific description of such commercial tort claim,
(ii) Section 3.1 shall apply to such commercial tort claim and (iii) such
Grantor shall execute and deliver to Agent, in each case in form and substance
satisfactory to Agent, any document, and take all other action, deemed by Agent
to be reasonably necessary or appropriate for Agent to obtain, for the benefit
of the Secured Parties, a perfected security interest having at least the
priority set forth in Section 4.2 in all such commercial tort claims. Any
supplement to Schedule 1 delivered pursuant to this Section 5.8 shall, after the
receipt thereof by Agent, become part of Schedule 1 for all purposes hereunder
other than in respect of representations and warranties made prior to the date
of such receipt.

Section 5.9 Controlled Securities Account. Each Grantor shall, to the extent
required by Section 4.11 of the Credit Agreement, deposit all of its Cash
Equivalents in securities accounts that are Controlled Securities Accounts in
accordance with Section 4.11 of the Credit Agreement.

ARTICLE VI

REMEDIAL PROVISIONS

Section 6.1 Code and Other Remedies. (a) UCC Remedies. During the continuance of
an Event of Default, Agent may exercise, in addition to all other rights and
remedies granted to it in this Agreement and in any other instrument or
agreement securing, evidencing or relating to any Secured Obligation, all rights
and remedies of a secured party under the UCC or any other applicable law.

(b) Disposition of Collateral. Without limiting the generality of the foregoing,
Agent may, without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred
to below) to or upon any Grantor or any other Person (all and each of which
demands, defenses, advertisements and notices are hereby waived), during the
continuance of any Event of Default (personally or through its agents or
attorneys), (i) enter upon the premises where any Collateral is located, without
any obligation to pay rent, through self-help, without judicial process, without
first obtaining a final judgment or giving any Grantor or any other Person
notice or opportunity for a hearing on Agent’s claim or action, (ii) collect,
receive, appropriate and realize upon any Collateral and (iii) sell, assign,
convey, transfer, grant option or options to purchase and deliver any Collateral

 

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(and enter into Contractual Obligations to do any of the foregoing), in one or
more parcels at public or private sale or sales, at any exchange, broker’s board
or office of any Secured Party or elsewhere upon such terms and conditions as it
may deem advisable and at such prices as it may deem best, for cash or on credit
or for future delivery without assumption of any credit risk. Agent shall have
the right, upon any such public sale or sales and, to the extent permitted by
the UCC and other applicable Requirements of Law, upon any such private sale, to
purchase the whole or any part of the Collateral so sold, free of any right or
equity of redemption of any Grantor, which right or equity is hereby waived and
released.

(c) Management of the Collateral. Each Grantor further agrees, that, during the
continuance of any Event of Default, (i) at Agent’s request, it shall assemble
the Collateral and make it available to Agent at places that Agent shall
reasonably select, whether at such Grantor’s premises or elsewhere, (ii) without
limiting the foregoing, Agent also has the right to require that each Grantor
store and keep any Collateral pending further action by Agent and, while any
such Collateral is so stored or kept, provide such guards and maintenance
services as shall be necessary to protect the same and to preserve and maintain
such Collateral in good condition, (iii) until Agent is able to sell, assign,
convey or transfer any Collateral, Agent shall have the right to hold or use
such Collateral to the extent that it deems appropriate for the purpose of
preserving the Collateral or its value or for any other purpose deemed
appropriate by Agent and (iv) Agent may, if it so elects, seek the appointment
of a receiver or keeper to take possession of any Collateral and to enforce any
of Agent’s remedies (for the benefit of the Secured Parties), with respect to
such appointment without prior notice or hearing as to such appointment. Agent
shall not have any obligation to any Grantor to maintain or preserve the rights
of any Grantor as against third parties with respect to any Collateral while
such Collateral is in the possession of Agent.

(d) Application of Proceeds. Agent shall apply the cash proceeds of any action
taken by it pursuant to this Section 6.1, after deducting all reasonable costs
and expenses of every kind incurred in connection therewith or incidental to the
care or safekeeping of any Collateral or in any way relating to the Collateral
or the rights of Agent and any other Secured Party hereunder, including
reasonable attorneys’ fees and disbursements, to the payment in whole or in part
of the Secured Obligations, as set forth in the Credit Agreement, and only after
such application and after the payment by Agent of any other amount required by
any Requirement of Law, need Agent account for the surplus, if any, to any
Grantor.

(e) Direct Obligation. Neither Agent nor any other Secured Party shall be
required to make any demand upon, or pursue or exhaust any right or remedy
against, any Grantor, any other Credit Party or any other Person with respect to
the payment of the Obligations or to pursue or exhaust any right or remedy with
respect to any Collateral therefor or any direct or indirect guaranty thereof.
All of the rights and remedies of Agent and any other Secured Party under any
Loan Document shall be cumulative, may be exercised individually or concurrently
and not exclusive of any other rights or remedies provided by any Requirement of
Law. To the extent it may lawfully

 

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do so, each Grantor absolutely and irrevocably waives and relinquishes the
benefit and advantage of, and covenants not to assert against Agent or any other
Secured Party, any valuation, stay, appraisement, extension, redemption or
similar laws and any and all rights or defenses it may have as a surety, now or
hereafter existing, arising out of the exercise by them of any rights hereunder.
If any notice of a proposed sale or other disposition of any Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given at
least 10 days before such sale or other disposition.

(f) Commercially Reasonable. To the extent that applicable Requirements of Law
impose duties on Agent to exercise remedies in a commercially reasonable manner,
each Grantor acknowledges and agrees that it is not commercially unreasonable
for Agent to do any of the following:

(i) fail to incur significant costs, expenses or other Liabilities reasonably
deemed as such by Agent to prepare any Collateral for disposition or otherwise
to complete raw material or work in process into finished goods or other
finished products for disposition;

(ii) fail to obtain Permits, or other consents, for access to any Collateral to
sell or for the collection or sale of any Collateral, or, if not required by
other Requirements of Law, fail to obtain Permits or other consents for the
collection or disposition of any Collateral;

(iii) fail to exercise remedies against account debtors or other Persons
obligated on any Collateral or to remove Liens on any Collateral or to remove
any adverse claims against any Collateral;

(iv) advertise dispositions of any Collateral through publications or media of
general circulation, whether or not such Collateral is of a specialized nature,
or to contact other Persons, whether or not in the same business as any Grantor,
for expressions of interest in acquiring any such Collateral;

(v) exercise collection remedies against account debtors and other Persons
obligated on any Collateral, directly or through the use of collection agencies
or other collection specialists, hire one or more professional auctioneers to
assist in the disposition of any Collateral, whether or not such Collateral is
of a specialized nature, or, to the extent deemed appropriate by Agent, obtain
the services of other brokers, investment bankers, consultants and other
professionals to assist Agent in the collection or disposition of any
Collateral, or utilize 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 to dispose of any
Collateral;

(vi) dispose of assets in wholesale rather than retail markets;

 

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(vii) disclaim disposition warranties, such as title, possession or quiet
enjoyment; or

(viii) purchase insurance or credit enhancements to insure Agent against risks
of loss, collection or disposition of any Collateral or to provide to Agent a
guaranteed return from the collection or disposition of any Collateral.

Each Grantor acknowledges that the purpose of this Section 6.1 is to provide a
non-exhaustive list of actions or omissions that are commercially reasonable
when exercising remedies against any Collateral and that other actions or
omissions by any Secured Party shall not be deemed commercially unreasonable
solely on account of not being indicated in this Section 6.1. Without limitation
upon the foregoing, nothing contained in this Section 6.1 shall be construed to
grant any rights to any Grantor or to impose any duties on Agent that would not
have been granted or imposed by this Agreement or by applicable Requirements of
Law in the absence of this Section 6.1.

(g) IP Licenses. For the purpose of enabling Agent to exercise rights and
remedies under this Section 6.1 (including in order to take possession of,
collect, receive, assemble, process, appropriate, remove, realize upon, sell,
assign, convey, transfer or grant options to purchase any Collateral) at such
time as Agent shall be lawfully entitled to exercise such rights and remedies,
each Grantor hereby grants to Agent, for the benefit of the Secured Parties,
(i) an irrevocable, nonexclusive, worldwide license (exercisable without payment
of royalty or other compensation to such Grantor), including in such license the
right to sublicense, use and practice any Intellectual Property now owned or
hereafter acquired by such Grantor and access to all media in which any of the
licensed items may be recorded or stored and to all Software and programs used
for the compilation or printout thereof and (ii) an irrevocable license (without
payment of rent or other compensation to such Grantor) to use, operate and
occupy all real Property owned, operated, leased, subleased or otherwise
occupied by such Grantor.

Section 6.2 Accounts and Payments in Respect of General Intangibles. (a) In
addition to, and not in substitution for, any similar requirement in the Credit
Agreement, if required by Agent at any time during the continuance of an Event
of Default, any payment of Accounts or payment in respect of general
intangibles, when collected by any Grantor, shall be promptly (and, in any
event, within 2 Business Days) deposited by such Grantor in the exact form
received, duly indorsed by such Grantor to Agent, in a Cash Collateral Account,
subject to withdrawal by Agent as provided in Section 6.4. Until so turned over,
such payment shall be held by such Grantor in trust for Agent, segregated from
other funds of such Grantor. Each such deposit of proceeds of Accounts and
payments in respect of general intangibles shall be accompanied by a report
identifying in reasonable detail the nature and source of the payments included
in the deposit.

(b) At any time during the continuance of an Event of Default:

 

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(i) each Grantor shall, upon Agent’s request, deliver to Agent all original and
other documents evidencing, and relating to, the Contractual Obligations and
transactions that gave rise to any Account or any payment in respect of general
intangibles, including all original orders, invoices and shipping receipts and
notify account debtors that the Accounts or general intangibles have been
collaterally assigned to Agent and that payments in respect thereof shall be
made directly to Agent;

(ii) Agent may, without notice, at any time during the continuance of an Event
of Default, limit or terminate the authority of a Grantor to collect its
Accounts or amounts due under general intangibles or any thereof and, in its own
name or in the name of others, communicate with account debtors to verify with
them to Agent’s satisfaction the existence, amount and terms of any Account or
amounts due under any general intangible. In addition, during the continuance of
an Event of Default, Agent may at any time enforce such Grantor’s rights against
such account debtors and obligors of general intangibles; and

(iii) each Grantor shall take all actions, deliver all documents and provide all
information necessary or reasonably requested by Agent to ensure any Internet
Domain Name is registered.

(c) Anything herein to the contrary notwithstanding, each Grantor shall remain
liable under each Account and each payment in respect of general intangibles to
observe and perform all the conditions and obligations to be observed and
performed by it thereunder, all in accordance with the terms of any agreement
giving rise thereto. No Secured Party shall have any obligation or liability
under any agreement giving rise to an Account or a payment in respect of a
general intangible by reason of or arising out of any Loan Document or the
receipt by any Secured Party of any payment relating thereto, nor shall any
Secured Party be obligated in any manner to perform any obligation of any
Grantor under or pursuant to any agreement giving rise to an Account or a
payment in respect of a general intangible, to make any payment, to make any
inquiry as to the nature or the sufficiency of any payment received by it or as
to the sufficiency of any performance by any party thereunder, to present or
file any claim, to take any action to enforce any performance or to collect the
payment of any amounts that may have been assigned to it or to which it may be
entitled at any time or times.

Section 6.3 Pledged Collateral. (a) Voting Rights. Subject to Section 8.13,
during the continuance of an Event of Default, upon notice by Agent to the
relevant Grantor or Grantors, Agent or its nominee may exercise (i) any voting,
consent, corporate and other right pertaining to the Pledged Collateral at any
meeting of shareholders, partners or members, as the case may be, of the
relevant issuer or issuers of Pledged Collateral or otherwise and (ii) any right
of conversion, exchange and subscription and any other right, privilege or
option pertaining to the Pledged Collateral as if it were the absolute owner
thereof (including the right to exchange at its discretion any Pledged
Collateral upon the merger, amalgamation, consolidation, reorganization,
recapitalization

 

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or other fundamental change in the corporate or equivalent structure of any
issuer of Pledged Stock, the right to deposit and deliver any Pledged Collateral
with any committee, depositary, transfer agent, registrar or other designated
agency upon such terms and conditions as Agent may determine), all without
liability except to account for property actually received by it; provided,
however, that Agent shall have no duty to any Grantor to exercise any such
right, privilege or option and shall not be responsible for any failure to do so
or delay in so doing.

(b) Proxies. In order to permit Agent to exercise the voting and other
consensual rights that it may be entitled to exercise pursuant hereto and to
receive all dividends and other distributions that it may be entitled to receive
hereunder, (i) each Grantor shall promptly execute and deliver (or cause to be
executed and delivered) to Agent all such proxies, dividend payment orders and
other instruments as Agent may from time to time reasonably request and
(ii) without limiting the effect of clause (i) above, such Grantor hereby grants
to Agent an irrevocable proxy to vote all or any part of the Pledged Collateral
and to exercise all other rights, powers, privileges and remedies to which a
holder of the Pledged Collateral would be entitled (including giving or
withholding written consents of shareholders, partners or members, as the case
may be, calling special meetings of shareholders, partners or members, as the
case may be, and voting at such meetings), which proxy shall be effective,
automatically and without the necessity of any action (including any transfer of
any Pledged Collateral on the record books of the issuer thereof) by any other
person (including the issuer of such Pledged Collateral or any officer or agent
thereof) during the continuance of an Event of Default and which proxy shall
only terminate upon the payment in full of the Secured Obligations (other than
contingent indemnification obligations to the extent no claim giving rise
thereto has been asserted).

(c) Authorization of Issuers. Each Grantor hereby expressly and irrevocably
authorizes and instructs, without any further instructions from such Grantor,
each issuer of any Pledged Collateral pledged hereunder by such Grantor to
(i) comply with any instruction received by it from Agent in writing that states
that an Event of Default is continuing and is otherwise in accordance with the
terms of this Agreement and each Grantor agrees that such issuer shall be fully
protected from Liabilities to such Grantor in so complying and (ii) unless
otherwise expressly permitted hereby or the Credit Agreement, pay any dividend
or make any other payment during the continuance of an Event of Default with
respect to the Pledged Collateral directly to Agent.

Section 6.4 Proceeds to be Turned over to and Held by Agent. Unless otherwise
expressly provided in the Credit Agreement or this Agreement, all proceeds of
any Collateral received by any Grantor hereunder in cash or Cash Equivalents
shall be held by such Grantor in trust for Agent and the other Secured Parties,
segregated from other funds of such Grantor, and shall, promptly upon receipt by
any Grantor, be turned over to Agent in the exact form received (with any
necessary endorsement). All such proceeds of Collateral and any other proceeds
of any Collateral received by Agent in cash or Cash Equivalents shall be held by
Agent in a Cash Collateral Account. All proceeds being held by Agent in a Cash
Collateral Account (or by such Grantor in trust for Agent) shall continue to be
held as collateral security for the Secured Obligations and shall not constitute
payment thereof until applied as provided in the Credit Agreement.

 

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Section 6.5 Sale of Pledged Collateral. (a) Each Grantor recognizes that Agent
may be unable to effect a public sale of any Pledged Collateral by reason of
certain prohibitions contained in the Securities Act and applicable state or
foreign securities laws or otherwise or may determine that a public sale is
impracticable, not desirable or not commercially reasonable and, accordingly,
may resort to one or more private sales thereof to a restricted group of
purchasers that shall be obliged to agree, among other things, to acquire such
securities for their own account for investment and not with a view to the
distribution or resale thereof. Each Grantor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances, agrees
that any such private sale shall be deemed to have been made in a commercially
reasonable manner. Agent shall be under no obligation to delay a sale of any
Pledged Collateral for the period of time necessary to permit the issuer thereof
to register such securities for public sale under the Securities Act or under
applicable state securities laws even if such issuer would agree to do so.

(b) Each Grantor agrees to use its best efforts to do or cause to be done all
such other acts as may be necessary to make such sale or sales of any portion of
the Pledged Collateral pursuant to Section 6.1 hereof and this Section 6.5 valid
and binding and in compliance with all applicable Requirements of Law. Each
Grantor further agrees that a breach of any covenant contained herein will cause
irreparable injury to Agent and other Secured Parties, that 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 herein shall be
specifically enforceable against such Grantor, and such Grantor hereby waives
and agrees not to assert any defense against an action for specific performance
of such covenants except for a defense that no Event of Default has occurred
under the Credit Agreement. Each Grantor waives any and all rights of
contribution or subrogation upon the sale or disposition of all or any portion
of the Pledged Collateral by Agent.

Section 6.6 Deficiency. Each Grantor shall remain liable for any deficiency if
the proceeds of any sale or other disposition of any Collateral are insufficient
to pay the Secured Obligations and the fees and disbursements of any attorney
employed by Agent or any other Secured Party to collect such deficiency.

ARTICLE VII

AGENT

Section 7.1 Agent’s Appointment as Attorney-in-Fact. (a) Each Grantor hereby
irrevocably constitutes and appoints Agent and any Related Person thereof, with
full power of substitution, as its true and lawful attorney-in-fact with full
irrevocable

 

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power and authority in the place and stead of such Grantor and in the name of
such Grantor or in its own name, for the purpose of carrying out the terms of
the Loan Documents, to take any appropriate action and to execute any document
or instrument that may be necessary or desirable to accomplish the purposes of
the Loan Documents, and, without limiting the generality of the foregoing, each
Grantor hereby gives Agent and its Related Persons the power and right, on
behalf of such Grantor, without notice to or assent by such Grantor, to do any
of the following when an Event of Default shall be continuing:

(i) in the name of such Grantor, in its own name or otherwise, take possession
of and indorse and collect any check, draft, note, acceptance or other
instrument for the payment of moneys due under any Account or general intangible
or with respect to any other Collateral and file any claim or take any other
action or proceeding in any court of law or equity or otherwise deemed
appropriate by Agent for the purpose of collecting any such moneys due under any
Account or general intangible or with respect to any other Collateral whenever
payable;

(ii) in the case of any Intellectual Property owned by or licensed to such
Grantor, execute, deliver and have recorded any document that Agent may request
to evidence, effect, publicize or record Agent’s security interest in such
Intellectual Property and the goodwill and general intangibles of such Grantor
relating thereto or represented thereby;

(iii) pay or discharge taxes and Liens levied or placed on or threatened against
any Collateral, effect any repair or pay any insurance called for by the terms
of the Credit Agreement (including all or any part of the premiums therefor and
the costs thereof);

(iv) execute, in connection with any sale provided for in Section 6.1 hereof or
6.5 hereof, any document to effect or otherwise necessary or appropriate in
relation to evidence the sale of any Collateral;

(v) (A) direct any party liable for any payment under any Collateral to make
payment of any moneys due or to become due thereunder directly to Agent or as
Agent shall direct, (B) ask or demand for, and collect and receive payment of
and receipt for, any moneys, claims and other amounts due or to become due at
any time in respect of or arising out of any Collateral, (C) sign and indorse
any invoice, freight or express bill, bill of lading, storage or warehouse
receipt, draft against debtors, assignment, verification, notice and other
document in connection with any Collateral, (D) commence and prosecute any suit,
action or proceeding at law or in equity in any court of competent jurisdiction
to collect any Collateral and to enforce any other right in respect of any
Collateral, (E) defend any actions, suits, proceedings, audits, claims, demands,
orders or disputes brought against such Grantor with respect to any Collateral,
(F) settle, compromise or adjust any such actions, suits, proceedings,

 

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audits, claims, demands, orders or disputes and, in connection therewith, give
such discharges or releases as Agent may deem appropriate, (G) assign any
Intellectual Property owned by such Grantor or any IP Licenses of such Grantor
throughout the world on such terms and conditions and in such manner as Agent
shall in its sole discretion determine, including the execution and filing of
any document necessary to effectuate or record such assignment and
(H) generally, sell, assign, convey, transfer or grant a Lien on, make any
Contractual Obligation with respect to and otherwise deal with, any Collateral
as fully and completely as though Agent were the absolute owner thereof for all
purposes and do, at Agent’s option, at any time or from time to time, all acts
and things that Agent deems necessary to protect, preserve or realize upon any
Collateral and the Secured Parties’ security interests therein and to effect the
intent of the Loan Documents, all as fully and effectively as such Grantor might
do; or

(vi) If any Grantor fails to perform or comply with any Contractual Obligation
contained herein, Agent, at its option, but without any obligation so to do, may
perform or comply, or otherwise cause performance or compliance, with such
Contractual Obligation.

(b) The out-of-pocket expenses of Agent incurred in connection with actions
undertaken as provided in this Section 7.1, together with interest thereon at a
rate set forth in Section 1.3(c) of the Credit Agreement, from the date of
payment by Agent to the date reimbursed by the relevant Grantor, shall be
payable by such Grantor to Agent on demand.

(c) Each Grantor hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue of this Section 7.1. All powers, authorizations and
agencies contained in this Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the security interests
created hereby are released.

Section 7.2 Authorization to File Financing Statements. Each Grantor authorizes
Agent and its Related Persons, at any time and from time to time, to file or
record financing statements, amendments thereto, and other filing or recording
documents or instruments with respect to any Collateral in such form and in such
offices as Agent reasonably determines appropriate to perfect, or continue or
maintain perfection of, the security interests of Agent under this Agreement,
and such financing statements and amendments may describe the Collateral covered
thereby as “all assets” or “all assets of the debtor” or words of similar
import. A photographic or other reproduction of this Agreement shall be
sufficient as a financing statement or other filing or recording document or
instrument for filing or recording in any jurisdiction. Such Grantor also hereby
ratifies its authorization for Agent to have filed any initial financing
statement or amendment thereto under the UCC (or other similar laws) in effect
in any jurisdiction if filed prior to the date hereof. Each Grantor hereby
(i) waives any right under the UCC or any other Requirement of Law to receive
notice and/or copies of any filed or recorded financing statements, amendments
thereto, continuations thereof or termination statements and (ii) releases and
excuses each Secured Party from any obligation under the UCC or any other
Requirement of Law to provide notice or a copy of any such filed or recorded
documents.

 

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Section 7.3 Authority of Agent. Each Grantor acknowledges that the rights and
responsibilities of Agent under this Agreement with respect to any action taken
by Agent or the exercise or non-exercise by Agent of any option, voting right,
request, judgment or other right or remedy provided for herein or resulting or
arising out of this Agreement shall, as between Agent and the other Secured
Parties, be governed by the Credit Agreement and by such other agreements with
respect thereto as may exist from time to time among them, but, as between Agent
and any Grantor, Agent shall be conclusively presumed to be acting as agent for
the Secured Parties with full and valid authority so to act or refrain from
acting, and no Grantor shall be under any obligation or entitlement to make any
inquiry respecting such authority.

Section 7.4 Duty; Obligations and Liabilities. (a) Duty of Agent. Agent’s sole
duty with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession shall be to deal with it in the same manner as
Agent deals with similar property for its own account. The powers conferred on
Agent hereunder are solely to protect Agent’s interest in the Collateral, for
the benefit of the Secured Parties, and shall not impose any duty upon Agent to
exercise any such powers. Agent shall be accountable only for amounts that it
receives as a result of the exercise of such powers, and neither it nor any of
its Related Persons shall be responsible to any Grantor for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct as
finally determined by a court of competent jurisdiction. In addition, Agent
shall not be liable or responsible for any loss or damage to any Collateral, or
for any diminution in the value thereof, by reason of the act or omission of any
warehousemen, carrier, forwarding agency, consignee or other bailee if such
Person has been selected by Agent in good faith.

(b) Obligations and Liabilities with respect to Collateral. No Secured Party and
no Related Person thereof shall be liable for failure to demand, collect or
realize upon any Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
any Grantor or any other Person or to take any other action whatsoever with
regard to any Collateral. The powers conferred on Agent hereunder shall not
impose any duty upon any other Secured Party to exercise any such powers. The
other Secured Parties shall be accountable only for amounts that they actually
receive as a result of the exercise of such powers, and neither they nor any of
their respective officers, directors, employees or agents shall be responsible
to any Grantor for any act or failure to act hereunder, except for their own
gross negligence or willful misconduct as finally determined by a court of
competent jurisdiction.

 

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ARTICLE VIII

MISCELLANEOUS

Section 8.1 Reinstatement. Each Grantor agrees that, if any payment made by any
Credit Party or other Person and applied to the Secured Obligations is at any
time annulled, avoided, set aside, rescinded, invalidated, declared to be
fraudulent or preferential or otherwise required to be refunded or repaid, or
the proceeds of any Collateral are required to be returned by any Secured Party
to such Credit Party, its estate, trustee, receiver or any other party,
including any Grantor, under any bankruptcy law, state or federal law, common
law or equitable cause, then, to the extent of such payment or repayment, any
Lien or other Collateral securing such liability shall be and remain in full
force and effect, as fully as if such payment had never been made. If, prior to
any of the foregoing, (a) any Lien or other Collateral securing such Grantor’s
liability hereunder shall have been released or terminated by virtue of the
foregoing or (b) any provision of the Guaranty hereunder shall have been
terminated, cancelled or surrendered, such Lien, other Collateral or provision
shall be reinstated in full force and effect and such prior release,
termination, cancellation or surrender shall not diminish, release, discharge,
impair or otherwise affect the obligations of any such Grantor in respect of any
Lien or other Collateral securing such obligation or the amount of such payment.

Section 8.2 Release of Collateral. (a) At the time provided in
Section 8.10(b)(iii) of the Credit Agreement, the Collateral shall be released
from the Lien created hereby and this Agreement and all obligations (other than
those expressly stated to survive such termination) of Agent and each Grantor
hereunder shall terminate, all without delivery of any instrument or performance
of any act by any party, and all rights to the Collateral shall revert to the
Grantors. Each Grantor is hereby authorized to file UCC amendments at such time
evidencing the termination of the Liens so released. At the request of any
Grantor following any such termination, Agent shall promptly deliver to such
Grantor any Collateral of such Grantor held by Agent hereunder and shall
promptly execute and deliver to such Grantor such documents as such Grantor
shall reasonably request to evidence such termination.

(b) If Agent shall be directed or permitted pursuant to Section 8.10(b) of the
Credit Agreement to release any Lien or any Collateral, such Collateral shall be
released from the Lien created hereby to the extent provided under, and subject
to the terms and conditions set forth in, Section 8.10(b) of the Credit
Agreement. In connection therewith, Agent, at the request of any Grantor, shall
promptly execute and deliver to such Grantor such documents as such Grantor
shall reasonably request to evidence such release.

(c) At the time provided in Section 8.10(b) of the Credit Agreement and at the
request of the Borrower Representative, a Grantor shall be automatically
released from its obligations hereunder in the event that all the Stock and
Stock Equivalents of such Grantor shall be sold to any Person that is not an
Affiliate of Holdings, a Borrower or the Subsidiaries of a Borrower in a
transaction permitted by the Loan Documents.

 

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Section 8.3 Independent Obligations. The obligations of each Grantor hereunder
are independent of and separate from the Secured Obligations and the Guaranteed
Obligations. If any Secured Obligation or Guaranteed Obligation is not paid when
due, or upon the occurrence and during the continuance of any Event of Default,
Agent may, at its sole election, proceed directly and at once, without notice,
against any Grantor and any Collateral to collect and recover the full amount of
any Secured Obligation or Guaranteed Obligation then due, without first
proceeding against any other Grantor, any other Credit Party or any other
Collateral and without first joining any other Grantor or any other Credit Party
in any proceeding.

Section 8.4 No Waiver by Course of Conduct. No Secured Party shall by any act
(except by a written instrument pursuant to Section 8.5), delay, indulgence,
omission or otherwise be deemed to have waived any right or remedy hereunder or
to have acquiesced in any Default or Event of Default. No failure to exercise,
nor any delay in exercising, on the part of any Secured Party, any right, power
or privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by any Secured Party of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy that such
Secured Party would otherwise have on any future occasion.

Section 8.5 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 9.1 of the Credit Agreement; provided, however, that
annexes to this Agreement may be supplemented (but no existing provisions may be
modified and no Collateral may be released) through Pledge Amendments and
Joinder Agreements, in substantially the form of Annex 1 and Annex 2 to this
Agreement, respectively, in each case duly executed by Agent and each Grantor
directly affected thereby.

Section 8.6 Additional Grantors; Additional Pledged Collateral. (a) Joinder
Agreements. If, at the option of a U.S. Borrower or as required pursuant to
Section 4.13 of the Credit Agreement, a U.S. Borrower shall cause any Subsidiary
that is not a Grantor to become a Grantor hereunder, such Subsidiary shall
execute and deliver to Agent a Joinder Agreement substantially in the form of
Annex 2 to this Agreement and shall thereafter for all purposes be a party
hereto and have the same rights, benefits and obligations as a Grantor party
hereto on the Closing Date.

(b) Pledge Amendments. To the extent any Pledged Collateral has not been
delivered as of the Closing Date, such Grantor shall deliver a pledge amendment
duly executed by the Grantor in substantially the form of Annex 1 to this
Agreement (each, a “Pledge Amendment”). Such Grantor authorizes Agent to attach
each Pledge Amendment to this Agreement.

 

32

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

Section 8.7 Notices. All notices, requests and demands to or upon Agent or any
Grantor hereunder shall be effected in the manner provided for in Section 9.2 of
the Credit Agreement; provided, however, that any such notice, request or demand
to or upon any Grantor shall be addressed to the Borrower Representative’s
notice address set forth in Section 9.2 of the Credit Agreement.

Section 8.8 Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of each Grantor and shall inure to the benefit of each
Secured Party and their successors and assigns; provided, however, that no
Grantor may assign, transfer or delegate any of its rights or obligations under
this Agreement without the prior written consent of Agent.

Section 8.9 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Signature pages may be
detached from multiple separate counterparts and attached to a single
counterpart. Delivery of an executed signature page of this Agreement by
facsimile transmission or by Electronic Transmission shall be as effective as
delivery of a manually executed counterpart hereof.

Section 8.10 Severability. Any provision of this Agreement being held illegal,
invalid or unenforceable in any jurisdiction shall not affect any part of such
provision not held illegal, invalid or unenforceable, any other provision of
this Agreement or any part of such provision in any other jurisdiction.

Section 8.11 Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.

Section 8.12 Waiver of Jury Trial. THE PARTIES HERETO, TO THE EXTENT PERMITTED
BY LAW, WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING
ARISING OUT OF, IN CONNECTION WITH OR RELATING TO,, THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS AND ANY OTHER TRANSACTION CONTEMPLATED HEREBY OR THEREBY. THIS
WAIVER APPLIES TO ANY ACTION, SUIT OR PROCEEDING WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE. EACH GRANTOR AGREES TO BE BOUND BY THE PROVISIONS OF
SECTIONS 9.18(b) and 9.18(c) OF THE CREDIT AGREEMENT.

Section 8.13 ULC Limitation. Notwithstanding any provisions to the contrary
contained in this Agreement, the Credit Agreement or any other document or
agreement among all or some of the parties hereto, each Grantor is as of the
date of this Agreement the sole registered and beneficial owner of all Pledged
ULC Shares more particularly described in Schedule 3 to this Agreement and will
remain so until such time as such Pledged ULC Shares are fully and effectively
transferred into the name of the Agent or

 

33

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

any other person on the books and records of such ULC. Nothing in this
Agreement, the Credit Agreement or any other document or agreement delivered
among all or some of the parties hereto is intended to or shall constitute the
Agent or any person other than a Grantor to be a member or shareholder of any
ULC until such time as written notice is given by Agent or such other person to
the applicable Grantor and all further steps are taken so as to register the
Agent or other person as holder of the Pledged ULC Shares. The granting of the
pledge and security interest pursuant to Article III does not make the Agent a
successor to any Grantor as a member or shareholder of any ULC, and neither the
Agent nor any of its respective successors or assigns hereunder shall be deemed
to become a member or shareholder of any ULC by accepting this Agreement or
exercising any right granted herein unless and until such time, if any, when the
Agent or any successor or assign expressly becomes a registered member or
shareholder of any ULC. Each Grantor shall be entitled to receive and retain for
its own account any dividends or other distributions if any, in respect of the
Collateral, and shall have the right to vote such Pledged ULC Shares and to
control the direction, management and policies of the ULC issuing such Pledged
ULC Shares to the same extent as such Grantor would if such Pledged ULC Shares
were not pledged to the Agent or to any other person pursuant hereto. To the
extent any provision hereof would have the effect of constituting the Agent to
be a member or shareholder of any ULC prior to such time, such provision shall
be severed herefrom and ineffective with respect to the relevant Pledged ULC
Shares without otherwise invalidating or rendering unenforceable this Agreement
or invalidating or rendering unenforceable such provision insofar as it relates
to Collateral other than Pledged ULC Shares. Notwithstanding anything herein to
the contrary (except to the extent, if any, that the Agent or any of its
successors or assigns hereafter expressly becomes a registered member or
shareholder of any ULC), neither the Agent nor any of its respective successors
or assigns shall be deemed to have assumed or otherwise become liable for any
debts or obligations of any ULC. Except upon the exercise by the Agent or other
persons of rights to sell or otherwise dispose of Pledged ULC Shares or other
remedies following the occurrence and during the continuance of an Event of
Default, each Grantor shall not cause or permit, or enable any ULC in which it
holds Pledged ULC Shares to cause or permit, the Agent to: (a) be registered as
member or shareholder of such ULC; (b) have any notation entered in its favour
in the share register of such ULC; (c) be held out as member or shareholder of
such ULC; (d) receive, directly or indirectly, any dividends, property or other
distributions from such ULC by reason of the Agent or other person holding a
security interest in the Pledged ULC Shares; or (e) act as a member or
shareholder of such ULC, or exercise any rights of a member or shareholder of
such ULC, including the right to attend a meeting of such ULC or vote the shares
of such ULC.

[Remainder of page intentionally blank; signature pages follow.]

 

34

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IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be duly
executed and delivered as of the date first above written.

 

REAL ALLOY INTERMEDIATE HOLDING, LLC,

as Grantor

By:   /s/ Kyle Ross Name:   Kyle Ross Title:   Manager  

REAL ALLOY HOLDING, INC.,

as Grantor

By:  

/s/ Kyle Ross

Name:   Kyle Ross Title:   Assistant Secretary  

ALERIS RECYCLING, INC.,

as Grantor

By:  

/s/ Kyle Ross

Name:   Kyle Ross Title:   Assistant Secretary Effective upon the change of name
from “Aleris Recycling, Inc.” to “Real Alloy Recycling, Inc.”:

REAL ALLOY RECYCLING, INC.,

as Grantor

By:  

/s/ Kyle Ross

Name:   Kyle Ross Title:   Assistant Secretary

U.S. REVOLVING GUARANTY AND SECURITY AGREEMENT

SIGNATURE PAGE

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

ALERIS RECYCLING BENS RUN, LLC,

as Grantor

By:

/s/ Kyle Ross

Name: Kyle Ross Title: Assistant Secretary

 

Effective upon the change of name from “Aleris Recycling Bens Run, LLC.” to
“Real Alloy Bens Run, LLC”:

 

REAL ALLOY BENS RUN, LLC,

as Grantor

By:

/s/ Kyle Ross

Name: Kyle Ross Title: Assistant Secretary

 

ALERIS SPECIALTY PRODUCTS, INC.,

as Grantor

By:

/s/ Kyle Ross

Name: Kyle Ross Title: Assistant Secretary

 

Effective upon the change of name from “Aleris Specialty Products, Inc.” to
“Real Alloy Specialty Products, Inc.”:

 

REAL ALLOY SPECIALTY PRODUCTS, INC.,

as Grantor

By:

/s/ Kyle Ross

Name: Kyle Ross Title: Assistant Secretary

 

U.S. REVOLVING GUARANTY AND SECURITY AGREEMENT

SIGNATURE PAGE

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

ALERIS SPECIFICATION ALLOYS, INC.,

as Grantor

By:

/s/ Kyle Ross

Name: Kyle Ross Title: Assistant Secretary

 

Effective upon the change of name from “Aleris Specification Alloys, Inc.” to
“Real Alloy Specification, Inc.”:

 

REAL ALLOY SPECIFICATION, INC.,

as Grantor

By:

/s/ Kyle Ross

Name: Kyle Ross Title: Assistant Secretary

 

ETS SCHAEFER, LLC,

as Grantor

By:

/s/ Kyle Ross

Name: Kyle Ross Title: Assistant Secretary

 

RA MEXICO HOLDING, LLC,

as Grantor

By:

/s/ W. Christopher Manderson

Name: W. Christopher Manderson Title: Secretary

 

U.S. REVOLVING GUARANTY AND SECURITY AGREEMENT

SIGNATURE PAGE

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

ACCEPTED AND AGREED

as of the date first above written:

 

GENERAL ELECTRIC CAPITAL CORPORATION,

as Agent

By: /s/ Michael R. Todorow Name: Michael R. Todorow Title: Its Duly Authorized
Signatory

 

U.S. REVOLVING GUARANTY AND SECURITY AGREEMENT

SIGNATURE PAGE

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

ANNEX 1

TO

U.S. REVOLVING GUARANTY AND SECURITY AGREEMENT

FORM OF PLEDGE AMENDMENT

This Pledge Amendment (this “Pledge Amendment”), dated as of             ,
20    , is delivered pursuant to Section 8.6 of the U.S. Revolving Guaranty and
Security Agreement, dated as of Aleris Recycling, Inc., a Delaware corporation,
to be known as Real Alloy Recycling, Inc., a Delaware corporation, on the
Closing Date, the undersigned Grantor and the other Persons from time to time
party thereto as Grantors in favor of GENERAL ELECTRIC CAPITAL CORPORATION, a
Delaware corporation, in its capacity as Agent for the Secured Parties referred
to therein (as such agreement may be amended, restated, supplemented or
otherwise modified from time to time, the “Guaranty and Security Agreement”).
Capitalized terms used herein without definition are used as defined in the
Guaranty and Security Agreement.

The undersigned hereby agrees that this Pledge Amendment may be attached to the
Guaranty and Security Agreement and that the Pledged Collateral listed on
Annex 1-A to this Pledge Amendment shall be and become part of the Collateral
referred to in the Guaranty and Security Agreement and shall secure all Secured
Obligations of the undersigned.

The undersigned hereby represents and warrants that each of the representations
and warranties contained in Sections 4.1, 4.2, 4.3 and 4.8 of the Guaranty and
Security Agreement is true and correct on and as of the date hereof as if made
on and as of such date.

THIS PLEDGE AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL
BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.

IN WITNESS WHEREOF, the undersigned has caused this Pledge Amendment to be duly
executed and delivered as of the date first above written.

 

[GRANTOR] By:  

Name:

Title:

 

 

To be used for pledge of Additional Pledged Collateral by existing Grantor.

 

A1-1

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

Annex 1-A

PLEDGED STOCK

 

ISSUER

  

CLASS

  

CERTIFICATE

NO(S).

  

PAR VALUE

  

NUMBER OF

SHARES,

UNITS OR

INTERESTS

PLEDGED DEBT INSTRUMENTS

 

 

ISSUER

  

DESCRIPTION OF

DEBT

  

CERTIFICATE

NO(S).

  

FINAL

MATURITY

  

PRINCIPAL

AMOUNT

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

ACKNOWLEDGED AND AGREED

as of the date first above written:

GENERAL ELECTRIC CAPITAL CORPORATION,

as Agent

 

By:     Name: Title: Its Duly Authorized Signatory

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

ANNEX 2

TO

U.S. REVOLVING GUARANTY AND SECURITY AGREEMENT

FORM OF JOINDER AGREEMENT

This JOINDER AGREEMENT (this “Joinder Agreement”), dated as of             ,
20    , is delivered pursuant to Section 8.6 of the U.S. Revolving Guaranty and
Security Agreement, dated as of February 27, 2015, by Aleris Recycling, Inc., a
Delaware corporation, to be known as Real Alloy Recycling, Inc., a Delaware
corporation, on the Closing Date, the undersigned Grantor and the other Persons
from time to time party thereto as Grantors in favor of GENERAL ELECTRIC CAPITAL
CORPORATION, a Delaware corporation, in its capacity as Agent for the Secured
Parties referred to therein (as such agreement may be amended, restated,
supplemented or otherwise modified from time to time, the “Guaranty and Security
Agreement”). Capitalized terms used herein without definition are used as
defined in the Guaranty and Security Agreement.

By executing and delivering this Joinder Agreement, the undersigned, as provided
in Section 8.6 of the Guaranty and Security Agreement, hereby becomes a party to
the Guaranty and Security Agreement as a Grantor thereunder with the same force
and effect as if originally named as a Grantor therein and, without limiting the
generality of the foregoing, as collateral security for the prompt and complete
payment and performance when due (whether at stated maturity, by acceleration or
otherwise) of the Secured Obligations of the undersigned, hereby mortgages,
pledges and hypothecates to Agent, for the benefit of the Secured Parties, and
grants to Agent, for the benefit of the Secured Parties, a Lien on and security
interest in, all of its right, title and interest in, to and under the
Collateral of the undersigned and expressly assumes all obligations and
liabilities of a Grantor thereunder. The undersigned hereby agrees to be bound
as a Grantor for the purposes of the Guaranty and Security Agreement.

The information set forth in Annex 1-A to this Agreement is hereby added to the
information set forth in Schedules 1, 2, and 3 to the Guaranty and Security
Agreement and Schedules 3.9, 3.16, 3.20, 3.21 and 3.22 to the Credit Agreement.
By acknowledging and agreeing to this Joinder Agreement, the undersigned hereby
agree that this Joinder Agreement may be attached to the Guaranty and Security
Agreement and that the Pledged Collateral listed on Annex 1-A to this Joinder
Amendment shall be and become part of the Collateral referred to in the Guaranty
and Security Agreement and shall secure all Secured Obligations of the
undersigned.

The undersigned hereby represents and warrants that each of the representations
and warranties contained in Article IV of the Guaranty and Security Agreement
applicable to it is true and correct on and as of the date hereof as if made on
and as of such date.

THIS JOINDER AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO
SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK.

 

A2-1

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

IN WITNESS WHEREOF, THE UNDERSIGNED HAS CAUSED THIS JOINDER AGREEMENT TO BE DULY
EXECUTED AND DELIVERED AS OF THE DATE FIRST ABOVE WRITTEN.

 

[ADDITIONAL GRANTOR] By:  

Name:

Title:

 

A2-2

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

ACKNOWLEDGED AND AGREED

as of the date first above written:

 

[EACH GRANTOR PLEDGING ADDITIONAL COLLATERAL]

By:    

Name:

Title:

 

GENERAL ELECTRIC CAPITAL CORPORATION,

as Agent

By:     Name: Title: Its Duly Authorized Signatory

 

A2-3

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

ANNEX 3

TO

U.S. REVOLVING GUARANTY AND SECURITY AGREEMENT

FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT

THIS [COPYRIGHT] [PATENT] [TRADEMARK] SECURITY AGREEMENT, dated as of
            , 20    , is made by each of the entities listed on the signature
pages hereof (each a “Grantor” and, collectively, the “Grantors”), in favor of
General Electric Capital Corporation (“GE Capital”), as administrative agent (in
such capacity, together with its successors and permitted assigns, “Agent”) for
the Secured Parties (as defined in the Credit Agreement referred to below).

W I T N E S S E T H:

WHEREAS, pursuant to the Revolving Credit Agreement, dated as of February 27,
2015 (as the same may be amended, restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”), by and among Aleris Recycling, Inc.,
a Delaware corporation, to be known as Real Alloy Recycling, Inc., a Delaware
corporation, on the Closing Date, the other Credit Parties, the Lenders and the
L/C Issuers from time to time party thereto and GENERAL ELECTRIC CAPITAL
CORPORATION, a Delaware corporation, as Agent, the Lenders and the L/C Issuers
have severally agreed to make extensions of credit to the Borrowers upon the
terms and subject to the conditions set forth therein;

WHEREAS, each Grantor has agreed, pursuant to that certain U.S. Revolving
Guaranty and Security Agreement dated as of February 27, 2015 in favor of Agent
(as such agreement may be amended, restated, supplemented or otherwise modified
from time to time, the “Guaranty and Security Agreement”), to guarantee the
Obligations (as defined in the Credit Agreement) of each Borrower; and

WHEREAS, all of the Grantors are party to the Guaranty and Security Agreement
pursuant to which the Grantors are required to execute and deliver this
[Copyright] [Patent] [Trademark] Security Agreement;

NOW, THEREFORE, in consideration of the premises and to induce the Lenders, the
L/C Issuers and Agent to enter into the Credit Agreement and to induce the
Lenders and the L/C Issuers to make their respective extensions of credit to the
Borrowers thereunder, each Grantor hereby agrees with Agent as follows:

Section 1. Defined Terms. Capitalized terms used herein without definition are
used as defined in the Guaranty and Security Agreement.

Section 2. Grant of Security Interest in [Copyright] [Trademark] [Patent]
Collateral. Each Grantor, as collateral security for the prompt and complete
payment and performance when due (whether at stated maturity, by acceleration or
otherwise) of the Secured Obligations of such Grantor, hereby mortgages, pledges
and hypothecates to Agent for the benefit of the Secured Parties, and grants to
Agent for the benefit of the Secured Parties a Lien on and security interest in,
all of its right, title and interest in, to and under the following Collateral
of such Grantor (the “[Copyright] [Patent] [Trademark] Collateral”):

 

A3-1

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

(a) [all of its Copyrights and all IP Licenses providing for the grant by or to
such Grantor of any right under any Copyright, including, without limitation,
those referred to on Schedule 1 hereto;

(b) all renewals, reversions and extensions of the foregoing; and

(c) all income, royalties, proceeds and Liabilities at any time due or payable
or asserted under and with respect to any of the foregoing, including, without
limitation, all rights to sue and recover at law or in equity for any past,
present and future infringement, misappropriation, dilution, violation or other
impairment thereof.]

or

(a) [all of its Patents and all IP Licenses providing for the grant by or to
such Grantor of any right under any Patent, including, without limitation, those
referred to on Schedule 1 hereto;

(b) all reissues, reexaminations, continuations, continuations-in-part,
divisionals, renewals and extensions of the foregoing; and

(c) all income, royalties, proceeds and Liabilities at any time due or payable
or asserted under and with respect to any of the foregoing, including, without
limitation, all rights to sue and recover at law or in equity for any past,
present and future infringement, misappropriation, dilution, violation or other
impairment thereof.]

or

(a) [all of its Trademarks and all IP Licenses providing for the grant by or to
such Grantor of any right under any Trademark, including, without limitation,
those referred to on Schedule 1 hereto;

(b) all renewals and extensions of the foregoing;

(c) all goodwill of the business connected with the use of, and symbolized by,
each such Trademark; and

(d) all income, royalties, proceeds and Liabilities at any time due or payable
or asserted under and with respect to any of the foregoing, including, without
limitation, all rights to sue and recover at law or in equity for any past,
present and future infringement, misappropriation, dilution, violation or other
impairment thereof.]

Section 3. Guaranty and Security Agreement. The security interest granted
pursuant to this [Copyright] [Patent] [Trademark] Security Agreement is granted
in conjunction with the security interest granted to Agent pursuant to the
Guaranty and

 

A3-2

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

Security Agreement and each Grantor hereby acknowledges and agrees that the
rights and remedies of Agent with respect to the security interest in the
[Copyright] [Patent] [Trademark] Collateral made and granted hereby are more
fully set forth in the Guaranty and Security Agreement, the terms and provisions
of which are incorporated by reference herein as if fully set forth herein.

Section 4. Grantor Remains Liable. Each Grantor hereby agrees that, anything
herein to the contrary notwithstanding, such Grantor shall remain solely
responsible for the prosecution, defense, enforcement or any other necessary or
desirable actions in connection with their [Copyrights] [Patents] [Trademarks]
and IP Licenses subject to a security interest hereunder.

Section 5. Counterparts. This [Copyright] [Patent] [Trademark] Security
Agreement may be executed in any number of counterparts and by different parties
in separate counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same
agreement. Signature pages may be detached from multiple separate counterparts
and attached to a single counterpart.

Section 6. Governing Law. THIS [COPYRIGHT] [PATENT] [TRADEMARK] SECURITY
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK.

[Remainder of page intentionally blank; signature pages follow.]

 

A3-3

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

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

 

[GRANTOR]

as Grantor

By:      

Name:

Title:

ACCEPTED AND AGREED

as of the date first above written:

GENERAL ELECTRIC CAPITAL CORPORATION,

as Agent

By:    

Name:

Title: Its Duly Authorized Signatory

[SIGNATURE PAGE TO [COPYRIGHT] [PATENT] [TRADEMARK] SECURITY AGREEMENT]

 

A3-4

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

ACKNOWLEDGMENT OF GRANTOR

 

State of                                           ) ) ss.
County of                                       )

On this             day of             , 20            before me personally
appeared             , proved to me on the basis of satisfactory evidence to be
the person who executed the foregoing instrument on behalf of             , who
being by me duly sworn did depose and say that he is an authorized officer of
said corporation, that the said instrument was signed on behalf of said
corporation as authorized by its Board of Directors and that he acknowledged
said instrument to be the free act and deed of said corporation.

 

  Notary Public

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

SCHEDULE 1

TO

[COPYRIGHT] [PATENT] [TRADEMARK] SECURITY AGREEMENT

[Copyright] [Patent] [Trademark] Registrations

 

1. REGISTERED [COPYRIGHTS] [PATENTS] [TRADEMARKS]

[Include Registration Number and Date]

 

2. [COPYRIGHT] [PATENT] [TRADEMARK] APPLICATIONS

[Include Application Number and Date]

 

3. IP LICENSES

[Include complete legal description of agreement (name of agreement, parties and
date)]

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

SCHEDULE 1

TO

U.S. REVOLVING GUARANTY AND SECURITY AGREEMENT

Commercial Tort Claims

None.

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

SCHEDULE 2

TO

U.S. REVOLVING GUARANTY AND SECURITY AGREEMENT

Filings

 

DEBTOR

   FILING OFFICE

Real Alloy Intermediate Holding, LLC

   DE - SOS

Real Alloy Holding, Inc.

   DE - SOS

RA Mexico Holding, LLC

   DE - SOS

Aleris Recycling, Inc.

   DE - SOS

Aleris Specialty Products, Inc.

   DE - SOS

ETS Schaefer, LLC

   OH - SOS

Aleris Specification Alloys, Inc.

   DE - SOS

Aleris Recycling Bens Run, LLC

   DE - SOS

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

SCHEDULE 3

TO

U.S. REVOLVING GUARANTY AND SECURITY AGREEMENT

Pledged Collateral

Pledged Certificated Stock and Pledged Uncertificated Stock:

 

Debtor/Grantor

  

Issuer

   # of
Shares
Owned   Total Shares
Outstanding   

% of Interest

Pledged

Real Alloy Intermediate Holding, LLC

   Real Alloy Holding, Inc.    1,000   1,000    100%

Real Alloy Intermediate Holding, LLC

   SGH Escrow Corporation    1,000   1,000    100%

Real Alloy Holding, Inc.

   Aleris Recycling, Inc.    10   10    100%

Real Alloy Holding, Inc.

   Real Alloy Canada Company    100   100    65% to secure the Obligations;
remaining 35% to secure the Canadian Obligations

Real Alloy Holding, Inc.

   Evergreen Holding Germany GmbH*    100%
interest   N/A    65% to secure the Obligations; remaining 35% to secure the
Canadian Obligations

Real Alloy Holding, Inc.

   Real Alloy UK Holdco Ltd.    1,000   1,000    65% to secure the Obligations;
remaining 35% to secure the Canadian Obligations

Real Alloy Holding, Inc.

   RA Mexico Holding, LLC    100%
interest   N/A    100%

Real Alloy Holding, Inc.

   Real Alloy Mexico Holdco S. de R.L. de C.V.*    99.9999%
interest   N/A    65% to secure the Obligations; remaining 34.9999% to secure
the Canadian Obligations

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

Debtor/Grantor

  

Issuer

   # of
Shares
Owned   Total Shares
Outstanding   

% of Interest

Pledged

RA Mexico Holding, LLC

   Real Alloy Mexico Holdco S. de R.L. de C.V.*    0.0001%
interest   N/A    0.0001% to secure the Canadian Obligations

Aleris Recycling, Inc.

   Aleris Recycling Bens Run, LLC    100%
interest   N/A    100%

Aleris Recycling, Inc.

   Aleris Specialty Products, Inc.    10   10    100%

Aleris Recycling, Inc.

   Aleris Specification Alloys, Inc.    10   10    100%

Aleris Recycling, Inc.

   ETS Schaefer, LLC    100%
interest   N/A    100%

 

* Pledged Uncertificated Stock

Pledged Debt Instruments:

Master Intercompany Subordinated Note among the Credit Parties and their
Subsidiaries, dated as of February 27, 2015

The following promissory notes, each dated as of February 27, 2015:

 

  (a) Real Alloy UK Holdco Ltd. (Maker) on behalf of Real Alloy Holding, Inc.
(Holder)

 

  (b) Real Alloy Norway Holding AS (Maker) on behalf of Real Alloy Holding, Inc.
(Holder)

 

  (c) Realallholding S.A. de C.V. SOFOM ENR (Maker) on behalf of Real Alloy
Holding, Inc. (Holder)

 

  (d) Real Alloy Canada Company (Maker) on behalf of Real Alloy Holding, Inc.
(Holder)

 

  (e) Evergreen Holding Germany GmbH (Maker) on behalf of Real Alloy Holding,
Inc. (Holder)