EXHIBIT 10.24

 

CANADIAN SECURITY AGREEMENT dated as of February 17, 2004, among UNIPLAST
INDUSTRIES CO., a Nova Scotia company (the “Canadian Subsidiary Borrower”), each
other subsidiary of Pliant Corporation, a Utah corporation (the “Parent
Borrower”), organized under the laws of Canada or any province thereof listed on
Schedule I hereto (each such subsidiary individually a “Guarantor” and
collectively, the “Guarantors”; the Guarantors and the Canadian Subsidiary
Borrower are referred to collectively herein as the “Grantors”) and DEUTSCHE
BANK TRUST COMPANY AMERICAS, a New York banking corporation, as collateral agent
(in such capacity, the “Collateral Agent”) for the Secured Parties (as defined
herein).

 

Reference is made to (a) the Credit Agreement dated as of February 17, 2004 (as
amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among the Parent Borrower, the subsidiaries of the Parent Borrower
party thereto as domestic subsidiary borrowers (the “Domestic Subsidiary
Borrowers”), the Canadian Subsidiary Borrower (together with the Parent Borrower
and the Domestic Subsidiary Borrowers, the “Borrowers”), the lenders from time
to time party thereto (the “Lenders”), the Collateral Agent, Credit Suisse First
Boston, acting through its Cayman Islands Branch, as administrative agent (the
“Administrative Agent”), General Electric Capital Corporation, as co-collateral
agent (the “Co-Collateral Agent”), and JPMorgan Chase Bank, as syndication agent
(together with the Administrative Agent, the Collateral Agent and the
Co-Collateral Agent, the “Agents”), and (b) the Guarantee Agreement dated as of
February 17, 2004 (as amended, supplemented or otherwise modified from time to
time, the “Guarantee Agreement”), among, inter alia, the Parent Borrower, the
Canadian Subsidiary Borrower and the Administrative Agent.

 

The Collateral Agent and the trustees for the holders of the Senior Secured
Discount Notes and the Existing Senior Secured Notes have entered into an
Intercreditor Agreement dated as of February 17, 2004 (the “Intercreditor
Agreement”), which confirms the relative priority of the security interests of
the Secured Parties, the holders of the Senior Secured Discount Notes and the
holders of the Existing Senior Secured Notes in the Collateral.

 

The Lenders have agreed to make Loans to the Borrowers, and the Issuing Bank has
agreed to issue Letters of Credit for the account of the Parent Borrower, in an
amount up to $100,000,000, pursuant to, and upon the terms and subject to the
conditions specified in, the Credit Agreement.  The Guarantors have agreed to
guarantee, among other things, all the obligations of the Borrowers under the
Credit Agreement.  The Canadian Subsidiary Borrower has agreed to guarantee,
among other things, all the obligations of the Parent Borrower and the Domestic
Subsidiary Borrowers under the Credit Agreement.  The obligations of the Lenders
to make Loans and of the Issuing Bank to issue Letters of Credit under the
Credit Agreement are conditioned upon, among other things, the execution and
delivery by the Grantors of an agreement in the form hereof to secure (a) the
due and punctual payment by the Borrowers of (i) the principal of and premium,
if any, and interest (including interest accruing during the pendency of any

 

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bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding) on the Loans, when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment,
or otherwise, (ii) each payment required to be made by the Borrowers under the
Credit Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral and (iii) all other monetary obligations,
including fees, costs, expenses and indemnities, whether primary, secondary,
direct, contingent, fixed or otherwise (including monetary obligations incurred
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), of
each Loan Party to the Secured Parties under the Credit Agreement and the other
Loan Documents, (b) the due and punctual performance of all covenants,
agreements, obligations and liabilities of each Loan Party under or pursuant to
the Credit Agreement and the other Loan Documents, (c) the due and punctual
payment and performance of all obligations of each Loan Party, monetary or
otherwise, under each Swap Agreement that (i) is effective on the Effective Date
with a counterparty that is a Lender (or an Affiliate of a Lender) as of the
Effective Date or (ii) is entered into after the Effective Date with any
counterparty that is a Lender (or an Affiliate thereof) at the time such Swap
Agreement is entered into and (d) the due and punctual payment and performance
of all monetary obligations of each Loan Party in respect of overdrafts and
related liabilities owed to any of the Lenders (or any Affiliates thereof) or
Wachovia Bank N.A. (or any Affiliates thereof) arising from treasury, depositary
and cash management services or in connection with any automated clearinghouse
transfers of funds (all the monetary and other obligations described in the
preceding clauses (a) through (d) being collectively called the “Obligations”).

 

Accordingly, each of the Grantors and the Collateral Agent, on behalf of itself
and each Secured Party (and each of their respective successors or assigns),
hereby agrees as follows:

 

ARTICLE I

 

DEFINITIONS

 

SECTION 1.01.  DEFINITION OF TERMS USED HEREIN. UNLESS THE CONTEXT OTHERWISE
REQUIRES, ALL CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN SHALL HAVE THE
MEANINGS SET FORTH IN THE CREDIT AGREEMENT.

 

SECTION 1.02.  DEFINITION OF CERTAIN TERMS USED HEREIN.  AS USED HEREIN, THE
FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS:

 

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

 

“Accounts” shall mean any and all right, title and interest of any Grantor to
payment for goods and services sold or leased, including any such right
evidenced by chattel paper, whether due or to become due, whether or not it has
been earned by

 

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performance, and whether now or hereafter acquired or arising in the future,
including accounts receivable from Affiliates of the Grantors.

 

“Accounts Receivable” shall mean all Accounts and all right, title and interest
in any returned goods, together with all rights, titles, securities and
guarantees with respect thereto, including any rights to stoppage in transit,
replevin, reclamation and resales, and all related security interests, liens and
pledges, whether voluntary or involuntary, in each case whether now existing or
owned or hereafter arising or acquired.

 

“Cash Collection Period” means the period commencing on the first Business Day
after the occurrence of a Cash Collection Trigger Event and ending on the date
this Agreement is terminated in accordance with Section 8.14.

 

“Cash Collection Trigger Event” shall mean that, on three consecutive Business
Days, the Availability Amount at any time during the day is less than
U.S.$35,000,000.

 

“Cash Concentration Account” means, with respect to any Grantor, the cash
concentration account maintained by such Grantor with the Collateral Agent, to
which such Grantor will cause to be transferred, on each Business Day during the
Cash Collection Period, amounts deposited in the Collection Deposit Accounts on
such Business Day, as and to the extent provided in Section 5.01.

 

“Chattel Paper” shall mean all “chattel paper” as such term is defined in the
PPSA.

 

“Collateral” means all of the present and future undertaking, personal property
(including any personal property that may be described in any Schedule to this
Agreement or any schedules, documents or listings that a Grantor may from time
to time sign and provide to the Collateral Agent in connection with this
Agreement) of the Grantor (including all such property at any time owned, leased
or licensed by the Grantor, or in which the Grantor at any time has any interest
or to which the Grantor is or may at any time become entitled) and all Proceeds
thereof, wherever located including, without limiting the generality of the
foregoing, the following:

 

ALL ACCOUNTS RECEIVABLE;

 

ALL CHATTEL PAPER;

 

ALL DOCUMENTS;

 

ALL EQUIPMENT;

 

ALL FIXTURES;

 

ALL GENERAL INTANGIBLES;

 

ALL INSTRUMENTS;

 

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ALL INVENTORY;

 

ALL MONEY, CASH AND CASH ACCOUNTS;

 

ALL INVESTMENT PROPERTY;

 

ALL BOOKS AND RECORDS PERTAINING TO THE COLLATERAL;

 

ALL LETTER-OF-CREDIT RIGHTS; AND

 

TO THE EXTENT NOT OTHERWISE INCLUDED, ALL PROCEEDS AND PRODUCTS OF ANY AND ALL
OF THE FOREGOING.

 

“Collateral Proceeds Account” means an account maintained by and in the name of
the Administrative Agent, for purposes of this Agreement and the Credit
Agreement.

 

“Collection Deposit Accounts” means the respective collection accounts
maintained by the Collection Deposit Banks pursuant to the Collection Deposit
Letter Agreements and into which the Grantors will deposit or cause to be
deposited all Daily Receipts, as and to the extent provided in Section  5.01.

 

“Collection Deposit Bank” means, at any time, any financial institution then
serving as a “Collection Deposit Bank” as provided in Section 5.01.

 

“Collection Deposit Letter Agreement” means an agreement among the applicable
Grantor, a Collection Deposit Bank and the Collateral Agent, in form and
substance reasonably satisfactory to the Collateral Agent, pursuant to which
such Collection Deposit Bank shall maintain one or more Collection Deposit
Accounts, as such Collection Deposit Letter Agreement may be amended, modified
or supplemented from time to time.

 

“Copyright License”  shall mean any written agreement, now or hereafter in
effect, granting any right to any third party under any Copyright now or
hereafter owned by any Grantor or which such Grantor otherwise has the right to
license, or granting any right to such Grantor under any Copyright now or
hereafter owned by any third party, and all rights of such Grantor under any
such agreement.

 

“Copyrights” shall mean all of the following now owned or hereafter acquired by
any Person:  (a) all copyright rights in any work subject to the copyright laws
of the United States or Canada, whether as author, assignee, transferee or
otherwise, and (b) all registrations and applications for registration of any
such copyright in the United States or Canada, including registrations,
recordings, supplemental registrations and pending applications for registration
in the United States Copyright Office or the Canadian Intellectual Property
Office, including those listed on Schedule II.

 

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

 

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“Credit Card Payments” means all payments received or receivable by or on behalf
of any Grantor in respect of sales of Inventory paid for by credit card charges,
including payments from financial institutions that process credit card
transactions for any of the Grantors.

 

“Daily Receipts” means all amounts received by the Grantors, whether in the form
of cash, checks, any moneys received or receivable in respect of charges made by
means of credit cards, and other negotiable instruments, in each case as a
result of the sale of Inventory or in respect of Accounts Receivable.

 

“Documents” shall mean all instruments, files, records, ledger sheets and
documents covering or relating to any of the Collateral.

 

“Entitlement Holder” shall mean a Person identified in the records of a Security
Intermediary as the Person having a Security Entitlement against the Security
Intermediary.

 

“Equipment” shall mean all “equipment” as such term is defined in the PPSA, and
in any event, all equipment, furniture, fixtures and furnishings, including
tools, parts and supplies of every kind and description, and all improvements,
accessions or appurtenances thereto, that are now or hereafter owned by any
Grantor.

 

“Financial Asset” shall mean (a) a Security, (b) an obligation of a Person or a
share, participation or other interest in a Person or in property or an
enterprise of a Person,  which is, or is of a type, dealt with in or traded on
financial markets, or which is recognized in any area in which it is issued or
dealt in as a medium for investment or (c) any property that is held by a
Security Intermediary for another Person in a Securities Account.  As the
context requires, the term Financial Asset shall mean either the interest itself
or the means by which a Person’s claim to it is evidenced, including a
certificated or uncertificated Security, a certificate representing a Security
or a Security Entitlement.

 

“General Funds Account” means an account maintained by the Parent Borrower, to
which the Administrative Agent will, subject to the terms and conditions set
forth herein, cause to be transferred certain amounts on deposit in the
Collateral Proceeds Account.

 

“General Intangibles” shall mean all “intangibles” as such term is defined in
the PPSA, and in any event, with respect to any Grantor, all choses in action
and causes of action and all other assignable intangible personal property of
any Grantor of every kind and nature (other than Accounts Receivable) now owned
or hereafter acquired by any Grantor, including corporate or other business
records, indemnification claims, contract rights (including rights under leases,
whether entered into as lessor or lessee, Swap Agreements and other agreements
but excluding contract rights in contracts which contain an enforceable
prohibition on assignment or the granting of a security interest), Intellectual
Property, goodwill, registrations, franchises, tax refund claims and any letter
of credit, guarantee, claim, security interest or other security held by or
granted to any Grantor to secure payment by an Account Debtor of any of the
Accounts Receivable.

 

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“Instrument” shall mean “instrument” as such term is defined in the PPSA.

 

“Intellectual Property” shall mean all intellectual and similar property of any
Grantor of every kind and nature now owned or hereafter acquired by any Grantor,
including inventions, designs, Patents, Copyrights, Licenses, Trademarks, trade
secrets, confidential or proprietary technical and business information,
know-how, show-how or other data or information, software and databases and all
embodiments or fixations thereof and related documentation and registrations,
and all additions, improvements and accessions to, and books and records
describing or used in connection with, any of the foregoing.

 

“Intellectual Property Rights” shall have the meaning assigned to such term in
Section 3.01.

 

“Inventory” shall mean all “inventory” as such term is defined in the PPSA, and
in any event, all goods of any Grantor, whether now owned or hereafter acquired,
held for sale or lease, or furnished or to be furnished by any Grantor under
contracts of service, or consumed in any Grantor’s business, including raw
materials, intermediates, work in process, packaging materials, finished goods,
semi-finished inventory, scrap inventory, manufacturing supplies and spare
parts, and all such goods that have been returned to or repossessed by or on
behalf of any Grantor.

 

“Investment Property” shall mean all Securities (whether certificated or
uncertificated), Security Entitlements and Securities Accounts, whether now
owned or hereafter acquired by any Grantor.

 

“License” shall mean any Patent License, Trademark License, Copyright License or
other franchise agreement, license or sublicense to which any Grantor is a
party, including those listed on Schedule III.

 

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

 

“PPSA” means the Personal Property Security Act (Ontario), as such legislation
may be amended, renamed or replaced from time to time (and includes all
regulations from time to time made under such legislation).

 

“Patent License” shall mean any written agreement, now or hereafter in effect,
granting to any third party any right to make, use or sell any invention on
which a Patent, now or hereafter owned by any Grantor or which any Grantor
otherwise has the right to license, is in existence, or granting to any Grantor
any right to make, use or sell any invention on which a Patent, now or hereafter
owned by any third party, is in existence, and all rights of any Grantor under
any such agreement.

 

“Patents” shall mean all of the following now owned or hereafter acquired by any
Person:  (a) all letters patent of the United States or Canada, all
registrations and recordings thereof, and all applications for letters patent of
the United States or Canada, including registrations, recordings and pending
applications in the United States Patent

 

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and Trademark Office or the Canadian Intellectual Property Office, including
those listed on Schedule IV, and (b) all reissues, continuations, divisions,
continuations-in-part, renewals or extensions thereof, and the inventions
disclosed or claimed therein, including the right to make, use and/or sell the
inventions disclosed or claimed therein.

 

“Perfection Certificate” shall mean a certificate substantially in the form of
Annex 1 (or any other form approved by the Collateral Agent), completed and
supplemented with the schedules and attachments contemplated thereby, and duly
executed by a Financial Officer and the chief legal officer of the Parent
Borrower.

 

“Proceeds” shall mean all “proceeds” as such term is defined in the PPSA and, in
any event, shall include with respect to any Grantor any consideration received
from the sale, exchange, license, lease or other disposition of any asset or
property that constitutes Collateral, any value received as a consequence of the
possession of any Collateral and any payment received from any insurer or other
person or entity as a result of the destruction, loss, theft, damage or other
involuntary conversion of whatever nature of any asset or property which
constitutes Collateral, and shall include, (a) any claim of any Grantor against
any third party for (and the right to sue and recover for and the rights to
damages or profits due or accrued arising out of or in connection with)
(i) past, present or future infringement of any Patent now or hereafter owned by
any Grantor, or licensed under a Patent License, (ii) past, present or future
infringement or dilution of any Trademark now or hereafter owned by any Grantor
or licensed under a Trademark License or injury to the goodwill associated with
or symbolized by any Trademark now or hereafter owned by any Grantor,
(iii) past, present or future breach of any License and (iv) past, present or
future infringement of any Copyright now or hereafter owned by any Grantor or
licensed under a Copyright License and (b) any and all other amounts from time
to time paid or payable under or in connection with any of the Collateral.

 

“Receiver” means a receiver, a manager or a receiver and manager.

 

“Secured Parties” shall mean (a) the Lenders, (b) the Administrative Agent,
(c) the Collateral Agent and each of the other Agents, (d) the Issuing Bank,
(e) each counterparty to a Swap Agreement with a Loan Party the obligations
under which constitute Obligations, (f) the beneficiaries of each
indemnification obligation undertaken by any Grantor under any Loan Document,
(g) each lender in respect of overdrafts and related liabilities owed to any of
the Lenders (or any Affiliates thereof) and arising from treasury, depositary
and cash management services or in connection with any automated clearinghouse
transfers of funds, (h) Wachovia Bank N.A. (or any Affiliates thereof) in
respect of overdrafts and related liabilities owed to Wachovia Bank N.A. (or any
Affiliates thereof) and arising from treasury, depositary and cash management
services or in connection with any automated clearinghouse transfers of funds
and (i) the permitted successors and assigns of each of the foregoing.

 

“Securities” shall mean the plural of “security” as such term is defined in the
PPSA, and in any event, any obligations of an issuer or any shares,
participations or other interests in an issuer or in property or an enterprise
of an issuer which (a) are represented by a certificate representing a security
in bearer or registered form, or the

 

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transfer of which may be registered upon books maintained for that purpose by or
on behalf of the issuer, (b) are one of a class or series or by its terms is
divisible into a class or series of shares, participations, interests or
obligations or (c)(i) are, or are of a type, dealt with or traded on securities
exchanges or securities markets or (ii) are a medium for investment.

 

“Securities Account” shall mean an account to which a Financial Asset  is or may
be credited in accordance with an agreement under which the Person  maintaining
the account undertakes to treat the Person for whom the account is maintained as
entitled to exercise rights that comprise the Financial Asset.

 

“Security Entitlements” shall mean the rights and property interests of an
Entitlement Holder with respect to a Financial Asset.

 

“Security Interest” shall have the meaning assigned to such term in
Section 2.01.

 

“Security Intermediary” shall mean (a) a clearing corporation or (b) a Person,
including a bank or broker, that in the ordinary course of its business
maintains securities accounts for others and is acting in that capacity.

 

“Trademark License” shall mean any written agreement, now or hereafter in
effect, granting to any third party any right to use any Trademark now or
hereafter owned by any Grantor or which any Grantor otherwise has the right to
license, or granting to any Grantor any right to use any Trademark now or
hereafter owned by any third party, and all rights of any Grantor under any such
agreement.

 

“Trademarks” shall mean all of the following now owned or hereafter acquired by
any Person:  (a) all trademarks, service marks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, trade
dress, logos, other source or business identifiers, designs and general
intangibles of like nature, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all registration and recording
applications filed in connection therewith, including registrations and
registration applications in the United States Patent and Trademark Office, any
State of the United States or the Canadian Intellectual Property Office, and all
extensions or renewals thereof, including those listed on Schedule V, (b) all
goodwill associated therewith or symbolized thereby and (c) all other assets,
rights and interests that uniquely reflect or embody such goodwill.

 

“U.S.$” refers to the lawful currency of the United States of America.

 

“U.S. Intellectual Property” shall have the meaning assigned to such term in
Section 3.02(b).

 

SECTION 1.03.  RULES OF INTERPRETATION.  THE RULES OF INTERPRETATION SPECIFIED
IN SECTION 1.03 OF THE CREDIT AGREEMENT SHALL BE APPLICABLE TO THIS AGREEMENT.

 

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ARTICLE II

 

SECURITY INTEREST

 

SECTION 2.01.  SECURITY INTEREST.   (A)  AS GENERAL AND CONTINUING COLLATERAL
SECURITY FOR THE DUE PAYMENT AND PERFORMANCE WHEN DUE (WHETHER AT THE STATED
MATURITY, BY ACCELERATION OR OTHERWISE) OF ALL OBLIGATIONS, EACH GRANTOR HEREBY
MORTGAGES, CHARGES AND ASSIGNS TO THE COLLATERAL AGENT, AND GRANTS TO THE
COLLATERAL AGENT, FOR THE RATABLE BENEFIT OF THE SECURED PARTIES, A SECURITY
INTEREST (THE “SECURITY INTEREST”) IN, THE COLLATERAL.

 

 (B)  THE GRANT OF ANY SECURITY INTEREST IN RESPECT OF THE COLLATERAL SHALL NOT
INCLUDE WITH RESPECT TO ANY GRANTOR, ANY ITEM OF PROPERTY TO THE EXTENT THE
GRANT BY SUCH GRANTOR OF A SECURITY INTEREST PURSUANT TO THIS AGREEMENT IN SUCH
GRANTOR’S RIGHT, TITLE AND INTEREST IN SUCH ITEM OF PROPERTY IS PROHIBITED BY AN
APPLICABLE ENFORCEABLE CONTRACTUAL OBLIGATION (INCLUDING BUT NOT LIMITED TO A
CAPITAL LEASE OBLIGATION) OR REQUIREMENT OF LAW OR WOULD GIVE ANY OTHER PERSON
THE ENFORCEABLE RIGHT TO TERMINATE ITS OBLIGATIONS WITH RESPECT TO SUCH ITEM OF
PROPERTY AND PROVIDED, FURTHER, THAT THE LIMITATION IN THE FOREGOING PROVISO
SHALL NOT AFFECT, LIMIT, RESTRICT OR IMPAIR THE GRANT BY ANY GRANTOR OF A
SECURITY INTEREST PURSUANT TO THIS AGREEMENT IN ANY MONEY OR OTHER AMOUNTS DUE
OR TO BECOME DUE UNDER ANY ACCOUNT, CONTRACT, AGREEMENT OR GENERAL INTANGIBLE. 
IN ADDITION, THE SECURITY INTERESTS CREATED BY THIS AGREEMENT DO NOT EXTEND TO
THE LAST DAY OF THE TERM OF ANY LEASE OR AGREEMENT FOR LEASE OF REAL PROPERTY. 
SUCH LAST DAY SHALL BE HELD BY THE GRANTOR IN TRUST FOR THE COLLATERAL AGENT
AND, ON THE EXERCISE BY THE COLLATERAL AGENT OF ANY OF ITS RIGHTS UNDER THIS
AGREEMENT FOLLOWING THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF
DEFAULT, WILL BE ASSIGNED BY THE GRANTOR AS DIRECTED BY THE COLLATERAL AGENT.

 

 (C)  EACH GRANTOR CONFIRMS THAT VALUE HAS BEEN GIVEN BY THE COLLATERAL AGENT
AND THE OTHER SECURED PARTIES TO THE GRANTOR, THAT THE GRANTOR HAS RIGHTS IN THE
COLLATERAL (OTHER THAN AFTER-ACQUIRED PROPERTY) AND THAT THE GRANTOR AND THE
COLLATERAL AGENT HAVE NOT AGREED TO POSTPONE THE TIME FOR ATTACHMENT OF THE
SECURITY INTERESTS CREATED BY THIS AGREEMENT TO ANY OF THE COLLATERAL.

 

 (D)  EACH GRANTOR HEREBY IRREVOCABLY AUTHORIZES THE COLLATERAL AGENT, IN
ACCORDANCE WITH, AND TO THE EXTENT CONSISTENT WITH, THE INTERCREDITOR AGREEMENT,
AT ANY TIME AND FROM TIME TO TIME TO FILE IN ANY RELEVANT JURISDICTION ANY
FINANCING STATEMENTS WITH RESPECT TO THE COLLATERAL OR ANY PART THEREOF AND
AMENDMENTS THERETO.  EACH GRANTOR ALSO RATIFIES ITS AUTHORIZATION FOR THE
COLLATERAL AGENT TO FILE IN ANY RELEVANT JURISDICTION ANY FINANCING STATEMENTS
OR AMENDMENTS THERETO IF FILED PRIOR TO THE DATE HEREOF.

 

The Collateral Agent is further authorized to file with the United States Patent
and Trademark Office, the United States Copyright Office or the Canadian
Intellectual Property Office such documents as may be necessary or advisable for
the purpose of perfecting, confirming, continuing, enforcing or protecting the
Security Interest in and to the Intellectual Property granted by each Grantor,
without the signature of any Grantor (but, prior to the occurrence of any Event
of Default or Default, the

 

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Collateral Agent shall provide notice of such filing to such Grantor), and
naming any Grantor or the Grantors as debtors and the Collateral Agent as
secured party.

 

SECTION 2.02.  NO ASSUMPTION OF LIABILITY.  THE SECURITY INTEREST IS GRANTED AS
SECURITY ONLY AND SHALL NOT SUBJECT THE COLLATERAL AGENT OR ANY OTHER SECURED
PARTY TO, OR IN ANY WAY ALTER OR MODIFY, ANY OBLIGATION OR LIABILITY OF ANY
GRANTOR WITH RESPECT TO OR ARISING OUT OF THE COLLATERAL.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

The Grantors jointly and severally represent and warrant to the Collateral Agent
and the Secured Parties that:

 

SECTION 3.01.  TITLE AND AUTHORITY.  EACH GRANTOR HAS GOOD AND VALID RIGHTS IN
AND TITLE TO THE COLLATERAL WITH RESPECT TO WHICH IT HAS PURPORTED TO GRANT A
SECURITY INTEREST HEREUNDER AND HAS FULL POWER AND AUTHORITY TO GRANT TO THE
COLLATERAL AGENT THE SECURITY INTEREST IN SUCH COLLATERAL PURSUANT HERETO AND TO
EXECUTE, DELIVER AND PERFORM ITS OBLIGATIONS IN ACCORDANCE WITH THE TERMS OF
THIS AGREEMENT, WITHOUT THE CONSENT OR APPROVAL OF ANY OTHER PERSON OTHER THAN
ANY CONSENT OR APPROVAL WHICH HAS BEEN OBTAINED OR THE FAILURE OF WHICH TO
OBTAIN COULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT.

 

Each Grantor further represents and warrants that all Intellectual Property
owned by such Grantor, and all rights of the Grantor pursuant to any Trademark
License, Patent License or Copyright License to use any Intellectual Property
(collectively, “Intellectual Property Rights”), are described in the attached
schedules and the Perfection Certificate.  To the best of the Grantor’s
knowledge, each such Intellectual Property Right is valid, subsisting,
unexpired, enforceable and has not been abandoned.  Except as set out in the
Perfection Certificate and the schedules hereto, none of such Intellectual
Property Rights has been licensed or franchised by the Grantor to any Person.

 

SECTION 3.02.  FILINGS.   (A)  THE PERFECTION CERTIFICATE HAS BEEN DULY
PREPARED, COMPLETED AND EXECUTED AND THE INFORMATION SET FORTH THEREIN IS
CORRECT AND COMPLETE.  PERSONAL PROPERTY SECURITY ACT FINANCING STATEMENTS IN
EACH RELEVANT JURISDICTION ARE ALL THE FILINGS, RECORDINGS AND REGISTRATIONS
(OTHER THAN FILINGS, RECORDINGS AND REGISTRATIONS REQUIRED TO BE MADE IN THE
UNITED STATES PATENT AND TRADEMARK OFFICE, THE UNITED STATES COPYRIGHT OFFICE OR
THE CANADIAN INTELLECTUAL PROPERTY OFFICE IN ORDER TO PERFECT THE SECURITY
INTEREST IN COLLATERAL CONSISTING OF INTELLECTUAL PROPERTY) THAT ARE NECESSARY
TO PUBLISH NOTICE OF AND PROTECT THE VALIDITY OF AND TO ESTABLISH A LEGAL, VALID
AND PERFECTED SECURITY INTEREST IN FAVOR OF THE COLLATERAL AGENT (FOR THE
RATABLE BENEFIT OF THE SECURED PARTIES) IN RESPECT OF ALL COLLATERAL IN WHICH
THE SECURITY INTEREST MAY BE PERFECTED BY FILING, RECORDING OR REGISTRATION IN
ANY RELEVANT JURISDICTION, AND NO FURTHER OR SUBSEQUENT FILING, REFILING,
RECORDING, RERECORDING, REGISTRATION OR REREGISTRATION IS NECESSARY IN ANY SUCH
JURISDICTION, EXCEPT AS PROVIDED UNDER APPLICABLE LAW WITH RESPECT TO THE FILING
OF CONTINUATION STATEMENTS AND SUCH FILINGS, RECORDINGS AND REGISTRATIONS AS

 

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MAY BE NECESSARY TO PERFECT THE SECURITY INTEREST AS A RESULT OF ANY EVENT
DESCRIBED IN SECTION 5.03 OF THE CREDIT AGREEMENT.

 

 (B)  EACH GRANTOR REPRESENTS AND WARRANTS THAT FULLY EXECUTED SECURITY
AGREEMENTS IN THE FORM HEREOF (OR A FULLY EXECUTED SHORT-FORM AGREEMENT IN FORM
AND SUBSTANCE REASONABLY SATISFACTORY TO THE COLLATERAL AGENT) AND CONTAINING A
DESCRIPTION OF ALL COLLATERAL CONSISTING OF INTELLECTUAL PROPERTY OF SUCH
GRANTOR ACQUIRED OR DEVELOPED IN THE UNITED STATES (“U.S. INTELLECTUAL
PROPERTY”) SHALL HAVE BEEN RECEIVED AND RECORDED WITHIN THREE MONTHS AFTER THE
EXECUTION OF THIS AGREEMENT WITH RESPECT TO UNITED STATES PATENTS AND UNITED
STATES REGISTERED TRADEMARKS (AND TRADEMARKS FOR WHICH UNITED STATES
REGISTRATION APPLICATIONS ARE PENDING) AND WITHIN ONE MONTH AFTER THE EXECUTION
OF THIS AGREEMENT WITH RESPECT TO UNITED STATES REGISTERED COPYRIGHTS BY THE
UNITED STATES PATENT AND TRADEMARK OFFICE AND THE UNITED STATES COPYRIGHT OFFICE
PURSUANT TO 35 U.S.C. § 261, 15 U.S.C. § 1060 OR 17 U.S.C. § 205 AND THE
REGULATIONS THEREUNDER, AS APPLICABLE, TO PROTECT THE VALIDITY OF AND TO
ESTABLISH A LEGAL, VALID AND PERFECTED SECURITY INTEREST IN FAVOR OF THE
COLLATERAL AGENT (FOR THE RATABLE BENEFIT OF THE SECURED PARTIES) IN RESPECT OF
ALL COLLATERAL CONSISTING OF U.S. INTELLECTUAL PROPERTY IN WHICH A SECURITY
INTEREST MAY BE PERFECTED BY FILING, RECORDING OR REGISTRATION IN THE UNITED
STATES (OR ANY POLITICAL SUBDIVISION THEREOF) AND NO FURTHER OR SUBSEQUENT
FILING, REFILING, RECORDING, RERECORDING, REGISTRATION OR REREGISTRATION IS
NECESSARY (OTHER THAN SUCH ACTIONS AS ARE NECESSARY TO PERFECT THE SECURITY
INTEREST WITH RESPECT TO ANY COLLATERAL CONSISTING OF U.S. INTELLECTUAL PROPERTY
(OR REGISTRATION OR APPLICATION FOR REGISTRATION THEREOF) ACQUIRED OR DEVELOPED
AFTER THE DATE HEREOF).

 

SECTION 3.03.  VALIDITY OF SECURITY INTEREST.  THE SECURITY INTEREST CONSTITUTES
(A) A LEGAL AND VALID SECURITY INTEREST IN ALL THE COLLATERAL SECURING THE
PAYMENT AND PERFORMANCE OF THE OBLIGATIONS, (B) SUBJECT TO THE FILINGS DESCRIBED
IN SECTION 3.02 ABOVE, A PERFECTED SECURITY INTEREST IN ALL COLLATERAL IN WHICH
A SECURITY INTEREST MAY BE PERFECTED BY FILING, RECORDING OR REGISTERING A
FINANCING STATEMENT OR ANALOGOUS DOCUMENT IN THE UNITED STATES OR CANADA (OR ANY
POLITICAL SUBDIVISION OF EITHER) PURSUANT TO THE UNIFORM COMMERCIAL CODE, THE
PPSA OR OTHER APPLICABLE LAW IN SUCH JURISDICTIONS AND (C) A SECURITY INTEREST
THAT SHALL BE PERFECTED IN ALL COLLATERAL IN WHICH A SECURITY INTEREST MAY BE
PERFECTED IN THE UNITED STATES PATENT AND TRADEMARK OFFICE AND THE UNITED STATES
COPYRIGHT OFFICE UPON THE RECEIPT AND RECORDING OF THIS AGREEMENT WITH THE
UNITED STATES PATENT AND TRADEMARK OFFICE AND THE UNITED STATES COPYRIGHT
OFFICE, AS APPLICABLE, WITHIN THE THREE MONTH PERIOD (COMMENCING AS OF THE DATE
HEREOF) PURSUANT TO 35 U.S.C. § 261 OR 15 U.S.C. § 1060 OR THE ONE-MONTH PERIOD
(COMMENCING AS OF THE DATE HEREOF) PURSUANT TO 17 U.S.C. § 205 AND OTHERWISE AS
MAY BE REQUIRED PURSUANT TO THE LAWS OF ANY OTHER NECESSARY JURISDICTION.  THE
SECURITY INTEREST IS AND SHALL BE PRIOR TO ANY OTHER LIEN ON ANY OF THE
COLLATERAL, OTHER THAN LIENS EXPRESSLY PERMITTED TO BE PRIOR TO THE SECURITY
INTEREST PURSUANT TO SECTION 6.03 OF THE CREDIT AGREEMENT.

 

SECTION 3.04.  ABSENCE OF OTHER LIENS.  EXCEPT FOR THE SECURITY INTEREST CREATED
BY THIS AGREEMENT AND OTHER LIENS EXPRESSLY PERMITTED PURSUANT TO SECTION 6.03
OF THE CREDIT AGREEMENT, THE GRANTORS OWN (OR, WITH RESPECT TO ANY LEASED OR
LICENSED PROPERTY FORMING PART OF THE COLLATERAL, HOLD A VALID LEASEHOLD OR
LICENSED INTEREST IN) THE COLLATERAL FREE AND CLEAR OF ANY LIENS.  NO SECURITY
AGREEMENT, FINANCING STATEMENT OR

 

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OTHER NOTICE WITH RESPECT TO ANY OR ALL OF THE COLLATERAL IS ON FILE OR ON
RECORD IN ANY PUBLIC OFFICE, EXCEPT FOR FILINGS IN FAVOUR OF THE COLLATERAL
AGENT OR WITH RESPECT TO LIENS EXPRESSLY PERMITTED PURSUANT TO SECTION 6.03 OF
THE CREDIT AGREEMENT.

 

ARTICLE IV

 

COVENANTS

 

SECTION 4.01.  RECORDS.  EACH GRANTOR AGREES TO MAINTAIN, AT ITS OWN COST AND
EXPENSE, SUCH COMPLETE AND ACCURATE RECORDS WITH RESPECT TO THE COLLATERAL OWNED
BY IT AS IS CONSISTENT WITH ITS CURRENT PRACTICES AND IN ACCORDANCE WITH SUCH
PRUDENT AND STANDARD PRACTICES USED IN INDUSTRIES THAT ARE THE SAME AS OR
SIMILAR TO THOSE IN WHICH SUCH GRANTOR IS ENGAGED, BUT IN ANY EVENT TO INCLUDE
COMPLETE ACCOUNTING RECORDS INDICATING ALL PAYMENTS AND PROCEEDS RECEIVED WITH
RESPECT TO ANY PART OF THE COLLATERAL, AND, AT SUCH TIME OR TIMES AS THE
COLLATERAL AGENT MAY REASONABLY REQUEST, PROMPTLY TO PREPARE AND DELIVER TO THE
COLLATERAL AGENT A DULY CERTIFIED SCHEDULE OR SCHEDULES IN FORM AND DETAIL
REASONABLY SATISFACTORY TO THE COLLATERAL AGENT SHOWING THE IDENTITY, AMOUNT AND
LOCATION OF ANY AND ALL COLLATERAL.

 

SECTION 4.02.  PROTECTION OF SECURITY.  EACH GRANTOR SHALL, AT ITS OWN COST AND
EXPENSE, TAKE ANY AND ALL ACTIONS NECESSARY TO DEFEND TITLE TO THE COLLATERAL
AGAINST ALL PERSONS AND TO DEFEND THE SECURITY INTEREST OF THE COLLATERAL AGENT
IN THE COLLATERAL AND THE PRIORITY THEREOF AGAINST ANY LIEN NOT EXPRESSLY
PERMITTED PURSUANT TO SECTION 6.03 OF THE CREDIT AGREEMENT.

 

SECTION 4.03.  FURTHER ASSURANCES.  EACH GRANTOR AGREES, AT ITS OWN EXPENSE, TO
EXECUTE, ACKNOWLEDGE, DELIVER AND CAUSE TO BE DULY FILED ALL SUCH FURTHER
INSTRUMENTS AND DOCUMENTS AND TAKE ALL SUCH ACTIONS AS THE COLLATERAL AGENT, IN
ACCORDANCE WITH, AND TO THE EXTENT CONSISTENT WITH, THE TERMS OF THE
INTERCREDITOR AGREEMENT, MAY FROM TIME TO TIME REASONABLY REQUEST TO BETTER
ASSURE, PRESERVE, PROTECT AND PERFECT THE SECURITY INTEREST AND THE RIGHTS AND
REMEDIES CREATED HEREBY, INCLUDING THE PAYMENT OF ANY FEES AND TAXES REQUIRED IN
CONNECTION WITH THE EXECUTION AND DELIVERY OF THIS AGREEMENT, THE GRANTING OF
THE SECURITY INTEREST AND THE FILING OF ANY FINANCING STATEMENTS OR OTHER
DOCUMENTS IN CONNECTION HEREWITH OR THEREWITH.  IF ANY AMOUNT PAYABLE UNDER OR
IN CONNECTION WITH ANY OF THE COLLATERAL SHALL BE OR BECOME EVIDENCED BY ANY
PROMISSORY NOTE OR OTHER INSTRUMENT, SUCH NOTE OR INSTRUMENT SHALL BE
IMMEDIATELY PLEDGED AND DELIVERED TO THE COLLATERAL AGENT, DULY ENDORSED IN A
MANNER SATISFACTORY TO THE COLLATERAL AGENT.

 

Without limiting the generality of the foregoing, each Grantor hereby authorizes
the Collateral Agent, with prompt notice thereof to the Grantors, to supplement
this Agreement by supplementing Schedule II, III, IV or V hereto or adding
additional schedules hereto to specifically identify any registered asset or
item that may constitute Copyrights, Patents or Trademarks; provided, however,
that any Grantor shall have the right, exercisable within 30 days after it has
been notified by the Collateral Agent of the specific identification of such
Collateral, to advise the Collateral Agent in writing of any inaccuracy of the
representations and warranties made by such Grantor

 

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hereunder with respect to such Collateral.  Each Grantor agrees that it will use
its best efforts to take such action as shall be necessary in order that all
representations and warranties hereunder shall be true and correct with respect
to such Collateral within 30 days after the date it has been notified by the
Collateral Agent of the specific identification of such Collateral.

 

SECTION 4.04.  INSPECTION AND VERIFICATION.  SUBJECT TO THE LIMITATIONS SET
FORTH IN SECTION 5.09 OF THE CREDIT AGREEMENT, THE  COLLATERAL AGENT AND SUCH
PERSONS AS THE COLLATERAL AGENT MAY REASONABLY DESIGNATE SHALL HAVE THE RIGHT,
AT THE GRANTORS’ OWN COST AND EXPENSE, TO INSPECT THE COLLATERAL, ALL RECORDS
RELATED THERETO (AND TO MAKE EXTRACTS AND COPIES FROM SUCH RECORDS) AND THE
PREMISES UPON WHICH ANY OF THE COLLATERAL IS LOCATED, TO DISCUSS THE GRANTORS’
AFFAIRS WITH THE OFFICERS OF THE GRANTORS AND THEIR INDEPENDENT ACCOUNTANTS AND
TO VERIFY UNDER REASONABLE PROCEDURES THE VALIDITY, AMOUNT, QUALITY, QUANTITY,
VALUE, CONDITION AND STATUS OF, OR ANY OTHER MATTER RELATING TO, THE COLLATERAL,
INCLUDING, IN THE CASE OF ACCOUNTS OR COLLATERAL IN THE POSSESSION OF ANY THIRD
PARTY, BY CONTACTING ACCOUNT DEBTORS OR THE THIRD PERSON POSSESSING SUCH
COLLATERAL FOR THE PURPOSE OF MAKING SUCH A VERIFICATION.  THE COLLATERAL AGENT
SHALL HAVE THE ABSOLUTE RIGHT TO SHARE ANY INFORMATION IT GAINS FROM SUCH
INSPECTION OR VERIFICATION WITH ANY SECURED PARTY (IT BEING UNDERSTOOD THAT ANY
SUCH INFORMATION SHALL BE DEEMED TO BE “INFORMATION” SUBJECT TO THE PROVISIONS
OF SECTION 10.12 OF THE CREDIT AGREEMENT).

 

SECTION 4.05.  TAXES; ENCUMBRANCES.  IN ACCORDANCE WITH, AND TO THE EXTENT
CONSISTENT WITH, THE TERMS OF THE INTERCREDITOR AGREEMENT, AT ITS OPTION, THE
COLLATERAL AGENT MAY DISCHARGE PAST DUE TAXES, ASSESSMENTS, CHARGES, FEES,
LIENS, SECURITY INTERESTS OR OTHER ENCUMBRANCES AT ANY TIME LEVIED OR PLACED ON
THE COLLATERAL AND NOT PERMITTED PURSUANT TO SECTION 6.03 OF THE CREDIT
AGREEMENT, AND MAY PAY FOR THE MAINTENANCE AND PRESERVATION OF THE COLLATERAL TO
THE EXTENT ANY GRANTOR FAILS TO DO SO AS REQUIRED BY THE CREDIT AGREEMENT OR
THIS AGREEMENT, AND EACH GRANTOR JOINTLY AND SEVERALLY AGREES TO REIMBURSE THE
COLLATERAL AGENT ON DEMAND FOR ANY PAYMENT MADE OR ANY EXPENSE INCURRED BY THE
COLLATERAL AGENT PURSUANT TO THE FOREGOING AUTHORIZATION; PROVIDED, HOWEVER,
THAT NOTHING IN THIS SECTION 4.05 SHALL BE INTERPRETED AS EXCUSING ANY GRANTOR
FROM THE PERFORMANCE OF, OR IMPOSING ANY OBLIGATION ON THE COLLATERAL AGENT OR
ANY SECURED PARTY TO CURE OR PERFORM, ANY COVENANTS OR OTHER PROMISES OF ANY
GRANTOR WITH RESPECT TO TAXES, ASSESSMENTS, CHARGES, FEES, LIENS, SECURITY
INTERESTS OR OTHER ENCUMBRANCES AND MAINTENANCE AS SET FORTH HEREIN OR IN THE
OTHER LOAN DOCUMENTS.

 

SECTION 4.06.  ASSIGNMENT OF SECURITY INTEREST.  IF AT ANY TIME ANY GRANTOR
SHALL TAKE A SECURITY INTEREST IN ANY PROPERTY OF AN ACCOUNT DEBTOR OR ANY OTHER
PERSON TO SECURE PAYMENT AND PERFORMANCE OF AN ACCOUNT, SUCH GRANTOR SHALL
PROMPTLY ASSIGN SUCH SECURITY INTEREST TO THE COLLATERAL AGENT.  SUCH ASSIGNMENT
NEED NOT BE FILED OF PUBLIC RECORD UNLESS NECESSARY TO CONTINUE THE PERFECTED
STATUS OF THE SECURITY INTEREST AGAINST CREDITORS OF AND TRANSFEREES FROM THE
ACCOUNT DEBTOR OR OTHER PERSON GRANTING THE SECURITY INTEREST.

 

SECTION 4.07.  CONTINUING OBLIGATIONS OF THE GRANTORS.  EACH GRANTOR SHALL
REMAIN LIABLE TO OBSERVE AND PERFORM ALL THE CONDITIONS AND OBLIGATIONS TO BE
OBSERVED AND PERFORMED BY IT UNDER EACH CONTRACT, AGREEMENT OR INSTRUMENT
RELATING TO THE

 

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COLLATERAL, ALL IN ACCORDANCE WITH THE TERMS AND CONDITIONS THEREOF, AND EACH
GRANTOR JOINTLY AND SEVERALLY AGREES TO INDEMNIFY AND HOLD HARMLESS THE
COLLATERAL AGENT AND THE SECURED PARTIES FROM AND AGAINST ANY AND ALL LIABILITY
FOR SUCH PERFORMANCE.

 

SECTION 4.08.  USE AND DISPOSITION OF COLLATERAL.  NONE OF THE GRANTORS SHALL
MAKE OR PERMIT TO BE MADE AN ASSIGNMENT, PLEDGE OR HYPOTHECATION OF THE
COLLATERAL OR SHALL GRANT ANY OTHER LIEN IN RESPECT OF THE COLLATERAL, EXCEPT AS
EXPRESSLY PERMITTED BY SECTION 6.03 OF THE CREDIT AGREEMENT.  UNLESS AND (IN
ACCORDANCE WITH, AND TO THE EXTENT CONSISTENT WITH, THE TERMS OF THE
INTERCREDITOR AGREEMENT) UNTIL THE COLLATERAL AGENT SHALL NOTIFY THE GRANTORS
THAT (I) AN EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING AND
(II) DURING THE CONTINUANCE THEREOF THE GRANTORS SHALL NOT SELL, CONVEY, LEASE,
ASSIGN, TRANSFER OR OTHERWISE DISPOSE OF ANY COLLATERAL (WHICH NOTICE MAY BE
GIVEN BY TELEPHONE IF PROMPTLY CONFIRMED IN WRITING), THE GRANTORS MAY USE AND
DISPOSE OF THE COLLATERAL IN ANY LAWFUL MANNER NOT INCONSISTENT WITH THE
PROVISIONS OF THIS AGREEMENT, THE CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT. 
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EACH GRANTOR AGREES THAT IT
SHALL NOT PERMIT ANY INVENTORY TO BE IN THE POSSESSION OR CONTROL OF ANY
WAREHOUSEMAN, BAILEE, AGENT OR PROCESSOR AT ANY TIME, OTHER THAN INVENTORY THAT
IS IN TRANSIT BY ANY MEANS, UNLESS SUCH WAREHOUSEMAN, BAILEE, AGENT OR PROCESSOR
SHALL HAVE BEEN NOTIFIED OF THE SECURITY INTEREST AND EACH GRANTOR SHALL USE ITS
BEST EFFORTS TO OBTAIN A WRITTEN AGREEMENT IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE COLLATERAL AGENT TO HOLD THE INVENTORY SUBJECT TO THE
SECURITY INTEREST AND THE INSTRUCTIONS OF THE COLLATERAL AGENT AND TO WAIVE AND
RELEASE ANY LIEN HELD BY IT WITH RESPECT TO SUCH INVENTORY, WHETHER ARISING BY
OPERATION OF LAW OR OTHERWISE.

 

SECTION 4.09.  LIMITATION ON MODIFICATION OF ACCOUNTS.  NONE OF THE GRANTORS
WILL, WITHOUT THE COLLATERAL AGENT’S PRIOR WRITTEN CONSENT, GRANT ANY EXTENSION
OF THE TIME OF PAYMENT OF ANY OF THE ACCOUNTS RECEIVABLE, COMPROMISE, COMPOUND
OR SETTLE THE SAME FOR LESS THAN THE FULL AMOUNT THEREOF, RELEASE, WHOLLY OR
PARTLY, ANY PERSON LIABLE FOR THE PAYMENT THEREOF OR ALLOW ANY CREDIT OR
DISCOUNT WHATSOEVER THEREON, OTHER THAN EXTENSIONS, CREDITS, DISCOUNTS,
COMPROMISES OR SETTLEMENTS GRANTED OR MADE IN THE ORDINARY COURSE OF BUSINESS
AND CONSISTENT WITH ITS CURRENT PRACTICES AND IN ACCORDANCE WITH SUCH PRUDENT
AND STANDARD PRACTICES USED IN INDUSTRIES THAT ARE THE SAME AS OR SIMILAR TO
THOSE IN WHICH SUCH GRANTOR IS ENGAGED.

 

SECTION 4.10.  INSURANCE.  THE GRANTORS, AT THEIR OWN EXPENSE, SHALL MAINTAIN OR
CAUSE TO BE MAINTAINED INSURANCE COVERING PHYSICAL LOSS OR DAMAGE TO THE
INVENTORY AND EQUIPMENT IN ACCORDANCE WITH SECTION 5.07 OF THE CREDIT
AGREEMENT.  SUBJECT TO THE INTERCREDITOR AGREEMENT, EACH GRANTOR IRREVOCABLY
MAKES, CONSTITUTES AND APPOINTS THE COLLATERAL AGENT (AND ALL OFFICERS,
EMPLOYEES OR AGENTS DESIGNATED BY THE COLLATERAL AGENT) AS SUCH GRANTOR’S TRUE
AND LAWFUL AGENT (AND ATTORNEY-IN-FACT) FOR THE PURPOSE, DURING THE CONTINUANCE
OF AN EVENT OF DEFAULT, OF MAKING, SETTLING AND ADJUSTING CLAIMS IN RESPECT OF
COLLATERAL UNDER POLICIES OF INSURANCE, ENDORSING THE NAME OF SUCH GRANTOR ON
ANY CHECK, DRAFT, INSTRUMENT OR OTHER ITEM OF PAYMENT FOR THE PROCEEDS OF SUCH
POLICIES OF INSURANCE AND FOR MAKING ALL DETERMINATIONS AND DECISIONS WITH
RESPECT THERETO.  SUBJECT TO THE INTERCREDITOR AGREEMENT, IN THE EVENT THAT ANY
GRANTOR AT ANY TIME OR TIMES SHALL FAIL TO OBTAIN OR MAINTAIN ANY OF THE
POLICIES OF INSURANCE REQUIRED HEREBY OR TO PAY ANY PREMIUM IN WHOLE OR PART
RELATING THERETO, THE COLLATERAL AGENT MAY, WITHOUT

 

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WAIVING OR RELEASING ANY OBLIGATION OR LIABILITY OF THE GRANTORS HEREUNDER OR
ANY EVENT OF DEFAULT, IN ITS SOLE DISCRETION, OBTAIN AND MAINTAIN SUCH POLICIES
OF INSURANCE AND PAY SUCH PREMIUM AND TAKE ANY OTHER ACTIONS WITH RESPECT
THERETO AS THE COLLATERAL AGENT DEEMS REASONABLY ADVISABLE.  SUBJECT TO THE
INTERCREDITOR AGREEMENT, ALL SUMS DISBURSED BY THE COLLATERAL AGENT IN
CONNECTION WITH THIS SECTION 4.10, INCLUDING REASONABLE ATTORNEYS’ FEES, COURT
COSTS, EXPENSES AND OTHER CHARGES RELATING THERETO, SHALL BE PAYABLE, UPON
DEMAND, BY THE GRANTORS TO THE COLLATERAL AGENT AND SHALL BE ADDITIONAL
OBLIGATIONS SECURED HEREBY.

 

SECTION 4.11.  LEGEND.  EACH GRANTOR SHALL LEGEND, IN FORM AND MANNER REASONABLY
SATISFACTORY TO THE COLLATERAL AGENT, ITS ACCOUNTS RECEIVABLE AND ITS BOOKS,
RECORDS AND DOCUMENTS EVIDENCING OR PERTAINING THERETO WITH AN APPROPRIATE
REFERENCE TO THE FACT THAT SUCH ACCOUNTS RECEIVABLE HAVE BEEN ASSIGNED TO THE
COLLATERAL AGENT FOR THE BENEFIT OF THE SECURED PARTIES AND THAT THE COLLATERAL
AGENT HAS A SECURITY INTEREST THEREIN.

 

SECTION 4.12.  COVENANTS REGARDING PATENT, TRADEMARK AND COPYRIGHT COLLATERAL.  
(A)  EACH GRANTOR AGREES THAT IT WILL NOT, NOR WILL IT PERMIT ANY OF ITS
LICENSEES TO, DO ANY ACT, OR OMIT TO DO ANY ACT, WHEREBY ANY PATENT WHICH IS
MATERIAL TO THE CONDUCT OF SUCH GRANTOR’S BUSINESS MAY BECOME INVALIDATED OR
DEDICATED TO THE PUBLIC, AND AGREES, TO THE EXTENT PRACTICABLE, THAT IT SHALL
CONTINUE TO MARK ANY PRODUCTS COVERED BY A PATENT WITH THE RELEVANT PATENT
NUMBER AS NECESSARY AND SUFFICIENT TO ESTABLISH AND PRESERVE ITS MAXIMUM RIGHTS
UNDER APPLICABLE PATENT LAWS.

 

 (B)  EACH GRANTOR (EITHER ITSELF OR THROUGH ITS LICENSEES OR ITS SUBLICENSEES)
WILL, FOR EACH TRADEMARK MATERIAL TO THE CONDUCT OF SUCH GRANTOR’S BUSINESS,
(I) MAINTAIN SUCH TRADEMARK IN FULL FORCE FREE FROM ANY CLAIM OF ABANDONMENT OR
INVALIDITY FOR NON-USE, (II) MAINTAIN THE QUALITY OF PRODUCTS AND SERVICES
OFFERED UNDER SUCH TRADEMARK, (III) DISPLAY SUCH TRADEMARK WITH NOTICE OF
FEDERAL OR FOREIGN REGISTRATION TO THE EXTENT NECESSARY AND SUFFICIENT TO
ESTABLISH AND PRESERVE ITS MAXIMUM RIGHTS UNDER APPLICABLE LAW AND (IV) NOT
KNOWINGLY USE OR KNOWINGLY PERMIT THE USE OF SUCH TRADEMARK IN VIOLATION OF ANY
THIRD PARTY RIGHTS.

 

 (C)  EACH GRANTOR (EITHER ITSELF OR THROUGH LICENSEES) WILL, FOR EACH WORK
COVERED BY A MATERIAL COPYRIGHT, CONTINUE TO PUBLISH, REPRODUCE, DISPLAY, ADOPT
AND DISTRIBUTE THE WORK WITH APPROPRIATE COPYRIGHT NOTICE AS NECESSARY AND
SUFFICIENT TO ESTABLISH AND PRESERVE ITS MAXIMUM RIGHTS UNDER APPLICABLE
COPYRIGHT LAWS.

 

 (D)  EACH GRANTOR SHALL NOTIFY THE COLLATERAL AGENT PROMPTLY IF IT KNOWS THAT
ANY PATENT, TRADEMARK OR COPYRIGHT MATERIAL TO THE CONDUCT OF ITS BUSINESS MAY
BECOME ABANDONED, LOST OR DEDICATED TO THE PUBLIC, OR OF ANY ADVERSE
DETERMINATION OR DEVELOPMENT (INCLUDING THE INSTITUTION OF, OR ANY SUCH
DETERMINATION OR DEVELOPMENT IN, ANY PROCEEDING IN THE UNITED STATES PATENT AND
TRADEMARK OFFICE OR UNITED STATES COPYRIGHT OFFICE FOR U.S. INTELLECTUAL
PROPERTY, OR THE CANADIAN INTELLECTUAL PROPERTY OFFICE FOR INTELLECTUAL
PROPERTY) REGARDING SUCH GRANTOR’S OWNERSHIP OF ANY PATENT, TRADEMARK OR
COPYRIGHT, ITS RIGHT TO REGISTER THE SAME, OR TO KEEP AND MAINTAIN THE SAME.

 

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 (E)  IN NO EVENT SHALL ANY GRANTOR, EITHER ITSELF OR THROUGH ANY AGENT,
EMPLOYEE, LICENSEE OR DESIGNEE, FILE AN APPLICATION FOR ANY PATENT, TRADEMARK OR
COPYRIGHT (OR FOR THE REGISTRATION OF ANY TRADEMARK OR COPYRIGHT) WITH THE
UNITED STATES PATENT AND TRADEMARK OFFICE, UNITED STATES COPYRIGHT OFFICE FOR
U.S. INTELLECTUAL PROPERTY OR THE CANADIAN INTELLECTUAL PROPERTY OFFICE FOR
INTELLECTUAL PROPERTY, UNLESS IT PROMPTLY INFORMS THE COLLATERAL AGENT, AND, IN
ACCORDANCE WITH, AND TO THE EXTENT CONSISTENT WITH, THE TERMS OF THE
INTERCREDITOR AGREEMENT, UPON REQUEST OF THE COLLATERAL AGENT, EXECUTES AND
DELIVERS ANY AND ALL AGREEMENTS, INSTRUMENTS, DOCUMENTS AND PAPERS AS THE
COLLATERAL AGENT MAY REQUEST TO EVIDENCE THE COLLATERAL AGENT’S SECURITY
INTEREST IN SUCH PATENT, TRADEMARK OR COPYRIGHT, AND, IN ACCORDANCE WITH, AND TO
THE EXTENT CONSISTENT WITH, THE TERMS OF THE INTERCREDITOR AGREEMENT, EACH
GRANTOR HEREBY APPOINTS THE COLLATERAL AGENT AS ITS ATTORNEY-IN-FACT TO EXECUTE
AND FILE SUCH WRITINGS FOR THE FOREGOING PURPOSES (AND, PRIOR TO THE OCCURRENCE
OF ANY EVENT OF DEFAULT OR DEFAULT, SUCH GRANTOR SHALL BE NOTIFIED OF SUCH
FILING), ALL ACTS OF SUCH ATTORNEY BEING HEREBY RATIFIED AND CONFIRMED; SUCH
POWER, BEING COUPLED WITH AN INTEREST, IS IRREVOCABLE.

 

 (F)  EACH GRANTOR WILL TAKE ALL NECESSARY STEPS THAT ARE CONSISTENT WITH THE
PRACTICE IN ANY PROCEEDING BEFORE THE UNITED STATES PATENT AND TRADEMARK OFFICE,
UNITED STATES COPYRIGHT OFFICE FOR U.S. INTELLECTUAL PROPERTY OR THE CANADIAN
INTELLECTUAL PROPERTY OFFICE FOR INTELLECTUAL PROPERTY, TO MAINTAIN AND PURSUE
EACH MATERIAL APPLICATION RELATING TO THE PATENTS, TRADEMARKS AND/OR COPYRIGHTS
(AND TO OBTAIN THE RELEVANT GRANT OR REGISTRATION) AND TO MAINTAIN EACH ISSUED
PATENT AND EACH REGISTRATION OF THE TRADEMARKS AND COPYRIGHTS THAT IS MATERIAL
TO THE CONDUCT OF ANY GRANTOR’S BUSINESS, INCLUDING TIMELY FILINGS OF
APPLICATIONS FOR RENEWAL, AFFIDAVITS OF USE, AFFIDAVITS OF INCONTESTABILITY AND
PAYMENT OF MAINTENANCE FEES, AND, IF CONSISTENT WITH GOOD BUSINESS JUDGMENT, TO
INITIATE OPPOSITION, INTERFERENCE AND CANCELATION PROCEEDINGS AGAINST THIRD
PARTIES.

 

 (G)  IN THE EVENT THAT ANY GRANTOR HAS REASON TO BELIEVE THAT ANY COLLATERAL
CONSISTING OF A PATENT, TRADEMARK OR COPYRIGHT MATERIAL TO THE CONDUCT OF ANY
GRANTOR’S BUSINESS HAS BEEN OR IS ABOUT TO BE INFRINGED, MISAPPROPRIATED OR
DILUTED BY A THIRD PARTY, SUCH GRANTOR PROMPTLY SHALL NOTIFY THE COLLATERAL
AGENT AND SHALL, IF CONSISTENT WITH GOOD BUSINESS JUDGMENT, PROMPTLY SUE FOR
INFRINGEMENT, MISAPPROPRIATION OR DILUTION AND TO RECOVER ANY AND ALL DAMAGES
FOR SUCH INFRINGEMENT, MISAPPROPRIATION OR DILUTION, AND TAKE SUCH OTHER ACTIONS
AS ARE APPROPRIATE UNDER THE CIRCUMSTANCES TO PROTECT SUCH COLLATERAL.

 

 (H)  UPON AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, EACH GRANTOR SHALL
USE ITS REASONABLE BEST EFFORTS TO OBTAIN ALL REQUISITE CONSENTS OR APPROVALS BY
THE LICENSOR OF EACH COPYRIGHT LICENSE, PATENT LICENSE OR TRADEMARK LICENSE TO
EFFECT THE ASSIGNMENT OF ALL OF SUCH GRANTOR’S RIGHT, TITLE AND INTEREST
THEREUNDER TO THE COLLATERAL AGENT OR THEIR DESIGNEES FOR THE BENEFIT OF THE
SECURED PARTIES IN ACCORDANCE WITH THE INTERCREDITOR AGREEMENT.

 

SECTION 4.13.  DEPOSIT ACCOUNTS. EACH GRANTOR WILL, WITHIN 60 DAYS AFTER THE
EFFECTIVE DATE, ENTER INTO CONTROL AGREEMENTS IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE COLLATERAL AGENT WITH EACH DEPOSITORY BANK (OTHER THAN THE
COLLATERAL AGENT) WITH WHICH IT MAINTAINS ANY DEPOSIT ACCOUNTS (OTHER THAN,
PRIOR TO THE 2004 NOTES

 

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FIRST LIEN TRANSITION DATE, THE NOTES COLLATERAL ACCOUNT (EACH AS DEFINED IN THE
INTERCREDITOR AGREEMENT)) AND THEREAFTER SHALL CAUSE ALL CASH HELD BY SUCH
GRANTOR (OTHER THAN, PRIOR TO THE 2004 NOTES FIRST LIEN TRANSITION DATE, CASH
HELD BY SUCH GRANTOR IN A NOTES COLLATERAL ACCOUNT IN ACCORDANCE WITH THE TERMS
OF THE 2004 INDENTURE (AS IN EFFECT ON THE DATE HEREOF) TO BE MAINTAINED IN SUCH
ACCOUNTS.

 

SECTION 4.14.  LETTER-OF-CREDIT RIGHTS.  IF ANY GRANTOR IS AT ANY TIME A
BENEFICIARY UNDER A LETTER OF CREDIT NOW OR HEREAFTER ISSUED IN FAVOR OF SUCH
GRANTOR IN AN AMOUNT EXCEEDING U.S.$1,000,000, SUCH GRANTOR SHALL PROMPTLY
NOTIFY THE COLLATERAL AGENT THEREOF AND, AT THE REQUEST AND OPTION OF THE
COLLATERAL AGENT, SUCH GRANTOR SHALL, PURSUANT TO AN AGREEMENT IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO THE COLLATERAL AGENT, EITHER (I) ARRANGE
FOR THE ISSUER AND ANY CONFIRMER OF SUCH LETTER OF CREDIT TO CONSENT TO AN
ASSIGNMENT TO THE COLLATERAL AGENT OF THE PROCEEDS OF ANY DRAWING UNDER THE
LETTER OF CREDIT OR (II) ARRANGE FOR THE COLLATERAL AGENT TO BECOME THE
TRANSFEREE BENEFICIARY OF THE LETTER OF CREDIT, WITH THE COLLATERAL AGENT
AGREEING, IN EACH CASE, THAT THE PROCEEDS OF ANY DRAWING UNDER THE LETTER OF
CREDIT ARE TO BE PAID TO THE APPLICABLE GRANTOR UNLESS AN EVENT OF DEFAULT HAS
OCCURRED OR IS CONTINUING.

 

ARTICLE V

 

COLLECTIONS

 

SECTION 5.01.  CASH MANAGEMENT ACCOUNTS.   (A)  EACH GRANTOR WILL ESTABLISH AND
MAINTAIN, WITHIN 60 DAYS AFTER THE EFFECTIVE DATE, (I) ONE CASH CONCENTRATION
ACCOUNT AND (II) ONE OR MORE COLLECTION DEPOSIT ACCOUNTS, IN THE CASE OF THIS
CLAUSE (II), WITH THE COLLATERAL AGENT OR WITH ANY FINANCIAL INSTITUTION
SELECTED BY SUCH GRANTOR THAT (A) IS REASONABLY SATISFACTORY TO THE COLLATERAL
AGENT AND (B) ENTERS INTO A COLLECTION DEPOSIT LETTER AGREEMENT WITH RESPECT TO
THE COLLECTION DEPOSIT ACCOUNTS OF SUCH GRANTOR WITH SUCH FINANCIAL
INSTITUTION.  EACH FINANCIAL INSTITUTION WITH WHICH A COLLECTION DEPOSIT ACCOUNT
IS MAINTAINED IS REFERRED TO HEREIN AS A “COLLECTION DEPOSIT BANK”.

 

 (B)  EACH GRANTOR, COMMENCING WITHIN 60 DAYS AFTER THE EFFECTIVE DATE, WILL
DEPOSIT ON EACH BUSINESS DAY ALL DAILY RECEIPTS INTO EITHER (I) A COLLECTION
DEPOSIT ACCOUNT OR (II) A CASH CONCENTRATION ACCOUNT.  EACH GRANTOR SHALL USE
ALL REASONABLE EFFORTS TO PREVENT ANY FUNDS THAT ARE NOT DAILY RECEIPTS FROM
BEING DEPOSITED INTO, OR OTHERWISE COMMINGLED WITH, THE FUNDS HELD IN THE
COLLECTION DEPOSIT ACCOUNTS OR THE CASH CONCENTRATION ACCOUNTS.

 

 (C)  ON EACH BUSINESS DAY DURING THE CASH COLLECTION PERIOD, ALL COLLECTED
FUNDS ON DEPOSIT IN EACH COLLECTION DEPOSIT ACCOUNT WILL BE TRANSFERRED TO THE
APPLICABLE CASH CONCENTRATION ACCOUNT TO THE EXTENT PROVIDED IN THE APPLICABLE
COLLECTION DEPOSIT LETTER AGREEMENT.

 

 (D)  ON EACH BUSINESS DAY DURING THE CASH COLLECTION PERIOD, ALL COLLECTED
FUNDS ON DEPOSIT IN THE CASH CONCENTRATION ACCOUNTS WILL BE TRANSFERRED TO THE
COLLATERAL PROCEEDS ACCOUNT TO BE APPLIED BY THE ADMINISTRATIVE AGENT, ON BEHALF
OF THE

 

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BORROWERS, TO PREPAY REVOLVING BORROWINGS AND SWINGLINE LOANS IN THE MANNER
PROVIDED IN SECTION 2.10 OF THE CREDIT AGREEMENT, UNTIL ALL OUTSTANDING
SWINGLINE LOANS AND REVOLVING BORROWINGS HAVE BEEN REPAID, AND THEREAFTER TO BE
TRANSFERRED TO THE GENERAL FUNDS ACCOUNT, SUBJECT TO PARAGRAPH (F) BELOW.

 

 (E)  DURING THE CASH COLLECTION PERIOD, NO GRANTOR SHALL HAVE ANY CONTROL OVER,
OR ANY RIGHT OR POWER TO WITHDRAW ANY FUNDS ON DEPOSIT IN, ANY COLLECTION
DEPOSIT ACCOUNT OR CASH CONCENTRATION ACCOUNT; PROVIDED, HOWEVER, THAT, SUBJECT
TO PARAGRAPH (F) BELOW, ANY GRANTOR MAY INSTRUCT ANY COLLECTION DEPOSIT BANK TO
WITHDRAW FUNDS FROM ITS COLLECTION DEPOSIT ACCOUNT TO HONOR ACH INSTRUCTIONS OF
SUCH GRANTOR TO TRANSFER FUNDS TO THE CASH CONCENTRATION ACCOUNT.  THE PARENT
BORROWER MAY AT ANY TIME WITHDRAW ANY FUNDS CONTAINED IN THE GENERAL FUNDS
ACCOUNT FOR USE, SUBJECT TO THE PROVISIONS OF THE CREDIT AGREEMENT, FOR GENERAL
CORPORATE PURPOSES.

 

 (F)  UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT:

 

(I)  EACH COLLECTION DEPOSIT ACCOUNT AND CASH CONCENTRATION ACCOUNT WILL,
WITHOUT ANY FURTHER ACTION ON THE PART OF ANY GRANTOR, THE COLLATERAL AGENT OR
ANY COLLECTION DEPOSIT BANK, CONVERT INTO A CLOSED ACCOUNT UNDER THE EXCLUSIVE
DOMINION AND CONTROL OF THE COLLATERAL AGENT IN WHICH FUNDS ARE HELD SUBJECT TO
THE RIGHTS OF THE COLLATERAL AGENT HEREUNDER.  NO GRANTOR SHALL THEREAFTER HAVE
ANY RIGHT OR POWER TO WITHDRAW ANY FUNDS FROM ANY COLLECTION DEPOSIT ACCOUNT OR
CASH CONCENTRATION ACCOUNT WITHOUT THE PRIOR WRITTEN CONSENT OF THE COLLATERAL
AGENT UNTIL ALL EVENTS OF DEFAULT ARE CURED OR WAIVED.  THE GRANTORS IRREVOCABLY
AUTHORIZE THE COLLATERAL AGENT TO NOTIFY EACH COLLECTION DEPOSIT BANK (A) OF THE
OCCURRENCE OF AN EVENT OF DEFAULT AND (B) OF THE MATTERS REFERRED TO IN THIS
PARAGRAPH (F)(I).

 

(II)  THE COLLATERAL AGENT WILL INSTRUCT EACH COLLECTION DEPOSIT BANK TO
IMMEDIATELY TRANSFER ALL FUNDS HELD IN EACH COLLECTION DEPOSIT ACCOUNT TO A CASH
CONCENTRATION ACCOUNT.

 

(III)  ANY FUNDS HELD IN THE COLLECTION DEPOSIT ACCOUNTS, THE CASH CONCENTRATION
ACCOUNTS OR THE COLLATERAL PROCEEDS ACCOUNT MAY BE APPLIED AS PROVIDED IN
SECTION 7.02 SO LONG AS AN EVENT OF DEFAULT IS CONTINUING.  THE COLLATERAL AGENT
WILL NOT BE REQUIRED TO TRANSFER ANY FUNDS FROM THE COLLATERAL PROCEEDS ACCOUNT
TO THE GENERAL FUNDS ACCOUNT UNTIL ALL EVENTS OF DEFAULT ARE CURED OR WAIVED.

 

 (G)  ALL PAYMENTS BY ANY GRANTOR INTO ANY COLLECTION DEPOSIT ACCOUNT OR CASH
CONCENTRATION ACCOUNT PURSUANT TO THIS ARTICLE V, WHETHER IN THE FORM OF CASH,
CHECKS, NOTES, DRAFTS, BILLS OF EXCHANGE, MONEY ORDERS OR OTHERWISE, SHALL BE
DEPOSITED IN THE RELEVANT COLLECTION DEPOSIT ACCOUNT OR CASH CONCENTRATION
ACCOUNT IN PRECISELY THE FORM IN WHICH RECEIVED (BUT WITH ANY ENDORSEMENTS OF
SUCH GRANTOR NECESSARY FOR DEPOSIT OR COLLECTION), AND UNTIL THEY ARE SO
DEPOSITED SUCH PAYMENTS SHALL BE HELD IN TRUST BY SUCH GRANTOR FOR AND AS THE
PROPERTY OF THE COLLATERAL AGENT.

 

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SECTION 5.02.  COLLECTIONS.   (A)  EACH GRANTOR AGREES PROMPTLY TO NOTIFY AND
DIRECT EACH ACCOUNT DEBTOR AND EVERY OTHER PERSON OBLIGATED TO MAKE PAYMENTS
WITH RESPECT TO THE ACCOUNTS RECEIVABLE OR INVENTORY, COMMENCING WITHIN 60 DAYS
AFTER THE EFFECTIVE DATE, TO MAKE ALL SUCH PAYMENTS DIRECTLY TO A COLLECTION
DEPOSIT ACCOUNT OR THE APPLICABLE CASH CONCENTRATION ACCOUNT (SUBJECT TO THE
PROVISO IN THE FOLLOWING SENTENCE).  EACH GRANTOR SHALL USE ALL REASONABLE
EFFORTS TO CAUSE, COMMENCING WITHIN 60 DAYS AFTER THE EFFECTIVE DATE, EACH
ACCOUNT DEBTOR AND EVERY OTHER PERSON IDENTIFIED IN THE PRECEDING SENTENCE TO
MAKE ALL PAYMENTS WITH RESPECT TO THE ACCOUNTS RECEIVABLE OR INVENTORY EITHER
DIRECTLY TO A COLLECTION DEPOSIT ACCOUNT OR A CASH CONCENTRATION ACCOUNT;
PROVIDED THAT CREDIT CARD PAYMENTS SHALL BE MADE DIRECTLY TO THE CASH
CONCENTRATION ACCOUNT.

 

 (B)  IN THE EVENT THAT A GRANTOR DIRECTLY RECEIVES ANY DAILY RECEIPTS DURING
THE CASH COLLECTION PERIOD, NOTWITHSTANDING THE ARRANGEMENTS FOR PAYMENT
DIRECTLY INTO THE COLLECTION DEPOSIT ACCOUNTS PURSUANT TO SECTION 5.02, SUCH
REMITTANCES SHALL BE HELD FOR THE BENEFIT OF THE COLLATERAL AGENT AND THE
SECURED PARTIES AND SHALL BE SEGREGATED FROM OTHER FUNDS OF SUCH GRANTOR,
SUBJECT TO THE SECURITY INTEREST GRANTED HEREBY, AND SUCH GRANTOR SHALL CAUSE
SUCH REMITTANCES AND PAYMENTS TO BE DEPOSITED INTO A COLLECTION DEPOSIT ACCOUNT
OR A CASH CONCENTRATION ACCOUNT, AS APPLICABLE, AS SOON AS PRACTICABLE AFTER
SUCH GRANTOR’S RECEIPT THEREOF.

 

 (C)  WITHOUT THE PRIOR WRITTEN CONSENT OF THE COLLATERAL AGENT, NO GRANTOR
SHALL, UNDER ANY CIRCUMSTANCES WHATSOEVER, CHANGE THE GENERAL INSTRUCTIONS GIVEN
TO ACCOUNT DEBTORS AND OTHER PERSONS OBLIGATED TO MAKE PAYMENTS WITH RESPECT TO
THE ACCOUNTS RECEIVABLE OR INVENTORY REGARDING THE DEPOSIT OF PAYMENTS WITH
RESPECT TO THE ACCOUNTS RECEIVABLE OR INVENTORY IN A COLLECTION DEPOSIT ACCOUNT
OR A CASH CONCENTRATION ACCOUNT, AS APPLICABLE.  EACH GRANTOR SHALL, AND THE
COLLATERAL AGENT HEREBY AUTHORIZES EACH GRANTOR TO, ENFORCE AND COLLECT ALL
AMOUNTS OWING WITH RESPECT TO THE ACCOUNTS RECEIVABLE OR INVENTORY FOR THE
BENEFIT AND ON BEHALF OF THE COLLATERAL AGENT AND THE OTHER SECURED PARTIES;
PROVIDED, HOWEVER, THAT SUCH PRIVILEGE MAY AT THE OPTION OF THE COLLATERAL AGENT
BE TERMINATED UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF
DEFAULT.

 

ARTICLE VI

 

POWER OF ATTORNEY

 

SECTION 6.01.      EACH GRANTOR IRREVOCABLY MAKES, CONSTITUTES AND APPOINTS THE
COLLATERAL AGENT (AND ALL OFFICERS, EMPLOYEES OR AGENTS DESIGNATED BY THE
COLLATERAL AGENT) AS SUCH GRANTOR’S TRUE AND LAWFUL AGENT AND ATTORNEY-IN-FACT,
AND IN SUCH CAPACITY THE COLLATERAL AGENT SHALL HAVE THE RIGHT, WITH POWER OF
SUBSTITUTION FOR EACH GRANTOR AND IN EACH GRANTOR’S NAME OR OTHERWISE, FOR THE
USE AND BENEFIT OF THE COLLATERAL AGENT AND THE SECURED PARTIES, UPON THE
OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT (A) TO RECEIVE,
ENDORSE, ASSIGN AND/OR DELIVER ANY AND ALL NOTES, ACCEPTANCES, CHECKS, DRAFTS,
MONEY ORDERS OR OTHER EVIDENCES OF PAYMENT RELATING TO THE COLLATERAL OR ANY
PART THEREOF; (B) TO DEMAND, COLLECT, RECEIVE PAYMENT OF, GIVE RECEIPT FOR AND
GIVE DISCHARGES AND RELEASES OF ALL OR ANY OF THE COLLATERAL; (C) TO SIGN THE
NAME OF

 

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ANY GRANTOR ON ANY INVOICE OR BILL OF LADING RELATING TO ANY OF THE COLLATERAL;
(D) TO SEND VERIFICATIONS OF ACCOUNTS RECEIVABLE TO ANY ACCOUNT DEBTOR; (E) TO
COMMENCE AND PROSECUTE ANY AND ALL SUITS, ACTIONS OR PROCEEDINGS AT LAW OR IN
EQUITY IN ANY COURT OF COMPETENT JURISDICTION TO COLLECT OR OTHERWISE REALIZE ON
ALL OR ANY OF THE COLLATERAL OR TO ENFORCE ANY RIGHTS IN RESPECT OF ANY
COLLATERAL; (F) TO SETTLE, COMPROMISE, COMPOUND, ADJUST OR DEFEND ANY ACTIONS,
SUITS OR PROCEEDINGS RELATING TO ALL OR ANY OF THE COLLATERAL; (G) TO NOTIFY, OR
TO REQUIRE ANY GRANTOR TO NOTIFY, ACCOUNT DEBTORS TO MAKE PAYMENT DIRECTLY TO
THE COLLATERAL AGENT; AND (H) TO USE, SELL, ASSIGN, TRANSFER, PLEDGE, MAKE ANY
AGREEMENT WITH RESPECT TO OR OTHERWISE DEAL WITH ALL OR ANY OF THE COLLATERAL,
AND TO DO ALL OTHER ACTS AND THINGS NECESSARY TO CARRY OUT THE PURPOSES OF THIS
AGREEMENT, AS FULLY AND COMPLETELY AS THOUGH THE COLLATERAL AGENT WERE THE
ABSOLUTE OWNER OF THE COLLATERAL FOR ALL PURPOSES; PROVIDED, HOWEVER, THAT
NOTHING HEREIN CONTAINED SHALL BE CONSTRUED AS REQUIRING OR OBLIGATING THE
COLLATERAL AGENT OR ANY SECURED PARTY TO MAKE ANY COMMITMENT OR TO MAKE ANY
INQUIRY AS TO THE NATURE OR SUFFICIENCY OF ANY PAYMENT RECEIVED BY THE
COLLATERAL AGENT OR ANY SECURED PARTY, OR TO PRESENT OR FILE ANY CLAIM OR
NOTICE, OR TO TAKE ANY ACTION WITH RESPECT TO THE COLLATERAL OR ANY PART THEREOF
OR THE MONEYS DUE OR TO BECOME DUE IN RESPECT THEREOF OR ANY PROPERTY COVERED
THEREBY, AND NO ACTION TAKEN OR OMITTED TO BE TAKEN BY THE COLLATERAL AGENT OR
ANY SECURED PARTY WITH RESPECT TO THE COLLATERAL OR ANY PART THEREOF SHALL GIVE
RISE TO ANY DEFENSE, COUNTERCLAIM OR OFFSET IN FAVOR OF ANY GRANTOR OR (UNLESS
SUCH ACTION IS THE RESULT OF GROSS NEGLIGENCE OR WILLFUL MISCONDUCT) TO ANY
CLAIM OR ACTION AGAINST THE COLLATERAL AGENT OR ANY SECURED PARTY.  IT IS
UNDERSTOOD AND AGREED THAT THE APPOINTMENT OF THE COLLATERAL AGENT AS THE AGENT
AND ATTORNEY-IN-FACT OF THE GRANTORS FOR THE PURPOSES SET FORTH ABOVE IS COUPLED
WITH AN INTEREST AND IS IRREVOCABLE.  THE PROVISIONS OF THIS SECTION SHALL IN NO
EVENT RELIEVE ANY GRANTOR OF ANY OF ITS OBLIGATIONS HEREUNDER OR UNDER ANY OTHER
LOAN DOCUMENT WITH RESPECT TO THE COLLATERAL OR ANY PART THEREOF OR IMPOSE ANY
OBLIGATION ON THE COLLATERAL AGENT OR ANY SECURED PARTY TO PROCEED IN ANY
PARTICULAR MANNER WITH RESPECT TO THE COLLATERAL OR ANY PART THEREOF, OR IN ANY
WAY LIMIT THE EXERCISE BY THE COLLATERAL AGENT OR ANY SECURED PARTY OF ANY OTHER
OR FURTHER RIGHT WHICH IT MAY HAVE ON THE DATE OF THIS AGREEMENT OR HEREAFTER,
WHETHER HEREUNDER, UNDER ANY OTHER LOAN DOCUMENT, BY LAW OR OTHERWISE.

 

Notwithstanding anything in this Article VI to the contrary, the Collateral
Agent agrees that it will not exercise any rights under the power of attorney
provided for in this Article VI unless it does so in accordance with, and to the
extent consistent with, the Intercreditor Agreement.

 

ARTICLE VII

 

REMEDIES

 

SECTION 7.01.  REMEDIES UPON DEFAULT.  IN ACCORDANCE WITH, AND TO THE EXTENT
CONSISTENT WITH, THE TERMS OF THE INTERCREDITOR AGREEMENT, UPON THE OCCURRENCE
AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, EACH GRANTOR AGREES TO
DELIVER EACH ITEM OF COLLATERAL TO THE COLLATERAL AGENT ON DEMAND, AND IT IS
AGREED THAT THE COLLATERAL AGENT SHALL HAVE THE RIGHT TO TAKE ANY OF OR ALL THE
FOLLOWING ACTIONS AT THE SAME OR DIFFERENT TIMES:  (A) WITH RESPECT TO ANY
COLLATERAL CONSISTING OF INTELLECTUAL PROPERTY, ON DEMAND,

 

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TO CAUSE THE SECURITY INTEREST TO BECOME AN ASSIGNMENT, TRANSFER AND CONVEYANCE
OF ANY OF OR ALL SUCH COLLATERAL BY THE APPLICABLE GRANTORS TO THE COLLATERAL
AGENT, OR TO LICENSE OR SUBLICENSE, WHETHER GENERAL, SPECIAL OR OTHERWISE, AND
WHETHER ON AN EXCLUSIVE OR NON-EXCLUSIVE BASIS, ANY SUCH COLLATERAL THROUGHOUT
THE WORLD ON SUCH TERMS AND CONDITIONS AND IN SUCH MANNER AS THE COLLATERAL
AGENT SHALL DETERMINE (OTHER THAN IN VIOLATION OF ANY THEN-EXISTING LICENSING OR
CONTRACTUAL ARRANGEMENTS TO THE EXTENT THAT WAIVERS CANNOT BE OBTAINED), AND
(B) WITH OR WITHOUT LEGAL PROCESS AND WITH OR WITHOUT PRIOR NOTICE OR DEMAND FOR
PERFORMANCE, TO TAKE POSSESSION OF THE COLLATERAL AND WITHOUT LIABILITY FOR
TRESPASS TO ENTER ANY PREMISES WHERE THE COLLATERAL MAY BE LOCATED FOR THE
PURPOSE OF TAKING POSSESSION OF OR REMOVING THE COLLATERAL AND, GENERALLY, TO
EXERCISE ANY AND ALL RIGHTS AFFORDED TO A SECURED PARTY UNDER THE PPSA AND ANY
OTHER APPLICABLE STATUTE, OR OTHERWISE AVAILABLE TO THE COLLATERAL AGENT AT LAW
OR IN EQUITY.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, IN ACCORDANCE
WITH, AND TO THE EXTENT CONSISTENT WITH, THE TERMS OF THE INTERCREDITOR
AGREEMENT, EACH GRANTOR AGREES THAT THE COLLATERAL AGENT SHALL HAVE THE RIGHT,
SUBJECT TO THE MANDATORY REQUIREMENTS OF APPLICABLE LAW, TO SELL OR OTHERWISE
DISPOSE OF ALL OR ANY PART OF THE COLLATERAL, AT PUBLIC OR PRIVATE SALE OR AT
ANY BROKER’S BOARD OR ON ANY SECURITIES EXCHANGE, FOR CASH, UPON CREDIT OR FOR
FUTURE DELIVERY AS THE COLLATERAL AGENT SHALL DEEM APPROPRIATE.  THE COLLATERAL
AGENT SHALL BE AUTHORIZED AT ANY SUCH SALE (IF IT DEEMS IT ADVISABLE TO DO SO)
TO RESTRICT THE PROSPECTIVE BIDDERS OR PURCHASERS TO PERSONS WHO WILL REPRESENT
AND AGREE THAT THEY ARE PURCHASING THE COLLATERAL FOR THEIR OWN ACCOUNT FOR
INVESTMENT AND NOT WITH A VIEW TO THE DISTRIBUTION OR SALE THEREOF, AND UPON
CONSUMMATION OF ANY SUCH SALE THE COLLATERAL AGENT SHALL HAVE THE RIGHT TO
ASSIGN, TRANSFER AND DELIVER TO THE PURCHASER OR PURCHASERS THEREOF THE
COLLATERAL SO SOLD.  EACH SUCH PURCHASER AT ANY SUCH SALE SHALL HOLD THE
PROPERTY SOLD ABSOLUTELY, FREE FROM ANY CLAIM OR RIGHT ON THE PART OF ANY
GRANTOR, AND EACH GRANTOR HEREBY WAIVES (TO THE EXTENT PERMITTED BY LAW) ALL
RIGHTS OF REDEMPTION, STAY AND APPRAISAL WHICH SUCH GRANTOR NOW HAS OR MAY AT
ANY TIME IN THE FUTURE HAVE UNDER ANY RULE OF LAW OR STATUTE NOW EXISTING OR
HEREAFTER ENACTED.

 

The Collateral Agent shall give the Grantors such prior written notice of the
Collateral Agent’s intention to make any sale of Collateral as may be required
by the PPSA or other applicable law.  Such notice, in the case of a public sale,
shall state the time and place for such sale and, in the case of a sale at a
broker’s board or on a securities exchange, shall state the board or exchange at
which such sale is to be made and the day on which the Collateral, or portion
thereof, will first be offered for sale at such board or exchange.  Any such
public sale shall be held at such time or times within ordinary business hours
and at such place or places as the Collateral Agent may fix and state in the
notice (if any) of such sale.  At any such sale, the Collateral, or portion
thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as the Collateral Agent may (in its sole and absolute discretion)
determine.  The Collateral Agent shall not be obligated to make any sale of any
Collateral if it shall determine not to do so, regardless of the fact that
notice of sale of such Collateral shall have been given.  The Collateral Agent
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and place
fixed for sale, and such sale may, without further notice, be made at the time
and place to which the same was so adjourned.  In case any sale of all or any
part of the Collateral is made on credit or for future delivery, the Collateral
so sold may be retained by the Collateral

 

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Agent until the sale price is paid by the purchaser or purchasers thereof, but
the Collateral Agent shall not incur any liability in case any such purchaser or
purchasers shall fail to take up and pay for the Collateral so sold and, in case
of any such failure, such Collateral may be sold again upon like notice.  At any
public (or, to the extent permitted by law, private) sale made pursuant to this
Section, any Secured Party may bid for or purchase, free (to the extent
permitted by law) from any right of redemption, stay, valuation or appraisal on
the part of any Grantor (all said rights being also hereby waived and released
to the extent permitted by law), the Collateral or any part thereof offered for
sale and may make payment on account thereof by using any claim then due and
payable to such Secured Party from any Grantor as a credit against the purchase
price, and such Secured Party may, upon compliance with the terms of sale, hold,
retain and dispose of such property without further accountability to any
Grantor therefor.  For purposes hereof, a written agreement to purchase the
Collateral or any portion thereof shall be treated as a sale thereof; the
Collateral Agent shall be free to carry out such sale pursuant to such agreement
and no Grantor shall be entitled to the return of the Collateral or any portion
thereof subject thereto, notwithstanding the fact that after the Collateral
Agent shall have entered into such an agreement all Events of Default shall have
been remedied and the Obligations paid in full.  As an alternative to exercising
the power of sale herein conferred upon it, in accordance with, and to the
extent consistent with, the terms of the Intercreditor Agreement, the Collateral
Agent may (i) proceed by a suit or suits at law or in equity to foreclose this
Agreement and to sell the Collateral or any portion thereof pursuant to a
judgment or decree of a court or courts having competent jurisdiction or
pursuant to a proceeding by a court-appointed receiver or (ii) appoint by
instrument in writing one or more Receivers of any Grantor or any or all of the
Collateral with such rights, powers and authority (including any or all of the
rights, powers and authority of the Collateral Agent under this Agreement) as
may be provided for in the instrument of appointment or any supplemental
instrument, and remove and replace any such Receiver from time to time to the
extent permitted by applicable law.  Any Receiver appointed by the Collateral
Agent will (for purposes relating to responsibility for the Receiver’s acts or
omissions) be considered to be the agent of such Grantor and not of the
Collateral Agent.

 

SECTION 7.02.  APPLICATION OF PROCEEDS.  IN ACCORDANCE WITH, AND TO THE EXTENT
CONSISTENT WITH, THE TERMS OF THE INTERCREDITOR AGREEMENT, THE COLLATERAL AGENT
SHALL APPLY THE PROCEEDS OF ANY COLLECTION OR SALE OF THE COLLATERAL, AS WELL AS
ANY COLLATERAL CONSISTING OF CASH, AS FOLLOWS:

 

FIRST, to the payment of all costs and expenses incurred by the Administrative
Agent or the Collateral Agent (in its capacity as such hereunder or under any
other Loan Document) in connection with such collection or sale or otherwise in
connection with this Agreement or any of the Obligations, including all court
costs and the fees and expenses of its agents and legal counsel, the repayment
of all advances made by the Collateral Agent hereunder or under any other Loan
Document on behalf of any Grantor and any other costs or expenses incurred in
connection with the exercise of any right or remedy hereunder or under any other
Loan Document;

 

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SECOND, to the payment in full of the Obligations (the amounts so applied to be
distributed among the Secured Parties pro rata in accordance with the amounts of
the Obligations owed to them on the date of any such distribution); and

 

THIRD, to the Grantors, their successors or assigns, or as a court of competent
jurisdiction may otherwise direct.

 

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

 

SECTION 7.03.  GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY.  IN ACCORDANCE
WITH, AND TO THE EXTENT CONSISTENT WITH, THE TERMS OF THE INTERCREDITOR
AGREEMENT, FOR THE PURPOSE OF ENABLING THE COLLATERAL AGENT TO EXERCISE RIGHTS
AND REMEDIES UNDER THIS ARTICLE AT SUCH TIME AS THE COLLATERAL AGENT SHALL BE
LAWFULLY ENTITLED TO EXERCISE SUCH RIGHTS AND REMEDIES, EACH GRANTOR HEREBY
GRANTS TO THE COLLATERAL AGENT AN IRREVOCABLE, NON-EXCLUSIVE LICENSE
(EXERCISABLE WITHOUT PAYMENT OF ROYALTY OR OTHER COMPENSATION TO THE GRANTORS)
TO THE EXTENT THAT SUCH LICENSE DOES NOT VIOLATE ANY THEN EXISTING LICENSING
ARRANGEMENTS (TO THE EXTENT THAT WAIVERS CANNOT BE OBTAINED) TO USE, LICENSE OR
SUB-LICENSE ANY OF THE COLLATERAL CONSISTING OF INTELLECTUAL PROPERTY NOW OWNED
OR HEREAFTER ACQUIRED BY SUCH GRANTOR, AND WHEREVER THE SAME MAY BE LOCATED, AND
INCLUDING IN SUCH LICENSE REASONABLE ACCESS TO ALL MEDIA IN WHICH ANY OF THE
LICENSED ITEMS MAY BE RECORDED OR STORED AND TO ALL COMPUTER SOFTWARE AND
PROGRAMS USED FOR THE COMPILATION OR PRINTOUT THEREOF AND SUFFICIENT RIGHTS OF
QUALITY CONTROL IN FAVOR OF GRANTOR TO AVOID THE INVALIDATION OF THE TRADEMARKS
SUBJECT TO THE LICENSE.  THE USE OF SUCH LICENSE BY THE COLLATERAL AGENT SHALL
BE EXERCISED, AT THE OPTION OF THE COLLATERAL AGENT, UPON THE OCCURRENCE AND
DURING THE CONTINUATION OF AN EVENT OF DEFAULT; PROVIDED THAT ANY LICENSE,
SUB-LICENSE OR OTHER TRANSACTION ENTERED INTO BY THE COLLATERAL AGENT IN
ACCORDANCE HEREWITH SHALL BE BINDING UPON THE GRANTORS NOTWITHSTANDING ANY
SUBSEQUENT CURE OF AN EVENT OF DEFAULT.

 

ARTICLE VIII

 

MISCELLANEOUS

 

SECTION 8.01.  NOTICES.  ALL COMMUNICATIONS AND NOTICES HEREUNDER SHALL (EXCEPT
AS OTHERWISE EXPRESSLY PERMITTED HEREIN) BE IN WRITING AND GIVEN AS PROVIDED IN
SECTION 10.01 OF THE CREDIT AGREEMENT.  ALL COMMUNICATIONS AND NOTICES HEREUNDER
TO ANY GUARANTOR SHALL BE GIVEN TO IT AT ITS ADDRESS OR TELECOPY NUMBER SET
FORTH ON SCHEDULE I, WITH A COPY TO THE PARENT BORROWER.

 

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SECTION 8.02.  SECURITY INTEREST ABSOLUTE.  ALL RIGHTS OF THE COLLATERAL AGENT
HEREUNDER, THE SECURITY INTEREST AND ALL OBLIGATIONS OF THE GRANTORS HEREUNDER
SHALL BE ABSOLUTE AND UNCONDITIONAL IRRESPECTIVE OF (A) ANY LACK OF VALIDITY OR
ENFORCEABILITY OF THE CREDIT AGREEMENT, ANY OTHER LOAN DOCUMENT, ANY AGREEMENT
WITH RESPECT TO ANY OF THE OBLIGATIONS OR ANY OTHER AGREEMENT OR INSTRUMENT
RELATING TO ANY OF THE FOREGOING, (B) ANY CHANGE IN THE TIME, MANNER OR PLACE OF
PAYMENT OF, OR IN ANY OTHER TERM OF, ALL OR ANY OF THE OBLIGATIONS, OR ANY OTHER
AMENDMENT OR WAIVER OF OR ANY CONSENT TO ANY DEPARTURE FROM THE CREDIT
AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY OTHER AGREEMENT OR INSTRUMENT, (C) ANY
EXCHANGE, RELEASE OR NON-PERFECTION OF ANY LIEN ON OTHER COLLATERAL, OR ANY
RELEASE OR AMENDMENT OR WAIVER OF OR CONSENT UNDER OR DEPARTURE FROM ANY
GUARANTEE, SECURING OR GUARANTEEING ALL OR ANY OF THE OBLIGATIONS, OR (D) ANY
OTHER CIRCUMSTANCE THAT MIGHT OTHERWISE CONSTITUTE A DEFENSE AVAILABLE TO, OR A
DISCHARGE OF, ANY GRANTOR IN RESPECT OF THE OBLIGATIONS OR THIS AGREEMENT.

 

SECTION 8.03.  SURVIVAL OF AGREEMENT.  ALL COVENANTS, AGREEMENTS,
REPRESENTATIONS AND WARRANTIES MADE BY ANY GRANTOR HEREIN AND IN THE
CERTIFICATES OR OTHER INSTRUMENTS PREPARED OR DELIVERED IN CONNECTION WITH OR
PURSUANT TO THIS AGREEMENT SHALL BE CONSIDERED TO HAVE BEEN RELIED UPON BY THE
SECURED PARTIES AND SHALL SURVIVE THE MAKING BY THE LENDERS OF THE LOANS, AND
THE EXECUTION AND DELIVERY TO THE LENDERS OF ANY NOTES EVIDENCING SUCH LOANS,
REGARDLESS OF ANY INVESTIGATION MADE BY THE LENDERS OR ON THEIR BEHALF, AND
SHALL CONTINUE IN FULL FORCE AND EFFECT UNTIL THIS AGREEMENT SHALL TERMINATE.

 

SECTION 8.04.  BINDING EFFECT; SEVERAL AGREEMENT.  THIS AGREEMENT SHALL BECOME
EFFECTIVE AS TO ANY GRANTOR WHEN A COUNTERPART HEREOF EXECUTED ON BEHALF OF SUCH
GRANTOR SHALL HAVE BEEN DELIVERED TO THE COLLATERAL AGENT AND A COUNTERPART
HEREOF SHALL HAVE BEEN EXECUTED ON BEHALF OF THE COLLATERAL AGENT, AND
THEREAFTER SHALL BE BINDING UPON SUCH GRANTOR AND THE COLLATERAL AGENT AND THEIR
RESPECTIVE SUCCESSORS AND ASSIGNS, AND SHALL INURE TO THE BENEFIT OF SUCH
GRANTOR, THE COLLATERAL AGENT AND THE OTHER SECURED PARTIES AND THEIR RESPECTIVE
SUCCESSORS AND ASSIGNS, EXCEPT THAT NO GRANTOR SHALL HAVE THE RIGHT TO ASSIGN OR
TRANSFER ITS RIGHTS OR OBLIGATIONS HEREUNDER OR ANY INTEREST HEREIN OR IN THE
COLLATERAL (AND ANY SUCH ASSIGNMENT OR TRANSFER SHALL BE VOID) EXCEPT AS
EXPRESSLY CONTEMPLATED BY THIS AGREEMENT OR THE CREDIT AGREEMENT.  THIS
AGREEMENT SHALL BE CONSTRUED AS A SEPARATE AGREEMENT WITH RESPECT TO EACH
GRANTOR AND MAY BE AMENDED, MODIFIED, SUPPLEMENTED, WAIVED OR RELEASED WITH
RESPECT TO ANY GRANTOR WITHOUT THE APPROVAL OF ANY OTHER GRANTOR AND WITHOUT
AFFECTING THE OBLIGATIONS OF ANY OTHER GRANTOR HEREUNDER.

 

SECTION 8.05.  SUCCESSORS AND ASSIGNS.  WHENEVER IN THIS AGREEMENT ANY OF THE
PARTIES HERETO IS REFERRED TO, SUCH REFERENCE SHALL BE DEEMED TO INCLUDE THE
SUCCESSORS AND ASSIGNS OF SUCH PARTY; AND ALL COVENANTS, PROMISES AND AGREEMENTS
BY OR ON BEHALF OF ANY GRANTOR OR THE COLLATERAL AGENT THAT ARE CONTAINED IN
THIS AGREEMENT SHALL BIND AND INURE TO THE BENEFIT OF THEIR RESPECTIVE
SUCCESSORS AND ASSIGNS.

 

SECTION 8.06.  COLLATERAL AGENT’S EXPENSES; INDEMNIFICATION.  IN ACCORDANCE
WITH, AND TO THE EXTENT CONSISTENT WITH, THE TERMS OF THE INTERCREDITOR
AGREEMENT,  (A)  EACH GRANTOR JOINTLY AND SEVERALLY AGREES TO PAY UPON DEMAND TO
THE

 

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COLLATERAL AGENT THE AMOUNT OF ANY AND ALL REASONABLE EXPENSES, INCLUDING THE
REASONABLE FEES, DISBURSEMENTS AND OTHER CHARGES OF ITS COUNSEL AND OF ANY
EXPERTS OR AGENTS, WHICH THE COLLATERAL AGENT MAY INCUR IN CONNECTION WITH
(I) THE ADMINISTRATION OF THIS AGREEMENT, (II) THE CUSTODY OR PRESERVATION OF,
OR THE SALE OF, COLLECTION FROM OR OTHER REALIZATION UPON ANY OF THE COLLATERAL,
(III) THE EXERCISE, ENFORCEMENT OR PROTECTION OF ANY OF THE RIGHTS OF THE
COLLATERAL AGENT HEREUNDER OR (IV) THE FAILURE OF ANY GRANTOR TO PERFORM OR
OBSERVE ANY OF THE PROVISIONS HEREOF.

 

 (B)  WITHOUT LIMITATION OF ITS INDEMNIFICATION OBLIGATIONS UNDER THE OTHER LOAN
DOCUMENTS, EACH GRANTOR JOINTLY AND SEVERALLY AGREES TO INDEMNIFY THE COLLATERAL
AGENT AND THE OTHER INDEMNITEES AGAINST, AND HOLD EACH OF THEM HARMLESS FROM,
ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED EXPENSES, INCLUDING
REASONABLE FEES, DISBURSEMENTS AND OTHER CHARGES OF COUNSEL, INCURRED BY OR
ASSERTED AGAINST ANY OF THEM ARISING OUT OF, IN ANY WAY CONNECTED WITH, OR AS A
RESULT OF, THE EXECUTION, DELIVERY OR PERFORMANCE OF THIS AGREEMENT OR ANY
CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING HERETO OR TO THE
COLLATERAL, WHETHER OR NOT ANY INDEMNITEE IS A PARTY THERETO; PROVIDED THAT SUCH
INDEMNITY SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH
LOSSES, CLAIMS, DAMAGES, LIABILITIES OR RELATED EXPENSES HAVE RESULTED FROM THE
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE.

 

 (C)  ANY SUCH AMOUNTS PAYABLE AS PROVIDED HEREUNDER SHALL BE ADDITIONAL
OBLIGATIONS SECURED HEREBY AND BY THE OTHER SECURITY DOCUMENTS.  THE PROVISIONS
OF THIS SECTION 8.06 SHALL REMAIN OPERATIVE AND IN FULL FORCE AND EFFECT
REGARDLESS OF THE TERMINATION OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, THE
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY, THE REPAYMENT OF ANY OF
THE LOANS, THE INVALIDITY OR UNENFORCEABILITY OF ANY TERM OR PROVISION OF THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY INVESTIGATION MADE BY OR ON BEHALF
OF THE COLLATERAL AGENT OR ANY LENDER.  ALL AMOUNTS DUE UNDER THIS SECTION 8.06
SHALL BE PAYABLE ON WRITTEN DEMAND THEREFOR.

 

SECTION 8.07.  GOVERNING LAW.  THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE PROVINCE OF ONTARIO AND THE FEDERAL LAWS OF
CANADA APPLICABLE THEREIN.

 

SECTION 8.08.  WAIVERS; AMENDMENT.   (A)  NO FAILURE OR DELAY OF THE COLLATERAL
AGENT IN EXERCISING ANY POWER OR RIGHT HEREUNDER SHALL OPERATE AS A WAIVER
THEREOF, NOR SHALL ANY SINGLE OR PARTIAL EXERCISE OF ANY SUCH RIGHT OR POWER, OR
ANY ABANDONMENT OR DISCONTINUANCE OF STEPS TO ENFORCE SUCH A RIGHT OR POWER,
PRECLUDE ANY OTHER OR FURTHER EXERCISE THEREOF OR THE EXERCISE OF ANY OTHER
RIGHT OR POWER.  THE RIGHTS AND REMEDIES OF THE COLLATERAL AGENT HEREUNDER AND
OF THE COLLATERAL AGENT, THE ISSUING BANK, THE ADMINISTRATIVE AGENT, THE OTHER
AGENTS AND THE LENDERS UNDER THE OTHER LOAN DOCUMENTS ARE CUMULATIVE AND ARE NOT
EXCLUSIVE OF ANY RIGHTS OR REMEDIES THAT THEY WOULD OTHERWISE HAVE.  NO WAIVER
OF ANY PROVISIONS OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR CONSENT TO ANY
DEPARTURE BY ANY GRANTOR THEREFROM SHALL IN ANY EVENT BE EFFECTIVE UNLESS THE
SAME SHALL BE PERMITTED BY PARAGRAPH (B) BELOW, AND THEN SUCH WAIVER OR CONSENT
SHALL BE EFFECTIVE ONLY IN THE SPECIFIC INSTANCE AND FOR THE PURPOSE FOR

 

25

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WHICH GIVEN.  NO NOTICE TO OR DEMAND ON ANY GRANTOR IN ANY CASE SHALL ENTITLE
SUCH GRANTOR OR ANY OTHER GRANTOR TO ANY OTHER OR FURTHER NOTICE OR DEMAND IN
SIMILAR OR OTHER CIRCUMSTANCES.

 

 (B)  NEITHER THIS AGREEMENT NOR ANY PROVISION HEREOF MAY BE WAIVED, AMENDED OR
MODIFIED EXCEPT (I) PURSUANT TO AN AGREEMENT OR AGREEMENTS IN WRITING ENTERED
INTO BY THE COLLATERAL AGENT AND THE GRANTOR OR GRANTORS WITH RESPECT TO WHICH
SUCH WAIVER, AMENDMENT OR MODIFICATION IS TO APPLY, SUBJECT TO (A) ANY CONSENT
REQUIRED IN ACCORDANCE WITH SECTION 10.02 OF THE CREDIT AGREEMENT AND (B) TO THE
LIMITATIONS IN THE INTERCREDITOR AGREEMENT OR (II) AS PROVIDED IN THE
INTERCREDITOR AGREEMENT.

 

SECTION 8.09.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.  EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.09.

 

SECTION 8.10.  SEVERABILITY.  IN THE EVENT ANY ONE OR MORE OF THE PROVISIONS
CONTAINED IN THIS AGREEMENT SHOULD BE HELD INVALID, ILLEGAL OR UNENFORCEABLE IN
ANY RESPECT, THE VALIDITY, LEGALITY AND ENFORCEABILITY OF THE REMAINING
PROVISIONS CONTAINED HEREIN SHALL NOT IN ANY WAY BE AFFECTED OR IMPAIRED THEREBY
(IT BEING UNDERSTOOD THAT THE INVALIDITY OF A PARTICULAR PROVISION IN A
PARTICULAR JURISDICTION SHALL NOT IN AND OF ITSELF AFFECT THE VALIDITY OF SUCH
PROVISION IN ANY OTHER JURISDICTION).  THE PARTIES SHALL ENDEAVOR IN GOOD-FAITH
NEGOTIATIONS TO REPLACE THE INVALID, ILLEGAL OR UNENFORCEABLE PROVISIONS WITH
VALID PROVISIONS THE ECONOMIC EFFECT OF WHICH COMES AS CLOSE AS POSSIBLE TO THAT
OF THE INVALID, ILLEGAL OR UNENFORCEABLE PROVISIONS.

 

SECTION 8.11.  COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED IN TWO OR MORE
COUNTERPARTS, EACH OF WHICH SHALL CONSTITUTE AN ORIGINAL BUT ALL OF WHICH WHEN
TAKEN TOGETHER SHALL CONSTITUTE BUT ONE CONTRACT (SUBJECT TO SECTION 8.04), AND
SHALL BECOME EFFECTIVE AS PROVIDED IN SECTION 8.04.  DELIVERY OF AN EXECUTED
SIGNATURE PAGE TO THIS AGREEMENT BY FACSIMILE TRANSMISSION SHALL BE EFFECTIVE AS
DELIVERY OF A MANUALLY EXECUTED COUNTERPART HEREOF.

 

SECTION 8.12.  HEADINGS.  ARTICLE AND SECTION HEADINGS USED HEREIN ARE FOR THE
PURPOSE OF REFERENCE ONLY, ARE NOT PART OF THIS AGREEMENT AND ARE NOT TO AFFECT
THE CONSTRUCTION OF, OR TO BE TAKEN INTO CONSIDERATION IN INTERPRETING, THIS
AGREEMENT.

 

26

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SECTION 8.13.  JURISDICTION; CONSENT TO SERVICE OF PROCESS.   (A)  EACH GRANTOR
HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO
THE NONEXCLUSIVE JURISDICTION OF ANY ONTARIO COURT OR FEDERAL COURT OF CANADA
SITTING IN SUCH PROVINCE, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH ONTARIO COURT OR,
TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT.  EACH OF THE PARTIES
HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT SHALL AFFECT ANY
RIGHT THAT THE COLLATERAL AGENT, THE ADMINISTRATIVE AGENT, THE ISSUING BANK OR
ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS AGAINST ANY GRANTOR OR ITS PROPERTIES IN
THE COURTS OF ANY JURISDICTION.

 

 (B)  EACH GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT IN ANY ONTARIO COURT OR FEDERAL COURT OF
CANADA SITTING IN SUCH PROVINCE.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

 (C)  EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN
THE MANNER PROVIDED FOR NOTICES IN SECTION 8.01.  NOTHING IN THIS AGREEMENT WILL
AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW.

 

SECTION 8.14.  TERMINATION.   (A)  THIS AGREEMENT AND THE SECURITY INTEREST
SHALL TERMINATE WHEN ALL THE OBLIGATIONS HAVE BEEN INDEFEASIBLY PAID IN FULL,
THE LENDERS HAVE NO FURTHER COMMITMENT TO LEND, THE LC EXPOSURE HAS BEEN REDUCED
TO ZERO AND THE ISSUING BANK HAS NO FURTHER COMMITMENT TO ISSUE LETTERS OF
CREDIT UNDER THE CREDIT AGREEMENT.

 

 (B)  A GUARANTOR SHALL AUTOMATICALLY BE RELEASED FROM ITS OBLIGATIONS HEREUNDER
AND THE SECURITY INTEREST IN THE COLLATERAL OF SUCH GUARANTOR SHALL BE
AUTOMATICALLY RELEASED IN THE EVENT THAT ALL THE CAPITAL STOCK OF SUCH GUARANTOR
SHALL BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF TO A PERSON THAT IS NOT AN
AFFILIATE OF THE PARENT BORROWER IN ACCORDANCE WITH THE TERMS OF THE CREDIT
AGREEMENT; PROVIDED THAT THE REQUIRED LENDERS SHALL HAVE CONSENTED TO SUCH SALE,
TRANSFER OR OTHER DISPOSITION (TO THE EXTENT REQUIRED BY THE CREDIT AGREEMENT)
AND THE TERMS OF SUCH CONSENT DID NOT PROVIDE OTHERWISE.

 

 (C)  UPON ANY SALE OR OTHER TRANSFER BY ANY GRANTOR OF ANY COLLATERAL THAT IS
PERMITTED UNDER THE CREDIT AGREEMENT, PROVIDED THAT THE REQUIRED LENDERS SHALL
HAVE CONSENTED TO SUCH TRANSACTION (TO THE EXTENT REQUIRED BY THE CREDIT
AGREEMENT) AND THE TERMS OF SUCH CONSENT DID NOT PROVIDE OTHERWISE, OR UPON THE
EFFECTIVENESS OF ANY WRITTEN

 

27

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

 

CONSENT TO THE RELEASE OF THE SECURITY INTEREST GRANTED HEREBY IN ANY COLLATERAL
PURSUANT TO SECTION 10.02 OF THE CREDIT AGREEMENT, THE SECURITY INTEREST IN SUCH
COLLATERAL SHALL BE AUTOMATICALLY RELEASED.

 

 (D)  IF ANY OF THE 2004 NOTES FIRST LIEN COLLATERAL (AS DEFINED IN THE
INTERCREDITOR AGREEMENT) SHALL BECOME SUBJECT TO THE RELEASE PROVISIONS SET
FORTH IN SECTION 5.1(C) OF THE INTERCREDITOR AGREEMENT, SUCH COLLATERAL SHALL BE
AUTOMATICALLY RELEASED FROM THE SECURITY INTEREST TO THE EXTENT PROVIDED IN
SECTION 5.1(C) OF THE INTERCREDITOR AGREEMENT.

 

 (E)  IN CONNECTION WITH ANY TERMINATION OR RELEASE PURSUANT TO PARAGRAPH (A),
(B), (C) OR (D) ABOVE, THE COLLATERAL AGENT SHALL EXECUTE AND DELIVER TO THE
GRANTORS, AT THE GRANTORS’ EXPENSE, ALL PERSONAL PROPERTY SECURITY ACT FINANCING
CHANGE STATEMENTS AND SIMILAR DOCUMENTS WHICH THE GRANTOR SHALL REASONABLY
REQUEST TO EVIDENCE SUCH TERMINATION OR RELEASE.  ANY EXECUTION AND DELIVERY OF
TERMINATION STATEMENTS OR RELEASE DOCUMENTS PURSUANT TO THIS SECTION 8.14 SHALL
BE WITHOUT RECOURSE TO OR WARRANTY BY THE COLLATERAL AGENT.

 

SECTION 8.15.  ADDITIONAL GRANTORS.  UPON EXECUTION AND DELIVERY BY THE
COLLATERAL AGENT AND A SUBSIDIARY ORGANIZED UNDER THE LAWS OF CANADA OR ANY
PROVINCE THEREOF OF AN INSTRUMENT IN THE FORM OF ANNEX 2, SUCH SUBSIDIARY SHALL
BECOME A GRANTOR HEREUNDER WITH THE SAME FORCE AND EFFECT AS IF ORIGINALLY NAMED
AS A GRANTOR HEREIN.  THE EXECUTION AND DELIVERY OF ANY SUCH INSTRUMENT SHALL
NOT REQUIRE THE CONSENT OF ANY GRANTOR HEREUNDER.  THE RIGHTS AND OBLIGATIONS OF
EACH GRANTOR HEREUNDER SHALL REMAIN IN FULL FORCE AND EFFECT NOTWITHSTANDING THE
ADDITION OF ANY NEW GRANTOR AS A PARTY TO THIS AGREEMENT.

 

SECTION 8.16.  SUBJECT TO INTERCREDITOR AGREEMENT.  NOTWITHSTANDING ANYTHING
HEREIN TO THE CONTRARY, THE LIEN AND SECURITY INTEREST GRANTED TO THE COLLATERAL
AGENT PURSUANT TO THIS AGREEMENT AND THE EXERCISE OF ANY RIGHT OR REMEDY BY THE
COLLATERAL AGENT HEREUNDER ARE SUBJECT TO THE PROVISIONS OF THE INTERCREDITOR
AGREEMENT.  IN THE EVENT OF ANY CONFLICT BETWEEN THE TERMS OF THE INTERCREDITOR
AGREEMENT AND THIS AGREEMENT, THE TERMS OF THE INTERCREDITOR AGREEMENT SHALL
GOVERN.

 

SECTION 8.17.  2004 INDENTURE.  THE COLLATERAL AGENT ACKNOWLEDGES AND AGREES, ON
BEHALF OF ITSELF AND THE SECURED PARTIES, THAT, ANY PROVISION OF THIS AGREEMENT
TO THE CONTRARY NOTWITHSTANDING, UNTIL THE 2004 NOTES FIRST LIEN TRANSITION DATE
(AS DEFINED IN THE INTERCREDITOR AGREEMENT), THE GRANTORS SHALL NOT BE REQUIRED
TO ACT OR REFRAIN FROM ACTING WITH RESPECT TO ANY 2004 NOTES FIRST LIEN
COLLATERAL ON WHICH THE 2004 TRUSTEE (AS DEFINED IN THE INTERCREDITOR AGREEMENT)
HAS A LIEN SUPERIOR IN PRIORITY TO THE COLLATERAL AGENT’S LIEN THEREON IN ANY
MANNER THAT WOULD RESULT IN A DEFAULT UNDER THE TERMS AND PROVISIONS OF THE 2004
INDENTURE (AS DEFINED IN THE INTERCREDITOR AGREEMENT).

 

28

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

 

 

UNIPLAST INDUSTRIES CO.,

 

 

 

 

 

by

 

 

 

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

DEUTSCHE BANK TRUST COMPANY
AMERICAS, as Collateral Agent,

 

 

 

 

 

by

 

 

 

 

 

 

Name:

 

 

Title:

 

29

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Schedule I to the
Canadian Security Agreement

 

 

GRANTORS

 

 

Grantor

 

Address for Notice

 

Fascimile

 

 

 

 

 

Nil

 

 

 

 

 

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

 

Schedule II to the
Canadian Security Agreement

 

 

COPYRIGHTS

 

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

 

Schedule III to the
Canadian Security Agreement

 

 

LICENSES

 

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

 

Schedule IV to the
Canadian Security Agreement

 

 

PATENTS

 

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

 

Schedule V to the
Canadian Security Agreement

 

 

TRADEMARKS

 

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

 

Annex I
To the Canadian Security Agreement

 

 

[Form Of] PERFECTION CERTIFICATE

 

 

Reference is made to the Canadian Security Agreement dated as of February 17,
2004 (as amended, supplemented or otherwise modified from time to time, the
“Canadian Security Agreement”), among Uniplast Industries Co. (the “Canadian
Subsidiary Borrower”), the other grantors party thereto and Wilmington Trust
Company, as collateral agent (the “Notes Collateral Agent”) for the Secured
Parties (as defined in the Canadian Security Agreement).  Reference is also made
to the Credit Agreement dated as of February 17, 2004 (as amended, supplemented
or otherwise modified from time to time, the “Credit Agreement”), among Pliant
Corporation (the “Parent Borrower”), the Canadian Subsidiary Borrower, the
subsidiaries of the Parent Borrower party thereto as domestic subsidiary
borrowers, the lenders from time to time party thereto (the “Lenders”), Credit
Suisse First Boston, acting through its Cayman Islands Branch, as administrative
and documentation agent for the Lenders, Deutsche Bank Trust Company Americas,
as collateral agent (the “Collateral Agent”), General Electric Capital
Corporation, as co-collateral agent, and JPMorgan Chase Bank, as syndication
agent.  Capitalized terms used but not defined herein have the meanings assigned
in the Credit Agreement or the Canadian Security Agreement referred to therein,
as applicable.

 

The undersigned, a Financial Officer of the Parent Borrower, hereby certifies to
(i) the Collateral Agent and each other Secured Party and (ii) the Notes
Collateral Agent and each other Secured Party (as defined in the Canadian
Security Agreement) as follows:

 

SECTION 1. Names.  (a)  Set forth below is (i) the exact legal name of each
Grantor, as such name appears in its document of formation, (ii) each other
legal name each Grantor has had in the past five years and (iii) the date of the
relevant change:

 

Legal Name

 

Former Name

 

Date of Change

 

 

 

 

 

 

(b)  Except as set forth in Schedule 1 hereto, no Grantor has changed its
identity or corporate structure in any way within the past five years. Changes
in identity or corporate structure would include mergers, consolidations and
acquisitions, as well as any change in the form, nature or jurisdiction of
corporate organization.  If any such change has occurred, include in Schedule 1
the information required by Sections 1 and 2 of this certificate as to each
acquiree or constituent party to a merger or consolidation.

 

(c)  Set forth below is a list of all other names (including trade names or
similar appellations) used by each Grantor or any of its divisions or other
business units in connection with the conduct of its business or the ownership
of its properties at any time during the past five years:

 

Legal Name

 

Other Name

 

 

 

 

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

 

(d)  Set forth below is the organizational identification number, if any, issued
by the jurisdiction of formation of each Grantor that is a registered
organization:

 

Legal Name

 

Organizational No.

 

 

 

 

SECTION 2. Locations.  (a)  Set forth below opposite the name of each Grantor
that is a registered organization is the jurisdiction of formation of such
Grantor:

 

Legal Name

 

Organizational No.

 

 

 

 

(b)  Set forth below opposite the name of each Grantor is the address and county
or region of the chief executive office of such Grantor:

 

Legal Name

 

Address of Chief Executive Office

 

Region

 

 

 

 

 

 

(c)  Set forth below opposite the name of each Grantor is the address and county
or region of all locations where such Grantor maintains any books or records
relating to any Accounts Receivable and/or General Intangibles (with each
location at which chattel paper, if any, is kept being indicated by an “*”):

 

Legal Name

 

Address of Accounts Receivable
and/or General Intangibles

 

Region

 

 

 

 

 

 

(d)  Set forth below opposite the name of each Grantor is the address and county
of all locations where such Grantor maintains any Inventory, Equipment and/or
other Collateral not identified above:

 

Legal Name

 

Address of Inventory,
Equipment and/or Other Collateral

 

Postal Code

 

 

 

 

 

 

2

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(e)  Set forth below opposite the name of each Grantor is the address and county
of all the places of business of such Grantor not identified in paragraph (a),
(b), (c) or (d) above:

 

Legal Name

 

Other Business Addresses

 

Postal Code

 

 

 

 

 

 

(f)  Set forth below opposite the name of each Grantor are the names, addresses
and counties of all Persons other than such Grantor that have possession of any
of the Collateral of such Grantor (with each such Person that holds such
Collateral subject to a Lien (including, but not limited to, warehousemen’s,
mechanics’ and other statutory liens) indicated by an “*”):

 

Legal Name

 

Other Collateral Addresses

 

Postal Code

 

 

 

 

 

 

SECTION 3. Unusual Transactions.  All Accounts have been originated by the
Grantors and all Inventory has been acquired by the Grantors in the ordinary
course of business.

 

SECTION 4. File Search Reports. Search reports have been obtained from each
provincial personal property security registry identified with respect to such
Grantor in Section 2 hereof, and such search reports reflect no liens against
any of the Collateral other than those permitted under the Credit Agreement.

 

SECTION 5.  PPSA Filings.  PPSA financing statements have been filed in the
relevant provincial personal property security registry and, in the case of
fixture filings, the applicable land registration office, in each jurisdiction
identified with respect to such Grantor in Section 2 and Section 10, as
applicable, hereof.

 

SECTION 6.  Schedule of Filings.  Attached hereto as Schedule 6 is a true and
correct list, with respect to the filings described in Section 5 above, of each
filing and the provincial personal property security registry or, in the case of
fixture filings, the applicable land registration office, in which such filing
was made.

 

SECTION 7.  Stock Ownership and Other Equity Interests.  Attached hereto as
Schedule 7 is a true and correct list of all the Equity Interests of each
Grantor and the record and beneficial owners of such Equity Interests.  Also set
forth on Schedule 7 is each equity investment of each Grantor that represents
50% or less of the equity of the entity in which such investment was made.

 

SECTION 8.  Debt Instruments.  Attached hereto as Schedule 8 is a true and
correct list of all instruments, including any promissory notes, and other
evidence of indebtedness held by each Grantor that are required to be pledged
under the Canadian Security Agreement, including all intercompany notes between
the Parent Borrower and any Grantor or between any Grantor and any other
Grantor.

 

SECTION 9.  Advances.  Attached hereto as Schedule 9 is (a) a true and correct
list of all advances made by the Canadian Subsidiary Borrower to any Subsidiary

 

3

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

 

of the Parent Borrower (other than those identified on Schedule 8), which
advances will be on and after the date hereof evidenced by one or more
intercompany notes pledged to the Collateral Agent under the Canadian Security
Agreement and (b) a true and correct list of all unpaid intercompany transfers
of goods sold and delivered by or to the Canadian Subsidiary Borrower or any
Subsidiary of the Parent Borrower.

 

SECTION 10.  Mortgage Filings.  Attached hereto as Schedule 10 is a true and
correct list, with respect to each Mortgaged Property, of (a) the exact name of
the Person that owns such property as such name appears in its certificate of
incorporation or other organizational document, (b) if different from the name
identified pursuant to clause (a), the exact name of the current record owner of
such property reflected in the records of the land registration office for such
property identified pursuant to the following clause and (c) the land
registration office in which a Mortgage with respect to such property must be
filed or recorded in order for the Collateral Agent to obtain a properly
recorded mortgage therein.

 

SECTION 11.  Intellectual Property.  Attached hereto as Schedule 11(A) in proper
form for filing with the Canadian Intellectual Property Office and the United
States Patent and Trademark Office, as applicable, is a true and correct list of
each Grantor’s Patents, Patent Licenses, Trademarks and Trademark Licenses,
including the name of the registered owner, registration number and expiration
date of each Patent, Patent License, Trademark and Trademark License owned by
any Grantor.  Attached hereto as Schedule 11(B) in proper form for filing with
the Canadian Intellectual Property Office and the United States Copyright
Office, as applicable, is a true and correct list of each Grantor’s Copyrights
and Copyright Licenses, including the name of the registered owner, registration
number and expiration date of each Copyright or Copyright License owned by any
Grantor.

 

SECTION 12.  Deposit Accounts.  Attached hereto as Schedule 12 is a true and
correct list of deposit accounts maintained by each Grantor, including the name
and address of the depositary institution, the type of account, and the account
number.

 

IN WITNESS WHEREOF, the undersigned has duly executed this certificate on this
[    ] day of February, 2004.

 

 

 

PLIANT CORPORATION,

 

 

 

 

by

 

 

 

 

 

 

Name:

 

 

Title:  [Financial Officer]

 

4

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Annex 2 to the
Canadian Security Agreement

 

SUPPLEMENT NO.      dated as of                               , 20       to the
Canadian Security Agreement dated as of February 17, 2004, among Uniplast
Industries Co., a Nova Scotia company (the “Canadian Subsidiary Borrower”), each
other subsidiary of Pliant Corporation, a Utah corporation (the “Parent
Borrower”), organized under the laws of Canada or any province thereof listed on
Schedule I thereto (each such subsidiary individually a “Guarantor” and
collectively, the “Guarantors”; the Guarantors and the Canadian Subsidiary
Borrower are referred to collectively herein as the “Grantors”) and DEUTSCHE
BANK TRUST COMPANY AMERICAS, a New York banking corporation, as collateral agent
(in such capacity, the “Collateral Agent”) for the Secured Parties (as defined
therein).

 

A.           Reference is made to (a) the Credit Agreement dated as of
February 17, 2004 (as amended, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among the Parent Borrower, the domestic
subsidiary borrowers party thereto, the Canadian Subsidiary Borrower, the
lenders from time to time party thereto (the “Lenders”), the Collateral Agent,
Credit Suisse First Boston, acting through its Cayman Islands Branch, as
administrative agent (the “Administrative Agent”), General Electric Capital
Corporation, as co-collateral agent, and JPMorgan Chase Bank, as syndication
agent, and (b) the Guarantee Agreement dated as of February 17, 2004 (as
amended, supplemented or otherwise modified from time to time, the “Guarantee
Agreement”), among, inter alia, the Parent Borrower, the Canadian Subsidiary
Borrower and the Administrative Agent.

 

B.             Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Canadian Security
Agreement and the Credit Agreement.

 

C.             The Grantors have entered into the Canadian Security Agreement in
order to induce the Lenders to make Loans and the Issuing Bank to issue Letters
of Credit.  Section 8.15 of the Canadian Security Agreement provides that
additional Subsidiaries organized under the laws of Canada or any province
thereof may become Grantors under the Canadian Security Agreement by execution
and delivery of an instrument in the form of this Supplement.  The undersigned
Subsidiary (the “New Grantor”) is executing this Supplement in accordance with
the requirements of the Credit Agreement to become a Grantor under the Canadian
Security Agreement in order to induce the Lenders to make additional Loans and
the Issuing Bank to issue additional Letters of Credit and as consideration for
Loans previously made and Letters of Credit previously issued.

 

Accordingly, the Collateral Agent and the New Grantor agree as follows:

 

SECTION 1.  In accordance with Section 8.15 of the Canadian Security Agreement,
the New Grantor by its signature below becomes a Grantor under the Canadian
Security Agreement with the same force and effect as if originally named

 

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

 

therein as a Grantor and the New Grantor hereby (a) agrees to all the terms and
provisions of the Canadian Security Agreement applicable to it as a Grantor
thereunder and (b) represents and warrants that the representations and
warranties made by it as a Grantor thereunder are true and correct on and as of
the date hereof.  In furtherance of the foregoing, the New Grantor, as security
for the payment and performance in full of the Obligations (as defined in the
Canadian Security Agreement), does hereby create and grant to the Collateral
Agent, its successors and assigns, for the benefit of the Secured Parties, their
successors and assigns, a security interest in and lien on all of the New
Grantor’s right, title and interest in and to the Collateral (as defined in the
Canadian Security Agreement) of the New Grantor.  Each reference to a “Grantor”
in the Canadian Security Agreement shall be deemed to include the New Grantor.
The Canadian Security Agreement is hereby incorporated herein by reference.

 

SECTION 2.  The New Grantor represents and warrants to the Collateral Agent and
the other Secured Parties that this Supplement has been duly authorized,
executed and delivered by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms.

 

SECTION 3.  This Supplement may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an
original, but all of which when taken together shall constitute a single
contract. This Supplement shall become effective when the Collateral Agent shall
have received counterparts of this Supplement that, when taken together, bear
the signatures of the New Grantor and the Collateral Agent.  Delivery of an
executed signature page to this Supplement by facsimile transmission shall be
effective as delivery of a manually signed counterpart of this Supplement.

 

SECTION 4.  The New Grantor hereby represents and warrants that (a) set forth on
Schedule I attached hereto is a true and correct schedule of the location of any
and all Collateral of the New Grantor and (b) set forth under or above its
signature hereto, is the true and correct legal name of the New Subsidiary, its
jurisdiction of formation, its organizational identification number (if any) and
the location of the chief executive office of the New Grantor.

 

SECTION 5.  Except as expressly supplemented hereby, the Canadian Security
Agreement shall remain in full force and effect.

 

SECTION 6.  THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE PROVINCE OF ONTARIO AND THE FEDERAL LAWS OF CANADA
APPLICABLE THEREIN.

 

SECTION 7.  In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Canadian Security Agreement shall not in any way be affected
or impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction

 

2

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shall not in and of itself affect the validity of such provision in any other
jurisdiction). The parties hereto shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.

 

SECTION 8.  All communications and notices hereunder shall be in writing and
given as provided in Section 10.01 of the Credit Agreement. All communications
and notices hereunder to the New Grantor shall be given to it at the address set
forth under its signature below.

 

SECTION 9.  The New Grantor agrees to reimburse the Collateral Agent for its
reasonable out-of-pocket expenses in connection with this Supplement, including
the reasonable fees, other charges and disbursements of counsel for the
Collateral Agent.

 

IN WITNESS WHEREOF, the New Grantor and the Collateral Agent have duly executed
this Supplement to the Canadian Security Agreement as of the day and year first
above written.

 

 

[Name Of New Grantor],

 

 

By

 

 

 

 

 

 

Name:

 

 

Title:

 

 

Address:

 

 

 

 

 

 

 

DEUTSCHE BANK TRUST COMPANY
AMERICAS, as Collateral Agent,

 

 

 

 

By

 

 

 

 

 

 

Name:

 

 

Title:

 

3

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SCHEDULE I
to Supplement No.      to the
Canadian Security Agreement

 

 

LOCATION OF COLLATERAL

 

 

Description

 

Location

 

 

 

 

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