Exhibit 10.1

COLLATERAL AGREEMENT

dated and effective as of March 2, 2012,

among

CLAIRE’S STORES, INC.,

as Issuer,

THE PLEDGORS PARTY HERETO,

and

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,

as Collateral Agent

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TABLE OF CONTENTS

 

         Page     ARTICLE I      DEFINITIONS   

Section 1.01.

 

Indenture

     1   

Section 1.02.

 

Other Defined Terms

     2      ARTICLE II      PLEDGE OF SECURITIES   

Section 2.01.

 

Pledge

     6   

Section 2.02.

 

Delivery of the Pledged Collateral

     7   

Section 2.03.

 

Representations, Warranties and Covenants

     8   

Section 2.04.

 

Registration in Nominee Name; Denominations

     9   

Section 2.05.

 

Voting Rights; Dividends and Interest, Etc.

     10      ARTICLE III      SECURITY INTERESTS IN OTHER PERSONAL PROPERTY   

Section 3.01.

 

Security Interest

     11   

Section 3.02.

 

Representations and Warranties

     13   

Section 3.03.

 

Covenants

     16   

Section 3.04.

 

Other Actions

     18   

Section 3.05.

 

Covenants Regarding Patent, Trademark and Copyright Collateral

     18   

Section 3.06.

 

Further Assurances; Additional Security

     20      ARTICLE IV      REMEDIES   

Section 4.01.

 

Remedies Upon Default

     21   

Section 4.02.

 

Application of Proceeds

     23   

Section 4.03.

 

Securities Act, Etc.

     23      ARTICLE V      MISCELLANEOUS   

Section 5.01.

 

Notices

     24   

Section 5.02.

 

Security Interest Absolute

     24   

Section 5.03.

 

Limitation By Law

     24   

Section 5.04.

 

Binding Effect; Several Agreement

     24   

Section 5.05.

 

Successors and Assigns

     25   

Section 5.06.

 

Collateral Agent’s Fees and Expenses; Indemnification

     25   

 

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         Page  

Section 5.07.

 

Collateral Agent Appointed Attorney-in-Fact

     26   

Section 5.08.

 

GOVERNING LAW

     26   

Section 5.09.

 

Waivers Amendment

     26   

Section 5.10.

 

WAIVER OF JURY TRIAL

     27   

Section 5.11.

 

Severability

     27   

Section 5.12.

 

Counterparts

     27   

Section 5.13.

 

Headings

     27   

Section 5.14.

 

Jurisdiction; Consent to Service of Process

     27   

Section 5.15.

 

Termination or Release

     28   

Section 5.16.

 

Additional Subsidiaries

     29      ARTICLE VI      INTERCREDITOR AGREEMENT   

Section 6.01.

 

Intercreditor Agreement Controls

     29   

Section 6.02.

 

Discharge

     29      ARTICLE VII      THE COLLATERAL AGENT   

Schedules

    

Schedule I

 

Subsidiary Parties

  

Schedule II

 

Pledged Stock; Debt Securities

  

Schedule III

 

Intellectual Property

  

Schedule IV

 

Filing Jurisdictions

  

Schedule V

 

Commercial Tort Claims

  

Schedule VI

 

Matters Relating to Accounts and Inventory

  

Exhibits

    

Exhibit I

 

Form of Supplement to the Collateral Agreement

  

 

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COLLATERAL AGREEMENT dated and effective as of March 2, 2012 (this “Agreement”),
among CLAIRE’S STORES, INC., a Florida corporation (the “Issuer”), each
Subsidiary of the Company identified on Schedule I hereto (each such Subsidiary,
together with the Issuer and any Subsidiary of the Company that becomes a party
hereto pursuant to Section 5.16 hereof, the “Pledgors,” and each, a “Pledgor”),
and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as collateral agent (in
such capacity, the “Collateral Agent”) for the Indenture Secured Parties (as
defined below).

Pursuant to the terms, conditions and provisions of (a) the Indenture dated as
of February 28, 2012, among Claire’s Escrow II Corporation, a Delaware
corporation (“Claire’s Escrow”), and The Bank of New York Mellon Trust Company,
N.A., as trustee (in such capacity, the “Trustee”) and Collateral Agent, as
supplemented by the Supplemental Indenture dated March 2, 2012 among the Issuer,
the Issuer’s Subsidiaries named therein, the Trustee and the Collateral Agent
(such agreement, as amended, amended and restated, supplemented or otherwise
modified from time to time, the “Indenture”), and (b) the Purchase Agreement
dated February 13, 2012 (as amended, amended and restated, supplemented or
otherwise modified from time to time, the “Purchase Agreement”) among Claire’s
Escrow, the Issuer, the Issuer’s Subsidiaries named therein and the
representatives of the several parties named in Schedule A thereto, the Issuer
has assumed the obligations of Claire’s Escrow with respect to $400,000,000 in
aggregate principal amount of 9.00% Senior Secured First Lien Notes due 2019 (as
such notes may be amended, amended and restated, supplemented or otherwise
modified from time to time, the “Notes”) upon the terms and subject to the
conditions contained therein.

The Issuer and each other Pledgor will receive substantial benefits from the
execution, delivery and performance of the obligations under the Indenture and
the other Noteholder Documents and each is, therefor, willing to enter into this
Agreement.

This Agreement is given by each Pledgor in favor of the Collateral Agent for the
benefit of the Indenture Secured Parties to secure the payment and performance
of all of the Notes Obligations (as hereinafter defined).

It is a requirement of the Indenture and the Purchase Agreement that each
Pledgor execute and deliver the applicable Noteholder Documents, including this
Agreement.

Accordingly, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01. Indenture.

(a) Capitalized terms used in this Agreement and not otherwise defined herein
have the respective meanings assigned thereto in the Indenture. All capitalized
terms defined in the New York UCC (as defined herein) and not defined in this
Agreement have the meanings specified therein. The term “instrument” shall have
the meaning specified in Article 9 of the New York UCC.

(b) The rules of construction specified in Section 1.04 of the Indenture also
apply to this Agreement.

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

“Account Debtor” means any person who is or who may become obligated to any
Pledgor under, with respect to or on account of an Account, Chattel Paper,
General Intangibles, Instruments or Investment Property.

“Applicable Collateral Agent” has the meaning assigned to such term in the First
Lien Intercreditor Agreement.

“Article 9 Collateral” has the meaning assigned to such term in Section 3.01.

“Claire’s Escrow” has the meaning assigned to such term in the preliminary
statement of this Agreement.

“Collateral” means the collective reference to Article 9 Collateral and Pledged
Collateral.

“Collateral Requirement” shall mean the requirement that:

(a) in the case of any person that becomes a Guarantor under the Indenture after
the Issue Date, the Collateral Agent shall have received a supplement to this
Agreement, in the form attached hereto as Exhibit I, duly executed and delivered
on behalf of such Guarantor;

(b) in the case of any person that becomes a “first tier” Foreign Subsidiary
directly owned by the Issuer or any other Pledgor after the Issue Date, subject
to Section 3.06 hereof, the Collateral Agent shall have received, as promptly as
practicable following such event (unless the Collateral Agent, in its sole
discretion, shall have waived such requirement), a Foreign Pledge Agreement,
duly executed and delivered on behalf of such Foreign Subsidiary and the direct
parent company of such Foreign Subsidiary; provided, that such a pledge would
not violate any applicable law or agreements with other shareholders or joint
venture partners;

(c) after the Issue Date, (i) all the outstanding Equity Interests of (A) any
person that becomes a Guarantor under the Indenture after the Issue Date and
(B) subject to Section 3.06(f) hereof, all the Equity Interests that are
acquired by any Pledgor after the Issue Date shall have been pledged pursuant to
this Agreement or a Foreign Pledge Agreement; provided, that in no event shall
more than 65% of the issued and outstanding voting Equity Interests of (1) any
“first tier” Foreign Subsidiary or (2) any “first tier” Qualified CFC Holding
Company directly owned by such Pledgor be pledged to secure the Notes
Obligations, and in no event shall any of the issued and outstanding Equity
Interests of any Foreign Subsidiary that is not a “first tier” Foreign
Subsidiary of a Pledgor or any Qualified CFC Holding Company that is not a
“first tier” Subsidiary of a Pledgor be pledged to secure the Notes Obligations,
and (ii) subject to the Intercreditor Agreements, the Collateral Agent (or a
bailee on behalf of the Collateral Agent) shall have received all certificates
or other instruments (if any) representing such Equity Interests, together with
stock powers or other instruments of transfer with respect thereto endorsed in
blank;

(d) except as otherwise contemplated by any Security Document, all documents and
instruments, including Uniform Commercial Code financing statements, required by
law or reasonably requested by the Collateral Agent to be filed, registered or
recorded to create the Liens intended to be created by the Security Documents
(in each case, including any supplements thereto) and perfect such Liens to the
extent required by, and with the priority required by, the Security Documents,
shall have been filed, registered or recorded or delivered to the Collateral
Agent for filing, registration or the recording concurrently with, or promptly
following, the execution and delivery of each such Security Document;

 

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(e) within 30 days after the date hereof, the Collateral Agent shall be listed
as a co-loss payee on property and casualty insurance policies and as an
additional insured on liability insurance policies;

(f) after the Issue Date, the Collateral Agent shall have received (1) such
other Security Documents as may be required to be delivered pursuant to
Section 3.06 hereof, and (ii) upon reasonable request by the Collateral Agent,
evidence of compliance with any other requirements of Section 3.06 hereof;

(g) all Indebtedness of the Issuer and each Subsidiary having, in the case of
each instance of Indebtedness, an aggregate principal amount in excess of $5.0
million (other than (A) intercompany current liabilities incurred in the
ordinary course of business in connection with the cash management operations of
the Issuer and the Subsidiaries or (B) to the extent that a pledge of such
promissory note or instrument would violate applicable law) that is owing to any
Pledgor shall be evidenced by a promissory note or an instrument and shall have
been pledged pursuant to this Agreement, and (ii) subject to the Intercreditor
Agreements, the Collateral Agent (or a bailee on behalf of the Collateral Agent)
shall have received all such promissory notes or instruments, together with note
powers or other instruments of transfer with respect thereto endorsed in blank;
and

(h) except as otherwise contemplated by any Security Document, each Pledgor
shall have obtained all consents and approvals required to be obtained by it in
connection with (i) the execution and delivery of all Security Documents (or
supplements thereto) to which it is a party and the granting by it of the Liens
thereunder and (ii) the performance of its obligations thereunder.

“Copyright License” means any written agreement, now or hereafter in effect,
granting any right to any Pledgor under any Copyright now or hereafter owned by
any third party, and all rights of any Pledgor under any such agreement
(including, without limitation, any such rights that such Pledgor has the right
to license).

“Copyrights” means all of the following now owned or hereafter acquired by any
Pledgor: (a) all copyright rights in any work subject to the copyright laws of
the United States or any other country, whether as author, assignee, transferee
or otherwise, (b) all registrations and applications for registration of any
such Copyright in the United States or any other country, including
registrations, supplemental registrations and pending applications for
registration in the United States Copyright Office and the right to obtain all
renewals thereof, including those listed on Schedule III, (c) all claims for,
and rights to sue for, past or future infringements of any of the foregoing and
(d) all income, royalties, damages and payments now or hereafter due and payable
with respect to any of the foregoing, including damages and payments for past or
future infringement thereof.

“Credit Agreement Obligations” has the meaning assigned to such term in the
First Lien Intercreditor Agreement.

“Discharge” shall (i) with respect to the Notes Obligations, mean the
satisfaction and discharge (pursuant to Article XII of the Indenture),
defeasance (pursuant to Article VIII of the Indenture) or other satisfaction in
full of the Notes Obligations and (ii) with respect to the Credit Agreement
Obligations, have the meaning assigned to such term in the First Lien
Intercreditor Agreement.

“Federal Securities Laws” has the meaning assigned to such term in Section 4.03.

 

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“Foreign Pledge Agreement” shall mean a pledge agreement with respect to the
Pledged Collateral that constitutes Equity Interests of a “first tier” Foreign
Subsidiary; provided, that in no event shall more than 65% of the issued and
outstanding voting Equity Interests of such Foreign Subsidiary be pledged to
secure the Notes Obligations.

“General Intangibles” means all “General Intangibles” as defined in the New York
UCC, including all choses in action and causes of action and all other
intangible personal property of any Pledgor of every kind and nature (other than
Accounts) now owned or hereafter acquired by any Pledgor, 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), Intellectual Property (but excluding “intent-to-use”
applications for trademark or service mark registrations filed pursuant to
Section 1(b) of the Lanham Act, 15 U.S.C. § 1051, unless and until an Amendment
to Allege Use or a Statement of Use under Sections 1(c) and 1(d) of the Lanham
Act has been filed, to the extent that, and solely during the period for which,
any assignment of an “intent-to-use” application prior to such filing would
violate the Lanham Act), goodwill, registrations, franchises, tax refund claims
and any guarantee, claim, security interest or other security held by or granted
to any Pledgor to secure payment by an Account Debtor of any of the Accounts.

“Governmental Authority” shall mean any federal, state, local or foreign court
or governmental agency, authority, instrumentality or regulatory or legislative
body.

“Indenture” has the meaning assigned to such term in the preliminary statement
of this Agreement.

“Indenture Secured Parties” shall mean the Persons holding Notes Obligations,
including the Trustee, the Holders and the Collateral Agent.

“Intellectual Property” means all intellectual property of every kind and nature
now owned or hereafter acquired by any Pledgor, including inventions, designs,
Patents, Copyrights, Trademarks, Patent Licenses, Copyright Licenses, Trademark
Licenses, trade secrets, domain names, confidential or proprietary technical and
business information, know-how, show-how or other data or information and all
related documentation.

“Intellectual Property Security Agreement” means a security agreement in the
form hereof or a short form hereof.

“IP Agreements” means all material Copyright Licenses, Patent Licenses,
Trademark Licenses, and all other agreements, permits, consents, orders and
franchises relating to the license, development, use or disclosure of any
material Intellectual Property to which a Pledgor, now or hereafter, is a party
or a beneficiary.

“Issuer” has the meaning assigned to such term in the preliminary statement of
this Agreement.

“Material Adverse Effect” means a material adverse effect on the business,
property, operations or condition of the Issuer and the Subsidiaries, taken as a
whole, or the validity or enforceability of any of the material Noteholder
Documents or the rights and remedies of the Collateral Agent, the Trustee and
the Holders thereunder.

 

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

“Noteholder Documents” shall mean (a) the Indenture, the Notes, any Additional
Notes, the Security Documents (as defined in the Indenture) and (b) any other
related document or instrument executed and delivered pursuant to any Noteholder
Document described in clause (a) above evidencing or governing any Obligations
thereunder.

“Notes” has the meaning assigned to such term in the preliminary statement of
this Agreement.

“Notes Obligations” shall mean all Obligations in respect of the Notes, any
Additional Notes or arising under the Noteholder Documents or any of them,
including all fees and expenses of the Trustee thereunder.

“Patent License” means any written agreement, now or hereafter in effect,
granting to any Pledgor any right to make, use or sell any invention covered by
a Patent, now or hereafter owned by any third party (including, without
limitation, any such rights that such Pledgor has the right to license).

“Patents” means all of the following now owned or hereafter acquired by any
Pledgor: (a) all letters patent of the United States or the equivalent thereof
in any other country or jurisdiction, including those listed on Schedule III,
and all applications for letters patent of the United States or the equivalent
thereof in any other country or jurisdiction, including those listed on Schedule
III, (b) all provisionals, reissues, extensions, continuations, divisions,
continuations-in-part, reexaminations or revisions thereof, and the inventions
disclosed or claimed therein, including the right to make, use, import and/or
sell the inventions disclosed or claimed therein, (c) all claims for, and rights
to sue for, past or future infringements of any of the foregoing and (d) all
income, royalties, damages and payments now or hereafter due and payable with
respect to any of the foregoing, including damages and payments for past or
future infringement thereof.

“Permitted Liens” has the meaning assigned to such term in the Indenture.

“Pledged Collateral” has the meaning assigned to such term in Section 2.01.

“Pledged Debt Securities” has the meaning assigned to such term in Section 2.01.

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

“Pledged Stock” has the meaning assigned to such term in Section 2.01.

“Pledgor” has the meaning assigned to such term in the preliminary statement of
this Agreement.

“Qualified CFC Holding Company” shall mean a Wholly-owned Subsidiary of the
Issuer (a) that is a Delaware limited liability company that is treated as a
disregarded entity for U.S. federal income tax purposes, (b) the primary asset
of which consists of Equity Interests in either (i) one or more Foreign
Subsidiaries or (ii) one or more other Qualified CFC Holding Companies and
(c) has no outstanding Guarantee of Indebtedness of the Issuer or any Domestic
Subsidiary.

 

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“Real Property” shall mean, collectively, all right, title and interest
(including any leasehold estate) in and to any and all parcels of or interests
in real property owned in fee or leased by any Pledgor, together with, in each
case, all easements, hereditaments and appurtenances relating thereto, and all
improvements and appurtenant fixtures incidental to the ownership or lease
thereof.

“Security Interest” has the meaning assigned to such term in Section 3.01.

“Trademark License” means any written agreement, now or hereafter in effect,
granting to any Pledgor any right to use any Trademark now or hereafter owned by
any third party (including, without limitation, any such rights that such
Pledgor has the right to license).

“Trademarks” means all of the following now owned or hereafter acquired by any
Pledgor: (a) all trademarks, service marks, 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 thereof
(if any), and all registration and recording applications filed in connection
therewith, including registrations and registration applications in the United
States Patent and Trademark Office or any similar offices in any State of the
United States or any other country or any political subdivision thereof (except
for “intent-to-use” applications for trademark or service mark registrations
filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. § 1051, unless and
until an Amendment to Allege Use or a Statement of Use under Sections 1(c) and
1(d) of the Lanham Act has been filed, to the extent that any assignment of an
“intent-to-use” application prior to such filing would violate the Lanham Act),
and all renewals thereof, including those listed on Schedule III, (b) all
goodwill associated therewith or symbolized thereby, (c) all claims for, and
rights to sue for, past or future infringements of any of the foregoing and
(d) all income, royalties, damages and payments now or hereafter due and payable
with respect to any of the foregoing, including damages and payments for past or
future infringement thereof.

ARTICLE II

PLEDGE OF SECURITIES

Section 2.01. Pledge. As security for the payment or performance, as the case
may be, in full of the Notes Obligations, each Pledgor hereby assigns and
pledges to the Collateral Agent, its successors and permitted assigns, for the
ratable benefit of the Indenture Secured Parties, and hereby grants to the
Collateral Agent, its successors and permitted assigns, for the ratable benefit
of the Indenture Secured Parties, a security interest in all of such Pledgor’s
right, title and interest in, to and under (a) the Equity Interests directly
owned by it (including those listed on Schedule II) and any other Equity
Interests obtained in the future by such Pledgor and any certificates
representing all such Equity Interests (the “Pledged Stock”); provided that the
Pledged Stock shall not include (i)(A) more than 65% of the issued and
outstanding voting Equity Interests of any “first tier” Foreign Subsidiary
directly owned by such Pledgor, (B) more than 65% of the issued and outstanding
voting Equity Interests of any “first tier” Qualified CFC Holding Company
directly owned by such Pledgor, (C) any issued and outstanding Equity Interest
of any Foreign Subsidiary that is not a first tier Foreign Subsidiary, or
(D) any issued and outstanding Equity Interests of any Qualified CFC Holding
Company that is not a “first tier” Qualified CFC Holding Company, (ii) to the
extent applicable law-requires that a Subsidiary of such Pledgor issue
directors’ qualifying shares or similar shares, such shares or nominee or other
similar shares, (iii) any Equity Interests with respect to which a grant of
security is not required by reason of Section 3.06 hereof, or (iv) any Equity
Interests of a Subsidiary to the extent that, as of the Issue Date, and for so
long as, such a pledge of such Equity Interests would violate applicable law or
an enforceable contractual obligation binding on or relating to such Equity
Interests; (b)(i) the debt obligations listed opposite the name of such Pledgor
on

 

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Schedule II, (ii) any debt securities in the future issued to such Pledgor and
(iii) the certificates, promissory notes and any other instruments, if any,
evidencing such debt securities (the “Pledged Debt Securities”); (c) subject to
Section 2.05 hereof, all payments of principal or interest, dividends, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of, in exchange for or upon the conversion of,
and all other proceeds received in respect of, the property referred to in
clauses (a) and (b) above; (d) subject to Section 2.05 hereof, all rights and
privileges of such Pledgor with respect to the securities and other property
referred to in clauses (a), (b) and (c) above; and (e) all proceeds of any of
the foregoing (the items referred to in clauses (a) through (e) above being
collectively referred to as the “Pledged Collateral”).

TO HAVE AND TO HOLD the Pledged Collateral, together with all right, title,
interest, powers, privileges and preferences pertaining or incidental thereto,
unto the Collateral Agent, its successors and permitted assigns, for the ratable
benefit of the Indenture Secured Parties, forever; subject, however, to the
terms, covenants and conditions hereinafter set forth.

Section 2.02. Delivery of the Pledged Collateral.

(a) Subject to the terms of the Intercreditor Agreements, each Pledgor agrees
promptly to deliver or cause to be delivered to the Collateral Agent, for the
ratable benefit of the Indenture Secured Parties, any and all Pledged Securities
to the extent such Pledged Securities are either (i) Equity Interests or
(ii) promissory notes or other instruments evidencing Indebtedness required to
be delivered pursuant to paragraph (b) of this Section 2.02. Subject to the
terms of the Intercreditor Agreements, if any Pledged Stock that is
uncertificated on the date hereof shall hereafter become certificated, the
applicable Pledgor shall promptly cause the certificate or certificates
representing Pledged Stock to be delivered to the Collateral Agent, for the
ratable benefit of the Indenture Secured Parties, together with the accompanying
note powers or other documentation required by Section 2.02(c). None of the
Pledgors shall permit any other party to “control” (for purposes of
Section 8-106 of the New York UCC (or any analogous provision of the Uniform
Commercial Code in effect in the jurisdiction whose law applies)) any
uncertificated securities that constitute Pledged Collateral other than the
Collateral Agent, as agent for the Indenture Secured Parties, and the Applicable
Collateral Agent.

(b) To the extent permitted by and subject to the terms of the Intercreditor
Agreements, each Pledgor will cause any Indebtedness for borrowed money having
an aggregate principal amount in excess of $5.0 million (other than
(i) intercompany current liabilities incurred in the ordinary course of business
in connection with the cash management operations of the Issuer and its
Subsidiaries or (ii) to the extent that a pledge of such promissory note or
instrument would violate applicable law) owed to such Pledgor by any person to
be evidenced by a duly executed promissory note that is pledged and delivered to
the Collateral Agent, for the ratable benefit of the Indenture Secured Parties,
together with the accompanying note powers or other documentation required by
Section 2.02(c), pursuant to the terms hereof. Subject to the terms of the
Intercreditor Agreements, to the extent any such promissory note is a demand
note, each Pledgor party thereto agrees, if requested by the Collateral Agent,
to immediately demand payment thereunder upon an Event of Default specified
under Section 6.01(i), (ii), (iv), (vii) or (viii) of the Indenture unless such
demand would not be commercially reasonable or would otherwise expose such
Pledgor to liability to the maker.

(c) Subject to the terms of the Intercreditor Agreements, upon delivery to the
Collateral Agent, (i) any Pledged Securities required to be delivered pursuant
to the foregoing paragraphs (a) and (b) of this Section 2.02 shall be
accompanied by stock powers or note powers, as applicable, duly executed in
blank or other instruments of transfer and such other instruments and documents
as the Collateral Agent may reasonably request and (ii) all other property
comprising part of the Pledged Collateral delivered

 

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pursuant to the terms of this Agreement shall be accompanied to the extent
necessary to perfect the security interest in or allow realization on the
Pledged Collateral by proper instruments of assignment duly executed by the
applicable Pledgor and such other instruments or documents (including issuer
acknowledgments in respect of uncertificated securities) as the Collateral Agent
may reasonably request. Each delivery of Pledged Securities shall be accompanied
by a schedule describing the securities, which schedule shall be attached hereto
as Schedule II (or a supplement to Schedule II, as applicable) and made a part
hereof; provided that failure to attach any such schedule hereto shall not
affect the validity of such pledge of such Pledged Securities. Each schedule so
delivered shall supplement any prior schedules so delivered.

(d) To the extent permitted by and subject to the terms of the Intercreditor
Agreements, in the event any Pledged Securities constitute uncertificated
securities, each Pledgor shall either (i) cause the issuer to agree to comply
with instructions from the Collateral Agent without further consent of any
Pledgor or (ii) cause the issuer to register the Collateral Agent as the
registered owner of such uncertificated security.

Section 2.03. Representations, Warranties and Covenants. The Pledgors, jointly
and severally, represent, warrant and covenant to and with the Collateral Agent,
for the ratable benefit of the Indenture Secured Parties, that:

(a) Schedule II correctly sets forth the percentage of the issued and
outstanding shares of each class of the Equity Interests of the issuer thereof
represented by such Pledged Stock and includes all Equity Interests, debt
securities and promissory notes or instruments evidencing Indebtedness required
to be (i) pledged in order to satisfy the Collateral Requirement, or
(ii) delivered pursuant to Section 2.02(b);

(b) the Pledged Stock and Pledged Debt Securities (solely with respect to
Pledged Debt Securities issued by a person that is not a Subsidiary of the
Issuer or an Affiliate of any such Subsidiary, to the best of each Pledgor’s
knowledge) have been duly and validly authorized and issued by the issuers
thereof and (i) in the case of Pledged Stock, are fully paid and nonassessable
(other than with respect to Pledged Stock consisting of membership interests of
limited liability companies to the extent provided in Sections 18-502 and 18-607
of the Delaware Limited Liability Company Act) and (ii) in the case of Pledged
Debt Securities (solely with respect to Pledged Debt Securities issued by a
person that is not a Subsidiary of the Issuer or an Affiliate of any such
Subsidiary, to the best of each Pledgor’s knowledge) are legal, valid and
binding obligations of the issuers thereof, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors’ rights generally, general
equitable principles (whether considered in a proceeding at law or in equity)
and an implied covenant of good faith and fair dealing;

(c) except for the security interests granted hereunder, each Pledgor (i) is
and, subject to any transfers made in compliance with the Indenture, will
continue to be the direct owner, beneficially and of record, of the Pledged
Securities indicated on Schedule II as owned by such Pledgor, (ii) holds the
same free and clear of all Liens, other than Permitted Liens, (iii) will make no
assignment, pledge, hypothecation or transfer of, or create or permit to exist
any security interest in or other Lien on, the Pledged Collateral, other than
pursuant to a transaction permitted by the Indenture and other than Permitted
Liens and (iv) subject to the rights of such Pledgor under the Noteholder
Documents to dispose of Pledged Collateral, will use commercially reasonable
efforts to defend its title or interest hereto or therein against any and all
Liens (other than Permitted Liens), however arising, of all persons;

 

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(d) other than as set forth in the Indenture, and except for restrictions and
limitations imposed by the Noteholder Documents or securities laws generally or
otherwise permitted to exist pursuant to the terms of the Indenture, the Pledged
Stock (other than partnership interests) is and will continue to be freely
transferable and assignable, and none of the Pledged Stock is or will be subject
to any option, right of first refusal, shareholders agreement, charter or by-law
provisions or contractual restriction of any nature that might prohibit, impair,
delay or otherwise affect the pledge of such Pledged Stock hereunder, the sale
or disposition thereof pursuant hereto or the exercise by the Collateral Agent
of rights and remedies hereunder;

(e) each Pledgor has the power and authority to pledge the Pledged Collateral
pledged by it hereunder in the manner hereby done or contemplated;

(f) other than as set forth in the Indenture, no consent or approval of any
Governmental Authority, any securities exchange or any other person was or is
necessary to the validity of the pledge effected hereby (other than such as have
been obtained and are in full force and effect);

(g) by virtue of the execution and delivery by the Pledgors of this Agreement
and the Foreign Pledge Agreements, when any Pledged Securities (including
Pledged Stock of any Domestic Subsidiary, any Qualified CPC Holding Company or
any foreign stock covered by a Foreign Pledge Agreement) are subject to the
Intercreditor Agreements, delivered to the Collateral Agent, for the ratable
benefit of the Indenture Secured Parties, in accordance with this Agreement and
a financing statement covering such Pledged Securities is filed in the
appropriate filing office, the Collateral Agent will obtain, for the ratable
benefit of the Indenture Secured Parties, a legal, valid and perfected lien upon
and security interest in such Pledged Securities’ under the New York UCC,
subject only to Permitted Liens, as security for the payment and performance of
the Notes Obligations;

(h) each Pledgor that is an issuer of the Pledged Collateral confirms that it
has received notice of the security interest granted hereunder and consents to
such security interest and agrees to transfer record ownership of the securities
issued by it in connection with any request by the Collateral Agent; and

(i) the Pledgors shall not amend, or permit to be amended, the limited liability
company agreement (or operating agreement or similar agreement) or partnership
agreement of any Subsidiary of any Pledgor whose Equity Interests are, or are
required to be, Collateral in a manner to cause such Equity Interests to not
constitute a security under Section 8-103 of the New York UCC or the
corresponding code or statute of any other applicable jurisdiction unless such
Pledgor shall have first delivered 30 days written notice to the Collateral
Agent and shall have taken all actions contemplated hereby and as otherwise
reasonably required by the Collateral Agent to maintain the security interest of
the Collateral Agent therein as a valid, perfected, first priority security
interest.

Section 2.04. Registration in Nominee Name; Denominations. To the extent
permitted by and subject to the Intercreditor Agreements, the Collateral Agent,
on behalf of the Indenture Secured Parties, shall have the right (in its sole
and absolute discretion) to hold the Pledged Securities in the name of the
applicable Pledgor, endorsed or assigned in blank or in favor of the Collateral
Agent or, if an Event of Default shall have occurred and be continuing, in its
own name as pledgee or the name of a nominee (as pledgee or as sub-agent). Each
Pledgor will promptly give to the Collateral Agent copies of any notices or
other communications received by it with respect to Pledged Securities
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such Pledgor. To the extent permitted by and subject to the Intercreditor
Agreements, if an Event of Default shall have occurred and be continuing, the
Collateral Agent shall have the right to exchange the certificates representing
Pledged Securities for certificates of smaller or larger denominations for any
purpose consistent with this Agreement. To the extent permitted by and subject
to the Intercreditor Agreements, each Pledgor shall use its commercially
reasonable efforts to cause any issuer of Pledged Securities that is not a party
to this Agreement to comply with a request by the Collateral Agent, pursuant to
this Section 2.04, to exchange certificates representing Pledged Securities of
such issuer for certificates of smaller or larger denominations.

Section 2.05. Voting Rights; Dividends and Interest, Etc.

(a) Unless and until an Event of Default shall have occurred and be continuing
and the Collateral Agent shall have given notice to the relevant Pledgors of the
Collateral Agent’s intention to exercise its rights hereunder (to the extent
permitted by the Intercreditor Agreements):

(i) Each Pledgor shall be entitled to exercise any and all voting and/or other
consensual rights and powers inuring to an owner of Pledged Collateral or any
part thereof for any purpose consistent with the terms of this Agreement, the
Indenture and the other Noteholder Documents; provided that, except as permitted
under the Indenture, such rights and powers shall not be exercised in any manner
that could materially and adversely affect the rights inuring to a holder of any
Pledged Collateral, the rights and remedies of any of the Collateral Agent or
the other Indenture Secured Parties under this Agreement, the Indenture or any
other Noteholder Document or the ability of the Indenture Secured Parties to
exercise the same.

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

(iii) Each Pledgor shall be entitled to receive and retain any and all
dividends, interest, principal and other distributions paid on or distributed in
respect of the Pledged Collateral to the extent and only to the extent that such
dividends, interest, principal and other distributions are permitted by, and
otherwise paid or distributed in accordance with, the terms and conditions of
the Indenture, the other Noteholder Documents and applicable laws; provided that
(A) any noncash dividends, interest, principal or other distributions, payments
or other consideration in respect thereof, including any rights to receive the
same to the extent not so distributed or paid, that would constitute Pledged
Securities, whether resulting from a subdivision, combination or
reclassification of the outstanding Equity Interests of the issuer of any
Pledged Securities, received in exchange for Pledged Securities or any part
thereof, or in redemption thereof, as a result of any merger, consolidation,
acquisition or other exchange of assets to which such issuer may be a party or
otherwise and (B) any non-cash dividends and other distributions paid or payable
in respect of any Pledged Securities that would constitute Pledged Securities in
connection with a partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid in surplus, shall be and
become part of the Pledged Collateral, and, if received by any Pledgor, shall
not be commingled by such Pledgor with any of its other funds or property but,
subject to the Intercreditor Agreements, shall be held separate and apart
therefrom, shall be held in trust for the benefit of the Collateral Agent, for
the ratable benefit of the Indenture Secured Parties, and shall be forthwith
delivered to the Collateral Agent, for the ratable benefit of the Indenture
Secured Parties, in the same form as so received (duly endorsed by such
Pledgor).

 

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(b) Subject to the terms of the Intercreditor Agreements, upon the occurrence
and during the continuance of an Event of Default and after notice by the
Collateral Agent to the Issuer of the Collateral Agent’s intention to exercise
its rights hereunder, all rights of any Pledgor to dividends, interest,
principal or other distributions that such Pledgor is authorized to receive
pursuant to paragraph (a)(iii) of this Section 2.05 shall cease, and all such
rights shall thereupon become vested, for the ratable benefit of the Indenture
Secured Parties, in the Collateral Agent which shall have the sole and exclusive
right and authority to receive and retain such dividends, interest, principal or
other distributions; provided, however, that even after the occurrence of an
Event of Default, any Pledgor may continue to exercise dividend and distribution
rights solely to the extent permitted under Sections 4.07(b)(xii) and
4.07(b)(xiii)(A) of the Indenture. Subject to the Intercreditor Agreements, all
dividends, interest, principal or other distributions received by any Pledgor
contrary to the provisions of this Section 2.05 shall not be commingled by such
Pledgor with any of its other funds or property but shall be held separate and
apart therefrom, shall be held in trust for the benefit of the Collateral Agent,
for the ratable benefit of the Indenture Secured Parties, and-shall be forthwith
delivered to the Collateral Agent, for the ratable benefit of the Indenture
Secured Parties, in the same form as so received (endorsed by such Pledgor). Any
and all money and other property paid over to or received by the Collateral
Agent pursuant to the provisions of this paragraph (b) shall be retained by the
Collateral Agent in an account to be established by the Collateral Agent upon
receipt of such money or other property and shall be applied in accordance with
the provisions of Section 4.02 hereof. After all Events of Default have been
cured or waived and the Issuer has delivered to the Collateral Agent a
certificate to that effect, the Collateral Agent shall promptly repay to each
Pledgor (without interest) all dividends, interest, principal or other
distributions that such Pledgor would otherwise be permitted to retain pursuant
to the terms of paragraph (a)(iii) of this Section 2.05 and that remain in such
account.

(c) Subject to the terms of the Intercreditor Agreements, upon the occurrence
and during the continuance of an Event of Default and after notice by the
Collateral Agent to the Issuer of the Collateral Agent’s intention to exercise
its rights hereunder, all rights of any Pledgor to exercise the voting and/or
consensual rights and powers it is entitled to exercise pursuant to paragraph
(a)(i) of this Section 2.05, and the obligations of the Collateral Agent under
paragraph (a)(ii) of this Section 2.05, shall cease, and all such rights shall
thereupon become vested in the Collateral Agent, for the ratable benefit of the
Indenture Secured Parties, which shall have the sole and exclusive right and
authority to exercise such voting and consensual rights and powers; provided
that, subject to the terms of the Intercreditor Agreements and the Indenture,
unless the Collateral Agent shall have received written objections from at least
a majority of the Holders of the Notes then outstanding, the Collateral Agent
shall have the right from time to time following and during the continuance of
an Event of Default to permit the Pledgors to exercise such rights. After all
Events of Default have been cured or waived and the Issuer has delivered to the
Collateral Agent a certificate to that effect, each Pledgor shall have the right
to exercise the voting and/or consensual rights and powers that such Pledgor
would otherwise be entitled to exercise pursuant to the terms of paragraph
(a)(i) above.

ARTICLE III

SECURITY INTERESTS IN OTHER PERSONAL PROPERTY

Section 3.01. Security Interest.

(a) As security for the payment or performance when due (whether at the stated
maturity, by acceleration or otherwise), as the case may be, in full of the
Notes Obligations, each Pledgor hereby assigns and pledges to the Collateral
Agent, its successors and permitted assigns, for the ratable benefit of the
Indenture Secured Parties, and hereby grants to the Collateral Agent, its
successors and

 

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permitted assigns, for the ratable benefit of the Indenture Secured Parties, a
security interest (the “Security Interest”) in all right, title and interest in
or to any and all of the following assets and properties now owned or at any
time hereafter acquired by such Pledgor or in which such Pledgor now has or at
any time in the future may acquire any right, title or interest (collectively,
the “Article 9 Collateral”):

(i) all Accounts;

(ii) all Chattel Paper;

(iii) all Documents;

(iv) all Equipment;

(v) all General Intangibles;

(vi) all Instruments;

(vii) all Inventory;

(viii) all Investment Property;

(ix) all Letter of Credit Rights;

(x) all Commercial Tort Claims;

(xi) other personal property not otherwise described above (except for property
specifically excluded from any defined term used in any of the foregoing
clauses);

(xii) all books and records pertaining to the Article 9 Collateral; and

(xiii) to the extent not otherwise included, all proceeds (including cash and
Deposit Accounts), Supporting Obligations and products of any and all of the
foregoing and all collateral security and guarantees given by any person with
respect to any of the foregoing.

Notwithstanding anything to the contrary in this Agreement, this Agreement shall
not constitute a grant of a security interest in (a) any vehicle covered by a
certificate of title or ownership, whether now owned or hereafter acquired,
(b) any assets (including Equity Interests), whether now owned or hereafter
acquired, with respect to which the Collateral Requirement or the other
paragraphs of Section 3.06 hereof would not be required to be satisfied by
reason of Section 3.06(f) hereof if hereafter acquired, (c) any property
excluded from the definition of Pledged Collateral by virtue of the proviso to
Section 2.01 hereof, (d) any Letter of Credit Rights to the extent any Pledgor
is required by applicable law to apply the proceeds of a drawing of such Letter
of Credit for a specified purpose, (e) any Pledgor’s right, title or interest in
any license, contract or agreement to which such Pledgor is a party or any of
its right, title or interest thereunder to the extent, but only to the extent,
that such a grant would, under the terms of such license, contract or agreement,
result in a breach of the terms of, or constitute a default under, or result in
the abandonment, invalidation or unenforceability of, any license, contract or
agreement to which such Pledgor is a party (other than to the extent that any
such term would be rendered ineffective pursuant to Section 9-406, 9-407, 9-408
or 9-409 of the New York UCC or any other applicable law (including, without
limitation, Title 11 of the United States Code) or principles of equity);
provided that immediately upon the ineffectiveness, lapse or termination of any
such provision, the Collateral shall include, and such Pledgor

 

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shall be deemed to have granted a security interest in, all such rights and
interests as if such provision had never been in effect, and (f) any Equipment
owned by any Pledgor that is subject to a purchase money lien or a Capital Lease
Obligation if the contract or other agreement in which such Lien is granted (or
the documentation providing for such Capital Lease Obligation) prohibits or
requires the consent of any person other than the Pledgors as a condition to the
creation of any other security interest on such Equipment.

(b) Each Pledgor hereby irrevocably authorizes the Collateral Agent at any time
and from time to time to file in any relevant jurisdiction any initial financing
statements (including fixture filings) with respect to the Article 9 Collateral
or any part thereof and amendments thereto that contain the information required
by Article 9 of the Uniform Commercial Code of each applicable jurisdiction for
the filing of any financing statement or amendment, including (i) whether such
Pledgor is an organization, the type of organization and any organizational
identification number issued to such Pledgor; (ii) in the case of a financing
statement filed as a fixture filing, a sufficient description of the real
property to which such Article 9 Collateral relates; and (iii) a description of
collateral that describes such property in any other manner as the Collateral
Agent may reasonably determine is necessary or advisable to ensure the
perfection of the security interest in the Article 9 Collateral granted under
this Agreement, including describing such property as “all assets” or “all
property.” Each Pledgor agrees to provide such information to the Collateral
Agent promptly upon request.

The Collateral Agent is further authorized to file with the United States Patent
and Trademark Office or United States Copyright Office (or any successor office)
such documents as may be reasonably necessary or advisable for the purpose of
perfecting, confirming, continuing, enforcing or protecting the Security
Interest granted by each Pledgor, without the signature of such Pledgor, and
naming such Pledgor or the Pledgors as debtors and the Collateral Agent as
secured party. Notwithstanding anything to the contrary herein, no Pledgor shall
be required to take any action under the laws of any jurisdiction other than the
United States (or any political subdivision thereof) and its territories and
possessions for the purpose of perfecting the Security Interest in any Article 9
Collateral of such Pledgor constituting Patents, Trademarks or Copyrights unless
required by the Collateral Agent in its reasonable discretion.

(c) The Security Interest is granted as security only and shall not subject the
Collateral Agent or any other Indenture Secured Party to, or in any way alter or
modify, any obligation or liability of any Pledgor with respect to or arising
out of the Article 9 Collateral.

Section 3.02. Representations and Warranties. The Pledgors jointly and severally
represent and warrant to the Collateral Agent and the Indenture Secured Parties
that:

(a) Each Pledgor has good and valid rights in and title to the Article 9
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 Article 9 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 that has been obtained and is in full force and effect or
has otherwise been disclosed herein or in the Indenture.

(b) The information set forth in the schedules attached hereto is correct and
complete, in all material respects, as of the Issue Date. The Uniform Commercial
Code financing statements (including fixture filings, as applicable) or other
appropriate filings, recordings or registrations containing a description of the
Article 9 Collateral that have been prepared by the Collateral Agent for filing
in each governmental, municipal or other office specified in Schedule IV

 

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(or specified by notice from the Issuer to the Collateral Agent after the Issue
Date in the case of filings, recordings or registrations required by
Section 3.06 hereof) constitute all the filings, recordings and registrations
(except to the extent that filings are required to be made in the United States
Patent and Trademark Office and the United States Copyright Office, or any
similar office in any other jurisdiction, in order to perfect the Security
Interest in Article 9 Collateral consisting of United States Patents, United
States registered Trademarks and United States registered Copyrights) 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 Indenture Secured Parties) in respect of all
Article 9 Collateral in which the Security Interest may be perfected by filing,
recording or registration in the United States (or any political subdivision
thereof) and its territories and possessions, and no further or subsequent
filing, refiling, recording, rerecording, registration or reregistration is
necessary in any such jurisdiction, except as provided under applicable law with
respect to the filing of continuation statements or amendments. Each Pledgor
represents and warrants that a fully executed Intellectual Property Security
Agreement containing a description of all Article 9 Collateral consisting of
Intellectual Property with respect to United States Patents (and Patents for
which United States applications are pending), United States registered
Trademarks (and Trademarks for which United States registration applications are
pending) and United States registered Copyrights (and Copyrights for which
United States registration applications are pending) has been delivered to the
Collateral Agent for recording with 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,
and reasonably requested by the Collateral Agent, 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 Indenture Secured Parties, in
respect of all Article 9 Collateral consisting of such Intellectual Property in
which a security interest may be perfected by recording with the United States
Patent and Trademark Office and the United States Copyright Office, and no
further or subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary (other than the Uniform Commercial Code financings
statements referred to above, and other than such actions as are necessary to
perfect the Security Interest with respect to any Article 9 Collateral
consisting of United States Patents, Trademarks and Copyrights (or registration
or application for registration thereof) acquired or developed after the date
hereof).

(c) The Security Interest constitutes (i) a legal and valid security interest in
all the Article 9 Collateral securing the payment and performance of the Notes
Obligations, (ii) subject to the filings described in Section 3.02(b), a
perfected security interest in all Article 9 Collateral in which a security
interest may be perfected by filing, recording or registering a financing
statement or analogous document in the United States (or any political
subdivision thereof) and its territories and possessions pursuant to the Uniform
Commercial Code or other applicable law in such jurisdictions and (iii) a
security interest that shall be perfected in all Intellectual Property in which
a security interest may be perfected upon the receipt and recording of the
Intellectual Property Security Agreement with the United States Patent and
Trademark Office and the United States Copyright Office, as applicable. The
Security Interest is and shall be prior to any other Lien on any of the Article
9 Collateral other than Permitted Liens.

(d) The Article 9 Collateral is owned by the Pledgors free and clear of any
Lien, other than Permitted Liens. None of the Pledgors has filed or consented to
the filing of (i) any financing statement or analogous document under the
Uniform Commercial Code or any other applicable laws covering any Article 9
Collateral, (ii) any assignment in which any Pledgor assigns any Article 9
Collateral or any security agreement or similar instrument covering any Article
9 Collateral with the United States Patent and Trademark Office or the United
States Copyright Office

 

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or (iii) any assignment in which any Pledgor assigns any Article 9 Collateral or
any security agreement or similar instrument covering any Article 9 Collateral
with any foreign governmental, municipal or other office, which financing
statement or analogous document, assignment, security agreement or similar
instrument is still in effect, except, in each case, for Permitted Liens.

(e) None of the Pledgors holds any Commercial Tort Claim individually in excess
of $5.0 million as of the Issue Date except as indicated on Schedule V.

(f) Except as set forth in Schedule VI, as of the Issue Date, all Accounts have
been originated by the Pledgors and all Inventory has been produced or acquired
by the Pledgors in the ordinary course of business.

(g) As to itself and its Article 9 Collateral consisting of Intellectual
Property (the “Intellectual Property Collateral”), to the best of each Pledgor’s
knowledge:

(i) Schedule III hereto includes all of the material Patents, Trademarks,
Copyrights owned by such Pledgor as of the date hereof.

(ii) The Intellectual Property Collateral is subsisting and has not been
adjudged invalid or unenforceable in whole or part (except for office actions
issued in the ordinary course by the United States Patent and Trademark Office
or any similar office in any foreign jurisdiction), and, to the best of such
Pledgor’s knowledge, is valid and enforceable, except as would not reasonably be
expected to have a Material Adverse Effect. Such Pledgor is not aware of any
uses of any item of Intellectual Property Collateral that would be expected to
lead to such item becoming invalid or unenforceable, except as would not
reasonably be expected to have a Material Adverse Effect.

(iii) Such Pledgor has made or performed all commercially reasonable acts,
including, without limitation, filings, recordings and payment of all required
fees and taxes required to maintain and protect its interest in each and every
item of Intellectual Property Collateral in full force and effect in the United
States and such Pledgor has used proper statutory notice in connection with its
use of each Patent, Trademark and Copyright in the Intellectual Property
Collateral, in each case, except to the extent that the failure to do so would
not reasonably be expected to have a Material Adverse Effect.

(iv) With respect to each IP Agreement, the absence, termination or violation of
which would reasonably be expected to have a Material Adverse Effect: (A) such
Pledgor has not received any notice of termination or cancellation under such IP
Agreement; (B) such Pledgor has not received any notice of a breach or default
under such IP Agreement, which breach or default has not been cured or waived;
and (C) neither such Pledgor nor any other party to such IP Agreement is in
breach or default thereof in any material respect, and no event has occurred
that, with notice or lapse of time or both, would constitute such a breach or
default or permit termination, modification or acceleration under such IP
Agreement.

(v) Except as would not reasonably be expected to have a Material Adverse
Effect, no Pledgor or Intellectual Property Collateral is subject to any
outstanding consent, settlement, decree, order, injunction, judgment or ruling
restricting the use of any Intellectual Property Collateral or that would impair
the validity or enforceability of such Intellectual Property Collateral.

 

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Section 3.03. Covenants.

(a) Each Pledgor agrees to provide at least 10 days’ prior written notice to the
Collateral Agent of any change (i) in its corporate or organization name,
(ii) in its identity or type of organization or corporate structure, (iii) in
its Federal Taxpayer Identification Number or organizational identification
number or (iv) in its “location” (determined as provided in UCC Section 9-307).
Each Pledgor agrees promptly to provide the Collateral Agent with certified
organizational documents reflecting any of the changes described in the
immediately preceding sentence. Each Pledgor agrees not to effect or permit any
change referred to in the first sentence of this paragraph (a) unless all
filings have been made, or will have been made within any applicable statutory
period, under the Uniform Commercial Code or otherwise that are required in
order for the Collateral Agent to continue at all times following such change to
have a valid, legal and perfected first priority security interest in all the
Article 9 Collateral, for the ratable benefit of the Indenture Secured Parties,
subject to Permitted Liens. Each Pledgor agrees promptly to notify the
Collateral Agent if any material portion of the Article 9 Collateral owned or
held by such Pledgor is damaged or destroyed.

(b) Subject to the rights of such Pledgor under the Noteholder Documents to
dispose of Collateral, each Pledgor shall, at its own expense, use commercially
reasonable efforts to defend title to the Article 9 Collateral against all
persons and to defend the Security Interest of the Collateral Agent, for the
ratable benefit of the Indenture Secured Parties, in the Article 9 Collateral
and the priority thereof against any Lien that is not a Permitted Lien.

(c) Each Pledgor 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 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 and the granting of the Security Interest and the fling of any
financing statements (including fixture filings) or other documents in
connection herewith or therewith. Subject to the Intercreditor Agreements, any
amount payable under or in connection with any of the Article 9 Collateral that
is in excess of $5.0 million shall be or become evidenced by any promissory note
or other instrument, such note or instrument shall be promptly pledged and
delivered to the Collateral Agent, for the ratable benefit of the Indenture
Secured Parties, duly endorsed by the applicable Pledgor.

Without limiting the generality of the foregoing, each Pledgor hereby authorizes
the Collateral Agent, with prompt notice thereof to the Pledgors, to supplement
this Agreement by supplementing Schedule III or adding additional schedules
hereto to specifically identify any asset or item that may constitute material
Copyrights, Patents, Trademarks, Copyright Licenses, Patent Licenses or
Trademark Licenses; provided that any Pledgor shall have the right, exercisable
within 30 days after the Issuer has been notified by the Collateral Agent of the
specific identification of such Article 9 Collateral, to advise the Collateral
Agent in writing of any inaccuracy of the representations and warranties made by
such Pledgor hereunder with respect to such Article 9 Collateral. Each Pledgor
agrees that it will use its commercially reasonable 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 Article 9 Collateral within 30
days after the date it has been notified by the Collateral Agent of the specific
identification of such Article 9 Collateral.

(d) Subject to the Intercreditor Agreements, after the occurrence of an Event of
Default and during the continuance thereof, the Collateral Agent shall have the
right to verify under reasonable procedures the validity, amount, quality,
quantity, value, condition and status of, or any other matter

 

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relating to, the Article 9 Collateral, including, in the case of Accounts or
Article 9 Collateral in the possession of any third person, by contacting
Account Debtors or the third person possessing such Article 9 Collateral for the
purpose of making such a verification. The Collateral Agent shall have the right
to share any information it gains from such inspection or verification with any
Indenture Secured Party.

(e) Subject to the Intercreditor Agreements, 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 Article 9
Collateral and not a Permitted Lien, and may pay for the maintenance and
preservation of the Article 9 Collateral to the extent any Pledgor fails to do
so as required by the Indenture or this Agreement, and each Pledgor jointly and
severally agrees to reimburse the Collateral Agent on demand for any reasonable
payment made or any reasonable expense incurred by the Collateral Agent pursuant
to the foregoing authorization; provided, however, that nothing in this
Section 3.03(e) shall be interpreted as excusing any Pledgor from the
performance of, or imposing any obligation on the Collateral Agent or any
Indenture Secured Party to cure or perform, any covenants or other promises of
any Pledgor with respect to taxes, assessments, charges, fees, Liens, security
interests or other encumbrances and maintenance as set forth herein or in the
other Noteholder Documents.

(f) Each Pledgor (rather than the Collateral Agent or any Indenture Secured
Party) shall remain liable for the observance and performance of all the
conditions and obligations to be observed and performed by it under each
contract, agreement or instrument relating to the Article 9 Collateral and each
Pledgor jointly and severally agrees to indemnify and hold harmless the
Collateral Agent and the Indenture Secured Parties from and against any and all
liability for such performance.

(g) None of the Pledgors shall make or permit to be made an assignment, pledge
or hypothecation of the Article 9 Collateral or shall grant any other Lien in
respect of the Article 9 Collateral, except as permitted by the Indenture and
the other provisions hereof. None of the Pledgors shall make or permit to be
made any transfer of the Article 9 Collateral and each Pledgor shall remain at
all times in possession of the Article 9 Collateral owned by it, except as
permitted by the Indenture and the other provisions hereof.

(h) None of the Pledgors will, without the Collateral Agent’s prior written
consent (which consent shall not be unreasonably withheld), grant any extension
of the time of payment of any Accounts included in the Article 9 Collateral,
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 prudent business practices or as otherwise
permitted under the Indenture.

(i) Subject to the Intercreditor Agreements, each Pledgor irrevocably makes,
constitutes and appoints the Collateral Agent (and all officers, employees or
agents designated by the Collateral Agent) as such Pledgor’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 Article 9
Collateral under policies of insurance, endorsing the name of such Pledgor 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 Agreements, in the event that any
Pledgor at any time or times shall fail to obtain or maintain any of the
policies of insurance required hereby or under the Indenture or to pay any
premium in whole or part relating thereto, the Collateral Agent may, without
waiving or releasing any obligation or liability of the Pledgors 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 reasonably deems advisable. All sums disbursed
by

 

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the Collateral Agent in connection with this Section 3.03(i), including
reasonable attorneys’ fees, court costs, expenses and other charges relating
thereto, shall be payable, upon demand, by the Pledgors to the Collateral Agent
and shall be additional Notes Obligations secured hereby.

Section 3.04. Other Actions. Subject to the terms of the Intercreditor
Agreements, in order to further ensure the attachment, perfection and priority
of, and the ability of the Collateral Agent to enforce, for the ratable benefit
of the Indenture Secured Parties, the Collateral Agent’s security interest in
the Article 9 Collateral, each Pledgor agrees, in each case at such Pledger’s
own expense, to take the following actions with respect to the following Article
9 Collateral:

(a) Instruments and Tangible Chattel Paper. If any Pledgor shall at any time
hold or acquire any Instruments (other than checks received and processed in the
ordinary course of business) or Tangible Chattel Paper evidencing an amount in
excess of $5.0 million, such Pledgor shall forthwith endorse, assign and deliver
the same to the Collateral Agent, accompanied by such instruments of transfer or
assignment duly executed in blank as the Collateral Agent may from time to time
reasonably request.

(b) Investment Property. Except to the extent otherwise provided in Article II,
if any Pledgor shall at any time hold or acquire any Certificated Security, such
Pledgor shall forthwith endorse, assign and deliver the same to the Collateral
Agent, accompanied by such instruments of transfer or assignment duly executed
in blank as the Collateral Agent may from time to time reasonably specify. If
any security of a domestic issuer now owned or hereafter acquired by any Pledgor
is uncertificated and is issued to such Pledgor or its nominee directly by the
issuer thereof, such Pledgor shall promptly notify the Collateral Agent of such
uncertificated securities and (i) upon the Collateral Agent’s reasonable request
or (ii) upon the occurrence and during the continuance of an Event of Default,
such Pledgor shall either (x) cause the issuer to agree to comply with
instructions from the Collateral Agent as to such security, without further
consent of any Pledgor or such nominee, or (y) cause the issuer to register the
Collateral Agent as the registered owner of such security.

(c) Commercial Tort Claims. If any Pledgor shall at any time hold or acquire a
Commercial Tort Claim in an amount reasonably estimated to exceed $5.0 million,
such Pledgor shall promptly notify the Collateral Agent thereof in a writing
signed by such Pledgor, including a summary description of such claim, and grant
to the Collateral Agent in writing a security interest therein and in the
proceeds thereof, all under the terms and provisions of this Agreement.

Section 3.05. Covenants Regarding Patent, Trademark and Copyright Collateral.
Except as permitted by the Indenture:

(a) Each Pledgor agrees that it will not knowingly do any act or omit to do any
act (and will exercise commercially reasonable efforts to prevent its licensees
from doing any act or omitting to do any act) whereby any Patent that is
material to the normal conduct of such Pledger’s business may become prematurely
invalidated, abandoned, lapsed or dedicated to the public, and agrees that it
shall take commercially reasonable steps with respect to any material products
covered by any such Patent as necessary and sufficient to establish and preserve
its rights under applicable patent laws.

(b) Each Pledgor will, and will use its commercially reasonable efforts to cause
its licensees or its sublicensees to, for each material Trademark necessary to
the normal conduct of such Pledger’s business, (i) maintain such Trademark in
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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 or claim of trademark or service mark as
required under applicable law and (iv) not knowingly use or knowingly permit its
licensees’ use of such Trademark in violation of any third-party rights.

(c) Each Pledgor will, and will use its commercially reasonable efforts to cause
its licensees or its sublicensees to, for each work covered by a material
Copyright necessary to the normal conduct of such Pledgor’s business that it
publishes, displays and distributes, use a copyright notice as necessary and
sufficient to establish and preserve its rights under applicable copyright laws.

(d) Each Pledgor shall notify the Collateral Agent promptly if it knows that any
Patent, Trademark or Copyright material to the normal conduct of such Pledgor’s
business may imminently become abandoned, lapsed or dedicated to the public, or
of any materially adverse determination or development, excluding office actions
and similar determinations or developments in the United States Patent and
Trademark Office, United States Copyright Office, any court or any similar
office of any country, regarding such Pledger’s ownership of any such material
Patent, Trademark or Copyright or its right to register or to maintain the same.

(e) Each Pledgor, either itself or through any agent, employee, licensee or
designee, shall (i) inform the Collateral Agent on an annual basis of each
application or registration by itself, or through any agent, employee, licensee
or designee, for any Patent with the United States Patent and Trademark Office
and each registration or application of any Trademark or Copyright with the
United States Patent and Trademark Office, the United States Copyright Office or
any comparable office or agency in any other country filed during the preceding
twelve-month period, and (ii) upon the reasonable request of the Collateral
Agent, execute and deliver any and all agreements, instruments, documents and
papers as the Collateral Agent may reasonably request to evidence the Collateral
Agent’s security interest in such Patent, Trademark or Copyright.

(f) Each Pledgor shall exercise its reasonable business judgment consistent with
the practice in any proceeding before the United States Patent and Trademark
Office, the United States Copyright Office or any comparable office or agency in
any other country with respect to maintaining and pursuing each application
relating to any Patent, Trademark and/or Copyright (and obtaining the relevant
grant or registration) material to the normal conduct of such Pledgor’s business
and to maintain (i) each issued Patent and (ii) the registrations of each
Trademark and each Copyright that is material to the normal conduct of such
Pledgor’s business, including, when applicable and necessary in such Pledgor’s
reasonable business judgment, timely filings of applications for renewal,
affidavits of use, affidavits of incontestability and payment of maintenance
fees, and, if any Pledgor believes necessary in its reasonable business
judgment, to initiate opposition, interference and cancellation proceedings
against third parties.

(g) In the event that any Pledgor knows or has reason to know that any Article 9
Collateral consisting of a Patent, Trademark or Copyright material to the normal
conduct of its business has been or is about to be materially infringed,
misappropriated or diluted by a third party, such Pledgor shall promptly notify
the Collateral Agent and shall, if such Pledgor deems it necessary in its
reasonable business judgment, promptly sue and recover any and all damages, and
take such other actions as are reasonably appropriate under the circumstances.

 

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Section 3.06. Further Assurances; Additional Security.

(a) Each Pledgor agrees to execute any and all further documents, financing
statements, agreements and instruments, and take all such further actions
(including the filing and recording of financing statements, fixture filings,
mortgages and other documents and recordings of Liens in stock registries) that
may be required under any applicable law, or that the Collateral Agent may
reasonably request, to satisfy the Collateral Requirement and to cause the
Collateral Requirement to be and remain satisfied, all at the expense of the
Issuer and provide to the Collateral Agent, from time to time upon reasonable
request, evidence as to the perfection and priority of the Liens created or
intended to be created by this Agreement and the other Noteholder Documents.

(b) If any asset (including any owned Real Property (other than owned Real
Property covered by paragraph (c) below) or improvements thereto or any interest
therein) that has an individual fair market value in an amount greater than $5.0
million is acquired by the Issuer or any other Pledgor after the Issue Date or
owned by an entity at the time it becomes a Pledgor (in each case other than
(x) assets constituting Collateral under a Security Document that become subject
to the Lien of such Security Document upon acquisition thereof and (y) assets
that are not required to become subject to Liens in favor of the Collateral
Agent pursuant to clause (f) below or the Security Documents), the Issuer will
(i) notify the Collateral Agent thereof and (ii) cause such asset to be
subjected to a Lien securing the Notes Obligations and take, and cause the other
Pledgors to take, such actions as shall be necessary or reasonably requested by
the Collateral Agent to grant and perfect such Liens, including actions
described in paragraph (a) of this Section 3.06, all at the expense of the
Issuer, subject to paragraph (f) below.

(c) The Issuer or the applicable Pledgors shall promptly notify the Collateral
Agent of the acquisition of, and grant and cause each of the other applicable
Pledgors to grant to the Collateral Agent security interests and mortgages in,
such owned Real Property of the Issuer or any such Pledgor, to the extent
acquired after the Issue Date and having a value at the time of acquisition in
excess of $5.0 million, pursuant to a mortgage, deed of trust or similar
agreement and constituting valid and enforceable Liens subject to no other Liens
except Permitted Liens at the time of perfection thereof, record or file, and
cause each such other applicable Pledgor to record or file, such mortgage or
instruments related thereto in such manner and in such places as is required by
law to establish, perfect, preserve and protect the Liens in favor of the
Collateral Agent granted pursuant to such mortgage or instrument and pay, and
cause each such other applicable Pledgor to pay, in full, all taxes, fees and
other charges payable in connection therewith, in each case subject to paragraph
(f) below.

(d) If any additional direct or indirect Subsidiary of the Issuer is formed or
acquired after the Issue Date (with any Subsidiary redesignation resulting in an
Unrestricted Subsidiary becoming a Restricted Subsidiary being deemed to
constitute the acquisition of a Subsidiary) and if such Subsidiary is a
Guarantor under the Indenture, within five Business Days after the date such
Subsidiary is formed or acquired, notify the Collateral Agent and the Holders
thereof and, within 20 Business Days after the date such Subsidiary is formed or
acquired or such longer period as the Applicable Collateral Agent shall agree,
cause the Collateral Requirement to be satisfied with respect to such Subsidiary
and with respect to any Equity Interest in or Indebtedness of such Subsidiary
owned by or on behalf of any Pledgor, subject to paragraph (f) below.

(e) If any additional Foreign Subsidiary of the Issuer is formed or acquired
after the Issue Date (with any Subsidiary redesignation resulting in an
Unrestricted Subsidiary becoming a Restricted Subsidiary being deemed to
constitute the acquisition of a Subsidiary) and if such Subsidiary is a “first
tier” Foreign Subsidiary, within five Business Days after the date such Foreign
Subsidiary is formed or acquired, notify the Collateral Agent and the Holders
thereof and, within 20 Business Days after the

 

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date such Foreign Subsidiary is formed or acquired (or such longer period as the
Credit Agreement Agent shall agree), cause the Collateral Requirement to be
satisfied with respect to any Equity Interest in such Foreign Subsidiary owned
by or on behalf of any Pledgor, subject to paragraph (f) below.

(f) The Collateral Requirement and the other provisions of this Section 3.06
need not be satisfied with respect to (i) any interests in Real Property held by
the Issuer or any of its Subsidiaries as a lessee under a lease or that has an
individual fair market value in an amount less than $5.0 million, (ii) any
vehicle subject to a certificate of title, (iii) cash and deposit accounts
(except to the extent constituting identifiable proceeds of Collateral),
(iv) any Equity Interests (other than in the case of any person which is a
Restricted Subsidiary, Equity Interests in such person issued or acquired after
such person became a Restricted Subsidiary) if, and to the extent that, and for
so long as (A) doing so would violate applicable law or a contractual obligation
binding on such Equity Interests and (B) with respect to contractual obligations
applicable to Equity Interests acquired after May 29, 2007, such obligation
existed at the time of the acquisition thereof and was not created or made
binding on such Equity Interests in contemplation of or in connection with the
acquisition of such assets, (v) any other assets to the extent that, and for so
long as, taking such actions would violate applicable law or an enforceable
contractual obligation binding on such assets; provided, in the case of
contractual obligations applicable to assets acquired after May 29, 2007, that
such contractual obligation existed at the time of acquisition thereof and was
not created or made binding on such assets in contemplation or in connection
with the acquisition of such assets (except in the case of assets acquired with
Indebtedness permitted under Section 4.09(b)(iv) of the Indenture that is
secured by a Permitted Lien or (vi) assets covered by a certificate of title or
ownership title to the extent that a Lien therein cannot be perfected by the
filing of a UCC financing statement in the jurisdiction of organization of the
Issuer or the applicable Pledgor.

ARTICLE IV

REMEDIES

Section 4.01. Remedies Upon Default. Upon the occurrence and during the
continuance of an Event of Default and subject to the Intercreditor Agreements,
each Pledgor 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 Article 9 Collateral consisting of Intellectual
Property, on demand, to cause the Security Interest to become an assignment,
transfer and conveyance of any of or all such Article 9 Collateral by the
applicable Pledgors to the Collateral Agent or to license or sublicense, whether
general, special or otherwise, and whether on an exclusive or a nonexclusive
basis, any such Article 9 Collateral throughout the world on such terms and
conditions and in such manner as the Collateral Agent shall determine (other
than in violation of any then-existing licensing arrangements to the extent that
waivers thereunder cannot be obtained with the use of commercially reasonable
efforts, which each Pledgor hereby agrees to use) and (b) with or without legal
process and with or without prior notice or demand for performance, to take
possession of the Article 9 Collateral and without liability for trespass to the
applicable Pledgor to enter any premises where the Article 9 Collateral may be
located for the purpose of taking possession of or removing the Article 9
Collateral and, generally, to exercise any and all rights afforded to a secured
party under the applicable Uniform Commercial Code or other applicable law.
Without limiting the generality of the foregoing, each Pledgor 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 a 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 in connection with any sale of a security (if it deems it advisable
to do so) pursuant to the foregoing to restrict the prospective bidders or
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security for their own account, for investment, and not with a view to the
distribution or sale thereof. Upon consummation of any such sale of Collateral
pursuant to this Section 4.01, 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 Pledgor, and
each Pledgor hereby waives and releases (to the extent permitted by law) all
rights of redemption, stay, valuation and appraisal that such Pledgor 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 applicable Pledgors 10 Business Days’
written notice (which each Pledgor agrees is reasonable notice within the
meaning of Section 9-611 of the New York UCC or its equivalent in other
jurisdictions) of the Collateral Agent’s intention to make any sale of
Collateral. Such notice, in the case of a public sale, shall state the time and
place for such sale and, in the case of a sale at a broker’s board or on a
securities exchange, shall state the board or exchange at which such sale is to
be made and the day on which the Collateral, or portion thereof, will first be
offered for sale at such board or exchange. Any such public sale shall be held
at such time or times within ordinary business hours and at such place or places
as the Collateral Agent may fix and state in the notice (if any) of such sale.
At any such sale, the Collateral, or the 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 the case of any sale of all or any part of the Collateral made on
credit or for future delivery, the Collateral so sold may be retained by the
Collateral Agent until the sale price is paid by the purchaser or purchasers
thereof, but the Collateral Agent shall not incur any liability in the event
that any such purchaser or purchasers shall fail to take up and pay for the
Collateral so sold and, in the case of any such failure, such Collateral may be
sold again upon notice given in accordance with provisions above. At any public
(or, to the extent permitted by law, private) sale made pursuant to this
Section 4.01, any Indenture Secured Party may bid for or purchase in cash, free
(to the extent permitted by law) from any right of redemption, stay, valuation
or appraisal on the part of any Pledgor (all such 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 Indenture Secured Party from any Pledgor as a
credit against the purchase price, and may make payment on account thereof by
using any claim then due and payable to such Indenture Secured Party from any
Pledgor as a credit against the purchase price, and such Indenture Secured Party
may, upon compliance with the terms of sale, hold, retain and dispose of such
property in accordance with Section 4.02 hereof without further accountability
to any Pledgor 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 Pledgor 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 Notes Obligations have been Discharged. As an
alternative to exercising the power of sale herein conferred upon it, the
Collateral Agent may proceed by a suit or suits at law or in equity to foreclose
this Agreement and to sell the Collateral or any portion thereof pursuant to a
judgment or decree of a court or courts having competent jurisdiction or
pursuant to a proceeding by a court-appointed receiver. Any sale pursuant to the
provisions of this Section 4.01 shall be deemed to conform to the commercially
reasonable standards as provided in Section 9-610(b) of the New York UCC or its
equivalent in other jurisdictions.

 

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Section 4.02. Application of Proceeds. Subject to the Intecreditor Agreements,
the Collateral Agent shall promptly apply the proceeds, moneys or balances of
any collection or sale of Collateral, as well as any Collateral consisting of
cash, as follows: FIRST, to the payment of all costs and expenses and
indemnification obligations incurred by the Collateral Agent or the Trustee in
connection with such collection or sale or otherwise in connection with this
Agreement, any other Noteholder Documents or any of the Notes Obligations,
including, without limitation, all court costs and the fees and expenses of its
agents and legal counsel, the repayment of all advances made by the Collateral
Agent or the Trustee hereunder or under any other Noteholder Document on behalf
of any Pledgor, any other costs or expenses incurred in connection with the
exercise of any right or remedy hereunder or under any other Noteholder
Document, and all other fees, indemnities and other amounts owing or
reimbursable to the Collateral Agent or the Trustee under any Noteholder
Document in its capacity as such; SECOND, to the payment in full of the Notes
Obligations (the amounts so applied to be distributed among the Indenture
Secured Parties pro rata in accordance with the respective amounts of the Notes
Obligations owed to them on the date of any such distribution); and THIRD, to
the Issuer, its successors or assigns or as a court of competent jurisdiction
may otherwise direct.

Upon any sale of Collateral by the Collateral Agent (including pursuant to a
power of sale granted by statute or under a judicial proceeding), the receipt of
the purchase money by 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.

If, after receipt of any payment which is applied to the payment of all or any
part of any Notes Obligations, the Collateral Agent, Trustee or any Holder is
for any reason compelled to surrender such payment or proceeds to any person
because such payment or application of proceeds is invalidated, declared
fraudulent, set aside, determined to be void or voidable as a preference,
impermissible set-off, or a diversion of trust funds, or for any other reason,
then the Notes Obligations or part thereof intended to be satisfied shall be
revived and continued and this Agreement shall continue in full force as if such
payment or proceeds had not been received by such Collateral Agent, Trustee or
Holder and the Issuer shall be liable to pay to such Collateral Agent, Trustee
and the Holders, and shall indemnify the Collateral Agent, Trustee and the
Holders and holds the Collateral Agent, Trustee and the Holders harmless for the
amount of such payment or proceeds surrendered. The provisions of this paragraph
shall be and remain effective notwithstanding any contrary action which may have
been taken by the Collateral Agent, Trustee or any Holder in reliance upon such
payment or application of proceeds, and any such contrary action so taken shall
be without prejudice to the Collateral Agent’s, Trustee’s and the Holders’
rights under this Agreement and shall be deemed to have been conditioned upon
such payment or application of proceeds having become final and irrevocable. The
provisions of this paragraph shall survive the termination of this Agreement.

Section 4.03. Securities Act, Etc. In view of the position of the Pledgors in
relation to the Pledged Collateral, or because of other current or future
circumstances, a question may arise under the Securities Act of 1933, as now or
hereafter in effect, or any similar federal statute hereafter enacted analogous
in purpose or effect (such Act and any such similar statute as from time to time
in effect being called the “Federal Securities Laws”) with respect to any
disposition of the Pledged Collateral permitted hereunder. Each Pledgor
understands that compliance with the Federal Securities Laws might very strictly
limit the course of conduct of the Collateral Agent if the Collateral Agent were
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of the Pledged Collateral, and might also limit the extent to which or the
manner in which any subsequent transferee of any Pledged Collateral could
dispose of the same. Similarly, there may be other legal restrictions or
limitations affecting the Collateral Agent in any attempt to dispose of all or
part of the Pledged Collateral under applicable Blue Sky or other state
securities laws or similar laws analogous in purpose or effect. Each Pledgor
acknowledges and agrees that in light of such restrictions and limitations, the
Collateral Agent, in its sole and absolute discretion, (a) may proceed to make
such a sale whether or not a registration statement for the purpose of
registering such Pledged Collateral or part thereof shall have been filed under
the Federal Securities Laws or, to the extent applicable, Blue Sky or other
state securities laws and (b) may approach and negotiate with a single potential
purchaser to effect such sale. Each Pledgor acknowledges and agrees that any
such sale might result in prices and other terms less favorable to the seller
than if such sale were a public sale without such restrictions. In the event of
any such sale, the Collateral Agent shall incur no responsibility or liability
for selling all or any part of the Pledged Collateral at a price that the
Collateral Agent, in its sole and absolute discretion, may in good faith deem
reasonable under the circumstances, notwithstanding the possibility that a
substantially higher price might have been realized if the sale were deferred
until after registration as aforesaid or if more than a single purchaser were
approached. The provisions of this Section 4.03 will apply notwithstanding the
existence of a public or private market upon which the quotations or sales
prices may exceed substantially the price at which the Collateral Agent sells.

ARTICLE V

MISCELLANEOUS

Section 5.01. Notices. All communications and notices hereunder shall (except as
otherwise permitted herein) be in writing and given as provided in Section 13.02
of the Indenture. All communications and notices hereunder to any Pledgor shall
be given to it in care of the Issuer, with such notice to be given as provided
in Section 13.02 of the Indenture.

Section 5.02. Security Interest Absolute. All rights of the Collateral Agent
hereunder, the Security Interest in the Article 9 Collateral, the security
interest in the Pledged Collateral and all obligations of each Pledgor hereunder
shall be absolute and unconditional irrespective of (a) any lack of validity or
enforceability of the Indenture, any other Noteholder Document, any agreement
with respect to any of the Notes 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 Notes
Obligations, or any other amendment or waiver of or any consent to any departure
from the Indenture, any other Noteholder 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 Notes
Obligations or (d) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, any Pledgor in respect of the Notes
Obligations or this Agreement (other than a defense of payment or performance).

Section 5.03. Limitation By Law. All rights, remedies and powers provided in
this Agreement may be exercised only to the extent that the exercise thereof
does not violate any applicable provision of law, and all the provisions of this
Agreement are intended to be subject to all applicable mandatory provisions of
law that may be controlling and to be limited to the extent necessary so that
they shall not render this Agreement invalid, unenforceable, in whole or in
part, or not entitled to be recorded, registered or filed under the provisions
of any applicable law.

Section 5.04. Binding Effect; Several Agreement. This Agreement shall become
effective as to any party to this Agreement when a counterpart hereof executed
on behalf of such party 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 party and the Collateral Agent and
their respective permitted successors and assigns, and shall inure to the
benefit of such party, the Collateral

 

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Agent and the other Indenture Secured Parties and their respective permitted
successors and assigns, except that no party 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 Indenture. This Agreement shall
be construed as a separate agreement with respect to each party and may be
amended, modified, supplemented, waived or released with respect to any party
without the approval of any other party and without affecting the obligations of
any other parry hereunder.

Section 5.05. Successors and Assigns. Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
permitted successors and assigns of such party, and all covenants, promises and
agreements by or on behalf of any Pledgor or the Collateral Agent that are
contained in this Agreement shall bind and inure to the benefit of their
respective permitted successors and assigns; provided that no Pledgor may
assign, transfer or delegate any of its rights or obligations under this
Agreement without the prior written consent of the Collateral Agent. The
Collateral Agent hereunder shall at all times be the same person that is the
Collateral Agent under the Indenture. Written notice of resignation by the
Collateral Agent pursuant to the Indenture shall also constitute notice of
resignation as the Collateral Agent under this Agreement. Upon the acceptance of
any appointment as the Collateral Agent under the Indenture by a successor
Collateral Agent, that successor Collateral Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the retiring
Collateral Agent pursuant hereto.

Section 5.06. Collateral Agent’s Fees and Expenses; Indemnification.

(a) The parties hereto agree that the Collateral Agent shall be entitled to
reimbursement of its expenses incurred hereunder as provided in Section 7.07 of
the Indenture.

(b) Without limitation of its indemnification obligations under the other
Noteholder Documents, each Pledgor jointly and severally agrees to indemnify the
Collateral Agent, the Trustee, the Holders, each of their respective Affiliates
and each of their respective directors, trustees, officers, employees, agents
and advisors (each such Person being called an “Indemnitee”) and the other
Indemnitees against, and hold each Indemnitee harmless from, any and all losses,
claims, damages, liabilities and related expenses, including reasonable counsel
fees, charges and disbursements, incurred by or asserted against any Indemnitee
arising out of, in connection with, or as a result of, (i) the execution,
delivery or performance of this Agreement or any other Noteholder Document or
any agreement or instrument contemplated hereby or thereby, the performance by
the parties hereto and thereto of their respective obligations thereunder or the
consummation of the transactions contemplated by the Indenture and hereby,
(ii) the use of proceeds of the Notes or (iii) any claim, litigation,
investigation or proceeding relating to any of the foregoing, 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 are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnitee.

(c) Any such amounts payable as provided hereunder shall be additional Notes
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 5.06 shall remain operative and in full force and effect
regardless of the termination of this Agreement or any other Noteholder
Document, the consummation of the transactions contemplated hereby, the
repayment of any of the Notes Obligations, the invalidity or unenforceability of
any term or provision of this Agreement or any other Noteholder Document, or any
investigation made by or on behalf of the Collateral Agent or any other
Indenture Secured Party. All amounts due under this Section 5.06 shall be
payable on written demand therefor. All obligations of each Pledgor under this
Section 5.06 shall survive termination of this Agreement.

 

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Section 5.07. Collateral Agent Appointed Attorney-in-Fact. Each Pledgor hereby
appoints the Collateral Agent the attorney-in-fact of such Pledgor for the
purpose of carrying out the provisions of this Agreement and taking any action
and executing any instrument that the Collateral Agent may deem necessary or
advisable to accomplish the purposes hereof, which appointment is irrevocable
and coupled with an interest. Subject to the Intercreditor Agreements, the
Collateral Agent shall have the right, upon the occurrence and during the
continuance of an Event of Default, with full power of substitution either in
the Collateral Agent’s name or in the name of such Pledgor, (a) to receive,
endorse, assign 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 ask for, demand,
sue for, collect, receive and give acquittance for any and all moneys due or to
become due under and by virtue of any Collateral, (d) to sign the name of any
Pledgor on any invoice or bill of lading relating to any of the Collateral,
(e) to send verifications of Accounts to any Account Debtor, (f) 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, (g) to
settle, compromise, compound, adjust or defend any actions, suits or proceedings
relating to all or any of the Collateral 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 that
nothing herein contained shall be construed as requiring or obligating the
Collateral Agent to make any commitment or to make any inquiry as to the nature
or sufficiency of any payment received by the Collateral Agent, or to present or
file any claim or notice, or to take any action with respect to the Collateral
or any part thereof or the moneys due or to become due in respect thereof or any
property covered thereby. The Collateral Agent and the other Indenture Secured
Parties shall be accountable only for amounts actually received as a result of
the exercise of the powers granted to them herein, and neither they nor their
officers, directors, employees or agents shall be responsible to any Pledgor for
any act or failure to act hereunder, except for their own gross negligence or
willful misconduct.

Section 5.08. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

Section 5.09. Waivers Amendment.

(a) No failure or delay by the Collateral Agent or any Holder in exercising any
right, power or remedy hereunder or under any other Noteholder Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy, or any abandonment or discontinuance of steps to
enforce such a right, power or remedy, preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. The rights, powers
and remedies of the Collateral Agent and the Holders hereunder and under the
other Noteholder Documents are cumulative and are not exclusive of any rights,
powers or remedies that they would otherwise have. No waiver of any provision of
this Agreement or consent to any departure by any Pledgor therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of this
Section 5.09, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice or demand on
any Pledgor in any case shall entitle any Pledgor to any other or further notice
or demand in similar or other circumstances.

 

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(b) Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into
by the Collateral Agent and the Pledgor or Pledgors with respect to which such
waiver, amendment or modification is to apply, subject to any consent required
in accordance with the Indenture and the Intercreditor Agreements.

Section 5.10. 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 OTHER NOTEHOLDER 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 BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 5.10.

Section 5.11. Severability. In the event any one or more of the provisions
contained in this Agreement or in any other Noteholder Document should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby. 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 5.12. 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, and shall become effective as
provided in Section 5.04 hereof. Delivery of an executed counterpart to this
Agreement by facsimile transmission or electronic mail shall be as effective as
delivery of a manually signed original.

Section 5.13. Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.

Section 5.14. Jurisdiction; Consent to Service of Process.

(a) Each party to this Agreement hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of any New York
State court or federal court of the United States of America sitting in New York
City, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement or any other Noteholder Documents,
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 New York
State 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 or any Holder may otherwise have to
bring any action or proceeding relating to this Agreement or any other
Noteholder Document against any Pledgor, or its properties, in the courts of any
jurisdiction.

 

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(b) Each party to this Agreement hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection which
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any other Noteholder
Document in any New York State or federal court. 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.

Section 5.15. Termination or Release.

(a) Subject to the terms of the Intercreditor Agreements, this Agreement, the
pledges made herein, the Security Interest and all other security interests
granted hereby shall terminate when all the Notes Obligations (other than
contingent or unliquidated obligations or liabilities not then due) have been
Discharged.

(b) Subject to the terms of the Intercreditor Agreements, a Pledgor (other than
the Issuer) shall automatically be released from its obligations hereunder and
the security interests in the Collateral of such Pledgor shall be automatically
released upon the consummation of any transaction permitted by the Indenture as
a result of which such Pledgor ceases to be a Restricted Subsidiary of the
Issuer or otherwise ceases to be a Guarantor; provided, that such portion of the
Holders as shall be required by the terms of the Indenture to have consented to
such transaction (to the extent such consent is required by the Indenture) shall
have consented thereto and the terms of such consent did not provide otherwise.

(c) Subject to the terms of the Intercreditor Agreements, upon any sale or other
transfer by any Pledgor of any Collateral that is permitted under the Indenture
to any person that is not a Pledgor, or upon the effectiveness of any written
consent to the release of the security interest granted hereby in any Collateral
pursuant to the Indenture, the security interest in such Collateral shall be
automatically released.

(d) Upon the transfer by any Pledgor of Equity Interests in a “first tier”
Foreign Subsidiary or “first tier” Qualified CFC Holding Company to a “first
tier” Foreign Subsidiary or “first tier” Qualified CFC Holding Company in a
transaction permitted under the Indenture and subject to the terms of the
Intercreditor Agreement, the pledge of Equity Interests so transferred shall be
automatically released.

(e) At any time the ABL Intercreditor Agreement is in effect, upon the release
of any ABL Priority Collateral securing the ABL Obligations (including all
commitments and letters of credit thereunder) in a sale or other disposition,
permitted by the ABL Credit Agreement and the Indenture, the Security Interest
and all other security interests granted hereby on such released property or
assets shall be automatically released; provided, however, that if the Issuer or
any Pledgor subsequently incurs ABL Obligations that are secured by liens on
property or assets of the Issuer or any Pledgor of the type constituting the ABL
Priority Collateral, then the Issuer and its Restricted Subsidiaries shall
reinstitute the Security Interest and any other security interests granted
hereby, which, in the case of any subsequent ABL Obligations will be
second-priority Liens on the ABL Priority Collateral securing such ABL
Obligations to the same extent provided by the Security Documents and on the
terms and conditions of the security documents relating to such ABL Obligations,
with the second-priority Lien held by either the administrative agent,
collateral agent or other representative for such ABL Obligations or by a
collateral agent or other representative designated by the Issuer to hold the
second-priority Liens for the benefit of the Holders of the Notes and subject to
an intercreditor agreement providing such administrative agent or collateral
agent substantially the same rights and powers afforded under the ABL
Intercreditor Agreement.

 

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(f) The Security Interest and all other security interests granted hereby will
also be released, in whole or in part, as provided in Article VIII of the
Indenture.

(g) In connection with any termination or release pursuant to paragraphs
(a) through (f) of this Section 5.15, the Collateral Agent shall execute and
deliver to any Pledgor, at such Pledgor’s expense, all documents that such
Pledgor shall reasonably request to evidence such termination or release
(including, without limitation, UCC termination statements) and will duly assign
and transfer to such Pledgor such of the Pledged Collateral that may be in the
possession of the Collateral Agent and has not theretofore been sold or
otherwise applied or released pursuant to this Agreement; provided that the
Collateral Agent shall not be required to take any action under this
Section 5.15(g) unless such Pledgor shall have delivered to the Collateral Agent
together with such request, which may be incorporated into such request, (i) a
reasonably detailed description of the Collateral, which in any event shall be
sufficient to effect the appropriate termination or release without affecting
any other Collateral, and (ii) a certificate of a Responsible Officer of the
Issuer or such Pledgor certifying that the transaction giving rise to such
termination or release is permitted by the Indenture and was consummated in
compliance with the Noteholder Documents. Any execution and delivery of
documents pursuant to this Section 5.15 shall be without recourse to or warranty
by the Collateral Agent.

Section 5.16. Additional Subsidiaries. Upon execution and delivery by the
Collateral Agent and any Subsidiary that is required to become a party hereto by
Section 3.06 hereof of an instrument in the form of Exhibit I hereto, such
Subsidiary shall become a Pledgor hereunder with the same force and effect as if
originally named as a Pledgor herein. The execution and delivery of any such
instrument shall not require the consent of any other party to this Agreement.
The rights and obligations of each party to this Agreement shall remain in full
force and effect notwithstanding the addition of any new party to this
Agreement.

ARTICLE VI

INTERCREDITOR AGREEMENT

Section 6.01. Intercreditor Agreements Control. Notwithstanding anything herein
to the contrary, the lien and security interests granted to the Collateral Agent
hereunder are subject to the provisions of the Intercreditor Agreements. In the
event of any conflict between the terms of the Intercreditor Agreements and this
Agreement, the terms of the Intercreditor Agreements shall govern and control;
provided that in the event of a conflict between (a) the ABL Intercreditor
Agreement and the Second Lien Intercreditor Agreement, the ABL Intercreditor
Agreement shall control as between the holders of the ABL Obligations and the
First Lien Obligations thereunder and (b) the First Lien Intercreditor Agreement
and the other Intercreditor Agreements, the First Lien Intercreditor Agreement
shall control as between the holders of the First Lien Obligation thereunder and
holders of indebtedness governed by the other Intercreditor Agreements.

Section 6.02. Discharge. Notwithstanding anything herein to the contrary, for so
long as a Discharge of Credit Agreement Obligations or a Discharge of ABL
Obligations (as defined in the ABL Intercreditor Agreement), as applicable,
shall not have occurred and the First Lien Intercreditor Agreement or the ABL
Intercreditor Agreement, as applicable, shall require the delivery of possession
and control to the Applicable Collateral Agent of Collateral, any covenant
hereunder requiring (or any representation or warranty hereunder to the extent
that it would have the effect of requiring) the delivery of possession and
control to the Collateral Agent of Collateral shall be deemed to have been
satisfied (or, in the case of any representation and warranty, shall be deemed
to be true) if, prior to the Discharge (as defined in the First Lien
Intercreditor Agreement) or a Discharge of ABL Obligations as defined in the

 

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ABL Intercreditor Agreement), as applicable, such possession or control shall
have been delivered to the Applicable Collateral Agent, as provided in the First
Lien Intercreditor Agreement or the ABL Intercreditor Agreement, as applicable.

ARTICLE VII

THE COLLATERAL AGENT

The Collateral Agent shall not have any duties or obligations except those
expressly set forth herein. Without limiting the generality of the foregoing,
the Collateral Agent:

(a) shall not be subject to any fiduciary or other implied duties, regardless of
whether an Event of Default has occurred and is continuing;

(b) shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby that the Collateral Agent is required to exercise as
directed in writing by the Trustee; provided that the Collateral Agent shall not
be required to take any action that, in its opinion or the opinion of its
counsel, may expose the Collateral Agent to liability, or for which it is not
indemnified to its satisfaction, or that is contrary to this Agreement,
applicable law;

(c) shall not be liable for any action taken or not taken by it (1) with the
consent or at the request of any Indenture Secured Party or (2) in the absence
of its own gross negligence or willful misconduct or (3) in reliance on a
certificate of an authorized officer of the Issuer stating that such action is
permitted by the terms of this Agreement;

(d) shall not be responsible for or have any duty to ascertain or inquire into
(1) any statement, warranty or representation made in or in connection with this
Agreement, (2) the contents of any certificate, report or other document
delivered hereunder or thereunder or in connection herewith or therewith,
(3) the performance or observance by any other Person of any of the covenants,
agreements or other terms or conditions set forth herein or therein or the
occurrence of any Default or Event of Default, (4) the validity, enforceability,
effectiveness or genuineness of this Agreement, any other Security Document or
any other agreement, instrument or document, or the creation, perfection or
priority of any Lien purported to be created by the Security Interest, (5) the
value or the sufficiency of any Collateral or (6) the satisfaction of any
condition set forth in any agreement, other than to confirm receipt of items
expressly required to be delivered to the Collateral Agent.

In addition:

(a) The duties and obligations of the Collateral Agent shall be determined
solely by the express provisions of this Agreement and the Collateral Agent
shall not be liable except for the performance of such duties and obligations as
are specifically set out in this Agreement. The Collateral Agent shall be under
no liability to any party hereto by reason of any failure on the part of any
other party hereto or any maker, guarantor, endorser or other signatory of any
document or any other Person to perform such Person’s obligations under any such
document.

(b) The Collateral Agent shall not be responsible in any manner for the
validity, enforceability or sufficiency of this Agreement, the Security Interest
or any Collateral delivered to it, or for the value or collectability of any
Obligations or other instrument, if any, so delivered, or

 

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for any representations made or obligations assumed by any party other than the
Collateral Agent. The Collateral Agent shall not be bound to examine or inquire
into or be liable for any defect or failure in the right or title of the Issuer
to all or any of the assets whether such defect or failure was known to the
Collateral Agent or might have been discovered upon examination or inquiry and
whether capable of remedy or not.

(c) The Collateral Agent shall not be responsible for any unsuitability,
inadequacy, expiration or unfitness of any security interest created hereunder
or pursuant to any other document pertaining to this matter nor shall it be
obligated to make any investigation into, and shall be entitled to assume, the
adequacy and fitness of any security interest created hereunder or pursuant to
any other document pertaining to this matter.

(d) The Collateral Agent shall not be liable for any error of judgment, or for
any act done or step taken or omitted by it in good faith.

(e) The Collateral Agent may seek the advice, at the expense of the Issuer, of
legal counsel in the event of any dispute or question as to the construction of
any of the provisions of this Agreement or its duties hereunder or under any
document or applicable law, and it shall incur no liability and shall be fully
protected in respect of any action taken, omitted or suffered by it in good
faith in accordance with the advice or written opinion of such counsel.

(f) The Collateral Agent shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, approval or other paper or document.

(g) In no event shall the Collateral Agent be liable for any indirect, special,
punitive or consequential loss or damage of any kind whatsoever, including, but
not limited to, lost profits, even if such loss or damage was foreseeable or it
has been advised of the likelihood of such loss or damage and regardless of the
form of action.

(h) In no event shall the Collateral Agent be liable for any failure or delay in
the performance of its obligations hereunder because of circumstances beyond its
control, including, but not limited to, acts of God, flood, war (whether
declared or undeclared), terrorism, strikes, work stoppages, civil or military
disturbances, nuclear or natural catastrophes, fire, riot, embargo, loss or
malfunctions of utilities, communications or computer (software and hardware)
services, government action, including any laws, ordinances, regulations,
governmental action or the like which delay, restrict or prohibit the providing
of the services contemplated by this Agreement.

(i) The Collateral Agent shall be entitled to seek written directions from the
Trustee prior to taking any action under this Agreement, or any Collateral
instrument or any of the other Noteholder Documents.

(j) The Collateral Agent shall have no responsibility for or liability with
respect to monitoring compliance of any other party to this Agreement or any
other document related hereto or thereto. The Collateral Agent has no duty to
monitor the value or rating of any Collateral on an ongoing basis.

(k) No provision of this Agreement shall require the Collateral Agent to expend,
advance or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers hereunder unless it is indemnified

 

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to its satisfaction and the Collateral Agent shall have no liability to any
person for any loss occasioned by any delay in taking or failure to take any
such action while it is awaiting an indemnity satisfactory to it.

(l) Whenever in the administration of this Agreement the Collateral Agent shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Collateral Agent (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, conclusively rely upon instructions from the Trustee.

(m) The Collateral Agent may act and rely and shall be protected in acting and
relying in good faith on the opinion or advice of, or information obtained from,
any counsel, accountant, investment banker, appraiser or other expert or
adviser, whether retained or employed by the Trustee or by the Collateral Agent.

(n) The Collateral Agent may employ or retain such counsel, accountants,
sub-agent, agent or attorney-in-fact, appraisers or other experts or advisers as
it may reasonably require for the purpose of determining and discharging its
rights and duties hereunder and shall not be responsible for the actions of any
parties it appoints with due care.

(o) The Collateral Agent may request that the Issuer or other parties deliver a
certificate setting forth the names of individuals and/or titles of officers
authorized at such time to take specified actions pursuant to this Agreement.

(p) Money held by the Collateral Agent in trust hereunder need not be segregated
from other funds except to the extent required by law. The Collateral Agent
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed in writing.

(q) Beyond the exercise of reasonable care in the custody thereof, the
Collateral Agent shall have no duty as to any Collateral in its possession or
control or in the possession or control of any agent or bailee or any income
thereon or as to preservation of rights against prior parties or any other
rights pertaining thereto and the Collateral Agent shall not be responsible for
filing any financing or continuation statements or recording any documents or
instruments in any public office at any time or times or otherwise perfecting or
maintaining the perfection of any security interest in the Collateral. All such
duties shall be the duty of the Issuer. The Collateral Agent shall be deemed to
have exercised reasonable care in the custody of the Collateral in its
possession if the Collateral is accorded treatment substantially equal to that
which it accords similar collateral and shall not be liable or responsible for
any loss or diminution in the value of any of the Collateral, by reason of the
act or omission of any carrier, forwarding agency or other agent or bailee.

(r) The Collateral Agent shall have no duty to ascertain or inquire as to or
monitor the performance or observance of any of the terms of the Indenture, this
Agreement, the other Noteholder Documents or documents by any other Person.

(s) The Issuer shall defend, indemnify, and hold harmless the Collateral Agent
(which for purposes of this paragraph (s) shall be deemed to include its
officers, directors, employees and agents) from and against any claims, demands,
penalties, fines, liabilities, settlements, damages or reasonable costs or
expenses of whatever kind or nature, known or unknown, contingent or otherwise,
arising out of the following in respect of the Collateral: (w) the presence,
disposal, release, or threatened release of any Hazardous Materials which are
on, from, or

 

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affecting the soil, water, vegetation, buildings, personal property, persons or
animals; (x) any personal injury (including wrongful death) or property damage
(real or personal) arising out of or related to such Hazardous Materials;
(y) any lawsuit brought or threatened, settlement reached, or government order
relating to such Hazardous Materials; and/or (z) any violation of laws, orders,
regulations, requirements or demands of government authorities, which are based
upon or in any way related to such Hazardous Materials including, reasonable
attorney and consultant fees and expenses, reasonable investigation and
laboratory fees, court costs, and reasonable litigation expenses, except, in
each case, where such claims, demands, penalties, fines, liabilities,
settlements, damages, costs or expenses arise solely from the gross negligence,
bad faith or willful misconduct of the Collateral Agent as determined in a
final, non-appealable order of a court of competent jurisdiction. For purposes
of this paragraph, “Hazardous Materials” includes radioactive materials,
hazardous materials, hazardous wastes, hazardous or toxic substances defined in
the U.S. Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended (42 U.S.C. § 9601, et seq.) (“CERCLA”), the Hazardous
Materials Transportation Act, as amended (49 U.S.C. Sections 5108, et seq.), the
Resource Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901, et
seq.), and in the regulations adopted and publications promulgated pursuant
thereto, or any other Federal, state or local environmental law, ordinance,
rule, or regulation. The provisions of this paragraph shall be in addition to
any and all other obligations and liabilities Holdings may have to the
Collateral Agent at common law, and shall survive the termination of this
Agreement, and the resignation or removal of the Trustee.

(t) The Collateral Agent reserves the right to conduct an environmental audit
prior to foreclosing on any real estate Collateral or mortgage Collateral. The
Collateral Agent reserves the right to forebear from foreclosing in its own name
if to do so may expose it to undue risk.

(u) Upon any payment or distribution of assets hereunder, the Collateral Agent,
and the Indenture Secured Parties shall be entitled to conclusively rely upon
any order or decree entered by any court of competent jurisdiction in which an
Insolvency or Liquidation Proceeding is pending, or a certificate of the trustee
in bankruptcy, liquidating trustee, custodian, receiver, assignee for the
benefit of creditors, agent or other person making such payment or distribution
in the Insolvency or Liquidation Proceeding, delivered to the Collateral Agent,
for the purpose of ascertaining the persons entitled to participate in such
payment or distribution, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent thereto.

(v) In the event that, following a foreclosure in respect of any mortgaged Real
Property, the Collateral Agent acquires title to any portion of such mortgaged
Real Property or takes any managerial action of any kind in regard thereto in
order to carry out any fiduciary or trust obligation for the benefit of another,
which in the Collateral Agent’s sole discretion may cause the Collateral Agent
to be considered an “owner or operator” under the provisions of CERCLA or
otherwise cause the Collateral Agent to incur liability under CERCLA or any
other Federal, state or local law, the Collateral Agent reserves the right,
instead of taking such action, to either resign as Collateral Agent or arrange
for the transfer of the title or control of the asset to a court-appointed
receiver.

(w) The rights and protections of the Collateral Agent set forth herein shall
also be applicable to the Collateral Agent in its roles as mortgagee,
beneficiary, pledgee or any of its other roles (including as Collateral Agent)
under any documents related to the Collateral.

 

-33-

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(x) Nothing in this Agreement, expressed or implied, is intended to or shall be
so construed as to impose upon the Collateral Agent any obligations in respect
of any Noteholder Document or any Collateral except as expressly set forth
herein or therein.

(y) The Collateral Agent may resign at any time by giving written notice thereof
to the Issuer and the Trustee; provided that no such resignation shall take
effect until a successor Collateral Agent has been appointed and has agreed to
act as such under this Agreement. Upon any such resignation, the Issuer shall
promptly (and no later than within 30 days) appoint a successor to the
Collateral Agent. Upon the acceptance of any appointment as Collateral Agent
hereunder by a successor Collateral Agent, such successor Collateral Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Collateral Agent, and the retiring Collateral Agent
shall be discharged from its duties and obligations. After any retiring
Collateral Agent’s resignation as Collateral Agent, the provisions of this
Agreement shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Collateral Agent. If the Issuer fails to appoint a
successor Collateral Agent within 30 days, the Collateral Agent may petition a
court of competent jurisdiction to do so.

(z) The Collateral Agent may act through its agents and attorneys and shall not
be liable for the acts or omissions of any such agent or attorney appointed with
due care by it hereunder.

(aa) No failure to exercise nor any delay in exercising on the part of the
Collateral Agent, any right, power or privilege hereunder, shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or future exercise thereof or the
exercise or any other right, power or privilege. The rights and remedies
hereunder provided are cumulative and may be exercised singly or concurrently
and are not exclusive of any rights and remedies provided by law.

[Signature Page Follows]

 

-34-

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

CLAIRE’S INC. By:  

/s/ J. Per Brodin

  Name: J. Per Brodin  

Title: Executive Vice President and

          Chief Financial Officer

CLAIRE’S STORES, INC. By:  

/s/ J. Per Brodin

  Name: J. Per Brodin  

Title: Executive Vice President and

          Chief Financial Officer

CLAIRE’S BOUTIQUES, INC.

CLAIRE’S PUERTO RICO CORP.

CBI DISTRIBUTING CORP.

CLAIRE’S CANADA CORP.

BMS DISTRIBUTING CORP.

By:  

/s/ J. Per Brodin

  Name: J. Per Brodin  

Title: Executive Vice President and

          Chief Financial Officer

CSI CANADA LLC By:  

/s/ J. Per Brodin

  Name: J. Per Brodin   Title: Manager

 

[Collateral Agreement]

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

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,

as Collateral Agent

By:  

/s/ Craig A. Kaye

  Name: Craig A. Kaye   Title: Vice President

 

[Collateral Agreement]

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

ACKNOWLEDGEMENT AND CONSENT

March 2, 2012

The undersigned hereby acknowledges receipt of a copy of the Collateral
Agreement dated as of March 2, 2012 (the “Agreement”), made by the Pledgors
parties thereto for the benefit of The Bank of New York Mellon Trust Company,
N.A., as Collateral Agent. The undersigned agrees for the benefit of the
Collateral Agent and the Indenture Secured Parties as follows:

The undersigned acknowledges that its Equity Interests (as defined in the
Agreement) have been pledged pursuant to the terms of the Agreement and will
comply with all actions that may be required of it pursuant to Section 2.05 and
2.04(b) of the Agreement.

[Signature on the following page]

 

[Acknowledgement and Consent]

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

IN WITNESS WHEREOF, the undersigned has duly executed this acknowledgement and
consent as of the first date written above.

 

CLAIRE’S STORES CANADA CORP. By:  

/s/ J. Per Brodin

  Name: J. Per Brodin  

Title: Executive Vice President and

          Chief Financial Officer

Address for Notices:

 

 

 

Fax:

 

[Acknowledgement and Consent]

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

Schedule I

to Collateral Agreement

SUBSIDIARY LOAN PARTIES

 

1. BMS Distributing Corp.

 

2. CBI Distributing Corp.

 

3. Claire’s Boutiques, Inc.

 

4. Claire’s Canada Corp.

 

5. Claire’s Puerto Rico Corp.

 

6. CSI Canada LLC

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

Schedule II

to Collateral Agreement

PLEDGED SECURITIES

EQUITY INTERESTS

 

Name of Owner

   Name of
Issuer    Certificate
Number    Class of
Stock    Number of Shares or
Other Interests

Claire’s Stores, Inc.

   Claire’s Puerto Rico Corp.    001    Common    10

Claire’s Stores, Inc.

   CBI Distributing Corp.    1    Common    100

Claire’s Boutiques, Inc.

   CBI Distributing Corp.    2    Common    80

Claire’s Stores, Inc.

   Claire’s Boutiques, Inc.    1    Common    100

Claire’s Stores, Inc.

   Claire’s Canada Corp.    R-1    Common    100

Claire’s Stores, Inc.

   Claire’s Canada Corp.    R-2    Common    1

Claire’s Canada Corp.

   Claire’s Stores Canada Corp.    C-4    Common    6,500,065

Claire’s Canada Corp.

   Claire’s Stores Canada Corp.    C-6    Common    3,250,000

CBI Distributing Corp.

   BMS Distributing Corp.    01    Common    1,000

Claire’s Canada Corp.

   CSI Canada LLC    1    Membership Interests    1 Membership Unit

Claire’s Stores, Inc.

   Claire’s Swiss Holdings LLC    1    Membership Interests   
65 Membership Interests

DEBT SECURITIES

 

Name of Issuer

   Principal Amount    Date of Note    Maturity Date

Claire’s Stores Canada Corp.

   $63,000,000 CAD    January 31, 2010    January 31, 2020

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

Schedule III

to Collateral Agreement

PATENTS, TRADEMARKS AND COPYRIGHTS

Trademark Registrations

Trademark Registrations

 

Trademark

  

Reg. No.

  

Owner

  

Classes

  

Status

…IT’S AT CLAIRE’S

   3,817,929    CBI Distributing Corp.    35    Registered

C Swirl

   3,512,546    CBI Distributing Corp.    4, 14, 16, 20, 26    Registered

CLAIRE

   2,813,344    CBI Distributing Corp.    28    Registered

CLAIRE’S

   2,978,984    CBI Distributing Corp.    16    Registered

CLAIRE’S

   2,967,212    CBI Distributing Corp.    20    Registered

CLAIRE’S

   2,908,861    CBI Distributing Corp.    26    Registered

CLAIRE’S

   3,190,840    CBI Distributing Corp.    21    Registered

CLAIRE’S

   3,190,839    CBI Distributing Corp.    35    Registered

CLAIRE’S

   2,925,470    CBI Distributing Corp.    25    Registered

CLAIRE’S

   1,891,172    CBI Distributing Corp.    25    Registered

CLAIRE’S

   2,919,171    CBI Distributing Corp.    21    Registered

CLAIRE’S

   2,951,866    CBI Distributing Corp.    3    Registered

CLAIRE’S

   2,908,858    CBI Distributing Corp.    11    Registered

CLAIRE’S

   2,908,859    CBI Distributing Corp.    16    Registered

CLAIRE’S

   2,996,103    CBI Distributing Corp.    14    Registered

CLAIRE’S

   2,908,857    CBI Distributing Corp.    9    Registered

CLAIRE’S

   2,900,024    CBI Distributing Corp.    24    Registered

CLAIRE’S

   2,974,652    CBI Distributing Corp.    35    Registered

CLAIRE’S

   1,890,335    CBI Distributing Corp.    42    Registered

CLAIRE’S

   1,925,359    CBI Distributing Corp.    14    Registered

CLAIRE’S

   3,319,826    CBI Distributing Corp.    3    Registered

CLAIRE’S

   1,929,317    CBI Distributing Corp.    5    Registered

CLAIRE’S ACCESSORIES

   1,946,557    CBI Distributing Corp.    42    Registered

CLAIRE’S ACCESSORIES

   1,956,047    CBI Distributing Corp.    42    Registered

CLAIRE’S ACCESSORIES & Design

   2,294,937    CBI Distributing Corp.    35    Registered

CLAIRE’S BOUTIQUES & Design

   1,514,045    CBI Distributing Corp.    42    Registered

CLAIRE’S CLUB

   2,908,867    CBI Distributing Corp.    20    Registered

CLAIRE’S CLUB

   2,908,191    CBI Distributing Corp.    26    Registered

CLAIRE’S CLUB

   2,908,868    CBI Distributing Corp.    25    Registered

CLAIRE’S CLUB

   2,908,863    CBI Distributing Corp.    9    Registered

CLAIRE’S CLUB

   2,908,862    CBI Distributing Corp.    3    Registered

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

CLAIRE’S CLUB    3,343,775    CBI Distributing Corp.    35    Registered
CLAIRE’S CLUB    2,908,866    CBI Distributing Corp.    18    Registered
CLAIRE’S CLUB    2,908,865    CBI Distributing Corp.    14    Registered
CLAIRE’S CLUB    2,992,613    CBI Distributing Corp.    21    Registered
CLAIRE’S ETC.    2,064,149    CBI Distributing Corp.    42    Registered
CLAIRE’S ETC.    2,065,959    CBI Distributing Corp.    42    Registered
CLAIRE’S (logo)    3,602,239    CBI Distributing Corp.    35    Registered
CLAIRE’S (stylized)    2,623,039    CBI Distributing Corp.    35    Registered
ICING    3,743,653    CBI Distributing Corp.    3, 9, 14, 18, 20, 25, 26, 35   
Registered ICING BY CLAIRE’S    3,050,863    CBI Distributing Corp.    35   
Registered ICING BY CLAIRE’S    3,475,495    CBI Distributing Corp.    14, 26   
Registered THE ICING    3,461,876    CBI Distributing Corp.    35    Registered
THE ICING    1,466,727    CBI Distributing Corp.    35    Registered THE ICING
ACCESSORIES & Design    2,234,841    CBI Distributing Corp.    35    Registered
SENSITIVE SOLUTIONS    1,951,435    CBI Distributing Corp.    14    Registered
WHERE GETTING READY IS HALF THE FUN    2,664,513    CBI Distributing Corp.    35
   Registered WHERE THROWING A PARTY IS ALL THE FUND    3,136,920    CBI
Distributing Corp.    41    Registered SECRET SANTA CIRCLE    4,005,371    CBI
Distributing Corp.    35    Registered CLAIRE’S GARDEN    2,745,298    CBI
Distributing Corp.    4    Registered CLAIRE’S GARDEN FILLED WAX CANDLE & Design
   2,856,777    CBI Distributing Corp.    21    Registered

 

-2

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

Schedule IV

to Collateral Agreement

FILING JURISDICTIONS

COLORADO:

 

1. Claire’s Boutiques, Inc.

DELAWARE:

 

1. BMS Distributing Corp.

 

2. CBI Distributing Corp.

 

3. Claire’s Canada Corp.

 

4. Claire’s Puerto Rico Corp.

 

5. CSI Canada LLC

FLORIDA:

 

1. Claire’s Stores, Inc.

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

Schedule V

to Collateral Agreement

COMMERCIAL TORT CLAIMS

NONE.

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

Schedule VI

to Collateral Agreement

MATTERS RELATING TO ACCOUNTS AND INVENTORY

NONE.

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

Exhibit I

to Collateral Agreement

SUPPLEMENT NO.              dated as of                      (this
“Supplement”), to the Collateral Agreement dated as of March 2, 2012 (the
“Collateral Agreement”), among CLAIRE’S STORES, INC., a Florida corporation (the
“Issuer”), each Pledgor party thereto from time to time and THE BANK OF NEW YORK
MELLON TRUST COMPANY, N.A., as collateral agent (in such capacity, the
“Collateral Agent”) for the Indenture Secured Parties (as defined in the
Collateral Agreement).

A. Reference is made to the Indenture dated as of February 28, 2012 (as
supplemented by the Supplemental Indenture dated March 2, 2012 and as further
amended, restated, supplemented, waived or otherwise modified from time to time,
the “Indenture”), among the Issuer, the Guarantors party thereto from time to
time, and The Bank of New York Mellon Trust Company, N.A., as trustee and
collateral agent.

B. Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Indenture and the Collateral Agreement.

C. The Pledgors have entered into the Collateral Agreement pursuant to the
Indenture. Section 5.16 of the Collateral Agreement provides that additional
Subsidiaries may become Pledgors under the Collateral Agreement by execution and
delivery of an instrument in the form of this Supplement. The undersigned
Subsidiary (the “New Subsidiary”) is executing this Supplement in accordance
with the requirements of the Collateral Agreement to become a Pledgor under the
Collateral Agreement as consideration for the Notes previously purchased.

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

SECTION 1. In accordance with Section 5.16 of the Collateral Agreement, the New
Subsidiary by its signature below becomes a Pledgor under the Collateral
Agreement with the same force and effect as if originally named therein as a
Pledgor, and the New Subsidiary hereby (a) agrees to all the terms and
provisions of the Collateral Agreement applicable to it as a Pledgor thereunder
and (b) represents and warrants that the representations and warranties made by
it as a Pledgor thereunder are true and correct, in all material respects, on
and as of the date hereof. In furtherance of the foregoing, the New Subsidiary,
as security for the payment and performance in full of the Notes Obligations (as
defined in the Collateral Agreement), does hereby create and grant to the
Collateral Agent, for the ratable benefit of the Indenture Secured Parties, a
security interest in and Lien on all the New Subsidiary’s right, title and
interest in and to the Collateral (as defined in the Collateral Agreement) of
the New Subsidiary. Each reference to a “Pledgor” in the Collateral Agreement
shall be deemed to include the New Subsidiary. The Collateral Agreement is
hereby incorporated herein by reference.

SECTION 2. The New Subsidiary represents and warrants to the Collateral Agent
and the other Indenture 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, subject
to (i) the effects of bankruptcy, insolvency, moratorium, reorganization,
fraudulent conveyance or other similar laws affecting creditors’ rights
generally, (ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and
(iii) implied covenants of good faith and fair dealing.

SECTION 3. 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.

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

This Supplement shall become effective when (a) the Collateral Agent shall have
received a counterpart of this Supplement that bears the signature of the New
Subsidiary and (b) the Collateral Agent has executed a counterpart hereof.

SECTION 4. The New Subsidiary hereby represents and warrants that (a) set forth
on Schedule I attached hereto is a true and correct schedule of all the Pledged
Securities of the New Subsidiary as of the date hereof, (b) set forth on
Schedule II attached hereto is a true and correct schedule of all of the
Patents, Trademarks and Copyrights of the New Subsidiary as of the date hereof,
(c) set forth on Schedule III attached hereto is a true and correct schedule of
all Commercial Tort Claims of the New Subsidiary individually in excess of $5.0
million as of the date hereof and (d) set forth under its signature hereto, is
the true and correct legal name of the New Subsidiary, its jurisdiction of
formation and the location of its chief executive office.

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

SECTION 6. THIS SUPPLEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER
THIS SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK.

SECTION 7. In the event 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 Collateral Agreement shall not in any way be affected or
impaired thereby. 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. All communications and notices hereunder shall be in writing and
given as provided in Section 5.01 of the Collateral Agreement.

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

 

I-2

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

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

 

[Name of New Subsidiary] By:  

 

  Name:   Title: Legal Name: Jurisdiction of Formation: Location of Chief
Executive Office:

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,

as Collateral Agent

By:  

 

  Name:   Title:

 

I-3

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

Schedule I

to Supplement No.      to the

Collateral Agreement

Pledged Securities of the New Subsidiary

EQUITY INTERESTS

 

Number of Issuer Certificate

   Registered Owner    Number and Class of
Equity Interest    Percentage of
Equity  Interests                                             

DEBT SECURITIES

 

Issuer

   Principal Amount    Date of Note    Maturity Date                           
                 

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

Schedule II

to Supplement No.      to the

Collateral Agreement

PATENTS, TRADEMARKS AND COPYRIGHTS

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

Schedule III

to Supplement No.      to the

Collateral Agreement

COMMERCIAL TORT CLAIMS