Exhibit 10.15

EXECUTION COPY

SECURITY AGREEMENT

dated as of

June 16, 2010

among

SPECTRUM BRANDS, INC.,

SB/RH HOLDINGS, LLC,

THE OTHER GRANTORS PARTY HERETO

and

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Collateral Trustee

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

TABLE OF CONTENTS

 

 

 

     PAGE

SECTION 1.   Definitions

   2

SECTION 2.   Grant of Transaction Liens

   15

SECTION 3.   General Representations and Warranties

   17

SECTION 4.   Further Assurances; General Covenants

   19

SECTION 5.   Recordable Intellectual Property

   21

SECTION 6.   Investment Property, Instruments and Letter-of-Credit Rights

   22

SECTION 7.   Deposit Accounts

   26

SECTION 8.   Cash Collateral Accounts

   26

SECTION 9.   Commercial Tort Claims

   27

SECTION 10.   Transfer of Record Ownership

   27

SECTION 11.   Right to Vote Securities

   27

SECTION 12.   Certain Cash Distributions

   28

SECTION 13.   Remedies upon Actionable Default

   28

SECTION 14.   Application of Proceeds

   30

SECTION 15.   Fees and Expenses; Indemnification

   30

SECTION 16.   Authority to Administer Collateral

   32

SECTION 17.   Limitation on Duty in Respect of Collateral

   32

SECTION 18.   General Provisions Concerning Collateral Trustee

   33

SECTION 19.   Termination of Transaction Liens; Release of Collateral

   33

SECTION 20.   Additional Grantors

   33

SECTION 21.   Notices

   33

SECTION 22.   No Implied Waivers; Remedies Not Exclusive

   33

SECTION 23.   Successors and Assigns

   33

SECTION 24.   Amendments and Waivers

   33

SECTION 25.   Applicable Law

   34

SECTION 26.   Waiver of Jury Trial

   34

SECTION 27.   Severability

   34

SECTION 28.   ABL Intercreditor Agreement

   34

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

SCHEDULES:

  

Schedule 1

   Equity Interests in Subsidiaries and Affiliates Owned by Original Grantors

Schedule 2

   Other Investment Property and Specified Instruments Owned by Original
Grantors

Schedule 3

   Commercial Tort Claims EXHIBITS:   

Exhibit A

   Security Agreement Supplement

Exhibit B

   Copyright Security Agreement

Exhibit C

   Patent Security Agreement

Exhibit D

   Trademark Security Agreement

Exhibit E

   Perfection Certificate

Exhibit F

   Issuer Control Agreement

Exhibit G

   Securities Account Control Agreement

Exhibit H

   Deposit Account Control Agreement

 

ii

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

SECURITY AGREEMENT

SECURITY AGREEMENT dated as of June 16, 2010 among SPECTRUM BRANDS, INC., a
Delaware corporation (the “Company”), SB/RH HOLDINGS, LLC, a Delaware limited
liability company (“Holdings”), the subsidiaries of the Company listed on the
signature pages hereof and the Additional Grantors described herein (the
Company, Holdings, the Subsidiaries so listed and the Additional Grantors being,
collectively, the “Grantors”) and WELLS FARGO BANK, NATIONAL ASSOCIATION, as
collateral trustee under the Collateral Trust Agreement (in such capacity,
including any successor thereto, the “Collateral Trustee”), for the benefit of
the Secured Parties described herein.

WHEREAS, the Company has entered into the Term Loan Credit Agreement described
in Section 1 hereof, pursuant to which the Company will borrow funds for the
purposes set forth therein;

WHEREAS, the Company has entered into the Senior Secured Note Indenture
described in Section 1 hereof, pursuant to which the Company will issue its
9.50% Senior Secured Notes due 2018 (the “Senior Secured Notes”);

WHEREAS, the Company is willing to secure (i) its obligations under the Term
Loan Credit Agreement and under the Senior Secured Notes and the Senior Secured
Note Indenture and (ii) certain other obligations, by granting Liens on its
assets to the Collateral Trustee as provided in the Security Documents;

WHEREAS, Holdings has guaranteed the foregoing obligations of the Company
pursuant to the Holdings Term Loan Guaranty and the Holdings Senior Secured
Notes Guaranty and is willing to secure its guarantee thereof by granting Liens
on its assets to the Collateral Trustee as provided in the Security Documents;

WHEREAS, the Company has caused each of its Domestic Subsidiaries to guarantee
the foregoing obligations of the Company pursuant to the Subsidiary Term Loan
Guaranties and the Subsidiary Senior Secured Note Guaranties (subsidiaries that
are party to such guaranties are collectively the “Subsidiary Guarantors” and,
together with Holdings, the “Guarantors”) and is willing to cause each such
Domestic Subsidiary to secure its guarantee thereof by granting Liens on its
assets to the Collateral Trustee as provided in the Security Documents;

WHEREAS, each Grantor will derive substantial direct and indirect benefit from
the transactions contemplated by the Term Loan Credit Agreement and the Senior
Secured Note Indenture;

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

WHEREAS, the Term Lenders are not willing to make loans under the Term Loan
Credit Agreement and the Senior Noteholders are not willing to purchase the
Senior Secured Notes, unless (i) the foregoing obligations of the Company are
secured and guaranteed as described above and (ii) each guarantee thereof is
secured by Liens on assets of the relevant Guarantor as provided in the Security
Documents;

WHEREAS, the Company, the Grantors, the Term Loan Agent, the Senior Indenture
Trustee and the Collateral Trustee have entered into that certain Collateral
Trust Agreement dated as of June 16, 2010 (as it may be amended, modified,
supplemented, restated or replaced from time to time, the “Collateral Trust
Agreement”), pursuant to which the Collateral Trustee has been appointed by the
Term Loan Agent on behalf of the Term Lenders and the Senior Indenture Trustee
on behalf of the Senior Noteholders, and the Collateral Trustee has agreed, to
hold and administer the Liens granted pursuant to the Security Documents for the
ratable benefit of all of the Secured Parties on a pari passu basis;

WHEREAS, the Grantors want to be able from time to time, as contemplated by the
Collateral Trust Agreement, to cause other obligations of the Company to be
secured hereunder on a pari passu basis; and

WHEREAS, upon any foreclosure or other enforcement of the Security Documents,
the net proceeds of the relevant Collateral are to be received by or paid over
to the Collateral Trustee and applied as provided in the Collateral Trust
Agreement;

NOW, THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

SECTION 1. Definitions.

(a) Terms Defined in Collateral Trust Agreement. As used herein, each of the
following terms shall have the meaning specified in the Collateral Trust
Agreement:

Term

Additional Authorized Representative

Additional Secured Debt Facility

Affiliate

Authorized Representative

Bankruptcy Proceeding

Class

Governmental Authority

 

2

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

Term

Holdings Senior Secured Note Guaranty

Holdings Term Loan Guaranty

Lien

Notice of Actionable Default

Permitted Investments

Person

Refinance

Required Secured Parties

Secured Debt Agreement

Secured Debt Documents

Secured Parties

Senior Noteholders

Senior Secured Note Documents

Senior Secured Note Secured Parties

Subsidiary Senior Secured Note Guaranties

Subsidiary Term Loan Guaranties

Term Lender

Term Loan Documents

Term Loan Secured Parties

Term Loans

Transaction Liens

(b) Terms Defined in UCC. As used herein, each of the following terms shall have
the meaning specified in the UCC:

 

Term

  

UCC

Account    9-102 Authenticate    9-102 Certificated Security    8-102 Chattel
Paper    9-102 Commercial Tort Claim    9-102 Commodity Account    9-102
Commodity Customer    9-102 Deposit Account    9-102 Document    9-102
Entitlement Holder    8-102 Equipment    9-102 Financial Asset    8-102 & 103
General Intangibles    9-102 Instrument    9-102 Inventory    9-102 Investment
Property    9-102

 

3

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

Term

  

UCC

Letter-of-Credit Right

   9-102

Record

   9-102

Securities Account

   8-501

Securities Intermediary

   8-102

Security

   8-102 & 103

Security Entitlement

   8-102

Supporting Obligation

   9-102

Uncertificated Security

   8-102

(c) Additional Definitions. The following additional terms, as used herein,
shall have the following meanings:

“ABL Agent” shall have the meaning assigned to such term in the ABL
Intercreditor Agreement.

“ABL Credit Agreement” shall mean that certain Loan and Security Agreement dated
as of June 16, 2010, among the Company and certain of its Subsidiaries, as
borrowers, Holdings and certain Subsidiaries, as guarantors, the lenders party
thereto, and Bank of America, N.A., as administrative agent, as the same may be
amended, supplemented, modified or Refinanced from time to time in accordance
with the terms of the ABL Intercreditor Agreement.

“ABL Intercreditor Agreement” shall have the meaning assigned to such term in
Section 28.

“Actionable Default” shall mean the occurrence of any of the following:

(a) an “Event of Default” under and as defined in the Term Loan Credit
Agreement;

(b) an “Event of Default” under and as defined in the Senior Secured Note
Indenture; or

(c) any event or condition which, under the terms of any Additional Secured Debt
Facility, causes, or permits (after giving effect to any applicable grace
periods) holders of the Additional Secured Obligations with respect to such
Additional Secured Debt Facility to cause, such Additional Secured Obligations
to become immediately due and payable;

provided that, upon delivery of a Notice of Actionable Default, the Collateral
Trustee may assume that an Actionable Default shall be deemed to be continuing
unless the Notice of Actionable Default delivered with respect thereto shall
have been withdrawn in a written notice delivered to the Collateral Trustee by
the Term

 

4

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

Loan Agent, the Senior Indenture Trustee or the Additional Authorized
Representative, as applicable, prior to the first date on which the Collateral
Trustee commences the exercise of any remedy with respect to the Collateral
following the receipt of such Notice of Actionable Default.

“Additional Grantor” shall mean each Subsidiary that shall, at any time after
the date hereof, become a “Grantor” pursuant to Section 20.

“Additional Secured Obligations” shall mean all obligations of any of the
Grantors from time to time arising under or in respect of the due and punctual
payment of (i) the principal of and premium, if any, and interest (including any
Post-Petition Interest) on the indebtedness for borrowed money outstanding under
each Additional Secured Debt Facility, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or otherwise, and
(ii) all other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any Bankruptcy
Proceeding with respect to any Grantor, regardless of whether allowed or
allowable in such proceeding), of the Grantors under the Additional Secured Debt
Documents owing to the Additional Secured Parties (in their capacity as such).
For the avoidance of doubt, as of the date hereof, there are no Additional
Secured Obligations outstanding.

“Agreement” shall mean this Agreement, as amended, restated or modified from
time to time in accordance with the terms of this Agreement, the Collateral
Trust Agreement and the ABL Intercreditor Agreement.

“Cash Collateral Account” shall have the meaning assigned to such term in
Section 8.

“Cash Distributions” shall mean dividends, interest and other distributions and
payments (including proceeds of liquidation, sale or other disposition) made or
received in cash upon or with respect to any Collateral.

“Closing Date” shall mean the date on which the initial loans are made under the
Term Loan Credit Agreement and the initial notes are issued under the Senior
Secured Note Indenture, which date is June 16, 2010.

“Collateral” shall mean all property, whether now owned or hereafter acquired,
on which a Lien is granted or purports to be granted to the Collateral Trustee
pursuant to the Security Documents. When used with respect to a specific
Grantor, the term “Collateral” shall mean all its property on which such a Lien
is granted or purports to be granted.

 

5

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

“Collateral Accounts” shall mean the Cash Collateral Accounts, the Controlled
Deposit Accounts and the Controlled Securities Accounts, which for the avoidance
of doubt shall exclude any Exempted Deposit Accounts.

“Collateral Trust Agreement” shall have the meaning assigned to such term in the
recitals.

“Collateral Trustee” shall have the meaning assigned to such term in the
introductory statement.

“Control” shall have the meaning specified in UCC Section 8-106, 9-104, 9-105,
9-106 or 9-107, as may be applicable to the relevant Collateral.

“Controlled Deposit Account” shall mean a Deposit Account (i) that is subject to
a Deposit Account Control Agreement or (ii) as to which the Collateral Trustee
is the Depositary Bank’s “customer” (as defined in UCC Section 4-104).

“Controlled Securities Account” shall mean a Securities Account that (i) is
maintained in the name of a Grantor at an office of a Securities Intermediary
located in the United States and (ii) together with all Financial Assets
credited thereto and all related Security Entitlements, is subject to a
Securities Account Control Agreement.

“Copyright License” shall mean any agreement now or hereafter in existence
granting to any Grantor, or pursuant to which any Grantor grants to any other
Person, any right to use, copy, reproduce, distribute, prepare derivative works,
display or publish any records or other materials on which a Copyright is in
existence or may come into existence, including any exclusive Copyright license
agreement identified in Schedule 1 to any Copyright Security Agreement.

“Copyrights” shall mean all the following: (i) all copyrights under the laws of
the United States or any other country (whether or not the underlying works of
authorship have been published), all registrations and recordings thereof, all
copyrightable works of authorship (whether or not published), and all
applications for copyrights under the laws of the United States or any other
country, including registrations, recordings and applications in the U.S.
Copyright Office or in any similar office or agency of the United States, any
State thereof or any other country or any political subdivision thereof,
including those described in Schedule 1 to any Copyright Security Agreement,
(ii) all renewals of any of the foregoing, (iii) all claims for, and rights to
sue for, past or future infringements of any of the foregoing and (iv) all
income, royalties, damages and payments now or hereafter due or payable with
respect to any of the foregoing, including damages and payments for past or
future infringements thereof.

 

6

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

“Copyright Security Agreement” shall mean a Copyright Security Agreement,
substantially in the form of Exhibit B (with any changes that the Collateral
Trustee and the Company shall have approved), executed and delivered by a
Grantor in favor of the Collateral Trustee for the benefit of the Secured
Parties.

“Deposit Account Control Agreement” shall mean, (x) a Deposit Account Control
Agreement substantially in the form of Exhibit H (with any changes that the
Collateral Trustee and the Company shall have approved) and (y) with respect to
any Deposit Account of any Grantor other than a Term Priority Cash Collateral
Account, so long as the ABL Credit Agreement remains in effect, a Deposit
Account Control Agreement (as defined in the ABL Credit Agreement) (with any
changes that the Collateral Trustee and the Company shall have approved), in
either case (A) providing that the relevant Depositary Bank will comply with
instructions originated by the Collateral Trustee or the ABL Agent, as
applicable, directing disposition of the funds in such Deposit Account, without
further consent by such Grantor and (B) subordinating to the Lien of the secured
parties described therein all claims of the Depositary Bank to such Controlled
Deposit Account (except its right to deduct its normal operating charges and any
uncollected funds previously credited thereto).

“Depositary Bank” shall mean a bank at which a Controlled Deposit Account is
maintained.

“Domestic Subsidiaries” shall mean all Subsidiaries incorporated or organized
under the laws of the United States, any State thereof or the District of
Columbia.

“Equity Interests” shall mean shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity interests in any Person, and any option, warrant or other
right entitling the holder thereof to purchase or otherwise acquire any such
equity interest.

“Excluded Assets” shall mean:

(a) voting Equity Interests in any Foreign Subsidiary, to the extent (but only
to the extent) required to prevent the Collateral from including more than 65%
of all voting Equity Interests in such Foreign Subsidiary;

(b) any interest in a joint venture or non-wholly owned Subsidiary to the extent
and for so long as the attachments of security interest created hereby therein
would violate any joint venture agreement, organizational documents,
shareholders agreement or equivalent agreement relating to such joint venture or
Subsidiary;

 

7

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

(c) any rights of any Grantor in any contract, license, right or other agreement
if under the terms thereof, or any applicable law with respect thereto, the
valid grant of a security interest therein to the Collateral Trustee is
prohibited and such prohibition has not been waived or the consent of the other
party to such contract or license has not been obtained or, under applicable
law, such prohibition cannot be waived; provided, however, that “Excluded
Assets” shall not be interpreted (A) to apply to any contract or license to the
extent the applicable prohibition is ineffective or unenforceable under the UCC
(including Sections 9-406 through 9-409) or any other applicable law, or (B) so
as to limit, impair or otherwise affect the Collateral Trustee’s unconditional
continuing security interest in and Lien upon any rights or interests of such
Grantor in or to moneys due or to become due under any such contract or license
(including any accounts);

(d) any intent-to-use U.S. trademark application to the extent that, and solely
during the period in which, grant of a security interest therein would impair
the validity or enforceability of such intent-to-use trademark application or
the mark that is the subject of such application under applicable federal law;

(e) motor vehicles the perfection of a security interest in which is excluded
from the UCC in the relevant jurisdiction;

(f) any Equipment or other property which is subject to a Lien permitted by
(x) Section 6.02(l) of the Term Loan Credit Agreement, securing indebtedness
permitted by clause (f) or (g) of Section 6.01 of the Term Loan Credit
Agreement, (y) by clause (20) of the definition of “Permitted Liens” under the
Senior Secured Note Indenture securing indebtedness permitted by
Section 4.06(b)(4) of the Senior Secured Note Indenture and (z) any comparable
provision of any Additional Secured Debt Facility, where the terms of such
indebtedness (or of the Lien securing such indebtedness) prohibit the existence
of a junior Lien on the applicable property; provided, that immediately upon the
ineffectiveness, lapse or termination of any such restriction, such property
will cease to be an Excluded Asset;

(g) any Exempted Deposit Account; and

(h) other property that the Applicable Authorized Representative may determine
from time to time that the cost of obtaining a Lien thereon exceeds the benefits
of obtaining such a Lien.

 

8

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

“Exempted Deposit Account” shall mean a Deposit Account, the balance of which
consists exclusively of (a) withheld income taxes and federal, state, local and
foreign employment taxes in such amounts as are required in the reasonable
judgment of the Company to be paid to the U.S. Internal Revenue Service or any
successor agency thereto or any other applicable Governmental Authority within
the following three (3) months with respect to employees of any Grantor and
(b) amounts required to be paid over to an employee benefit plan pursuant to DOL
Reg. Sec. 2510.3-102 or any Foreign Plan (as defined in the Term Loan Credit
Agreement) on behalf of or for the benefit of employees of one or more Grantors.

“Foreign Subsidiary” shall mean any Subsidiary that is not a Domestic
Subsidiary.

“Grantors” shall have the meaning assigned to such term in the introductory
statement.

“Guarantors” shall have the meaning assigned to such term in the recitals.

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

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

“Intellectual Property Filing” shall mean (i) with respect to any Patent, Patent
License recorded with the U.S. Patent and Trademark Office, Trademark or
Trademark License recorded with the U.S. Patent and Trademark Office, the filing
of the applicable Patent Security Agreement or Trademark Security Agreement with
the U.S. Patent and Trademark Office, together with an appropriately completed
recordation form, and (ii) with respect to any Copyright or exclusive Copyright
License, the filing of the applicable Copyright Security Agreement with the U.S.
Copyright Office, together with an appropriately completed recordation form, in
each case sufficient to record the Transaction Lien granted to the Collateral
Trustee in such Recordable Intellectual Property.

 

9

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

“Intellectual Property Security Agreement” shall mean a Copyright Security
Agreement, a Patent Security Agreement or a Trademark Security Agreement.

“Issuer Control Agreement” shall mean an Issuer Control Agreement substantially
in the form of Exhibit F (with any changes that the Collateral Trustee and the
Company shall have approved).

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

“Mortgage” shall mean a mortgage or deed of trust in form reasonably
satisfactory to the Collateral Trustee in each case creating a Lien on real
property in favor of the Collateral Trustee for the benefit of the Secured
Parties and with such changes in the form thereof as the Collateral Trustee
shall request for the purpose of conforming to local practice for similar
instruments in the jurisdiction where such real property is located.

“Original Grantor” shall mean any Grantor that grants a Lien on any of its
assets hereunder on the Closing Date.

“own” refers to the possession of sufficient rights in property to grant a
security interest therein as contemplated by UCC Section 9-203, and “acquire”
refers to the acquisition of any such rights.

“Patent License” shall mean any agreement now or hereafter in existence granting
to any Grantor, or pursuant to which any Grantor grants to any other Person, any
right with respect to any Patent or any invention now or hereafter in existence,
whether patentable or not, whether a patent or application for patent is in
existence on such invention or not, and whether a patent or application for
patent on such invention may come into existence or not, including any exclusive
Patent license agreement recorded with the U.S. Patent and Trademark Office
identified in Schedule 1 to any Patent Security Agreement.

“Patents” shall mean (i) all letters patent and design letters patent of the
United States or any other country and all applications for letters patent or
design letters patent of the United States or any other country, including
applications in the U.S. Patent and Trademark Office or in any similar office or
agency of the United States, any State thereof or any other country or any
political subdivision thereof, including those described in Schedule 1 to any
Patent Security Agreement, (ii) all reissues, divisions, continuations,
continuations in part, revisions and extensions of any of the foregoing,
(iii) all claims for, and rights to sue for, past or future infringements of any
of the foregoing and (iv) all income, royalties, damages and payments now or
hereafter due or payable with respect to any of the foregoing, including damages
and payments for past or future infringements thereof.

 

10

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

“Patent Security Agreement” shall mean a Patent Security Agreement,
substantially in the form of Exhibit C (with any changes that the Collateral
Trustee and the Company shall have approved), executed and delivered by a
Grantor in favor of the Collateral Trustee for the benefit of the Secured
Parties.

“Perfection Certificate” shall mean, with respect to any Grantor, a certificate
substantially in the form of Exhibit E (with any changes that the Collateral
Trustee and the Company shall have approved), completed and supplemented with
the schedules contemplated thereby, and signed by an officer of such Grantor.

“Permitted Liens” shall mean (i) the Transaction Liens and (ii) any other Liens
on the Collateral permitted to be created or assumed or to exist pursuant to
each of (A) Section 6.02 of the Term Loan Credit Agreement, (B) Section 4.08 of
the Senior Secured Note Indenture and (C) any other Secured Debt Agreement.

“Personal Property Collateral” shall mean all property included in the
Collateral except Real Property Collateral.

“Pledged”, when used in conjunction with any type of asset, shall mean at any
time an asset of such type that is included (or that creates rights that are
included) in the Collateral at such time. For example, “Pledged Equity Interest”
shall mean an Equity Interest that is included in the Collateral at such time.

“Post-Petition Interest” shall mean any interest and fees that accrue after the
commencement of any case, proceeding or other action relating to the bankruptcy,
insolvency or reorganization of any one or more of the Grantors (or would accrue
but for the operation of applicable bankruptcy or insolvency laws), whether or
not such interest is allowed or allowable as a claim in any such proceeding.

“Proceeds” shall mean all proceeds of, and all other profits, products, rents or
receipts, in whatever form, arising from the collection, sale, lease, exchange,
assignment, licensing or other disposition of, or other realization upon, any
Collateral, including all claims of the relevant Grantor against third parties
for loss of, damage to or destruction of, or for proceeds payable under, or
unearned premiums with respect to, policies of insurance in respect of, any
Collateral, and any condemnation or requisition payments with respect to any
Collateral.

“Real Property Collateral” shall mean all real property included in the
Collateral.

 

11

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

“Recordable Intellectual Property” shall mean (i) any Patent registered with the
U.S. Patent and Trademark Office, and any Patent License recorded in the U.S.
Patent and Trademark Office, (ii) any Trademark registered with the U.S. Patent
and Trademark Office, and any Trademark License recorded with the U.S. Patent
and Trademark Office with respect to a Trademark so registered, (iii) any
Copyright registered with the U.S. Copyright Office and any exclusive Copyright
License with respect to a Copyright so registered, and all rights in or under
any of the foregoing.

“Secured Obligations” shall mean (a) the Term Loan Obligations, (b) the Senior
Secured Note Obligations, (c) subject to Section 2(b) of the Collateral Trust
Agreement, the Additional Secured Obligations and (d) all amounts (including
Post-Petition Interest) now or hereafter payable by the Company or any of its
Subsidiaries arising under the Security Documents to the Collateral Trustee. For
the avoidance of doubt, if the Transaction Liens securing any Class of Secured
Obligations are released pursuant to Section 7(a)(iv) of the Collateral Trust
Agreement, such obligations shall cease to be Secured Obligations.

“Securities Account Control Agreement” shall mean, when used with respect to a
Securities Account, a Securities Account Control Agreement substantially in the
form of Exhibit G (with any changes that the Collateral Trustee and the Company
shall have approved) among the relevant Securities Intermediary, the relevant
Grantor and the Collateral Trustee.

“Security Agreement Supplement” shall mean a Security Agreement Supplement,
substantially in the form of Exhibit A, signed and delivered to the Collateral
Trustee for the purpose of adding a Subsidiary as a party hereto pursuant to
Section 20 and/or adding additional property to the Collateral.

“Security Documents” shall mean this Agreement, the Security Agreement
Supplements, the ABL Intercreditor Agreement, the Collateral Trust Agreement,
the Deposit Account Control Agreements, the Issuer Control Agreements, the
Securities Account Control Agreements, the Mortgages, the Intellectual Property
Security Agreements and all other supplemental or additional security
agreements, control agreements, mortgages or similar instruments delivered
pursuant to the Secured Debt Documents.

“Senior Indenture Trustee” shall mean US Bank, National Association, as trustee
under the Senior Secured Note Indenture, together with its successors and
assigns from time to time.

“Senior Secured Note Indenture” shall mean the Indenture dated as of June 16,
2010 among the Company, the Guarantors party thereto and US Bank, National
Association, as indenture trustee, as the same may be amended, supplemented,
modified or Refinanced from time to time in accordance with the terms of the ABL
Intercreditor Agreement.

 

12

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

“Senior Secured Note Obligations” shall mean all obligations of any of the
Grantors from time to time arising under or in respect of the due and punctual
payment of (i) the principal of and premium, if any, and interest (including any
Post-Petition Interest) on the Senior Secured Notes and any other series of
notes outstanding under the Senior Secured Note Indenture, when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment
or otherwise, and (ii) all other monetary obligations, including fees, costs,
expenses and indemnities, whether primary, secondary, direct, contingent, fixed
or otherwise (including monetary obligations incurred during the pendency of any
Bankruptcy Proceeding with respect to any Grantor, regardless of whether allowed
or allowable in such proceeding), of the Grantors under the Senior Secured Note
Documents owing to the Senior Secured Note Secured Parties (in their capacity as
such); provided that the aggregate amount of Senior Secured Note Obligations
shall not exceed greater of (x) $750,000,000 and (y) the maximum amount of
Indebtedness permitted to be incurred under the Senior Secured Note Indenture by
the Term Loan Credit Agreement at any time.

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

“Specified Dormant Foreign Subsidiary” shall mean each of the following Foreign
Subsidiaries: Minera Vidaluz S.A. de C.V., Rayovac Foreign Sales Corporation,
and Zoephos International N.V., so long as each such Foreign Subsidiary
transacts no business and has no operations other than activities required to
maintain its existence; provided that no Subsidiary may be a Specified Dormant
Foreign Subsidiary if the Borrower or any of its other Subsidiaries provides any
credit support thereto or is liable in any respect for the liabilities thereof
greater in the aggregate than such Subsidiary’s fair market value.

“Specified Instrument” shall mean any Instrument with a value greater than or
equal to $5,000,000 and any Instrument representing intercompany debt or any
global intercompany note.

“subsidiary” shall mean, with respect to any Person (herein referred to as the
“parent”), any corporation, partnership, limited liability company, association
or other business entity of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power or more than 50% of the general partnership interests are, at the time any
determination is being made, directly or indirectly, owned, Controlled or held
by such Person. For purposes of this definition, “Control” shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability
to exercise voting power, by contract or otherwise. The term “Controlled” shall
have a correlative meaning.

 

13

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

“Subsidiary” shall mean any subsidiary of the Company.

“Term Loan Agent” shall mean Credit Suisse AG, Cayman Islands Branch as
administrative agent under the Term Loan Credit Agreement, together with its
successors and assigns from time to time.

“Term Loan Credit Agreement” shall mean the Credit Agreement dated as of
June 16, 2010 among the Company, Holdings, the Term Lenders party thereto and
Credit Suisse AG, Cayman Islands Branch as administrative agent, as the same may
be amended, supplemented, modified or refinanced from time to time in accordance
with the terms of the ABL Intercreditor Agreement.

“Term Loan Obligations” shall mean all obligations of any of the Grantors from
time to time arising under or in respect of the due and punctual payment of
(i) the principal of and premium, if any, and interest (including any
Post-Petition Interest) on the Term Loans and any other loans outstanding under
the Term Loan Credit Agreement, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or otherwise, and
(ii) all other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any Bankruptcy
Proceeding with respect to any Grantor, regardless of whether allowed or
allowable in such proceeding), of the Grantors under the Term Loan Documents
owing to the Term Loan Secured Parties (in their capacity as such); provided
that the aggregate amount of Term Loan Obligations shall not exceed greater of
(x) $850,000,000 and (y) the maximum amount of Indebtedness permitted to be
incurred under the Term Loan Credit Agreement by the Secured Note Indenture at
any time.

“Term Priority Cash Collateral Account” shall mean a deposit account established
for the purpose set forth in the definition of “Net Cash Proceeds” in the Term
Loan Credit Agreement or any comparable provision in any other Secured Debt
Agreement.

“Trademark License” shall mean any agreement now or hereafter in existence
granting to any Grantor, or pursuant to which any Grantor grants to any other
Person, any right to use any Trademark, including any Trademark license
agreement recorded with the U.S. Patent and Trademark Office identified in
Schedule 1 to any Trademark Security Agreement.

“Trademarks” shall mean: (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos, brand names, trade dress, prints and labels on which any of

 

14

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

the foregoing have appeared or appear, package and other designs, and all other
source or business identifiers, and all general intangibles of like nature, and
the rights in any of the foregoing which arise under applicable law, (ii) the
goodwill of the business symbolized thereby or associated with each of them,
(iii) all registrations and applications in connection therewith, including
registrations and applications in the U.S. Patent and Trademark Office or in any
similar office or agency of the U.S., any State thereof or any other country or
any political subdivision thereof, including those described in Schedule 1 to
any Trademark Security Agreement, (iv) all renewals of any of the foregoing,
(v) all claims for, and rights to sue for, past or future infringements of any
of the foregoing and (vi) all income, royalties, damages and payments now or
hereafter due or payable with respect to any of the foregoing, including damages
and payments for past or future infringements thereof.

“Trademark Security Agreement” shall mean a Trademark Security Agreement,
substantially in the form of Exhibit D (with any changes that the Collateral
Trustee and the Company shall have approved), executed and delivered by a
Grantor in favor of the Collateral Trustee for the benefit of the Secured
Parties.

“UCC” shall mean the Uniform Commercial Code as in effect from time to time in
the State of New York or, when the laws of any other jurisdiction govern the
perfection of enforcement of a Transaction Lien, the Uniform Commercial Code of
such jurisdiction.

“United States” or “U.S.” shall mean the United States of America.

(d) Rules of Construction. The rules of construction specified in Section 1(c)
of the Collateral Trust Agreement also apply to this Agreement.

SECTION 2. Grant of Transaction Liens.

(a) The Company and each Guarantor listed on the signature pages hereof, in
order to secure the Secured Obligations, grants to the Collateral Trustee for
the benefit of the Secured Parties a continuing security interest in all the
following property of the Company or such Guarantor, as the case may be, whether
now owned or existing or hereafter acquired or arising and regardless of where
located:

(i) all Accounts;

(ii) all Chattel Paper;

(iii) all cash and Deposit Accounts;

 

15

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

(iv) all Documents;

(v) all Equipment;

(vi) all General Intangibles (including (x) any Equity Interests in other
Persons that do not constitute Investment Property and (y) any Intellectual
Property);

(vii) all Instruments;

(viii) all Inventory;

(ix) all Investment Property;

(x) the Commercial Tort Claims described in Schedule 3;

(xi) all Letter-of-Credit Rights;

(xii) all books and records (including customer lists, credit files, computer
programs, printouts and other computer materials and records) of such Grantor
pertaining to any of its Collateral;

(xiii) such Grantor’s ownership interest in (1) its Collateral Accounts, (2) all
Financial Assets credited to its Collateral Accounts from time to time and all
Security Entitlements in respect thereof, (3) all cash held in its Collateral
Accounts from time to time and (4) all other money in the possession of the
Collateral Trustee; and

(xiv) all Proceeds of the Collateral described in the foregoing clauses
(i) through (xiii);

provided that, not withstanding the foregoing or anything herein to the
contrary, in no event shall the Collateral include, or the security interest
attach to, any Excluded Assets; provided, however, the security interests and
Liens granted hereunder shall attach to, and the “Collateral” shall
automatically include any asset or property of a Grantor that ceases to be an
Excluded Asset, without further action by any Grantor or Secured Party.

(b) With respect to each right to payment or performance included in the
Collateral from time to time, the Transaction Lien granted therein includes a
continuing security interest in (i) any Supporting Obligation that supports such
payment or performance and (ii) any Lien that (x) secures such right to payment
or performance or (y) secures any such Supporting Obligation.

(c) The Transaction Liens are granted as security only and shall not subject the
Collateral Trustee or any other Secured Party to, or transfer or in any way
affect or modify, any obligation or liability of any Grantor with respect to any
of the Collateral or any transaction in connection therewith.

 

16

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

SECTION 3. General Representations and Warranties. Each Grantor represents and
warrants that:

(a) Such Grantor is duly organized, validly existing and in good standing under
the laws of the jurisdiction identified as its jurisdiction of organization in
the Perfection Certificate (except as disclosed in writing to the Collateral
Trustee after the Closing Date).

(b) With respect to each Original Grantor, Schedule 1 lists all Equity Interests
in Subsidiaries owned by such Grantor as of the Closing Date. Such Grantor holds
all such Equity Interests directly (i.e., not through a Subsidiary, a Securities
Intermediary or any other Person).

(c) With respect to each Original Grantor, Schedule 2 lists, as of the Closing
Date, (i) all Securities owned by such Grantor (except Securities evidencing
Equity Interests in Subsidiaries), (ii) all Securities Accounts to which
Financial Assets are credited in respect of which such Grantor owns Security
Entitlements and (iii) all Specified Instruments owned by such Grantor.

(d) Except as disclosed in writing to the Collateral Trustee, such Grantor owns
no Commodity Account in respect of which such Grantor is the Commodity Customer.

(e) All Pledged Equity Interests owned by such Grantor are owned by it free and
clear of any Lien other than (i) the Transaction Liens and Liens arising under
the ABL Loan Documents and (ii) any nonconsensual Permitted Liens. All shares of
capital stock included in such Pledged Equity Interests (including shares of
capital stock in respect of which such Grantor owns a Security Entitlement) have
been duly authorized and validly issued and are fully paid and non-assessable.
None of such Pledged Equity Interests is subject to any option to purchase or
similar right of any Person.

(f) Such Grantor has good and marketable title to all its Collateral (subject to
exceptions that are, in the aggregate, not material), free and clear of any
Lien, except for Permitted Liens.

(g) Such Grantor has not performed any acts that might prevent the Collateral
Trustee from enforcing any of the provisions of the Security Documents or that
would in any material respect limit the Collateral Trustee in any such
enforcement. No financing statement, security agreement, mortgage or similar or
equivalent document or instrument covering all or part of the Collateral owned
by such Grantor is on file or of record in any jurisdiction in which such

 

17

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

filing or recording would be effective to perfect or record a Lien on such
Collateral, except financing statements, mortgages or other similar or
equivalent documents with respect to Permitted Liens. After the Closing Date, no
Collateral owned by such Grantor will be in the possession or under the Control
of any other Person having a claim thereto or security interest therein, other
than a Permitted Lien.

(h) The Transaction Liens on all Personal Property Collateral owned by such
Grantor (i) have been validly created, (ii) will attach to each item of such
Collateral on the Closing Date (or, if such Grantor first obtains rights thereto
on a later date, on such later date) and (iii) when so attached, will secure all
the Secured Obligations.

(i) When the relevant Mortgages have been duly executed and delivered, the
Transaction Liens on all Real Property Collateral owned by such Grantor as of
the Closing Date will have been validly created and will secure all the Secured
Obligations. When such Mortgages have been duly recorded, such Transaction Liens
will rank prior to all other Liens (except Permitted Liens) on such Real
Property Collateral.

(j) Such Grantor has delivered a Perfection Certificate to the Collateral
Trustee. With respect to each Original Grantor, information set forth therein is
correct and complete as of the Closing Date. Within 60 days after the Closing
Date, such Original Grantor will furnish to the Collateral Trustee a file search
report from each UCC filing office listed in the Perfection Certificate, showing
the filing made at such filing office to perfect the Transaction Liens on its
Collateral.

(k) When UCC financing statements describing the Collateral as “all personal
property” have been filed in the offices specified in the Perfection
Certificate, the Transaction Liens will constitute perfected security interests
in the Personal Property Collateral owned by such Grantor to the extent that a
security interest therein may be perfected by filing pursuant to the UCC, prior
to all Liens and rights of others therein except Permitted Liens. When, in
addition to the filing of such UCC financing statements, the applicable
Intellectual Property Filings have been made with respect to such Grantor’s
Recordable Intellectual Property (including any future filings required pursuant
to Sections 4(a) and 5(a)), the Transaction Liens will constitute perfected
security interests in all right, title and interest of such Grantor in its
Recordable Intellectual Property to the extent that security interests therein
may be perfected by such filings, prior to all Liens and rights of others
therein except Permitted Liens. Except for (i) the filing of such UCC financing
statements, (ii) such Intellectual Property Filings and (iii) the due
recordation of the Mortgages, no registration, recordation or filing with any
governmental body, agency or official is required in connection with the
execution or delivery of the Security Documents or is necessary for the validity
or enforceability thereof or for the perfection or due recordation of the
Transaction Liens.

 

18

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

(l) Such Grantor has taken, and will continue to take, all actions necessary
under the UCC to perfect its interest in any Accounts or Chattel Paper purchased
or otherwise acquired by it, as against its assignors and creditors of its
assignors.

(m) Such Grantor’s Collateral is insured to the extent required by the Term Loan
Credit Agreement, the Senior Secured Note Indenture and any other Secured Debt
Agreement.

(n) To the best of such Grantor’s knowledge, all of such Grantor’s Inventory has
or will have been produced in compliance in all material respects with the
applicable requirements of the Fair Labor Standards Act, as amended.

SECTION 4. Further Assurances; General Covenants. Each Grantor covenants as
follows:

(a) Such Grantor will, from time to time, at the Company’s expense, execute,
deliver, file and record any statement, assignment, instrument, document,
agreement or other paper and take any other action (including any Intellectual
Property Filing) that from time to time may be necessary or desirable, or that
the Collateral Trustee may reasonably request, in order to:

(i) create, preserve, perfect, confirm or validate the Transaction Liens on such
Grantor’s Collateral;

(ii) in the case of Pledged Deposit Accounts, Pledged Investment Property,
Pledged Instruments and Pledged Letter-of-Credit Rights, cause the Collateral
Trustee to have Control thereof;

(iii) enable the Collateral Trustee and the other Secured Parties to obtain the
full benefits of the Security Documents; or

(iv) enable the Collateral Trustee to exercise and enforce any of its rights,
powers and remedies with respect to any of such Grantor’s Collateral.

Such Grantor authorizes the Collateral Trustee (or any Authorized
Representative) to execute and file such financing statements or continuation
statements in such jurisdictions with such descriptions of collateral (including
“all assets” or “all personal property” or other words to that effect) and other
information set forth therein as is necessary or desirable for the purposes set
forth in the preceding sentence. Each Grantor also ratifies its authorization
for the

 

19

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

Collateral Trustee (or any Authorized Representative) to file in any such
jurisdiction any initial financing statements or amendments thereto if filed
prior to the date hereof. The Collateral Trustee (or any Authorized
Representative) is further authorized to file with the U.S. Patent and Trademark
Office or U.S. Copyright Office (or any successor office or any similar office
in any other country) such documents as may be necessary or advisable for the
purpose of perfecting, confirming, continuing, enforcing or protecting the
security interests granted by each Grantor, without the signature of any
Grantor, and naming any Grantor or the Grantors as debtors and the Collateral
Trustee as secured party. The Company will pay the costs of, or incidental to,
any Intellectual Property Filings and any recording or filing of any financing
or continuation statements or other documents recorded or filed pursuant hereto.
For the avoidance of doubt, the Collateral Trustee’s responsibility for the
preparation, filing or recording of any financing statement, continuation
statement or other documents as a result of the authorizations set forth in this
paragraph shall be limited as set forth in Section 6(b)(iv) of the Collateral
Trust Agreement.

(b) Such Grantor will not (i) change its name or organizational form or
structure, (ii) change its location (determined as provided in UCC
Section 9-307) or (iii) become bound, as provided in UCC Section 9-203(d) or
otherwise, by a security agreement entered into by another Person, unless it
shall have given the Collateral Trustee at least 10 days’ prior written notice
thereof and taken all steps necessary to maintain the Transaction Liens in the
Collateral of such Grantor.

(c) If any of its Collateral in excess of $10,000,000, individually or in the
aggregate at any time outstanding, is in the possession or control of a
warehouseman, bailee or agent at any time, such Grantor will (i) notify such
warehouseman, bailee or agent of the relevant Transaction Liens, (ii) instruct
such warehouseman, bailee or agent to hold all such Collateral for the
Collateral Trustee’s account subject to the Collateral Trustee’s instructions
(which, subject to the terms of the ABL Intercreditor Agreement, shall permit
such Collateral to be removed by such Grantor in the ordinary course of business
until the Collateral Trustee notifies such warehouseman, bailee or agent that an
Actionable Default has occurred and is continuing), (iii) cause such
warehouseman, bailee or agent to Authenticate a Record acknowledging that it
holds possession of such Collateral for the Collateral Trustee’s benefit and
(iv) make such Authenticated Record available to the Collateral Trustee.

(d) Except for sales of Inventory in the ordinary course of business, such
Grantor will not sell, lease, exchange, assign or otherwise dispose of, or grant
any option with respect to, any of its Collateral; provided that such Grantor
may do any of the foregoing unless (i) doing so would violate a covenant in the
Term Loan Credit Agreement, the Senior Secured Note Indenture or any other
Secured Debt Agreement or (ii) an Actionable Default shall have occurred and be

 

20

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

continuing and either (A) the Collateral Trustee shall have notified such
Grantor that its right to do so is terminated, suspended or otherwise limited or
(B) the maturity of any or all of the Secured Obligations shall have been
accelerated. Concurrently with any sale, exchange, assignment or other
disposition (except a sale or disposition to another Grantor or a lease)
expressly permitted by the foregoing proviso, the Transaction Liens on the
assets sold, exchanged, assigned or disposed of (but not in any Proceeds arising
from such sale or disposition) will cease immediately without any action by the
Collateral Trustee or any other Secured Party. The Collateral Trustee will, at
the Company’s expense, execute and deliver to the relevant Grantor such
documents as such Grantor shall reasonably request to evidence the fact that any
asset so sold or disposed of is no longer subject to a Transaction Lien.

(e) Such Grantor will, promptly upon request, provide to the Collateral Trustee
all information and evidence concerning such Grantor’s Collateral that the
Collateral Trustee may reasonably request from time to time to enable it to
enforce the provisions of the Security Documents.

(f) Each year, concurrently with the delivery of annual financial statements
with respect to the preceding fiscal year pursuant to Section 5.04(a) of the
Term Loan Credit Agreement (or a comparable provision in any other Secured Debt
Agreement), each of Holdings and the Company shall deliver to the Collateral
Trustee a certificate executed by its chief legal officer or its Financial
Officer, certifying that all UCC financing statements (including fixture
filings, as applicable) or other appropriate filings, recordings or
registrations, including all refilings or continuations thereof, have been filed
of record in each governmental, municipal or other appropriate office in each
jurisdiction identified pursuant to clause (a) of this Section 4 to the extent
necessary to protect and perfect the security interests granted hereunder for a
period of not less than 18 months after the date of such certificate (except as
noted therein with respect to any continuation statements to be filed within
such period).

SECTION 5. Recordable Intellectual Property. Each Grantor covenants as follows:

(a) On the Closing Date (in the case of an Original Grantor) or the date on
which it signs and delivers its first Security Agreement Supplement (in the case
of any other Grantor), such Grantor will sign and deliver to the Collateral
Trustee Intellectual Property Security Agreements with respect to all Recordable
Intellectual Property then owned by it. Within 30 days after each June 30 and
December 31 thereafter (starting with December 31, 2010), it will sign and
deliver to the Collateral Trustee an appropriate Intellectual Property Security
Agreement covering any Recordable Intellectual Property owned by it on such
June 30 and December 31 that is not covered by any previous Intellectual
Property Security Agreement so signed and delivered by it. In each case, it will
promptly after each such June 30 and December 31 make all Intellectual Property
Filings necessary to record the Transaction Liens on such Recordable
Intellectual Property.

 

21

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

(b) Such Grantor will notify the Collateral Trustee promptly if it knows that
any application or registration relating to any Recordable Intellectual Property
material to the operation of its business owned or licensed to it may become
abandoned or dedicated to the public, or of any material adverse determination
or development (including the institution of, or any adverse determination or
development in, any proceeding in the U.S. Copyright Office, the U.S. Patent and
Trademark Office (other than non-final office actions) or any court) regarding
such Grantor’s ownership of such Recordable Intellectual Property, its right to
register or patent the same, or its right to keep and maintain the same. If any
of such Grantor’s rights to any Recordable Intellectual Property are infringed,
misappropriated or diluted in any material respect by a third party, such
Grantor will notify the Collateral Trustee in writing within 30 days after it
learns thereof and will, unless such Grantor shall reasonably determine that
such action would be of negligible value, economic or otherwise, or is otherwise
likely to have an adverse effect on its business promptly sue for infringement,
misappropriation or dilution and to recover any and all damages for such
infringement, misappropriation or dilution, and take such other actions as such
Grantor shall reasonably deem appropriate under the circumstances to protect
such Recordable Intellectual Property.

(c) Upon the occurrence and during the continuance of an Actionable Default,
each Grantor shall use its reasonable best efforts to obtain all requisite
consents or approvals by the licensor of each Copyright License, Patent License
or Trademark License material to the operations of its business under which such
Grantor is a licensee to effect the assignment of all such Grantor’s right,
title and interest thereunder to the Collateral Trustee, for the ratable benefit
of the Secured Parties, or its designee.

SECTION 6. Investment Property, Instruments and Letter-of-Credit Rights. Each
Grantor represents, warrants and covenants as follows:

(a) Certificated Securities. On the Closing Date (in the case of an Original
Grantor) or the date on which it signs and delivers its first Security Agreement
Supplement (in the case of any other Grantor), such Grantor will deliver to the
Collateral Trustee as Collateral hereunder all certificates representing Pledged
Certificated Securities then owned by such Grantor. Thereafter, whenever such
Grantor acquires any other certificate representing a Pledged Certificated
Security, such Grantor will promptly (and in any case, within 10 Business Days)
deliver such certificate to the Collateral Trustee as Collateral hereunder. The
provisions of this subsection are subject to the limitation in Section 6(j) in
the case of voting Equity Interests in a Foreign Subsidiary.

 

22

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

(b) Uncertificated Securities. Within 45 days of the Closing Date (in the case
of an Original Grantor) or the date on which it signs and delivers its first
Security Agreement Supplement (in the case of any other Grantor), such Grantor
will enter into (and cause the relevant issuer to enter into) an Issuer Control
Agreement in respect of each Pledged Uncertificated Security then owned by such
Grantor, where the issuer of such Uncertificated Security is a Subsidiary of
such Grantor (and use commercially reasonable efforts to cause the relevant
issuer to enter into an Issuer Control Agreement in respect of each Pledged
Uncertificated Security then owned by such Grantor, where the issuer of such
Uncertificated Security is not a Subsidiary of such Grantor), and deliver such
Issuer Control Agreement to the Collateral Trustee (which shall enter into the
same). Thereafter, whenever such Grantor acquires any other Pledged
Uncertificated Security, such Grantor will enter into (and cause the relevant
issuer to enter into) an Issuer Control Agreement in respect of such Pledged
Uncertificated Security, where the issuer of such Uncertificated Security is a
Subsidiary of such Grantor (and use commercially reasonable efforts to cause the
relevant issuer to enter into an Issuer Control Agreement in respect of each
Pledged Uncertificated Security then owned by such Grantor, where the issuer of
such Uncertificated Security is a not a Subsidiary of such Grantor), and deliver
such Issuer Control Agreement to the Collateral Trustee (which shall enter into
the same), and deliver such Issuer Control Agreement to the Collateral Trustee
(which shall enter into the same). The provisions of this subsection are subject
to the limitation in Section 6(j) in the case of voting Equity Interests in a
Foreign Subsidiary.

(c) Security Entitlements. Within 45 days of the Closing Date (in the case of an
Original Grantor) or on the date on which it signs and delivers its first
Security Agreement Supplement (in the case of any other Grantor), such Grantor
will, with respect to each Security Entitlement then owned by it, enter into
(and cause the relevant Securities Intermediary to enter into) a Securities
Account Control Agreement in respect of such Security Entitlement and the
Securities Account to which the underlying Financial Asset is credited and will
deliver such Securities Account Control Agreement to the Collateral Trustee
(which shall enter into the same). Thereafter, whenever such Grantor acquires
any other Security Entitlement, such Grantor will, as promptly as practicable,
cause the underlying Financial Asset to be credited to a Controlled Securities
Account.

(d) Perfection as to Certificated Securities. When such Grantor delivers the
certificate representing any Pledged Certificated Security owned by it to the
Collateral Trustee and complies with Section 6(h) in connection with such
delivery, (i) the Transaction Lien on such Pledged Certificated Security will be
perfected, subject to no prior Liens or rights of others other than
nonconsensual Permitted Liens, (ii) the Collateral Trustee will have Control of
such Pledged Certificated Security and (iii) the Collateral Trustee will be a
protected purchaser (within the meaning of UCC Section 8-303) thereof.

 

23

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

(e) Perfection as to Uncertificated Securities. When such Grantor, the
Collateral Trustee and the issuer of any Pledged Uncertificated Security owned
by such Grantor enter into an Issuer Control Agreement with respect thereto,
(i) the Transaction Lien on such Pledged Uncertificated Security will be
perfected, subject to no prior Liens or rights of others other than
nonconsensual Permitted Liens, (ii) the Collateral Trustee will have Control of
such Pledged Uncertificated Security and (iii) the Collateral Trustee will be a
protected purchaser (within the meaning of UCC Section 8-303) thereof.

(f) Perfection as to Security Entitlements. So long as the Financial Asset
underlying any Security Entitlement owned by such Grantor is credited to a
Controlled Securities Account, (i) the Transaction Lien on such Security
Entitlement will be perfected, subject to no prior Liens or rights of others
other than nonconsensual Permitted Liens (except Liens and rights of the
relevant Securities Intermediary that are Permitted Liens), (ii) the Collateral
Trustee will have Control of such Security Entitlement and (iii) no action based
on an adverse claim to such Security Entitlement or such Financial Asset,
whether framed in conversion, replevin, constructive trust, equitable lien or
other theory, may be asserted against the Collateral Trustee or any other
Secured Party.

(g) Agreement as to Applicable Jurisdiction. In respect of all Security
Entitlements owned by such Grantor, and all Securities Accounts to which the
related Financial Assets are credited, the Securities Intermediary’s
jurisdiction (determined as provided in UCC Section 8-110(e)) will at all times
be located in the United States.

(h) Delivery of Pledged Certificates. All certificates representing Pledged
Certificated Securities, when delivered to the Collateral Trustee, will be in
suitable form for transfer by delivery, or accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
reasonably satisfactory to the Collateral Trustee.

(i) Communications. Upon the request of the Collateral Trustee, each Grantor
will promptly give to the Collateral Trustee copies of any notices and other
communications received by it with respect to (i) Pledged Securities registered
in the name of such Grantor or its nominee and (ii) Pledged Security
Entitlements as to which such Grantor is the Entitlement Holder.

(j) Foreign Subsidiaries. A Grantor will not be obligated to comply with the
provisions of this Section at any time with respect to (i) any voting Equity
Interest in a Foreign Subsidiary if and to the extent (but only to the extent)
that such voting Equity Interest is an Excluded Asset at such time and (ii) any
Equity Interest in a Specified Dormant Foreign Subsidiary so long as it meets
the requirements contained in the definition of “Specified Dormant Foreign
Subsidiary”.

 

24

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

(k) Compliance with Applicable Foreign Laws. If at any time (i) the Collateral
includes any Equity Interest in a Foreign Subsidiary (each such Foreign
Subsidiary being referred to herein as a “First Tier Foreign Subsidiary”) and
(ii) either (A) such First Tier Foreign Subsidiary and its subsidiaries
represent more than 10% of the Consolidated EBITDA (as defined in the Term Loan
Credit Agreement) for the most recent fiscal quarter then ended (occurrence of
such event, the “10% Trigger”) or (B) an Actionable Default has occurred and is
continuing, then the applicable Grantor will, upon request of the Collateral
Trustee, use its commercially reasonable efforts to take all such action as may
be required under the laws of the applicable foreign jurisdictions to ensure
that the Transaction Lien on such Collateral ranks prior to all Liens and rights
of others therein to the extent permitted by such law.

(l) Certification of Limited Liability Company and Partnership Interests. Any
limited liability company and any partnership controlled by any Grantor shall
either (a) not include in its operative documents any provision that any Equity
Interests in such limited liability company or such partnership be a “security”
as defined under Article 8 of the UCC, or (b) certificate any Equity Interests
in any such limited liability company or such partnership. To the extent an
interest in any limited liability company or partnership controlled by any
Grantor and pledged hereunder is certificated or becomes certificated, each such
certificate shall be delivered to the Collateral Trustee pursuant to
Section 6(a) and such Grantor shall fulfill all other requirements under
Section 6 applicable in respect thereof.

(m) Instruments. (i) On the Closing Date (in the case of an Original Grantor) or
the date on which it signs and delivers its first Security Agreement Supplement
(in the case of any other Grantor), such Grantor will deliver to the Collateral
Trustee as Collateral hereunder all Pledged Specified Instruments then owned by
such Grantor. Thereafter, whenever such Grantor acquires any other Pledged
Specified Instrument, such Grantor will immediately deliver such Pledged
Specified Instrument to the Collateral Trustee as Collateral hereunder. All such
Pledged Specified Instruments owned by such Grantor, when delivered to the
Collateral Trustee, will be indorsed to the order of the Collateral Trustee, or
accompanied by duly executed instruments of assignment, with signatures
appropriately guaranteed, all in form and substance satisfactory to the
Collateral Trustee. Upon the delivery of any Pledged Specified Instrument owned
by such Grantor to the Collateral Trustee, the Transaction Lien on such
Collateral will be perfected, subject to no prior Liens or rights of others
other than nonconsensual Permitted Liens.

(ii) So long as no Event of Default shall have occurred and be continuing, the
Collateral Trustee will, promptly upon request by the relevant Grantor, make
appropriate arrangements for making any Pledged

 

25

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

Instrument available to it for purposes of presentation, collection or renewal
(any such arrangement to be effected, to the extent deemed appropriate by the
Collateral Trustee, against trust receipt or like document).

(n) Letter-of-Credit Rights. Each Grantor will use commercially reasonable
efforts to obtain from other Persons agreements evidencing Control of the
Collateral Trustee over any Collateral that are Letter-of-Credit Rights in
excess of $5,000,000 individually where confirmation of the Control of the
Collateral Trustee over the particular Letter-of-Credit Rights is required in
order to perfect a security interest therein.

SECTION 7. Deposit Accounts. Each Grantor represents, warrants and covenants as
follows:

(a) Such Grantor will enter into Deposit Account Control Agreements with each
bank or other financial institution in which it maintains a Deposit Account
(other than any Exempted Deposit Account) within 45 days after the Closing Date.
Thereafter, all cash owned by such Grantor will be deposited, upon or promptly
after the receipt thereof, in one or more Controlled Deposit Accounts; provided
that Deposit Accounts with balances of less than $1,000,000 individually on a
daily basis or $5,000,000 in the aggregate with respect to all such Deposit
Accounts on a daily basis need not be subject to a Deposit Account Control
Agreement unless the balances in such Deposit Accounts exceed $1,000,000
individually or $5,000,000 in the aggregate.

(b) In respect of each Controlled Deposit Account, the Depositary Bank’s
jurisdiction (determined as provided in UCC Section 9-304) will at all times be
a jurisdiction in which Article 9 of the UCC is in effect.

(c) So long as the Collateral Trustee has Control of a Controlled Deposit
Account, the Transaction Lien on such Controlled Deposit Account will be
perfected, subject to no prior Liens or rights of others (except (x) the
Depositary Bank’s right to deduct its normal operating charges and any
uncollected funds previously credited thereto, (y) nonconsensual Permitted Liens
and (z) as provided in the ABL Intercreditor Agreement).

SECTION 8. Cash Collateral Accounts. If and when required for purposes hereof or
of any other Secured Debt Document, the Collateral Trustee will establish with
respect to each Grantor an account (its “Cash Collateral Account”), in the name
and under the exclusive control of the Collateral Trustee, into which all
amounts owned by such Grantor that are to be deposited therein pursuant to such
Secured Debt Documents shall be deposited from time to time. Funds held in any
Cash Collateral Account may, until withdrawn, be invested and reinvested in such
Permitted Investments as the relevant Grantor shall request in

 

26

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

writing from time to time; provided that if an Actionable Default shall have
occurred and be continuing, the Collateral Trustee may select such Permitted
Investments. Subject to Section 14, withdrawal of funds on deposit in any Cash
Collateral Account shall be permitted if, as and when expressly so provided in
or in respect of the applicable provision of the Secured Debt Documents pursuant
to which such Cash Collateral Account was required to be established.

SECTION 9. Commercial Tort Claims. Each Grantor represents, warrants and
covenants as follows:

(a) In the case of an Original Grantor, Schedule 3 accurately describes, with
the specificity required to satisfy Official Comment 5 to UCC Section 9-108,
each Commercial Tort Claim with respect to which such Original Grantor is the
claimant as of the Closing Date (other than any Commercial Tort Claim with a
value of less than $5,000,000). In the case of any other Grantor, Schedule 3 to
its first Security Agreement Supplement will accurately describe, with the
specificity required to satisfy said Official Comment 5, each Commercial Tort
Claim with respect to which such Grantor is the claimant as of the date on which
it signs and delivers such Security Agreement Supplement.

(b) If any Grantor acquires a Commercial Tort Claim with a value of $5,000,000
or more after the Closing Date (in the case of an Original Grantor) or the date
on which it signs and delivers its first Security Agreement Supplement (in the
case of any other Grantor), such Grantor will promptly sign and deliver to the
Collateral Trustee a Security Agreement Supplement granting a security interest
in such Commercial Tort Claim (which shall be described therein with the
specificity required to satisfy said Official Comment 5) to the Collateral
Trustee for the benefit of the Secured Parties.

SECTION 10. Transfer of Record Ownership. At any time when an Actionable Default
shall have occurred and be continuing, the Collateral Trustee may (and to the
extent that action by it is required, the relevant Grantor, if directed to do so
by the Collateral Trustee, will as promptly as practicable) cause each of the
Pledged Securities (or any portion thereof specified in such direction) to be
transferred of record into the name of the Collateral Trustee or its nominee.
Each Grantor will take any and all actions reasonably requested by the
Collateral Trustee to facilitate compliance with this Section. If the provisions
of this Section are implemented, Section 6(b) shall not thereafter apply to any
Pledged Security that is registered in the name of the Collateral Trustee or its
nominee. The Collateral Trustee will promptly give to the relevant Grantor
copies of any notices and other communications received by the Collateral
Trustee with respect to Pledged Securities registered in the name of the
Collateral Trustee or its nominee.

SECTION 11. Right to Vote Securities. (a) Unless an Actionable Default shall
have occurred and be continuing, each Grantor will have the right, from time

 

27

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

to time, to vote and to give consents, ratifications and waivers with respect to
any Pledged Security owned by it and the Financial Asset underlying any Pledged
Security Entitlement owned by it, and the Collateral Trustee will, upon
receiving a written request from such Grantor, deliver to such Grantor or as
specified in such request such proxies, powers of attorney, consents,
ratifications and waivers in respect of any such Pledged Security that is
registered in the name of the Collateral Trustee or its nominee or any such
Pledged Security Entitlement as to which the Collateral Trustee or its nominee
is the Entitlement Holder, in each case as shall be specified in such request
and be in form and substance reasonably satisfactory to the Collateral Trustee.

(b) If an Actionable Default shall have occurred and be continuing, the
Collateral Trustee will if it has given the applicable Grantor prior written
notice of its intention to exercise such rights (which it will do at the written
direction of the Applicable Authorized Representative) have the exclusive right
to the extent permitted by law to vote, to give consents, ratifications and
waivers and to take any other action with respect to the Pledged Investment
Property, the other Pledged Equity Interests and the Financial Assets underlying
the Pledged Security Entitlements, with the same force and effect as if the
Collateral Trustee were the absolute and sole owner thereof, and each Grantor
will take all such action as the Collateral Trustee may reasonably request from
time to time to give effect to such right.

SECTION 12. Certain Cash Distributions. Cash Distributions with respect to
assets held in a Collateral Account shall be deposited and held therein, or
withdrawn therefrom, as provided in Section 8. Cash Distributions with respect
to any Pledged Equity Interest or Pledged Indebtedness that is not held in a
Collateral Account (whether held in the name of a Grantor or in the name of the
Collateral Trustee or its nominee) shall be deposited, promptly upon receipt
thereof, in a Controlled Deposit Account of the relevant Grantor; provided that,
if an Actionable Default shall have occurred and be continuing, the Collateral
Trustee may deposit, or direct the recipient thereof to deposit, each such Cash
Distribution in the relevant Grantor’s Cash Collateral Account.

SECTION 13. Remedies upon Actionable Default. (a) If an Actionable Default shall
have occurred and be continuing, the Collateral Trustee may exercise (or cause
its sub-agents to exercise) any or all of the remedies available to it (or to
such sub-agents) under the Security Documents.

(b) Without limiting the generality of the foregoing, if an Actionable Default
shall have occurred and be continuing, the Collateral Trustee may exercise on
behalf of the Secured Parties all the rights of a secured party under the UCC
(whether or not in effect in the jurisdiction where such rights are exercised)
with respect to any Personal Property Collateral and, in addition, the
Collateral Trustee may, without being required to give any notice, except as
herein provided

 

28

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

or as may be required by mandatory provisions of law, sell or otherwise dispose
of the Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange, broker’s board or at any of the Collateral
Trustee’s offices or elsewhere, for cash, on credit or for future delivery, at
such time or times and at such price or prices and upon such other terms as the
Collateral Trustee may deem commercially reasonable, irrespective of the impact
of any such sales on the market price of the Collateral. To the maximum extent
permitted by applicable law, any Secured Party may be the purchaser of any or
all of the Collateral at any such sale and (with the consent of the Collateral
Trustee, which may be withheld in its discretion) shall be entitled, for the
purpose of bidding and making settlement or payment of the purchase price for
all or any portion of the Collateral sold at any such public sale, to use and
apply all of any part of the Secured Obligations as a credit on account of the
purchase price of any Collateral payable at such sale. Upon any sale of
Collateral by the Collateral Trustee (including pursuant to a power of sale
granted by statute or under a judicial proceeding), the receipt of the
Collateral Trustee 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 to the Collateral Trustee or such officer or be
answerable in any way for the misapplication thereof. Each purchaser at any such
sale shall hold the property sold absolutely free from any claim or right on the
part of any Grantor, and each Grantor hereby waives (to the extent permitted by
law) all rights of redemption, stay or appraisal that it now has or may at any
time in the future have under any rule of law or statute now existing or
hereafter enacted. The Collateral Trustee shall not be obliged to make any sale
of Collateral regardless of notice of sale having been given. The Collateral
Trustee may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned. To the maximum
extent permitted by law, each Grantor hereby waives any claim against any
Secured Party arising because the price at which any Collateral may have been
sold at such a private sale was less than the price that might have been
obtained at a public sale, even if the Collateral Trustee accepts the first
offer received and does not offer such Collateral to more than one offeree. The
Collateral Trustee may disclaim any warranty, as to title or as to any other
matter, in connection with such sale or other disposition, and its doing so
shall not be considered adversely to affect the commercial reasonableness of
such sale or other disposition.

(c) If the Collateral Trustee sells any of the Collateral upon credit, the
Grantors will be credited only with payment actually made by the purchaser,
received by the Collateral Trustee and applied in accordance with Section 14
hereof. In the event the purchaser fails to pay for the Collateral, the
Collateral Trustee may resell the same, subject to the same rights and duties
set forth herein.

 

29

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

(d) Notice of any such sale or other disposition shall be given to the relevant
Grantor(s) as (and if) required by Section 16.

(e) For the purpose of enabling the Collateral Trustee to exercise rights and
remedies under this Agreement at such time as the Collateral Trustee shall be
lawfully entitled to exercise such rights and remedies, each Grantor hereby
grants to the Collateral Trustee an irrevocable license (exercisable without
payment of royalty or other compensation to the Grantors), to use, license or
sublicense any of the Collateral consisting of Intellectual Property now owned
or hereafter acquired by such Grantor, and including in such license access to
all media in which any of the licensed items may be recorded or stored and to
all computer software and programs used for the compilation or printout thereof.
The use of such license by the Collateral Trustee may be exercised only upon the
occurrence and during the continuation of an Actionable Default; provided,
however, that any license, sublicense or other transaction entered into by the
Collateral Trustee in accordance herewith shall be binding upon each Grantor
notwithstanding any subsequent cure of an Actionable Default.

(f) The foregoing provisions of this Section shall apply to Real Property
Collateral only to the extent permitted by applicable law and the provisions of
any applicable Mortgage or other document.

SECTION 14. Application of Proceeds. (a) If an Actionable Default shall have
occurred and be continuing, the Collateral Trustee may apply (i) any cash held
in the Collateral Accounts and (ii) the proceeds of any sale or other
disposition of all or any part of the Collateral, in the order of priorities set
out in Section 4 of the Collateral Trust Agreement.

SECTION 15. Fees and Expenses; Indemnification. (a) The Company will promptly
following demand (and in any event within three Business Days after the demand
therefore) pay to the Collateral Trustee:

(i) the amount of any taxes that the Collateral Trustee may have been required
to pay by reason of the Transaction Liens or to free any Collateral from any
other Lien thereon;

(ii) the amount of any and all reasonable and documented out-of-pocket expenses,
including transfer taxes and reasonable fees and expenses of one counsel and no
more than one counsel in each jurisdiction where Collateral is located, that the
Collateral Trustee may incur in connection with (x) the administration or
enforcement of the Security Documents, including such expenses as are incurred
to preserve the value of the Collateral or the validity, perfection, rank or
value of any Transaction Lien, (y) the collection, sale or other disposition of
any Collateral or (z) the exercise by the Collateral Trustee of any of its
rights or powers under the Security Documents;

 

30

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

(iii) the amount of any fees that the Company shall have agreed in writing to
pay to the Collateral Trustee and that shall have become due and payable in
accordance with such written agreement; and

(iv) the amount required to indemnify the Collateral Trustee for, or hold it
harmless and defend it against, any loss, liability or expense (including the
reasonable and documented fees and expenses of its counsel and any sub-agents
appointed by it hereunder) incurred or suffered by the Collateral Trustee in
connection with the Security Documents, except to the extent that such loss,
liability or expense arises from the Collateral Trustee’s gross negligence or
willful misconduct or a breach of any duty that the Collateral Trustee has under
this Agreement (after giving effect to Section 17).

Any such amount not paid to the Collateral Trustee within three Business Days
after a demand will bear interest for each day thereafter until paid at a rate
per annum equal to the sum of 2% plus the rate applicable to ABR Term Loans (as
defined in the Term Loan Credit Agreement) for such day.

(b) If any transfer tax, documentary stamp tax or other tax is payable in
connection with any transfer or other transaction provided for in the Security
Documents, the Company will pay such tax and provide any required tax stamps to
the Collateral Trustee or as otherwise required by law.

(c) The Company shall indemnify each of the Secured Parties, their respective
affiliates and the respective directors, officers, agents and employees of the
foregoing (each an “Indemnitee”) against, and hold each Indemnitee harmless
from, any and all liabilities, losses, damages, costs and expenses of any kind
(including reasonable expenses of investigation by engineers, environmental
consultants and similar technical personnel and reasonable fees and
disbursements of counsel) arising out of, or in connection with any and all
Environmental Liabilities (as defined in the Term Loan Credit Agreement);
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. Without limiting the generality of the foregoing, each Grantor
waives all rights for contribution and all other rights of recovery with respect
to liabilities, losses, damages, costs and expenses arising under or related to
Environmental Laws (as defined in the Term Loan Credit Agreement) that it might
have by statute or otherwise against any Indemnitee.

 

31

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

SECTION 16. Authority to Administer Collateral. Each Grantor irrevocably
appoints the Collateral Trustee its true and lawful attorney, with full power of
substitution, in the name of such Grantor, any Secured Party or otherwise, for
the sole use and benefit of the Secured Parties, but at the Company’s expense,
to the extent permitted by law to exercise, at any time and from time to time
while an Actionable Default shall have occurred and be continuing, all or any of
the following powers with respect to all or any of such Grantor’s Collateral:

(a) to demand, sue for, collect, receive and give acquittance for any and all
monies due or to become due upon or by virtue thereof;

(b) to settle, compromise, compound, prosecute or defend any action or
proceeding with respect thereto;

(c) to sell, lease, license or otherwise dispose of the same or the proceeds or
avails thereof, as fully and effectually as if the Collateral Trustee were the
absolute owner thereof; and

(d) to extend the time of payment of any or all thereof and to make any
allowance or other adjustment with reference thereto;

provided that, except in the case of Personal Property Collateral that is
perishable or threatens to decline speedily in value or is of a type customarily
sold on a recognized market, the Collateral Trustee will give the relevant
Grantor at least ten days’ prior written notice of the time and place of any
public sale thereof or the time after which any private sale or other intended
disposition thereof will be made. Any such notice shall (i) contain the
information specified in UCC Section 9-613, (ii) be Authenticated and (iii) be
sent to the parties required to be notified pursuant to UCC Section 9-611(c);
provided that, if the Collateral Trustee fails to comply with this sentence in
any respect, its liability for such failure shall be limited to the liability
(if any) imposed on it as a matter of law under the UCC.

SECTION 17. Limitation on Duty in Respect of Collateral. Beyond the exercise of
reasonable care in the custody and preservation thereof, the Collateral Trustee
will have no duty as to any Collateral in its possession or control or in the
possession or control of any sub-agent or bailee selected by it in good faith or
any income therefrom or as to the preservation of rights against prior parties
or any other rights pertaining thereto. The Collateral Trustee will be deemed to
have exercised reasonable care in the custody and preservation of the Collateral
in its possession or control if such Collateral is accorded treatment
substantially equal to that which it accords its own property, and will not be
liable or responsible for any loss or damage to any Collateral, or for any
diminution in the value thereof, by reason of any act or omission of any
sub-agent or bailee selected by the Collateral Trustee in good faith, except to
the extent that such liability arises from the Collateral Trustee’s gross
negligence or willful misconduct.

 

32

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

SECTION 18. General Provisions Concerning Collateral Trustee. The provisions of
Section 6 of the Collateral Trust Agreement shall inure to the benefit of the
Collateral Trustee and shall be binding on each Grantor and each Secured Party.

SECTION 19. Termination of Transaction Liens; Release of Collateral. The
Transaction Liens granted by each Grantor hereunder shall terminate, be released
or be subordinated as set forth in Section 7 of the Collateral Trust Agreement.

SECTION 20. Additional Grantors. Any Subsidiary may become a party hereto by
signing and delivering to the Collateral Trustee a Security Agreement
Supplement, whereupon such Subsidiary shall become a “Grantor” as defined
herein.

SECTION 21. Notices. Each notice, request or other communication given to any
party hereunder shall be given in accordance with Section 9 of the Collateral
Trust Agreement, and in the case of any such notice, request or other
communication to a Grantor other than the Company, shall be given to it in care
of the Company.

SECTION 22. No Implied Waivers; Remedies Not Exclusive. No failure by the
Collateral Trustee or any Secured Party to exercise, and no delay in exercising
and no course of dealing with respect to, any right or remedy under any Security
Document shall operate as a waiver thereof; nor shall any single or partial
exercise by the Collateral Trustee or any Secured Party of any right or remedy
under any Secured Debt Document preclude any other or further exercise thereof
or the exercise of any other right or remedy. The rights and remedies specified
in the Secured Debt Documents are cumulative and are not exclusive of any other
rights or remedies provided by law.

SECTION 23. Successors and Assigns. This Agreement is for the benefit of the
Collateral Trustee and the Secured Parties. If all or any part of any Secured
Party’s interest in any Secured Obligation is assigned or otherwise transferred,
the transferor’s rights hereunder, to the extent applicable to the obligation so
transferred, shall be automatically transferred with such obligation. This
Agreement shall be binding on the Grantors and their respective successors and
assigns.

SECTION 24. Amendments and Waivers. Neither this Agreement nor any provision
hereof may be waived or amended, modified except pursuant to an agreement or
agreements in writing entered into by the Collateral Trustee, with

 

33

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

the consent of such Secured Parties as are required to consent thereto under
Section 8(c) of the Collateral Trust Agreement. No such waiver, amendment or
modification shall be binding upon any Grantor, except with its written consent.

SECTION 25. Applicable Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, EXCEPT AS OTHERWISE REQUIRED
BY MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT REMEDIES PROVIDED
BY THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK ARE GOVERNED BY
THE LAWS OF SUCH JURISDICTION.

SECTION 26. Waiver of Jury Trial. EACH PARTY HERETO 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 SECURITY DOCUMENT. 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 25.

SECTION 27. Severability. In the event any one or more of the provisions
contained in this Agreement or in any other Security Document should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby (it being understood that the
invalidity of a particular provision in a particular jurisdiction shall not in
and of itself affect the validity of such provision in any other jurisdiction).
The parties shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.

SECTION 28. ABL Intercreditor Agreement. Notwithstanding anything herein to the
contrary, (i) the liens and security interests granted to the Collateral Trustee
pursuant to this Agreement and (ii) the exercise of any right or remedy by the
Collateral Trustee hereunder or the application of proceeds (including insurance
proceeds and condemnation proceeds) of any Collateral, are subject to the
provisions of the Intercreditor Agreement dated as of June 16, 2010 (as amended,
restated, supplemented or otherwise modified from time to time, the “ABL
Intercreditor Agreement”), among the ABL Agent, the Collateral

 

34

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

Trustee, the Company, Holdings and the Subsidiaries of the Company party
thereto. In the event of any conflict between the terms of the ABL Intercreditor
Agreement and the terms of this Agreement, the terms of the ABL Intercreditor
Agreement shall govern.

[SIGNATURE PAGES FOLLOW]

 

35

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

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

SPECTRUM BRANDS, INC. By:  

  /s/ John T. Wilson

  Name:   John T. Wilson   Title:   Vice President, Secretary & General Counsel

 

DB ONLINE, LLC,

ROVCAL, INC.,

SPECTRUM JUNGLE LABS CORPORATION,

SPECTRUM NEPTUNE US HOLDCO

CORPORATION,

TETRA HOLDING (US), INC.,

UNITED PET GROUP, INC.

By:  

  /s/ John T. Wilson

  Name:  John T. Wilson   Title:    Vice President and Secretary

 

ROV HOLDING, INC. By:  

  /s/ John T. Wilson

  Name:  John T. Wilson   Title:    Secretary

 

SCHULTZ COMPANY,

UNITED INDUSTRIES CORPORATION

By:  

  /s/ John T. Wilson

  Name:   John T. Wilson   Title:   Vice President and Assistant Secretary

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

SB/RH HOLDING, LLC,

RUSSELL HOBBS, INC.,

APN HOLDING COMPANY, INC.,

APPLICA AMERICAS, INC.,

APPLICA CONSUMER PRODUCTS, INC.,

APPLICA MEXICO HOLDINGS, INC.,

HOME CREATIONS DIRECT, LTD.,

HP DELAWARE, INC.,

HPG LLC,

SALTON HOLDINGS, INC.,

TOASTMASTER INC.

By:  

  /s/ Lisa R. Carstarphen

  Name:   Lisa Carstarphen   Title:   Vice President and Secretary

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

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Collateral Trustee

By:  

  /s/ Elizabeth T. Wagner

  Name:   Elizabeth T. Wagner   Title:   Vice President