Exhibit 10.1
EXECUTION COPY
COLLATERAL AGREEMENT
dated and effective as of March 4, 2011,
among
CLAIRE’S STORES, INC.,
as Issuer,
THE PLEDGORS PARTY HERETO,
and
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Collateral Agent
Notwithstanding anything herein to the contrary, (i) the liens and security
interests granted to the Collateral Agent pursuant to this Agreement are
expressly subject and subordinate to the liens and security interests granted to
Credit Suisse AG, Cayman Islands Branch (f/k/a Credit Suisse, Cayman Islands
Branch), as collateral agent (and its permitted successors), for the benefit of
the secured parties referred to below, pursuant to the Guarantee and Collateral
Agreement dated as of May 29, 2007 (as amended, amended and restated,
supplemented or otherwise modified from time to time), from the Issuer and the
other “Pledgors” referred to therein, in favor of Credit Suisse AG, Cayman
Islands Branch (f/k/a Credit Suisse, Cayman Islands Branch), as collateral agent
for the benefit of the secured parties referred to therein, and (ii) the
exercise of any right or remedy by the Collateral Agent hereunder is subject to
the limitations and provisions of the Intercreditor Agreement dated as of
March 4, 2011 (as amended, restated, supplemented or otherwise modified from
time to time, the “Intercreditor Agreement”), by and among Credit Suisse AG,
Cayman Islands Branch, in its capacity as Credit Agreement Agent, The Bank of
New York Mellon Trust Company, N.A., in its capacity as Trustee and Collateral
Agent, Claire’s Inc., the Issuer and the Subsidiaries party thereto. In the
event of any conflict between the terms of the Intercreditor Agreement and the
terms of this agreement, the terms of the Intercreditor Agreement shall govern.

 

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TABLE OF CONTENTS

              Page  
ARTICLE I
       
DEFINITIONS
       
Section 1.01. Indenture
    1  
Section 1.02. Other Defined Terms
    2  
ARTICLE II
       
PLEDGE OF SECURITIES
       
Section 2.01. Pledge
    7  
Section 2.02. Delivery of the Pledged Collateral
    8  
Section 2.03. Representations, Warranties and Covenants
    10  
Section 2.04. Registration in Nominee Name; Denominations
    11  
Section 2.05. Voting Rights; Dividends and Interest, Etc.
    12  
ARTICLE III
       
SECURITY INTERESTS IN OTHER PERSONAL PROPERTY
       
Section 3.01. Security Interest:
    14  
Section 3.02. Representations and Warranties
    18  
Section 3.04. Other Actions
    21  
Section 3.05. Covenants Regarding Patent, Trademark and Copyright Collateral
    21  
Section 3.06. Further Assurances; Additional Security
    23  
ARTICLE IV
       
REMEDIES
       
Section 4.01. Remedies Upon Default
    25  
Section 4.02. Application of Proceeds
    26  
Section 4.03. Securities Act, Etc.
    27  
ARTICLE V
       
MISCELLANEOUS
       
Section 5.01. Notices
    28  
Section 5.02. Security Interest Absolute
    28  
Section 5.03. Limitation By Law
    28  
Section 5.04. Binding Effect; Several Agreement
    29  
Section 5.05. Successors and Assigns
    29  
Section 5.06. Collateral Agent’s Fees and Expenses; Indemnification
    29  
Section 5.07. Collateral Agent Appointed Attorney-in-Fact
    30  

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              Page  
Section 5.08. GOVERNING LAW
    31  
Section 5.09. Waivers; Amendment
    31  
Section 5.10. WAIVER OF JURY TRIAL
    31  
Section 5.11. Severability
    31  
Section 5.12. Counterparts
    32  
Section 5.13. Headings
    32  
Section 5.14. Jurisdiction; Consent to Service of Process
    32  
Section 5.15. Termination or Release
    32  
Section 5.16. Additional Subsidiaries
    33  
ARTICLE VI
       
INTERCREDITOR AGREEMENT
       
Section 6.01. Intercreditor Agreement Controls
    34  
Section 6.02. Discharge
    34  
ARTICLE VII
       
THE COLLATERAL AGENT
       

     
Schedules
   
Schedule I
  Subsidiary Parties
Schedule II
  Pledged Stock; Debt Securities
Schedule III
  Intellectual Property
Schedule IV
  Filing Jurisdictions
Schedule V
  Commercial Tort Claims
Schedule VI
  Matters Relating to Accounts and Inventory
Exhibits
   
Exhibit I
  Form of Supplement to the Collateral Agreement

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          COLLATERAL AGREEMENT dated and effective as of March 4, 2011 (this
“Agreement”), among CLAIRE’S STORES, INC., a Florida corporation (the “Issuer”),
each Subsidiary of the Company identified on Schedule I hereto (each such
Subsidiary, together with the Issuer and any Subsidiary of the Company that
becomes a party hereto pursuant to Section 5.16 hereof, the “Pledgors,” and
each, a “Pledgor”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as
collateral agent (in such capacity, the “Collateral Agent”) for the Indenture
Secured Parties (as defined below).
          Pursuant to the terms, conditions and provisions of (a) the Indenture
dated as of March 4, 2011, among Claire’s Escrow Corporation, a Delaware
corporation (“Claire’s Escrow”), and The Bank of New York Mellon Trust Company,
N.A., as trustee (in such capacity, the “Trustee”) and Collateral Agent, as
supplemented by the Supplemental Indenture dated March 4, 2011 among the Issuer,
the Issuer’s Subsidiaries named therein, the Trustee and the Collateral Agent
(such agreement, as amended, amended and restated, supplemented or otherwise
modified from time to time, the “Indenture”), and (b) the Purchase Agreement
dated February 17, 2011 (as amended, amended and restated, supplemented or
otherwise modified from time to time, the “Purchase Agreement”) among Claire’s
Escrow, the Issuer, the Issuer’s Subsidiaries named therein and the
representatives of the several parties named in Schedule A thereto, the Issuer
has assumed the obligations of Claire’s Escrow with respect to $450,000,000 in
aggregate principal amount of 8.875% Senior Secured Second Lien Notes due 2019
(as such notes may be amended, amended and restated, supplemented or otherwise
modified from time to time, the “Notes”) upon the terms and subject to the
conditions contained therein.
          The Issuer and each other Pledgor will receive substantial benefits
from the execution, delivery and performance of the obligations under the
Indenture and the other Noteholder Documents and each is, therefor, willing to
enter into this Agreement.
          This Agreement is given by each Pledgor in favor of the Collateral
Agent for the benefit of the Indenture Secured Parties to secure the payment and
performance of all of the Noteholder Claims (as hereinafter defined).
          It is a requirement of the Indenture and the Purchase Agreement that
each Pledgor execute and deliver the applicable Noteholder Documents, including
this Agreement.
          Accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
          Section 1.01. Indenture. (a) Capitalized terms used in this Agreement
and not otherwise defined herein have the respective meanings assigned thereto
in the Indenture. All capitalized terms defined in the New York UCC (as defined
herein) and not defined in this Agreement have the meanings specified therein.
The term “instrument” shall have the meaning specified in Article 9 of the New
York UCC.

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          (b) The rules of construction specified in Section 1.04 of the
Indenture also apply to this Agreement.
          Section 1.02. Other Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
          “Account Debtor” means any person who is or who may become obligated
to any Pledgor under, with respect to or on account of an Account, Chattel
Paper, General Intangibles, Instruments or Investment Property.
          “Article 9 Collateral” has the meaning assigned to such term in
Section 3.01.
          “Claire’s Escrow” has the meaning assigned to such term in the
preliminary statement of this Agreement.
          “Collateral” means the collective reference to Article 9 Collateral
and Pledged Collateral.
          “Collateral Requirement” shall mean the requirement that:
     (a) in the case of any person that becomes a Guarantor under the Indenture
after the Issue Date, the Collateral Agent shall have received a supplement to
this Agreement, in the form attached hereto as Exhibit I, duly executed and
delivered on behalf of such Guarantor;
     (b) in the case of any person that becomes a “first tier” Foreign
Subsidiary directly owned by the Issuer or any Pledgor after the Issue Date,
subject to Section 3.06(f) hereof, the Collateral Agent shall have received, as
promptly as practicable following such event (unless the Collateral Agent, in
its sole discretion, shall have waived such requirement), a Foreign Pledge
Agreement, duly executed and delivered on behalf of such Foreign Subsidiary and
the direct parent company of such Foreign Subsidiary; provided, that such a
pledge would not violate any applicable law or agreements with other
shareholders or joint venture partners;
     (c) after the Issue Date, (i) all the outstanding Equity Interests of
(A) any person that becomes a Guarantor under the Indenture after the Issue Date
and (B) subject to Section 3.06(f) hereof, all the Equity Interests that are
acquired by any Pledgor after the Issue Date shall have been pledged pursuant to
this Agreement or a Foreign Pledge Agreement; provided, that in no event shall
more than 65% of the issued and outstanding voting Equity Interests of (1) any
“first tier” Foreign Subsidiary or (2) any “first tier” Qualified CFC Holding
Company directly owned by such Pledgor be pledged to secure the Noteholder
Claims, and in no event shall any of the issued and outstanding Equity Interests
of any Foreign Subsidiary that is not a “first tier” Foreign Subsidiary of a
Pledgor or any Qualified CFC Holding Company that is not a “first tier”
Subsidiary of a Pledgor be pledged to secure the Noteholder Claims, and
(ii) subject to the Intercreditor Agreement, the Collateral Agent (or a bailee
on behalf of the Collateral Agent) shall have received all certificates or other
instruments (if any) representing such Equity Interests, together with stock
powers or other instruments of transfer with respect thereto endorsed in blank;
     (d) except as otherwise contemplated by any Security Document, all
documents and instruments, including Uniform Commercial Code financing
statements, required by law or

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reasonably requested by the Collateral Agent to be filed, registered or recorded
to create the Liens intended to be created by the Security Documents (in each
case, including any supplements thereto) and perfect such Liens to the extent
required by, and with the priority required by, the Security Documents, shall
have been filed, registered or recorded or delivered to the Collateral Agent for
filing, registration or the recording concurrently with, or promptly following,
the execution and delivery of each such Security Document;
     (e) within 30 days after the date hereof, the Collateral Agent shall be
listed as a co-loss payee on property and casualty insurance policies and as an
additional insured on liability insurance policies;
     (f) after the Issue Date, the Collateral Agent shall have received (i) such
other Security Documents as may be required to be delivered pursuant to
Section 3.06 hereof, and (ii) upon reasonable request by the Collateral Agent,
evidence of compliance with any other requirements of Section 3.06 hereof;
     (g) all Indebtedness of the Borrower and each Subsidiary having, in the
case of each instance of Indebtedness, an aggregate principal amount in excess
of $5.0 million (other than (A) intercompany current liabilities incurred in the
ordinary course of business in connection with the cash management operations of
the Borrower and the Subsidiaries or (B) to the extent that a pledge of such
promissory note or instrument would violate applicable law) that is owing to any
Pledgor shall be evidenced by a promissory note or an instrument and shall have
been pledged pursuant to this Agreement, and (ii) subject to the Intercreditor
Agreement, the Collateral Agent (or a bailee on behalf of the Collateral Agent)
shall have received all such promissory notes or instruments, together with note
powers or other instruments of transfer with respect thereto endorsed in blank;
and
          (h) except as otherwise contemplated by any Security Document, each
Pledgor shall have obtained all consents and approvals required to be obtained
by it in connection with (i) the execution and delivery of all Security
Documents (or supplements thereto) to which it is a party and the granting by it
of the Liens thereunder and (ii) the performance of its obligations thereunder.
          “Copyright License” means any written agreement, now or hereafter in
effect, granting any right to any Pledgor under any Copyright now or hereafter
owned by any third party, and all rights of any Pledgor under any such agreement
(including, without limitation, any such rights that such Pledgor has the right
to license).
          “Copyrights” means all of the following now owned or hereafter
acquired by any Pledgor: (a) all copyright rights in any work subject to the
copyright laws of the United States or any other country, whether as author,
assignee, transferee or otherwise, (b) all registrations and applications for
registration of any such Copyright in the United States or any other country,
including registrations, supplemental registrations and pending applications for
registration in the United States Copyright Office and the right to obtain all
renewals thereof, including those listed on Schedule III, (c) all claims for,
and rights to sue for, past or future infringements of any of the foregoing and
(d) all income, royalties, damages and payments now or hereafter due and payable
with respect to any of the foregoing, including damages and payments for past or
future infringement thereof.

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          “Credit Agreement Agent” has the meaning assigned to such term in the
Intercreditor Agreement.
          “Discharge” shall mean the satisfaction and discharge (pursuant to
Article XII of the Indenture), defeasance (pursuant to Article VIII of the
Indenture) or other satisfaction in full of the Noteholder Claims.
          “Discharge of Senior Lender Claims” has the meaning assigned to such
term in the Intercreditor Agreement.
          “Federal Securities Laws” has the meaning assigned to such term in
Section 4.03.
          “First Priority Designated Agent” has the meaning assigned to such
term in the Intercreditor Agreement.
          “Foreign Pledge Agreement” shall mean a pledge agreement with respect
to the Pledged Collateral that constitutes Equity Interests of a “first tier”
Foreign Subsidiary; provided, that in no event shall more than 65% of the issued
and outstanding voting Equity Interests of such Foreign Subsidiary be pledged to
secure the Noteholder Claims.
          “General Intangibles” means all “General Intangibles” as defined in
the New York UCC, including all choses in action and causes of action and all
other intangible personal property of any Pledgor of every kind and nature
(other than Accounts) now owned or hereafter acquired by any Pledgor, including
corporate or other business records, indemnification claims, contract rights
(including rights under leases, whether entered into as lessor or lessee, Swap
Agreements and other agreements), Intellectual Property (but excluding
“intent-to-use” applications for trademark or service mark registrations filed
pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. § 1051, unless and until
an Amendment to Allege Use or a Statement of Use under Sections 1(c) and 1(d) of
the Lanham Act has been filed, to the extent that, and solely during the period
for which, any assignment of an “intent-to-use” application prior to such filing
would violate the Lanham Act), goodwill, registrations, franchises, tax refund
claims and any guarantee, claim, security interest or other security held by or
granted to any Pledgor to secure payment by an Account Debtor of any of the
Accounts.
          “Governmental Authority” shall mean any federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
or legislative body.
          “Indenture” has the meaning assigned to such term in the preliminary
statement of this Agreement.
          “Indenture Secured Parties” has the meaning assigned to such term in
the Intercreditor Agreement.
          “Intellectual Property” means all intellectual property of every kind
and nature now owned or hereafter acquired by any Pledgor, including inventions,
designs, Patents, Copyrights, Trademarks, Patent Licenses, Copyright Licenses,
Trademark Licenses, trade

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secrets, domain names, confidential or proprietary technical and business
information, know-how, show-how or other data or information and all related
documentation.
          “Intellectual Property Security Agreement” means a security agreement
in the form hereof or a short form hereof.
          “Intercreditor Agreement” means the intercreditor agreement dated as
of March 4, 2011, among Claire’s Inc., the Issuer, the other Pledgors, the
Credit Agreement Agent, the Trustee and the Collateral Agent.
          “IP Agreements” means all material Copyright Licenses, Patent
Licenses, Trademark Licenses, and all other agreements, permits, consents,
orders and franchises relating to the license, development, use or disclosure of
any material Intellectual Property to which a Pledgor, now or hereafter, is a
party or a beneficiary.
          “Issuer” has the meaning assigned to such term in the preliminary
statement of this Agreement.
          “Material Adverse Effect” means a material adverse effect on the
business, property, operations or condition of the Issuer and the Subsidiaries,
taken as a whole, or the validity or enforceability of any of the material
Noteholder Documents or the rights and remedies of the Collateral Agent, the
Trustee and the Holders thereunder.
          “New York UCC” means the Uniform Commercial Code as from time to time
in effect in the State of New York.
          “Noteholder Claims” has the meaning assigned to such term in the
Intercreditor Agreement.
          “Noteholder Documents” has the meaning assigned to such term in the
Intercreditor Agreement.
          “Notes” has the meaning assigned to such term in the preliminary
statement of this Agreement.
          “Patent License” means any written agreement, now or hereafter in
effect, granting to any Pledgor any right to make, use or sell any invention
covered by a Patent, now or hereafter owned by any third party (including,
without limitation, any such rights that such Pledgor has the right to license).
          “Patents” means all of the following now owned or hereafter acquired
by any Pledgor: (a) all letters patent of the United States or the equivalent
thereof in any other country or jurisdiction, including those listed on
Schedule III, and all applications for letters patent of the United States or
the equivalent thereof in any other country or jurisdiction, including those
listed on Schedule III, (b) all provisionals, reissues, extensions,
continuations, divisions, continuations-in- part, reexaminations or revisions
thereof, and the inventions disclosed or claimed therein, including the right to
make, use, import and/or sell the inventions disclosed or claimed therein,

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(c) all claims for, and rights to sue for, past or future infringements of any
of the foregoing and (d) all income, royalties, damages and payments now or
hereafter due and payable with respect to any of the foregoing, including
damages and payments for past or future infringement thereof.
          “Permitted Liens” has the meaning assigned to such term in the
Indenture.
          “Pledged Collateral” has the meaning assigned to such term in
Section 2.01.
          “Pledged Debt Securities” has the meaning assigned to such term in
Section 2.01.
          “Pledged Securities” means any promissory notes, stock certificates or
other certificated securities now or hereafter included in the Pledged
Collateral, including all certificates, instruments or other documents
representing or evidencing any Pledged Collateral.
          “Pledged Stock” has the meaning assigned to such term in Section 2.01.
          “Pledgor” has the meaning assigned to such term in the preliminary
statement of this Agreement.
          “Qualified CFC Holding Company” shall mean a Wholly-owned Subsidiary
of the Issuer (a) that is a Delaware limited liability company that is treated
as a disregarded entity for U.S. federal income tax purposes, (b) the primary
asset of which consists of Equity Interests in either (i) one or more Foreign
Subsidiaries or (ii) one or more other Qualified CFC Holding Companies and
(c) has no outstanding Guarantee of Indebtedness of the Issuer or any Domestic
Subsidiary.
          “Real Property” shall mean, collectively, all right, title and
interest (including any leasehold estate) in and to any and all parcels of or
interests in real property owned in fee or leased by any Pledgor, together with,
in each case, all easements, hereditaments and appurtenances relating thereto,
and all improvements and appurtenant fixtures incidental to the ownership or
lease thereof.
          “Security Interest” has the meaning assigned to such term in
Section 3.01.
          “Senior Lender Claims” has the meaning assigned to such term in the
Intercreditor Agreement.
          “Senior Lender Documents” has the meaning assigned to such term in the
Intercreditor Agreement.
          “Trademark License” means any written agreement, now or hereafter in
effect, granting to any Pledgor any right to use any Trademark now or hereafter
owned by any third party (including, without limitation, any such rights that
such Pledgor has the right to license).
          “Trademarks” means all of the following now owned or hereafter
acquired by any Pledgor: (a) all trademarks, service marks, corporate names,
company names, business names, fictitious business names, trade styles, trade
dress, logos, other source or business identifiers, designs and general
intangibles of like nature, now existing or hereafter adopted or acquired, all

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registrations thereof (if any), and all registration and recording applications
filed in connection therewith, including registrations and registration
applications in the United States Patent and Trademark Office or any similar
offices in any State of the United States or any other country or any political
subdivision thereof (except for “intent-to-use” applications for trademark or
service mark registrations filed pursuant to Section 1(b) of the Lanham Act, 15
U.S.C. § 1051, unless and until an Amendment to Allege Use or a Statement of Use
under Sections 1(c) and 1(d) of the Lanham Act has been filed, to the extent
that any assignment of an “intent-to-use” application prior to such filing would
violate the Lanham Act), and all renewals thereof, including those listed on
Schedule III, (b) all goodwill associated therewith or symbolized thereby, (c)
all claims for, and rights to sue for, past or future infringements of any of
the foregoing and (d) all income, royalties, damages and payments now or
hereafter due and payable with respect to any of the foregoing, including
damages and payments for past or future infringement thereof.
ARTICLE II
PLEDGE OF SECURITIES
          Section 2.01. Pledge. Subject to the immediately following paragraph,
as security for the payment or performance, as the case may be, in full of the
Noteholder Claims, each Pledgor hereby assigns and pledges to the Collateral
Agent, its successors and permitted assigns, for the ratable benefit of the
Indenture Secured Parties, and hereby grants to the Collateral Agent, its
successors and permitted assigns, for the ratable benefit of the Indenture
Secured Parties, a security interest in all of such Pledgor’s right, title and
interest in, to and under (a) the Equity Interests directly owned by it
(including those listed on Schedule II) and any other Equity Interests obtained
in the future by such Pledgor and any certificates representing all such Equity
Interests (the “Pledged Stock”); provided that the Pledged Stock shall not
include (i)(A) more than 65% of the issued and outstanding voting Equity
Interests of any “first tier” Foreign Subsidiary directly owned by such Pledgor,
(B) more than 65% of the issued and outstanding voting Equity Interests of any
“first tier” Qualified CFC Holding Company directly owned by such Pledgor,
(C) any issued and outstanding Equity Interest of any Foreign Subsidiary that is
not a first tier Foreign Subsidiary, or (D) any issued and outstanding Equity
Interests of any Qualified CFC Holding Company that is not a “first tier”
Qualified CFC Holding Company, (ii) to the extent applicable law_requires that a
Subsidiary of such Pledgor issue directors’ qualifying shares or similar shares,
such shares or nominee or other similar shares, (iii) any Equity Interests with
respect to which a grant of security is not required by reason of Section 3.06
hereof, or (iv) any Equity Interests of a Subsidiary to the extent that, as of
the Issue Date, and for so long as, such a pledge of such Equity Interests would
violate applicable law or an enforceable contractual obligation binding on or
relating to such Equity Interests; (b)(i) the debt obligations listed opposite
the name of such Pledgor on Schedule II, (ii) any debt securities in the future
issued to such Pledgor and (iii) the certificates, promissory notes and any
other instruments, if any, evidencing such debt securities (the “Pledged Debt
Securities”); (c) subject to Section 2.05 hereof, all payments of principal or
interest, dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of, in exchange for or
upon the conversion of, and all other proceeds received in respect of, the
property referred to in

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clauses (a) and (b) above; (d) subject to Section 2.05 hereof, all rights and
privileges of such Pledgor with respect to the securities and other property
referred to in clauses (a), (b) and (c) above; and (e) all proceeds of any of
the foregoing (the items referred to in clauses (a) through (e) above being
collectively referred to as the “Pledged Collateral”).
          The securities of a Subsidiary of the Company will constitute Pledged
Collateral only to the extent that such securities can secure the Noteholder
Claims without Rule 3-16 of Regulation S-X under the Securities Act (or any
other law, rule or regulation) requiring separate financial statements of such
Subsidiary to be filed with the SEC (or any other governmental agency). In
addition, notwithstanding anything to the contrary provided herein, in the event
that Rule 3-16 of Regulation S-X under the Securities Act is amended, modified
or interpreted by the SEC to require (or is replaced with another rule or
regulation, or any other law, rule or regulation is adopted, which would
require) the filing with the SEC (or any other governmental agency) of separate
financial statements of any Subsidiary of the Company due to the fact that such
Subsidiary’s securities secure the Noteholder Claims, then the securities of
such Subsidiary will not be subject to the Liens securing the Noteholder Claims
and will automatically be deemed not to be part of the Pledged Collateral but
only to the extent necessary not to be subject to such requirement and only for
so long as required to not be subject to the requirement. In such event, this
Agreement may be amended or modified, without the consent of any Indenture
Secured Party, to the extent necessary to release the security interests in
favor of the Collateral Agent on the Equity Interests or other securities that
are so deemed to no longer constitute part of the Pledged Collateral for the
relevant Noteholder Claim. In the event that Rule 3-16 of Regulation S-X under
the Securities Act is amended, modified or interpreted by the SEC to permit (or
is replaced with another rule or regulation, or any other law, rule or
regulation is adopted, which would permit) such Subsidiary’s securities to
secure the Noteholder Claims in excess of the amount then pledged without the
filing with the SEC (or any other governmental agency) of separate financial
statements of such Subsidiary, then the securities of such Subsidiary will
automatically be deemed to be a part of the Pledged Collateral but only to the
extent permitted to not be subject to any such financial statement requirement.
In such event, this Agreement may be amended or modified, without the consent of
any Indenture Secured Party, to the extent necessary to subject to the Liens
under the Pledged Collateral such additional securities. In accordance with the
limitations set forth herein, as of the date hereof, the Pledged Collateral will
include the securities of the Subsidiaries only to the extent that the
applicable value of such securities (on a Subsidiary-by-Subsidiary basis) is
less than twenty percent (20%) of the aggregate principal amount of the Notes
(including any additional Notes) outstanding.
          TO HAVE AND TO HOLD the Pledged Collateral, together with all right,
title, interest, powers, privileges and preferences pertaining or incidental
thereto, unto the Collateral Agent, its successors and permitted assigns, for
the ratable benefit of the Indenture Secured Parties, forever; subject, however,
to the terms, covenants and conditions hereinafter set forth.
          Section 2.02. Delivery of the Pledged Collateral. (a) Subject to the
terms of the Intercrditor Agreement, each Pledgor agrees promptly to deliver or
cause to be delivered to the Collateral Agent, for the ratable benefit of the
Indenture Secured Parties, any and all Pledged Securities to the extent such
Pledged Securities are either (i) Equity Interests or (ii) promissory notes or
other instruments evidencing Indebtedness required to be delivered pursuant to

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paragraph (b) of this Section 2.02. Subject to the terms of the Intercreditor
Agreement, if any Pledged Stock that is uncertificated on the date hereof shall
hereafter become certificated, the applicable Pledgor shall promptly cause the
certificate or certificates representing Pledged Stock to be delivered to the
Collateral Agent, as agent for the Indenture Secured Parties, together with the
accompanying stock powers or other documentation required by Section 2.02(c).
None of the Pledgors shall permit any other party to “control” (for purposes of
Section 8-106 of the New York UCC (or any analogous provision of the Uniform
Commercial Code in effect in the jurisdiction whose law applies)) any
uncertificated securities that constitute Pledged Collateral other than the
Collateral Agent, as agent for the Indenture Secured Parties, and the First
Priority Designated Agent.
          (b) To the extent permitted by and subject to the terms of the
Intercreditor Agreement, each Pledgor will cause any Indebtedness for borrowed
money having an aggregate principal amount in excess of $5.0 million (other than
(i) intercompany current liabilities incurred in the ordinary course of business
in connection with the cash management operations of the Issuer and its
Subsidiaries or (ii) to the extent that a pledge of such promissory note or
instrument would violate applicable law) owed to such Pledgor by any person to
be evidenced by a duly executed promissory note that is pledged and delivered to
the Collateral Agent, for the ratable benefit of the Indenture Secured Parties,
pursuant to the terms hereof. Subject to the terms of the Intercreditor
Agreement, to the extent any such promissory note is a demand note, each Pledgor
party thereto agrees, if requested by the Collateral Agent, to immediately
demand payment thereunder upon an Event of Default specified under
Section 6.01(i), (ii), (iv), (vii) or (viii) of the Indenture unless such demand
would not be commercially reasonable or would otherwise expose such Pledgor to
liability to the maker.
          (c) Subject to the terms of the Intercreditor Agreement, upon delivery
to the Collateral Agent, (i) any Pledged Securities required to be delivered
pursuant to the foregoing paragraphs (a) and (b) of this Section 2.02 shall be
accompanied by stock powers or note powers, as applicable, duly executed in
blank or other instruments of transfer and such other instruments and documents
as the Collateral Agent may reasonably request and (ii) all other property
comprising part of the Pledged Collateral delivered pursuant to the terms of
this Agreement shall be accompanied to the extent necessary to perfect the
security interest in or allow realization on the Pledged Collateral by proper
instruments of assignment duly executed by the applicable Pledgor and such other
instruments or documents (including issuer acknowledgments in respect of
uncertificated securities) as the Collateral Agent may reasonably request. Each
delivery of Pledged Securities shall be accompanied by a schedule describing the
securities, which schedule shall be attached hereto as Schedule II (or a
supplement to Schedule II, as applicable) and made a part hereof; provided that
failure to attach any such schedule hereto shall not affect the validity of such
pledge of such Pledged Securities. Each schedule so delivered shall supplement
any prior schedules so delivered.
          (d) To the extent permitted by and subject to the terms of the
Intercreditor Agreement, in the event any Pledged Securities constitute
uncertificated securities, each Pledgor shall either (i) cause the issuer to
agree to comply with instructions from the Collateral Agent without further
consent of any Pledgor or (ii) cause the issuer to register the Collateral Agent
as the registered owner of such uncertificated security.

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          Section 2.03. Representations, Warranties and Covenants. The Pledgors,
jointly and severally, represent, warrant and covenant to and with the
Collateral Agent, for the ratable benefit of the Indenture Secured Parties,
that:
          (a) Schedule II correctly sets forth the percentage of the issued and
outstanding shares of each class of the Equity Interests of the issuer thereof
represented by such Pledged Stock and includes all Equity Interests, debt
securities and promissory notes or instruments evidencing Indebtedness required
to be (i) pledged in order to satisfy the Collateral Requirement, or
(ii) delivered pursuant to Section 2.02(b);
          (b) the Pledged Stock and Pledged Debt Securities (solely with respect
to Pledged Debt Securities issued by a person that is not a Subsidiary of the
Issuer or an Affiliate of any such subsidiary, to the best of each Pledgor’s
knowledge) have been duly and validly authorized and issued by the issuers
thereof and (i) in the case of Pledged Stock, are fully paid and nonassessable
(other than with respect to Pledged Stock consisting of membership interests of
limited liability companies to the extent provided in Sections 18-502 and 18-607
of the Delaware Limited Liability Company Act) and (ii) in the case of Pledged
Debt Securities (solely with respect to Pledged Debt Securities issued by a
person that is not a Subsidiary of the Issuer or an Affiliate of any such
subsidiary, to the best of each Pledgor’s knowledge) are legal, valid and
binding obligations of the issuers thereof, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors’ rights generally, general
equitable principles (whether considered in a proceeding at law or in equity)
and an implied covenant of good faith and fair dealing;
          (c) except for the security interests granted hereunder, each Pledgor
(i) is and, subject to any transfers made in compliance with the Indenture, will
continue to be the direct owner, beneficially and of record, of the Pledged
Securities indicated on Schedule II as owned by such Pledgor, (ii) holds the
same free and clear of all Liens, other than Permitted Liens, (iii) will make no
assignment, pledge, hypothecation or transfer of, or create or permit to exist
any security interest in or other Lien on, the Pledged Collateral, other than
pursuant to a transaction permitted by the Indenture and other than Permitted
Liens and (iv) subject to the rights of such Pledgor under the Noteholder
Documents to dispose of Pledged Collateral, will use commercially reasonable
efforts to defend its title or interest hereto or therein against any and all
Liens (other than Permitted Liens), however arising, of all persons;
          (d) other than as set forth in the Indenture, and except for
restrictions and limitations imposed by the Noteholder Documents or securities
laws generally or otherwise permitted to exist pursuant to the terms of the
Indenture, the Pledged Stock (other than partnership interests) is and will
continue to be freely transferable and assignable, and none of the Pledged Stock
is or will be subject to any option, right of first refusal, shareholders
agreement, charter or by-law provisions or contractual restriction of any nature
that might prohibit, impair, delay or otherwise affect the pledge of such
Pledged Stock hereunder, the sale or disposition thereof pursuant hereto or the
exercise by the Collateral Agent of rights and remedies hereunder;
          (e) each Pledgor has the power and authority to pledge the Pledged
Collateral pledged by it hereunder in the manner hereby done or contemplated;

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          (f) other than as set forth in the Indenture, no consent or approval
of any Governmental Authority, any securities exchange or any other person was
or is necessary to the validity of the pledge effected hereby (other than such
as have been obtained and are in full force and effect);
          (g) by virtue of the execution and delivery by the Pledgors of this
Agreement and the Foreign Pledge Agreements, when any Pledged Securities
(including Pledged Stock of any Domestic Subsidiary, any Qualified CFC Holding
Company or any foreign stock covered by a Foreign Pledge Agreement) are
delivered to the Collateral Agent, for the ratable benefit of the Indenture
Secured Parties, in accordance with this Agreement and a financing statement
covering such Pledged Securities is filed in the appropriate filing office, the
Collateral Agent will obtain, for the ratable benefit of the Indenture Secured
Parties, a legal, valid and perfected lien upon and security interest in such
Pledged Securities under the New York UCC, subject only to Permitted Liens, as
security for the payment and performance of the Noteholder Claims;
          (h) each Pledgor that is an issuer of the Pledged Collateral confirms
that it has received notice of the security interest granted hereunder and
consents to such security interest and agrees to transfer record ownership of
the securities issued by it in connection with any request by the Collateral
Agent; and
          (i) the Pledgors shall not amend, or permit to be amended, the limited
liability company agreement (or operating agreement or similar agreement) or
partnership agreement of any Subsidiary of any Pledgor whose Equity Interests
are, or are required to be, Collateral in a manner to cause such Equity
Interests to not constitute a security under Section 8-103 of the New York UCC
or the corresponding code or statute of any other applicable jurisdiction unless
such Pledgor shall have first delivered 30 days written notice to the Collateral
Agent and shall have taken all actions contemplated hereby and as otherwise
reasonably required by the Collateral Agent to maintain the security interest of
the Collateral Agent therein as a valid, perfected, second priority security
interest.
          Section 2.04. Registration in Nominee Name; Denominations. To the
extent permitted by and subject to the Intercreditor Agreement, the Collateral
Agent, on behalf of the Indenture Secured Parties, shall have the right (in its
sole and absolute discretion) to hold the Pledged Securities in the name of the
applicable Pledgor, endorsed or assigned in blank or in favor of the Collateral
Agent or, if an Event of Default shall have occurred and be continuing, in its
own name as pledgee or the name of a nominee (as pledgee or as sub-agent). Each
Pledgor will promptly give to the Collateral Agent copies of any notices or
other communications received by it with respect to Pledged Securities
registered in the name of such Pledgor. To the extent permitted by and subject
to the Intercreditor Agreement, if an Event of Default shall have occurred and
be continuing, the Collateral Agent shall have the right to exchange the
certificates representing Pledged Securities for certificates of smaller or
larger denominations for any purpose consistent with this Agreement. To the
extent permitted by and subject to the Intercreditor Agreement, each Pledgor
shall use its commercially reasonable efforts to cause any issuer of Pledged
Securities that is not a party to this Agreement to comply with a request by the
Collateral Agent, pursuant to this Section 2.04, to exchange certificates
representing Pledged Securities of such issuer for certificates of smaller or
larger denominations.

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          Section 2.05. Voting Rights; Dividends and Interest, Etc. (a) Unless
and until an Event of Default shall have occurred and be continuing and the
Collateral Agent shall have given notice to the relevant Pledgors of the
Collateral Agent’s intention to exercise its rights hereunder (to the extent
permitted by the Intercreditor Agreement):
     (i) Each Pledgor shall be entitled to exercise any and all voting and/or
other consensual rights and powers inuring to an owner of Pledged Collateral or
any part thereof for any purpose consistent with the terms of this Agreement,
the Indenture and the other Noteholder Documents; provided that, except as
permitted under the Indenture, such rights and powers shall not be exercised in
any manner that could materially and adversely affect the rights inuring to a
holder of any Pledged Collateral, the rights and remedies of any of the
Collateral Agent or the other Indenture Secured Parties under this Agreement,
the Indenture or any other Noteholder Document or the ability of the Indenture
Secured Parties to exercise the same.
     (ii) The Collateral Agent shall promptly execute and deliver to each
Pledgor, or cause to be executed and delivered to such Pledgor, all such
proxies, powers of attorney and other instruments as such Pledgor may reasonably
request for the purpose of enabling such Pledgor to exercise the voting and/or
consensual rights and powers it is entitled to exercise pursuant to subparagraph
(i) above.
     (iii) Each Pledgor shall be entitled to receive and retain any and all
dividends, interest, principal and other distributions paid on or distributed in
respect of the Pledged Collateral to the extent and only to the extent that such
dividends, interest, principal and other distributions are permitted by, and
otherwise paid or distributed in accordance with, the terms and conditions of
the Indenture, the other Noteholder Documents and applicable laws; provided that
(A) any noncash dividends, interest, principal or other distributions, payments
or other consideration in respect thereof, including any rights to receive the
same to the extent not so distributed or paid, that would constitute Pledged
Securities, whether resulting from a subdivision, combination or
reclassification of the outstanding Equity Interests of the issuer of any
Pledged Securities, received in exchange for Pledged Securities or any part
thereof, or in redemption thereof, as a result of any merger, consolidation,
acquisition or other exchange of assets to which such issuer may be a party or
otherwise and (B) any non-cash dividends and other distributions paid or payable
in respect of any Pledged Securities that would constitute Pledged Securities in
connection with a partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid in surplus, shall be and
become part of the Pledged Collateral, and, if received by any Pledgor, shall
not be commingled by such Pledgor with any of its other funds or property but,
subject to the Intercreditor Agreement, shall be held separate and apart
therefrom, shall be held in trust for the benefit of the Collateral Agent, for
the ratable benefit of the Indenture Secured Parties, and shall be forthwith
delivered to the Collateral Agent, for the ratable benefit of the Indenture
Secured Parties, in the same form as so received (duly endorsed by such
Pledgor).
          (b) Subject to the terms of the Intercreditor Agreement, upon the
occurrence and during the continuance of an Event of Default and after notice by
the Collateral Agent to the

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

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ARTICLE III
SECURITY INTERESTS IN OTHER PERSONAL PROPERTY
          Section 3.01. Security Interest. (a) As security for the payment or
performance when due (whether at the stated maturity, by acceleration or
otherwise), as the case may be, in full of the Noteholder Claims, each Pledgor
hereby assigns and pledges to the Collateral Agent, its successors and permitted
assigns, for the ratable benefit of the Indenture Secured Parties, and hereby
grants to the Collateral Agent, its successors and permitted assigns, for the
ratable benefit of the Indenture Secured Parties, a security interest (the
“Security Interest”) in all right, title and interest in or to any and all of
the following assets and properties now owned or at any time hereafter acquired
by such Pledgor or in which such Pledgor now has or at any time in the future
may acquire any right, title or interest (collectively, the “Article 9
Collateral”):
          (i) all Accounts;
          (ii) all Chattel Paper;
          (iii) all Documents;
          (iv) all Equipment;
          (v) all General Intangibles;
          (vi) all Instruments;
          (vii) all Inventory;
          (viii) all Investment Property;
          (ix) all Letter of Credit Rights;
          (x) all Commercial Tort Claims;
        (xi) all other personal property not otherwise described above (except
for property specifically excluded from any defined term used in any of the
foregoing clauses);
        (xii) all books and records pertaining to the Article 9 Collateral; and
        (xiii) to the extent not otherwise included, all proceeds, Supporting
Obligations and products of any and all of the foregoing and all collateral
security and guarantees given by any person with respect to any of the
foregoing.
Notwithstanding anything to the contrary in this Agreement, this Agreement shall
not constitute a grant of a security interest in (a) any vehicle covered by a
certificate of title or ownership, whether now owned or hereafter acquired,
(b) any assets (including Equity Interests), whether now owned or hereafter
acquired, with respect to which the Collateral Requirement or the other

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paragraphs of Section 3.06 hereof would not be required to be satisfied by
reason of Section 3.06(f) hereof if hereafter acquired, (c) any property
excluded from the definition of Pledged Collateral by virtue of the proviso to
Section 2.01 hereof, (d) any Letter of Credit Rights to the extent any Pledgor
is required by applicable law to apply the proceeds of a drawing of such Letter
of Credit for a specified purpose, (e) any Pledgor’s right, title or interest in
any license, contract or agreement to which such Pledgor is a party or any of
its right, title or interest thereunder to the extent, but only to the extent,
that such a grant would, under the terms of such license, contract or agreement,
result in a breach of the terms of, or constitute a default under, or result in
the abandonment, invalidation or unenforceability of, any license, contract or
agreement to which such Pledgor is a party (other than to the extent that any
such term would be rendered ineffective pursuant to Section 9-406, 9-407, 9-408
or 9-409 of the New York UCC or any other applicable law (including, without
limitation, Title 11 of the United States Code) or principles of equity);
provided that immediately upon the ineffectiveness, lapse or termination of any
such provision, the Collateral shall include, and such Pledgor shall be deemed
to have granted a security interest in, all such rights and interests as if such
provision had never been in effect; (f) any Equipment owned by any Pledgor that
is subject to a purchase money lien or a Capital Lease Obligation if the
contract or other agreement in which such Lien is granted (or the documentation
providing for such Capital Lease Obligation) prohibits or requires the consent
of any person other than the Pledgors as a condition to the creation of any
other security interest on such Equipment or (g) any Equity Interests or other
securities of any of the Pledgors to the extent that the pledge of such
securities results in the Issuer’s being required to file separate financial
statements of such Pledgor with the SEC, but only to the extent necessary not to
be subject to such requirement and only for so long as such requirement is in
existence.
          (b) Each Pledgor hereby irrevocably authorizes the Collateral Agent at
any time and from time to time to file in any relevant jurisdiction any initial
financing statements (including fixture filings) with respect to the Article 9
Collateral or any part thereof and amendments thereto that contain the
information required by Article 9 of the Uniform Commercial Code of each
applicable jurisdiction for the filing of any financing statement or amendment,
including (i) whether such Pledgor is an organization, the type of organization
and any organizational identification number issued to such Pledgor, (ii) in the
case of a financing statement filed as a fixture filing, a sufficient
description of the real property to which such Article 9 Collateral relates and
(iii) a description of collateral that describes such property in any other
manner as the Collateral Agent may reasonably determine is necessary or
advisable to ensure the perfection of the security interest in the Article 9
Collateral granted under this Agreement, including describing such property as
“all assets” or “all property”. Each Pledgor agrees to provide such information
to the Collateral Agent promptly upon request.
          The Collateral Agent is further authorized to file with the United
States Patent and Trademark Office or United States Copyright Office (or any
successor office) such documents as may be reasonably necessary or advisable for
the purpose of perfecting, confirming, continuing, enforcing or protecting the
Security Interest granted by each Pledgor, without the signature of such
Pledgor, and naming such Pledgor or the Pledgors as debtors and the Collateral
Agent as secured party. Notwithstanding anything to the contrary herein, no
Pledgor shall be required to take any action under the laws of any jurisdiction
other than the United States (or any political subdivision thereof) and its
territories and possessions for the purpose of perfecting the Security

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Interest in any Article 9 Collateral of such Pledgor constituting Patents,
Trademarks or Copyrights unless required by the Collateral Agent in its
reasonable discretion.
          (c) The Security Interest is granted as security only and shall not
subject the Collateral Agent or any other Indenture Secured Party to, or in any
way alter or modify, any obligation or liability of any Pledgor with respect to
or arising out of the Article 9 Collateral.
          Section 3.02. Representations and Warranties. The Pledgors jointly and
severally represent and warrant to the Collateral Agent and the Indenture
Secured Parties that:
          (a) Each Pledgor has good and valid rights in and title to the
Article 9 Collateral with respect to which it has purported to grant a Security
Interest hereunder and has full power and authority to grant to the Collateral
Agent the Security Interest in such Article 9 Collateral pursuant hereto and to
execute, deliver and perform its obligations in accordance with the terms of
this Agreement, without the consent or approval of any other person other than
any consent or approval that has been obtained and is in full force and effect
or has otherwise been disclosed herein or in the Indenture.
          (b) The information set forth in the schedules attached hereto is
correct and complete, in all material respects, as of the Issue Date. The
Uniform Commercial Code financing statements (including fixture filings, as
applicable) or other appropriate filings, recordings or registrations containing
a description of the Article 9 Collateral that have been prepared by the
Collateral Agent for filing in each governmental, municipal or other office
specified in Schedule IV (or specified by notice from the Issuer to the
Collateral Agent after the Issue Date in the case of filings, recordings or
registrations required by Section 3.06 hereof) constitute all the filings,
recordings and registrations (except to the extent that filings are required to
be made in the United States Patent and Trademark Office and the United States
Copyright Office, or any similar office in any other jurisdiction, in order to
perfect the Security Interest in Article 9 Collateral consisting of United
States Patents, United States registered Trademarks and United States registered
Copyrights) that are necessary to publish notice of and protect the validity of
and to establish a legal, valid and perfected security interest in favor of the
Collateral Agent (for the ratable benefit of the Indenture Secured Parties) in
respect of all Article 9 Collateral in which the Security Interest may be
perfected by filing, recording or registration in the United States (or any
political subdivision thereof) and its territories and possessions, and no
further or subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary in any such jurisdiction, except as provided under
applicable law with respect to the filing of continuation statements or
amendments. Each Pledgor represents and warrants that a fully executed
Intellectual Property Security Agreement containing a description of all
Article 9 Collateral consisting of Intellectual Property with respect to United
States Patents (and Patents for which United States applications are pending),
United States registered Trademarks (and Trademarks for which United States
registration applications are pending) and United States registered Copyrights
(and Copyrights for which United States registration applications are pending)
has been delivered to the Collateral Agent for recording with the United States
Patent and Trademark Office and the United States Copyright Office pursuant to
35 U.S.C. § 261, 15 U.S.C. § 1060 or 17 U.S.C. § 205 and the regulations
thereunder, as applicable, and reasonably requested by the Collateral Agent, to
protect the validity of and to establish a legal, valid and perfected security
interest in favor of the Collateral Agent, for the ratable benefit of the
Indenture

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Secured Parties, in respect of all Article 9 Collateral consisting of such
Intellectual Property in which a security interest may be perfected by recording
with the United States Patent and Trademark Office and the United States
Copyright Office, and no further or subsequent filing, refiling, recording,
rerecording, registration or reregistration is necessary (other than the Uniform
Commercial Code financings statements referred to above, and other than such
actions as are necessary to perfect the Security Interest with respect to any
Article 9 Collateral consisting of United States Patents, Trademarks and
Copyrights (or registration or application for registration thereof) acquired or
developed after the date hereof).
          (c) The Security Interest constitutes (i) a legal and valid security
interest in all the Article 9 Collateral securing the payment and performance of
the Noteholder Claims, (ii) subject to the filings described in Section 3.02(b),
a perfected security interest in all Article 9 Collateral in which a security
interest may be perfected by filing, recording or registering a financing
statement or analogous document in the United States (or any political
subdivision thereof) and its territories and possessions pursuant to the Uniform
Commercial Code or other applicable law in such jurisdictions and (iii) a
security interest that shall be perfected in all Article 9 Collateral in which a
security interest may be perfected upon the receipt and recording of the
Intellectual Property Security Agreement with the United States Patent and
Trademark Office and the United States Copyright Office, as applicable. The
Security Interest is and shall be prior to any other Lien on any of the
Article 9 Collateral other than Permitted Liens.
          (d) The Article 9 Collateral is owned by the Pledgors free and clear
of any Lien, other than Permitted Liens. None of the Pledgors has filed or
consented to the filing of (i) any financing statement or analogous document
under the Uniform Commercial Code or any other applicable laws covering any
Article 9 Collateral, (ii) any assignment in which any Pledgor assigns any
Article 9 Collateral or any security agreement or similar instrument covering
any Article 9 Collateral with the United States Patent and Trademark Office or
the United States Copyright Office or (iii) any assignment in which any Pledgor
assigns any Article 9 Collateral or any security agreement or similar instrument
covering any Article 9 Collateral with any foreign governmental, municipal or
other office, which financing statement or analogous document, assignment,
security agreement or similar instrument is still in effect, except, in each
case, for Permitted Liens.
          (e) None of the Pledgors holds any Commercial Tort Claim individually
in excess of $5.0 million as of the Issue Date except as indicated on
Schedule V.
          (f) Except as set forth in Schedule VI, as of the Issue Date, all
Accounts have been originated by the Pledgors and all Inventory has been
produced or acquired by the Pledgors in the ordinary course of business.
          (g) As to itself and its Article 9 Collateral consisting of
Intellectual Property (the “Intellectual Property Collateral”), to the best of
each Pledgor’s knowledge:
          (i) Schedule III hereto includes all of the material Patents,
Trademarks, Copyrights owned by such Pledgor as of the date hereof.

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     (ii) The Intellectual Property Collateral is subsisting and has not been
adjudged invalid or unenforceable in whole or part (except for office actions
issued in the ordinary course by the United States Patent and Trademark Office
or any similar office in any foreign jurisdiction), and, to the best of such
Pledgor’s knowledge, is valid and enforceable, except as would not reasonably be
expected to have a Material Adverse Effect. Such Pledgor is not aware of any
uses of any item of Intellectual Property Collateral that would be expected to
lead to such item becoming invalid or unenforceable, except as would not
reasonably be expected to have a Material Adverse Effect.
     (iii) Such Pledgor has made or performed all commercially reasonable acts,
including without limitation filings, recordings and payment of all required
fees and taxes, required to maintain and protect its interest in each and every
item of Intellectual Property Collateral in full force and effect in the United
States and such Pledgor has used proper statutory notice in connection with its
use of each Patent, Trademark and Copyright in the Intellectual Property
Collateral, in each case, except to the extent that the failure to do so would
not reasonably be expected to have a Material Adverse Effect.
     (iv) With respect to each IP Agreement, the absence, termination or
violation of which would reasonably be expected to have a Material Adverse
Effect: (A) such Pledgor has not received any notice of termination or
cancellation under such IP Agreement; (B) such Pledgor has not received any
notice of a breach or default under such IP Agreement, which breach or default
has not been cured or waived; and (C) neither such Pledgor nor any other party
to such IP Agreement is in breach or default thereof in any material respect,
and no event has occurred that, with notice or lapse of time or both, would
constitute such a breach or default or permit termination, modification or
acceleration under such IP Agreement.
     (v) Except as would not reasonably be expected to have a Material Adverse
Effect, no Pledgor or Intellectual Property Collateral is subject to any
outstanding consent, settlement, decree, order, injunction, judgment or ruling
restricting the use of any Intellectual Property Collateral or that would impair
the validity or enforceability of such Intellectual Property Collateral.
          Section 3.03. Covenants. (a) Each Pledgor agrees to provide at least
10 days’ prior written notice to the Collateral Agent of any change (i) in its
corporate or organization name, (ii) in its identity or type of organization or
corporate structure, (iii) in its Federal Taxpayer Identification Number or
organizational identification number or (iv) in its “location” (determined as
provided in UCC Section 9-307). Each Pledgor agrees promptly to provide the
Collateral Agent with certified organizational documents reflecting any of the
changes described in the immediately preceding sentence. Each Pledgor agrees not
to effect or permit any change referred to in the first sentence of this
paragraph (a) unless all filings have been made, or will have been made within
any applicable statutory period, under the Uniform Commercial Code or otherwise
that are required in order for the Collateral Agent to continue at all times
following such change to have a valid, legal and perfected second priority
security interest in all the Article 9 Collateral, for the ratable benefit of
the Indenture Secured Parties. Each Pledgor agrees promptly to notify the
Collateral Agent if any material portion of the Article 9 Collateral owned or
held by such Pledgor is damaged or destroyed.

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          (b) Subject to the rights of such Pledgor under the Noteholder
Documents to dispose of Collateral, each Pledgor shall, at its own expense, use
commercially reasonable efforts to defend title to the Article 9 Collateral
against all persons and to defend the Security Interest of the Collateral Agent,
for the ratable benefit of the Indenture Secured Parties, in the Article 9
Collateral and the priority thereof against any Lien that is not a Permitted
Lien.
          (c) Each Pledgor agrees, at its own expense, to execute, acknowledge,
deliver and cause to be duly filed all such further instruments and documents
and take all such actions as the Collateral Agent may from time to time
reasonably request to better assure, preserve, protect and perfect the Security
Interest and the rights and remedies created hereby, including the payment of
any fees and taxes required in connection with the execution and delivery of
this Agreement and the granting of the Security Interest and the filing of any
financing statements (including fixture filings) or other documents in
connection herewith or therewith. Subject to the Intercreditor Agreement, any
amount payable under or in connection with any of the Article 9 Collateral that
is in excess of $5.0 million shall be or become evidenced by any promissory note
or other instrument, such note or instrument shall be promptly pledged and
delivered to the Collateral Agent, for the ratable benefit of the Indenture
Secured Parties, duly endorsed by the applicable Pledgor.
          Without limiting the generality of the foregoing, each Pledgor hereby
authorizes the Collateral Agent, with prompt notice thereof to the Pledgors, to
supplement this Agreement by supplementing Schedule III or adding additional
schedules hereto to specifically identify any asset or item that may constitute
material Copyrights, Patents, Trademarks, Copyright Licenses, Patent Licenses or
Trademark Licenses; provided that any Pledgor shall have the right, exercisable
within 30 days after the Issuer has been notified by the Collateral Agent of the
specific identification of such Article 9 Collateral, to advise the Collateral
Agent in writing of any inaccuracy of the representations and warranties made by
such Pledgor hereunder with respect to such Article 9 Collateral. Each Pledgor
agrees that it will use its commercially reasonable efforts to take such action
as shall be necessary in order that all representations and warranties hereunder
shall be true and correct with respect to such Article 9 Collateral within
30 days after the date it has been notified by the Collateral Agent of the
specific identification of such Article 9 Collateral.
          (d) Subject to the Intercreditor Agreement, after the occurrence of an
Event of Default and during the continuance thereof, the Collateral Agent shall
have the right to verify under reasonable procedures the validity, amount,
quality, quantity, value, condition and status of, or any other matter relating
to, the Article 9 Collateral, including, in the case of Accounts or Article 9
Collateral in the possession of any third person, by contacting Account Debtors
or the third person possessing such Article 9 Collateral for the purpose of
making such a verification. The Collateral Agent shall have the right to share
any information it gains from such inspection or verification with any Indenture
Secured Party.
          (e) Subject to the Intercreditor Agreement, at its option, the
Collateral Agent may discharge past due taxes, assessments, charges, fees,
Liens, security interests or other encumbrances at any time levied or placed on
the Article 9 Collateral and not a Permitted Lien, and may pay for the
maintenance and preservation of the Article 9 Collateral to the extent any
Pledgor fails to do so as required by the Indenture or this Agreement, and each
Pledgor jointly

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and severally agrees to reimburse the Collateral Agent on demand for any
reasonable payment made or any reasonable expense incurred by the Collateral
Agent pursuant to the foregoing authorization; provided, however, that nothing
in this Section 3.03(e) shall be interpreted as excusing any Pledgor from the
performance of, or imposing any obligation on the Collateral Agent or any
Indenture Secured Party to cure or perform, any covenants or other promises of
any Pledgor with respect to taxes, assessments, charges, fees, Liens, security
interests or other encumbrances and maintenance as set forth herein or in the
other Noteholder Documents.
          (f) Each Pledgor (rather than the Collateral Agent or any Indenture
Secured Party) shall remain liable for the observance and performance of all the
conditions and obligations to be observed and performed by it under each
contract, agreement or instrument relating to the Article 9 Collateral and each
Pledgor jointly and severally agrees to indemnify and hold harmless the
Collateral Agent and the Indenture Secured Parties from and against any and all
liability for such performance.
          (g) None of the Pledgors shall make or permit to be made an
assignment, pledge or hypothecation of the Article 9 Collateral or shall grant
any other Lien in respect of the Article 9 Collateral, except as permitted by
the Indenture and the other provisions hereof. None of the Pledgors shall make
or permit to be made any transfer of the Article 9 Collateral and each Pledgor
shall remain at all times in possession of the Article 9 Collateral owned by it,
except as permitted by the Indenture and the other provisions hereof.
          (h) None of the Pledgors will, without the Collateral Agent’s prior
written consent (which consent shall not be unreasonably withheld), grant any
extension of the time of payment of any Accounts included in the Article 9
Collateral, compromise, compound or settle the same for less than the full
amount thereof, release, wholly or partly, any person liable for the payment
thereof or allow any credit or discount whatsoever thereon, other than
extensions, credits, discounts, compromises or settlements granted or made in
the ordinary course of business and consistent with prudent business practices
or as otherwise permitted under the Indenture.
          (i) Subject to the Intercreditor Agreement, each Pledgor irrevocably
makes, constitutes and appoints the Collateral Agent (and all officers,
employees or agents designated by the Collateral Agent) as such Pledgor’s true
and lawful agent (and attorney-in-fact) for the purpose, during the continuance
of an Event of Default, of making, settling and adjusting claims in respect of
Article 9 Collateral under policies of insurance, endorsing the name of such
Pledgor on any check, draft, instrument or other item of payment for the
proceeds of such policies of insurance and for making all determinations and
decisions with respect thereto. Subject to the Intercreditor Agreement, in the
event that any Pledgor at any time or times shall fail to obtain or maintain any
of the policies of insurance required hereby or under the Indenture or to pay
any premium in whole or part relating thereto, the Collateral Agent may, without
waiving or releasing any obligation or liability of the Pledgors hereunder or
any Event of Default, in its sole discretion, obtain and maintain such policies
of insurance and pay such premium and take any other actions with respect
thereto as the Collateral Agent reasonably deems advisable. All sums disbursed
by the Collateral Agent in connection with this Section 3.03(i), including
reasonable attorneys’ fees, court costs, expenses and other charges relating
thereto, shall be payable, upon

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demand, by the Pledgors to the Collateral Agent and shall be additional
Noteholder Claims secured hereby.
          Section 3.04. Other Actions. Subject to the terms of the Intercreditor
Agreement, in order to further ensure the attachment, perfection and priority
of, and the ability of the Collateral Agent to enforce, for the ratable benefit
of the Indenture Secured Parties, the Collateral Agent’s security interest in
the Article 9 Collateral, each Pledgor agrees, in each case at such Pledgor’s
own expense, to take the following actions with respect to the following Article
9 Collateral:
          (a) Instruments and Tangible Chattel Paper. If any Pledgor shall at
any time hold or acquire any Instruments (other than checks received and
processed in the ordinary course of business) or Tangible Chattel Paper
evidencing an amount in excess of $5.0 million, such Pledgor shall forthwith
endorse, assign and deliver the same to the Collateral Agent, accompanied by
such instruments of transfer or assignment duly executed in blank as the
Collateral Agent may from time to time reasonably request.
          (b) Investment Property. Except to the extent otherwise provided in
Article II, if any Pledgor shall at any time hold or acquire any Certificated
Security, such Pledgor shall forthwith endorse, assign and deliver the same to
the Collateral Agent, accompanied by such instruments of transfer or assignment
duly executed in blank as the Collateral Agent may from time to time reasonably
specify. If any security of a domestic issuer now owned or hereafter acquired by
any Pledgor is uncertificated and is issued to such Pledgor or its nominee
directly by the issuer thereof, such Pledgor shall promptly notify the
Collateral Agent of such uncertificated securities and (i) upon the Collateral
Agent’s reasonable request or (ii) upon the occurrence and during the
continuance of an Event of Default, such Pledgor shall either (x) cause the
issuer to agree to comply with instructions from the Collateral Agent as to such
security, without further consent of any Pledgor or such nominee, or (y) cause
the issuer to register the Collateral Agent as the registered owner of such
security.
          (c) Commercial Tort Claims. If any Pledgor shall at any time hold or
acquire a Commercial Tort Claim in an amount reasonably estimated to exceed
$5.0 million, such Pledgor shall promptly notify the Collateral Agent thereof in
a writing signed by such Pledgor, including a summary description of such claim,
and grant to the Collateral Agent in writing a security interest therein and in
the proceeds thereof, all under the terms and provisions of this Agreement.
          Section 3.05. Covenants Regarding Patent, Trademark and Copyright
Collateral. Except as permitted by the Indenture: (a) Each Pledgor agrees that
it will not knowingly do any act or omit to do any act (and will exercise
commercially reasonable efforts to prevent its licensees from doing any act or
omitting to do any act) whereby any Patent that is material to the normal
conduct of such Pledgor’s business may become prematurely invalidated,
abandoned, lapsed or dedicated to the public, and agrees that it shall take
commercially reasonable steps with respect to any material products covered by
any such Patent as necessary and sufficient to establish and preserve its rights
under applicable patent laws.

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          (b) Each Pledgor will, and will use its commercially reasonable
efforts to cause its licensees or its sublicensees to, for each material
Trademark necessary to the normal conduct of such Pledgor’s business,
(i) maintain such Trademark in full force free from any adjudication of
abandonment or invalidity for non-use, (ii) maintain the quality of products and
services offered under such Trademark, (iii) display such Trademark with notice
of federal or foreign registration or claim of trademark or service mark as
required under applicable law and (iv) not knowingly use or knowingly permit its
licensees’ use of such Trademark in violation of any third-party rights.
          (c) Each Pledgor will, and will use its commercially reasonable
efforts to cause its licensees or its sublicensees to, for each work covered by
a material Copyright necessary to the normal conduct of such Pledgor’s business
that it publishes, displays and distributes, use a copyright notice as necessary
and sufficient to establish and preserve its rights under applicable copyright
laws.
          (d) Each Pledgor shall notify the Collateral Agent promptly if it
knows that any Patent, Trademark or Copyright material to the normal conduct of
such Pledgor’s business may imminently become abandoned, lapsed or dedicated to
the public, or of any materially adverse determination or development, excluding
office actions and similar determinations or developments in the United States
Patent and Trademark Office, United States Copyright Office, any court or any
similar office of any country, regarding such Pledgor’s ownership of any such
material Patent, Trademark or Copyright or its right to register or to maintain
the same.
          (e) Each Pledgor, either itself or through any agent, employee,
licensee or designee, shall (i) inform the Collateral Agent on an annual basis
of each application by itself, or through any agent, employee, licensee or
designee, for any Patent with the United States Patent and Trademark Office and
each registration of any Trademark or Copyright with the United States Patent
and Trademark Office, the United States Copyright Office or any comparable
office or agency in any other country filed during the preceding twelve-month
period, and (ii) upon the reasonable request of the Collateral Agent, execute
and deliver any and all agreements, instruments, documents and papers as the
Collateral Agent may reasonably request to evidence the Collateral Agent’s
security interest in such Patent, Trademark or Copyright.
          (f) Each Pledgor shall exercise its reasonable business judgment
consistent with the practice in any proceeding before the United States Patent
and Trademark Office, the United States Copyright Office or any comparable
office or agency in any other country with respect to maintaining and pursuing
each application relating to any Patent, Trademark and/or Copyright (and
obtaining the relevant grant or registration) material to the normal conduct of
such Pledgor’s business and to maintain (i) each issued Patent and (ii) the
registrations of each Trademark and each Copyright that is material to the
normal conduct of such Pledgor’s business, including, when applicable and
necessary in such Pledgor’s reasonable business judgment, timely filings of
applications for renewal, affidavits of use, affidavits of incontestability and
payment of maintenance fees, and, if any Pledgor believes necessary in its
reasonable business judgment, to initiate opposition, interference and
cancellation proceedings against third parties.
          (g) In the event that any Pledgor knows or has reason to know that any
Article 9 Collateral consisting of a Patent, Trademark or Copyright material to
the normal

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conduct of its business has been or is about to be materially infringed,
misappropriated or diluted by a third party, such Pledgor shall promptly notify
the Collateral Agent and shall, if such Pledgor deems it necessary in its
reasonable business judgment, promptly sue and recover any and all damages, and
take such other actions as are reasonably appropriate under the circumstances.
          Section 3.06. Further Assurances; Additional Security
          (a) Each Pledgor agrees to execute any and all further documents,
financing statements, agreements and instruments, and take all such further
actions (including the filing and recording of financing statements, fixture
filings, mortgages and other documents and recordings of Liens in stock
registries), that may be required under any applicable law, or that the
Collateral Agent may reasonably request, to satisfy the Collateral Requirement
and to cause the Collateral Requirement to be and remain satisfied, all at the
expense of the Issuer and provide to the Collateral Agent, from time to time
upon reasonable request, evidence as to the perfection and priority of the Liens
created or intended to be created by this Agreement and the other Noteholder
Documents.
          (b) If any asset (including any owned Real Property (other than owned
Real Property covered by paragraph (c) below) or improvements thereto or any
interest therein) that has an individual fair market value in an amount greater
than $5.0 million is acquired by the Issuer or any other Pledgor after the Issue
Date or owned by an entity at the time it becomes a Pledgor (in each case other
than (x) assets constituting Collateral under a Security Document that become
subject to the Lien of such Security Document upon acquisition thereof and
(y) assets that are not required to become subject to Liens in favor of the
Collateral Agent pursuant to clause (f) below or the Security Documents) the
Issuer will (i) notify the Collateral Agent thereof and (ii) cause such asset to
be subjected to a Lien securing the Noteholder Claims and take, and cause the
other Pledgors to take, such actions as shall be necessary or reasonably
requested by the Collateral Agent to grant and perfect such Liens, including
actions described in paragraph (a) of this Section 3.06, all at the expense of
the Issuer, subject to paragraph (f) below.
          (c) The Issuer or the applicable Pledgors shall promptly notify the
Collateral Agent of the acquisition of, and grant and cause each of the other
applicable Pledgors to grant to the Collateral Agent security interests and
mortgages in, such owned Real Property of the Issuer or any such Pledgor, to the
extent acquired after the Issue Date and having a value at the time of
acquisition in excess of $5.0 million, pursuant to a mortgage, deed of trust or
similar agreement and constituting valid and enforceable Liens subject to no
other Liens except Permitted Liens at the time of perfection thereof, record or
file, and cause each such other applicable Pledgor to record or file, such
mortgage or instruments related thereto in such manner and in such places as is
required by law to establish, perfect, preserve and protect the Liens in favor
of the Collateral Agent granted pursuant to such mortgage or instrument and pay,
and cause each such other applicable Pledgor to pay, in full, all taxes, fees
and other charges payable in connection therewith, in each case subject to
paragraph (f) below.
          (d) If any additional direct or indirect Subsidiary of the Issuer is
formed or acquired after the Issue Date (with any Subsidiary redesignation
resulting in an Unrestricted Subsidiary becoming a Restricted Subsidiary being
deemed to constitute the acquisition of a

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Subsidiary) and if such Subsidiary is a Guarantor under the Indenture, within
five Business Days after the date such Subsidiary is formed or acquired, notify
the Collateral Agent and the Holders thereof and, within 20 Business Days after
the date such Subsidiary is formed or acquired or such longer period as the
Collateral Agent shall agree, cause the Collateral Requirement to be satisfied
with respect to such Subsidiary and with respect to any Equity Interest in or
Indebtedness of such Subsidiary owned by or on behalf of any Pledgor, subject to
paragraph (f) below.
          (e) If any additional Foreign Subsidiary of the Issuer is formed or
acquired after the Issue Date (with any Subsidiary redesignation resulting in an
Unrestricted Subsidiary becoming a Restricted Subsidiary being deemed to
constitute the acquisition of a Subsidiary) and if such Subsidiary is a “first
tier” Foreign Subsidiary, within five Business Days after the date such Foreign
Subsidiary is formed or acquired, notify the Collateral Agent and the Holders
thereof and, within 20 Business Days after the date such Foreign Subsidiary is
formed or acquired (or such longer period as the Credit Agreement Agent shall
agree), cause the Collateral a Requirement to be satisfied with respect to any
Equity Interest in such Foreign Subsidiary owned by or on behalf of any Pledgor,
subject to paragraph (f) below.
          (f) The Collateral Requirement and the other provisions of this
Section 3.06 need not be satisfied with respect to (i) any interests in Real
Property held by the Issuer or any of its Subsidiaries as a lessee under a lease
or that has an individual fair market value in an amount less than $5.0 million,
(ii) any vehicle, (iii) cash, deposit accounts and securities accounts, (iv) any
Equity Interests (other than in the case of any person which is a Restricted
Subsidiary, Equity Interests in such person issued or acquired after such person
became a Restricted Subsidiary) if, and to the extent that, and for so long as
(A) doing so would violate applicable law or a contractual obligation binding on
such Equity Interests and (B) with respect to contractual obligations applicable
to Equity Interests acquired after May 29, 2007, such obligation existed at the
time of the acquisition thereof and was not created or made binding on such
Equity Interests in contemplation of or in connection with the acquisition of
such Restricted Subsidiary, (v) any other assets to the extent that, and for so
long as, taking such actions would violate applicable law or an enforceable
contractual obligation binding on such assets, provided, in the case of
contractual obligations applicable to assets acquired after May 29, 2007, that
such contractual obligation existed at the time of the acquisition thereof and
was not created or made binding on such assets in contemplation or in connection
with the acquisition of such assets (except in the case of assets acquired with
Indebtedness permitted pursuant to Section 4.09(b)(iv) of the Indenture that is
secured by a Permitted Lien) or (vi) assets covered by a certificate of title or
ownership title to the extent that a Lien therein cannot be perfected by the
filing of a UCC financing statement in the jurisdiction of organization of the
Issuer or the applicable Pledgor; provided, that, upon the reasonable request of
the Collateral Agent, the Issuer shall, and shall cause any applicable
Restricted Subsidiary to, use commercially reasonable efforts to have waived or
eliminated any contractual obligation of the types described in clauses (iv) and
(v) above. Further, the Security Interest shall not be required to be perfected
in any other assets to the extent the Credit Agreement Agent has not perfected a
security interest therein.

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ARTICLE IV
REMEDIES
          Section 4.01. Remedies Upon Default. Upon the occurrence and during
the continuance of an Event of Default and subject to the Intercreditor
Agreement, each Pledgor agrees to deliver each item of Collateral to the
Collateral Agent on demand, and it is agreed that the Collateral Agent shall
have the right to take any of or all the following actions at the same or
different times: (a) with respect to any Article 9 Collateral consisting of
Intellectual Property, on demand, to cause the Security Interest to become an
assignment, transfer and conveyance of any of or all such Article 9 Collateral
by the applicable Pledgors to the Collateral Agent or to license or sublicense,
whether general, special or otherwise, and whether on an exclusive or a
nonexclusive basis, any such Article 9 Collateral throughout the world on such
terms and conditions and in such manner as the Collateral Agent shall determine
(other than in violation of any then-existing licensing arrangements to the
extent that waivers thereunder cannot be obtained with the use of commercially
reasonable efforts, which each Pledgor hereby agrees to use) and (b) with or
without legal process and with or without prior notice or demand for
performance, to take possession of the Article 9 Collateral and without
liability for trespass to the applicable Pledgor to enter any premises where the
Article 9 Collateral may be located for the purpose of taking possession of or
removing the Article 9 Collateral and, generally, to exercise any and all rights
afforded to a secured party under the applicable Uniform Commercial Code or
other applicable law. Without limiting the generality of the foregoing, each
Pledgor agrees that the Collateral Agent shall have the right, subject to the
mandatory requirements of applicable law, to sell or otherwise dispose of all or
any part of the Collateral at a public or private sale or at any broker’s board
or on any securities exchange, for cash, upon credit or for future delivery as
the Collateral Agent shall deem appropriate. The Collateral Agent shall be
authorized in connection with any sale of a security (if it deems it advisable
to do so) pursuant to the foregoing to restrict the prospective bidders or
purchasers to persons who represent and agree that they are purchasing such
security for their own account, for investment, and not with a view to the
distribution or sale thereof. Upon consummation of any such sale of Collateral
pursuant to this Section 4.01, the Collateral Agent shall have the right to
assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any such sale shall hold the property
sold absolutely, free from any claim or right on the part of any Pledgor, and
each Pledgor hereby waives and releases (to the extent permitted by law) all
rights of redemption, stay, valuation and appraisal that such Pledgor now has or
may at any time in the future have under any rule of law or statute now existing
or hereafter enacted.
          The Collateral Agent shall give the applicable Pledgors 10 Business
Days’ written notice (which each Pledgor agrees is reasonable notice within the
meaning of Section 9-611 of the New York UCC or its equivalent in other
jurisdictions) of the Collateral Agent’s intention to make any sale of
Collateral. Such notice, in the case of a public sale, shall state the time and
place for such sale and, in the case of a sale at a broker’s board or on a
securities exchange, shall state the board or exchange at which such sale is to
be made and the day on which the Collateral, or portion thereof, will first be
offered for sale at such board or exchange. Any such public sale shall be held
at such time or times within ordinary business hours and at such place or places
as the Collateral Agent may fix and state in the notice (if any) of such sale.
At any such sale, the

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Collateral, or the portion thereof, to be sold may be sold in one lot as an
entirety or in separate parcels, as the Collateral Agent may (in its sole and
absolute discretion) determine. The Collateral Agent shall not be obligated to
make any sale of any Collateral if it shall determine not to do so, regardless
of the fact that notice of sale of such Collateral shall have been given. The
Collateral Agent may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by announcement
at the time and place fixed for sale, and such sale may, without further notice,
be made at the time and place to which the same was so adjourned. In the case of
any sale of all or any part of the Collateral made on credit or for future
delivery, the Collateral so sold may be retained by the Collateral Agent until
the sale price is paid by the purchaser or purchasers thereof, but the
Collateral Agent shall not incur any liability in the event that any such
purchaser or purchasers shall fail to take up and pay for the Collateral so sold
and, in the case of any such failure, such Collateral may be sold again upon
notice given in accordance with provisions above. At any public (or, to the
extent permitted by law, private) sale made pursuant to this Section 4.01, any
Indenture Secured Party may bid for or purchase in cash, free (to the extent
permitted by law) from any right of redemption, stay, valuation or appraisal on
the part of any Pledgor (all such rights being also hereby waived and released
to the extent permitted by law), the Collateral or any part thereof offered for
sale and may make payment on account thereof by using any claim then due and
payable to such Indenture Secured Party from any Pledgor as a credit against the
purchase price, and may make payment on account thereof by using any claim then
due and payable to such Indenture Secured Party from any Pledgor as a credit
against the purchase price, and such Indenture Secured Party may, upon
compliance with the terms of sale, hold, retain and dispose of such property in
accordance with Section 4.02 hereof without further accountability to any
Pledgor therefor. For purposes hereof, a written agreement to purchase the
Collateral or any portion thereof shall be treated as a sale thereof; the
Collateral Agent shall be free to carry out such sale pursuant to such agreement
and no Pledgor shall be entitled to the return of the Collateral or any portion
thereof subject thereto, notwithstanding the fact that after the Collateral
Agent shall have entered into such an agreement all Events of Default shall have
been remedied and the Noteholder Claims have been Discharged. As an alternative
to exercising the power of sale herein conferred upon it, the Collateral Agent
may proceed by a suit or suits at law or in equity to foreclose this Agreement
and to sell the Collateral or any portion thereof pursuant to a judgment or
decree of a court or courts having competent jurisdiction or pursuant to a
proceeding by a court-appointed receiver. Any sale pursuant to the provisions of
this Section 4.01 shall be deemed to conform to the commercially reasonable
standards as provided in Section 9-610(b) of the New York UCC or its equivalent
in other jurisdictions.
          Section 4.02. Application of Proceeds. Subject to the Intecreditor
Agreement, the Collateral Agent shall promptly apply the proceeds, moneys or
balances of any collection or sale of Collateral, as well as any Collateral
consisting of cash, as follows: FIRST, to the payment of all costs and expenses
and indemnification obligations incurred by the Collateral Agent or the Trustee
in connection with such collection or sale or otherwise in connection with this
Agreement, any other Noteholder Documents or any of the Noteholder Claims,
including without limitation all court costs and the fees and expenses of its
agents and legal counsel, the repayment of all advances made by the Collateral
Agent or the Trustee hereunder or under any other Noteholder Document on behalf
of any Pledgor, any other costs or expenses incurred in connection with the
exercise of any right or remedy hereunder or under any other Noteholder

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Document, and all other fees, indemnities and other amounts owing or
reimbursable to the Collateral Agent or the Trustee under any Noteholder
Document in its capacity as such; SECOND, to the payment in full of the
Noteholder Claims (the amounts so applied to be distributed among the Indenture
Secured Parties pro rata in accordance with the respective amounts of the
Noteholder Claims owed to them on the date of any such distribution); and THIRD,
to the Issuer, its successors or assigns or as a court of competent jurisdiction
may otherwise direct.
          Upon any sale of Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the purchase money by the Collateral Agent or of the officer
making the sale shall be a sufficient discharge to the purchaser or purchasers
of the Collateral so sold and such purchaser or purchasers shall not be
obligated to see to the application of any part of the purchase money paid over
to the Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.
          If, after receipt of any payment which is applied to the payment of
all or any part of any Noteholder Claims, the Collateral Agent, Trustee or any
Holder is for any reason compelled to surrender such payment or proceeds to any
person because such payment or application of proceeds is invalidated, declared
fraudulent, set aside, determined to be void or voidable as a preference,
impermissible set-off, or a diversion of trust funds, or for any other reason,
then the Noteholder Claims or part thereof intended to be satisfied shall be
revived and continued and this Agreement shall continue in full force as if such
payment or proceeds had not been received by such Collateral Agent, Trustee or
Holder and the Issuer shall be liable to pay to such Collateral Agent, Trustee
and the Holders, and shall indemnify the Collateral Agent, Trustee and the
Holders and holds the Collateral Agent, Trustee and the Holders harmless for the
amount of such payment or proceeds surrendered. The provisions of this paragraph
shall be and remain effective notwithstanding any contrary action which may have
been taken by the Collateral Agent, Trustee or any Holder in reliance upon such
payment or application of proceeds, and any such contrary action so taken shall
be without prejudice to the Collateral Agent’s, Trustee’s and the Holders’
rights under this Agreement and shall be deemed to have been conditioned upon
such payment or application of proceeds having become final and irrevocable. The
provisions of this paragraph shall survive the termination of this Agreement.
          Section 4.03. Securities Act, Etc. In view of the position of the
Pledgors in relation to the Pledged Collateral, or because of other current or
future circumstances, a question may arise under the Securities Act of 1933, as
now or hereafter in effect, or any similar federal statute hereafter enacted
analogous in purpose or effect (such Act and any such similar statute as from
time to time in effect being called the “Federal Securities Laws”) with respect
to any disposition of the Pledged Collateral permitted hereunder. Each Pledgor
understands that compliance with the Federal Securities Laws might very strictly
limit the course of conduct of the Collateral Agent if the Collateral Agent were
to attempt to dispose of all or any part of the Pledged Collateral, and might
also limit the extent to which or the manner in which any subsequent transferee
of any Pledged Collateral could dispose of the same. Similarly, there may be
other legal restrictions or limitations affecting the Collateral Agent in any
attempt to dispose of all or part of the Pledged Collateral under applicable
Blue Sky or other state securities laws or similar laws analogous in purpose or
effect. Each Pledgor acknowledges and agrees that in light

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of such restrictions and limitations, the Collateral Agent, in its sole and
absolute discretion, (a) may proceed to make such a sale whether or not a
registration statement for the purpose of registering such Pledged Collateral or
part thereof shall have been filed under the Federal Securities Laws or, to the
extent applicable, Blue Sky or other state securities laws and (b) may approach
and negotiate with a single potential purchaser to effect such sale. Each
Pledgor acknowledges and agrees that any such sale might result in prices and
other terms less favorable to the seller than if such sale were a public sale
without such restrictions. In the event of any such sale, the Collateral Agent
shall incur no responsibility or liability for selling all or any part of the
Pledged Collateral at a price that the Collateral Agent, in its sole and
absolute discretion, may in good faith deem reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might have
been realized if the sale were deferred until after registration as aforesaid or
if more than a single purchaser were approached. The provisions of this
Section 4.03 will apply notwithstanding the existence of a public or private
market upon which the quotations or sales prices may exceed substantially the
price at which the Collateral Agent sells.
ARTICLE V
MISCELLANEOUS
          Section 5.01. Notices. All communications and notices hereunder shall
(except as otherwise permitted herein) be in writing and given as provided in
Section 13.02 of the Indenture. All communications and notices hereunder to any
Pledgor shall be given to it in care of the Issuer, with such notice to be given
as provided in Section 13.02 of the Indenture.
          Section 5.02. Security Interest Absolute. All rights of the Collateral
Agent hereunder, the Security Interest in the Article 9 Collateral, the security
interest in the Pledged Collateral and all obligations of each Pledgor hereunder
shall be absolute and unconditional irrespective of (a) any lack of validity or
enforceability of the Indenture, any other Noteholder Document, any agreement
with respect to any of the Noteholder Claims or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Noteholder
Claims, or any other amendment or waiver of or any consent to any departure from
the Indenture, any other Noteholder Document or any other agreement or
instrument, (c) any exchange, release or non-perfection of any Lien on other
collateral, or any release or amendment or waiver of or consent under or
departure from any guarantee, securing or guaranteeing all or any of the
Noteholder Claims or (d) any other circumstance that might otherwise constitute
a defense available to, or a discharge of, any Pledgor in respect of the
Noteholder Claims or this Agreement (other than a defense of payment or
performance).
          Section 5.03. Limitation By Law. All rights, remedies and powers
provided in this Agreement may be exercised only to the extent that the exercise
thereof does not violate any applicable provision of law, and all the provisions
of this Agreement are intended to be subject to all applicable mandatory
provisions of law that may be controlling and to be limited to the extent

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necessary so that they shall not render this Agreement invalid, unenforceable,
in whole or in part, or not entitled to be recorded, registered or filed under
the provisions of any applicable law.
          Section 5.04. Binding Effect; Several Agreement. This Agreement shall
become effective as to any party to this Agreement when a counterpart hereof
executed on behalf of such party shall have been delivered to the Collateral
Agent and a counterpart hereof shall have been executed on behalf of the
Collateral Agent, and thereafter shall be binding upon such party and the
Collateral Agent and their respective permitted successors and assigns, and
shall inure to the benefit of such party, the Collateral Agent and the other
Indenture Secured Parties and their respective permitted successors and assigns,
except that no party shall have the right to assign or transfer its rights or
obligations hereunder or any interest herein or in the Collateral (and any such
assignment or transfer shall be void) except as expressly contemplated by this
Agreement or the Indenture. This Agreement shall be construed as a separate
agreement with respect to each party and may be amended, modified, supplemented,
waived or released with respect to any party without the approval of any other
party and without affecting the obligations of any other party hereunder.
          Section 5.05. Successors and Assigns. Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the permitted successors and assigns of such party; and all covenants, promises
and agreements by or on behalf of any Pledgor or the Collateral Agent that are
contained in this Agreement shall bind and inure to the benefit of their
respective permitted successors and assigns; provided that no Pledgor may
assign, transfer or delegate any of its rights or obligations under this
Agreement without the prior written consent of the Collateral Agent. The
Collateral Agent hereunder shall at all times be the same person that is the
Collateral Agent under the Indenture. Written notice of resignation by the
Collateral Agent pursuant to the Indenture shall also constitute notice of
resignation as the Collateral Agent under this Agreement. Upon the acceptance of
any appointment as the Collateral Agent under the Indenture by a successor
Collateral Agent, that successor Collateral Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the retiring
Collateral Agent pursuant hereto.
          Section 5.06. Collateral Agent’s Fees and Expenses; Indemnification.
(a) The parties hereto agree that the Collateral Agent shall be entitled to
reimbursement of its expenses incurred hereunder as provided in Section 7.07 of
the Indenture.
          (b) Without limitation of its indemnification obligations under the
other Noteholder Documents, each Pledgor jointly and severally agrees to
indemnify the Collateral Agent, the Trustee, the Holders, each of their
respective Affiliates and each of their respective directors, trustees,
officers, employees, agents and advisors (each such Person being called an
“Indemnitee”) and the other Indemnitees against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including reasonable counsel fees, charges and disbursements, incurred
by or asserted against any Indemnitee arising out of, in connection with, or as
a result of, (i) the execution, delivery or performance of this Agreement or any
other Noteholder Document or any agreement or instrument contemplated hereby or
thereby, the performance by the parties hereto and thereto of their respective
obligations thereunder or the consummation of the transactions contemplated by
the Indenture and hereby, (ii) the use of proceeds of the Notes or (iii) any
claim, litigation, investigation or proceeding relating to any of

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the foregoing, or to the Collateral, whether or not any Indemnitee is a party
thereto; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Indemnitee.
          (c) Any such amounts payable as provided hereunder shall be additional
Noteholder Claims secured hereby and by the other Security Documents. The
provisions of this Section 5.06 shall remain operative and in full force and
effect regardless of the termination of this Agreement or any other Noteholder
Document, the consummation of the transactions contemplated hereby, the
repayment of any of the Noteholder Claims, the invalidity or unenforceability of
any term or provision of this Agreement or any other Noteholder Document, or any
investigation made by or on behalf of the Collateral Agent or any other
Indenture Secured Party. All amounts due under this Section 5.06 shall be
payable on written demand therefor. All obligations of each Pledgor under this
Section 5.06 shall survive termination of this Agreement.
          Section 5.07. Collateral Agent Appointed Attorney-in-Fact. Each
Pledgor hereby appoints the Collateral Agent the attorney-in-fact of such
Pledgor for the purpose of carrying out the provisions of this Agreement and
taking any action and executing any instrument that the Collateral Agent may
deem necessary or advisable to accomplish the purposes hereof, which appointment
is irrevocable and coupled with an interest. Subject to the Intercreditor
Agreement, the Collateral Agent shall have the right, upon the occurrence and
during the continuance of an Event of Default, with full power of substitution
either in the Collateral Agent’s name or in the name of such Pledgor, (a) to
receive, endorse, assign or deliver any and all notes, acceptances, checks,
drafts, money orders or other evidences of payment relating to the Collateral or
any part thereof, (b) to demand, collect, receive payment of, give receipt for
and give discharges and releases of all or any of the Collateral, (c) to ask
for, demand, sue for, collect, receive and give acquittance for any and all
moneys due or to become due under and by virtue of any Collateral, (d) to sign
the name of any Pledgor on any invoice or bill of lading relating to any of the
Collateral, (e) to send verifications of Accounts to any Account Debtor, (f) to
commence and prosecute any and all suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect or otherwise realize on
all or any of the Collateral or to enforce any rights in respect of any
Collateral, (g) to settle, compromise, compound, adjust or_defend any actions,
suits or proceedings relating to all or any of the Collateral and (h) to use,
sell, assign, transfer, pledge, make any agreement with respect to or otherwise
deal with all or any of the Collateral, and to do all other acts and things
necessary to carry out the purposes of this Agreement, as fully and completely
as though the Collateral Agent were the absolute owner of the Collateral for all
purposes; provided that nothing herein contained shall be construed as requiring
or obligating the Collateral Agent to make any commitment or to make any inquiry
as to the nature or sufficiency of any payment received by the Collateral Agent,
or to present or file any claim or notice, or to take any action with respect to
the Collateral or any part thereof or the moneys due or to become due in respect
thereof or any property covered thereby. The Collateral Agent and the other
Indenture Secured Parties shall be accountable only for amounts actually
received as a result of the exercise of the powers granted to them herein, and
neither they nor their officers, directors, employees or agents shall be

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responsible to any Pledgor for any act or failure to act hereunder, except for
their own gross negligence or willful misconduct.
          Section 5.08. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
          Section 5.09. Waivers; Amendment. (a) No failure or delay by the
Collateral Agent or any Holder in exercising any right, power or remedy
hereunder or under any other Noteholder Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy, or any abandonment or discontinuance of steps to enforce such a right,
power or remedy, preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The rights, powers and remedies of the
Collateral Agent and the Holders hereunder and under the other Noteholder
Documents are cumulative and are not exclusive of any rights, powers or remedies
that they would otherwise have. No waiver of any provision of this Agreement or
consent to any departure by any Pledgor therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) of this
Section 5.09, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice or demand on
any Pledgor in any case shall entitle any Pledgor to any other or further notice
or demand in similar or other circumstances.
          (b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Collateral Agent and the Pledgor or Pledgors with respect to
which such waiver, amendment or modification is to apply, subject to any consent
required in accordance with the Indenture.
          Section 5.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER NOTEHOLDER
DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 5.10.
          Section 5.11. Severability. In the event any one or more of the
provisions contained in this Agreement or in any other Noteholder Document
should be held invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein and
therein shall not in any way be affected or impaired thereby. The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

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          Section 5.12. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract, and shall become
effective as provided in Section 5.04 hereof. Delivery of an executed
counterpart to this Agreement by facsimile transmission or electronic mail shall
be as effective as delivery of a manually signed original.
          Section 5.13. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
          Section 5.14. Jurisdiction; Consent to Service of Process. (a) Each
party to this Agreement hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any New York State
court or federal court of the United States of America sitting in New York City,
and any appellate court from any thereof, in any action or proceeding arising
out of or relating to this Agreement or any other Noteholder Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that the Collateral Agent or any Holder may otherwise have to bring any
action or proceeding relating to this Agreement or any other Noteholder Document
against any Pledgor, or its properties, in the courts of any jurisdiction.
          (b) Each party to this Agreement hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
any other Noteholder Document in any New York State or federal court. Each of
the parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
          Section 5.15. Termination or Release. (a) Subject to the terms of the
Intercreditor Agreement, this Agreement, the pledges made herein, the Security
Interest and all other security interests granted hereby shall terminate when
all the Noteholder Claims (other than contingent or unliquidated obligations or
liabilities not then due) have been Discharged.
          (b) Subject to the terms of the Intercreditor Agreement, a Pledgor
(other than the Issuer) shall automatically be released from its obligations
hereunder and the security interests in the Collateral of such Pledgor shall be
automatically released upon the consummation of any transaction permitted by the
Indenture as a result of which such Pledgor ceases to be a Restricted Subsidiary
of the Issuer or otherwise ceases to be a Guarantor; provided that such portion
of the Holders as shall be required by the terms of the Indenture to have
consented to such transaction (to the extent such consent is required by the
Indenture) shall have consented thereto and the terms of such consent did not
provide otherwise.

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          (c) Subject to the terms of the Intercreditor Agreement, upon any sale
or other transfer by any Pledgor of any Collateral that is permitted under the
Indenture to any person that is not a Pledgor, or upon the effectiveness of any
written consent to the release of the security interest granted hereby in any
Collateral pursuant to the Indenture, the security interest in such Collateral
shall be automatically released.
          (d) Upon the transfer by any Pledgor of Equity Interests in a “first
tier” Foreign Subsidiary or “first tier” Qualified CFC Holding Company to a
“first tier” Foreign Subsidiary or “first tier” Qualified CFC Holding Company in
a transaction permitted under the Indenture and subject to the terms of the
Intercreditor Agreement, the pledge of Equity Interests so transferred shall be
automatically released.
          (e) Subject to the terms of the Intercreditor Agreement, upon the
release of any property or assets securing the Senior Lender Claims (including
all commitments and letters of credit thereunder), the Security Interest and all
other security interests granted hereby shall be automatically released;
provided, however, that if the Issuer or any Pledgor subsequently incurs Senior
Lender Claims that are secured by liens on property or assets of the Issuer or
any Pledgor of the type constituting the Collateral and the related Liens are
incurred in reliance on clause 6(C) of the definition of Permitted Liens, then
the Issuer and its Restricted Subsidiaries shall reinstitute the Security
Interest and any other security interests granted hereby, which, in the case of
any subsequent Senior Lender Claims will be second-priority Liens on the
Collateral securing such Senior Lender Claims to the same extent provided by the
Security Documents and on the terms and conditions of the security documents
relating to such Senior Lender Claims, with the second-priority Lien held by
either the administrative agent, collateral agent or other representative for
such Senior Lender Claims or by a collateral agent or other representative
designated by the Issuer to hold the second-priority Liens for the benefit of
the Holders of the Notes and subject to an intercreditor agreement providing
such administrative agent or collateral agent substantially the same rights and
powers afforded under the Intercreditor Agreement.
          (f) In connection with any termination or release pursuant to
paragraphs (a) through (e) of this Section 5.15, the Collateral Agent shall
execute and deliver to any Pledgor, at such Pledgor’s expense, all documents
that such Pledgor shall reasonably request to evidence such termination or
release (including, without limitation, UCC termination statements) and will
duly assign and transfer to such Pledgor such of the Pledged Collateral that may
be in the possession of the Collateral Agent and has not theretofore been sold
or otherwise applied or released pursuant to this Agreement; provided that the
Collateral Agent shall not be required to take any action under this
Section 5.15(f) unless such Pledgor shall have delivered to the Collateral Agent
together with such request, which may be incorporated into such request, (i) a
reasonably detailed description of the Collateral, which in any event shall be
sufficient to effect the appropriate termination or release without affecting
any other Collateral, and (ii) a certificate of a Responsible Officer of the
Issuer or such Pledgor certifying that the transaction giving rise to such
termination or release is permitted by the Indenture and was consummated in
compliance with the Noteholder Documents. Any execution and delivery of
documents pursuant to this Section 5.15 shall be without recourse to or warranty
by the Collateral Agent.
          Section 5.16. Additional Subsidiaries. Upon execution and delivery by
the Collateral Agent and any Subsidiary that is required to become a party
hereto by Section 3.06

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hereof of an instrument in the form of Exhibit I hereto, such Subsidiary shall
become a Pledgor hereunder with the same force and effect as if originally named
as a Pledgor herein. The execution and delivery of any such instrument shall not
require the consent of any other party to this Agreement. The rights and
obligations of each party to this Agreement shall remain in full force and
effect notwithstanding the addition of any new party to this Agreement.
ARTICLE VI
INTERCREDITOR AGREEMENT
          Section 6.01. Intercreditor Agreement Controls. Notwithstanding
anything herein to the contrary, the lien and security interests granted to the
Collateral Agent hereunder are subject to the provisions of the Intercreditor
Agreement. In the event of any conflict between the terms of the Intercreditor
Agreement and this Agreement, the terms of the Intercreditor Agreement shall
govern and control.
          Section 6.02. Discharge. Notwithstanding anything herein to the
contrary, for so long as a Discharge of Senior Lender Claims shall not have
occurred and the Senior Lender Documents shall require the delivery of
possession and control to the First Priority Designated Agent of Collateral, any
covenant hereunder requiring (or any representation or warranty hereunder to the
extent that it would have the effect of requiring) the delivery of possession
and control to the Collateral Agent of Collateral shall be deemed to have been
satisfied (or, in the case of any representation and warranty, shall be deemed
to be true) if, prior to the Discharge of Senior Lender Claims, such possession
or control shall have been delivered to the First Priority Designated Agent, as
provided in the Intercreditor Agreement.
ARTICLE VII
THE COLLATERAL AGENT
          The Collateral Agent shall not have any duties or obligations except
those expressly set forth herein. Without limiting the generality of the
foregoing, the Collateral Agent:
     (a) shall not be subject to any fiduciary or other implied duties,
regardless of whether an Event of Default has occurred and is continuing;
     (b) shall not have any duty to take any discretionary action or exercise
any discretionary powers, except discretionary rights and powers expressly
contemplated hereby that the Collateral Agent is required to exercise as
directed in writing by the Trustee; provided that the Collateral Agent shall not
be required to take any action that, in its opinion or the opinion of its
counsel, may expose the Collateral Agent to liability, or for which it is not
indemnified to its satisfaction, or that is contrary to this Agreement,
applicable law;

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     (c) shall not be liable for any action taken or not taken by it (1) with
the consent or at the request of any Indenture Secured Party or (2) in the
absence of its own gross negligence or willful misconduct or (3) in reliance on
a certificate of an authorized officer of the Issuer stating that such action is
permitted by the terms of this Agreement;
     (d) shall not be responsible for or have any duty to ascertain or inquire
into (1) any statement, warranty or representation made in or in connection with
this Agreement, (2) the contents of any certificate, report or other document
delivered hereunder or thereunder or in connection herewith or therewith,
(3) the performance or observance by any other Person of any of the covenants,
agreements or other terms or conditions set forth herein or therein or the
occurrence of any Default or Event of Default, (4) the validity, enforceability,
effectiveness or genuineness of this Agreement, any other Security Document or
any other agreement, instrument or document, or the creation, perfection or
priority of any Lien purported to be created by the Security Interest, (5) the
value or the sufficiency of any Collateral or (6) the satisfaction of any
condition set forth in any agreement, other than to confirm receipt of items
expressly required to be delivered to the Collateral Agent.
          In addition:
     (a) The duties and obligations of the Collateral Agent shall be determined
solely by the express provisions of this Agreement and the Collateral Agent
shall not be liable except for the performance of such duties and obligations as
are specifically set out in this Agreement. The Collateral Agent shall be under
no liability to any party hereto by reason of any failure on the part of any
other party hereto or any maker, guarantor, endorser or other signatory of any
document or any other Person to perform such Person’s obligations under any such
document.
     (b) The Collateral Agent shall not be responsible in any manner for the
validity, enforceability or sufficiency of this Agreement, the Security Interest
or any Collateral delivered to it, or for the value or collectability of any
Obligations or other instrument, if any, so delivered, or for any
representations made or obligations assumed by any party other than the
Collateral Agent. The Collateral Agent shall not be bound to examine or inquire
into or be liable for any defect or failure in the right or title of the Issuer
to all or any of the assets whether such defect or failure was known to the
Collateral Agent or might have been discovered upon examination or inquiry and
whether capable of remedy or not.
     (c) The Collateral Agent shall not be responsible for any unsuitability,
inadequacy, expiration or unfitness of any security interest created hereunder
or pursuant to any other document pertaining to this matter nor shall it be
obligated to make any investigation into, and shall be entitled to assume, the
adequacy and fitness of any security interest created hereunder or pursuant to
any other document pertaining to this matter.
     (d) The Collateral Agent shall not be liable for any error of judgment, or
for any act done or step taken or omitted by it in good faith.

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     (e) The Collateral Agent may seek the advice, at the expense of the Issuer,
of legal counsel in the event of any dispute or question as to the construction
of any of the provisions of this Agreement or its duties hereunder or under any
document or applicable law, and it shall incur no liability and shall be fully
protected in respect of any action taken, omitted or suffered by it in good
faith in accordance with the advice or written opinion of such counsel.
     (f) The Collateral Agent shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, approval or other paper
or document.
     (g) In no event shall the Collateral Agent be liable for any indirect,
special, punitive or consequential loss or damage of any kind whatsoever,
including, but not limited to, lost profits, even if such loss or damage was
foreseeable or it has been advised of the likelihood of such loss or damage and
regardless of the form of action.
     (h) In no event shall the Collateral Agent be liable for any failure or
delay in the performance of its obligations hereunder because of circumstances
beyond its control, including, but not limited to, acts of God, flood, war
(whether declared or undeclared), terrorism, strikes, work stoppages, civil or
military disturbances, nuclear or natural catastrophes, fire, riot, embargo,
loss or malfunctions of utilities, communications or computer (software and
hardware) services, government action, including any laws, ordinances,
regulations, governmental action or the like which delay, restrict or prohibit
the providing of the services contemplated by this Agreement.
     (i) The Collateral Agent shall be entitled to seek written directions from
the Trustee prior to taking any action under this Agreement, or any Collateral
instrument or any of the other Loan Documents.
     (j) The Collateral Agent shall have no responsibility for or liability with
respect to monitoring compliance of any other party to this Agreement or any
other document related hereto or thereto. The Collateral Agent has no duty to
monitor the value or rating of any Collateral on an ongoing basis.
     (k) No provision of this Agreement shall require the Collateral Agent to
expend, advance or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of any of
its rights or powers hereunder unless it is indemnified to its satisfaction and
the Collateral Agent shall have no liability to any person for any loss
occasioned by any delay in taking or failure to take any such action while it is
awaiting an indemnity satisfactory to it.
     (l) Whenever in the administration of this Agreement the Collateral Agent
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Collateral Agent (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, may conclusively rely upon instructions from the Trustee.

36

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     (m) The Collateral Agent may act and rely and shall be protected in acting
and relying in good faith on the opinion or advice of, or information obtained
from, any counsel, accountant, investment banker, appraiser or other expert or
adviser, whether retained or employed by the Trustee or by the Collateral Agent.
     (n) The Collateral Agent may employ or retain such counsel, accountants,
sub-agent, agent or attorney in fact, appraisers or other experts or advisers as
it may reasonably require for the purpose of determining and discharging its
rights and duties hereunder and shall not be responsible for the actions of any
parties it appoints with due care.
     (o) The Collateral Agent may request that the Issuer or other parties
deliver a certificate setting forth the names of individuals and/or titles of
officers authorized at such time to take specified actions pursuant to this
Agreement.
     (p) Money held by the Collateral Agent in trust hereunder need not be
segregated from other funds except to the extent required by law. The Collateral
Agent shall be under no liability for interest on any money received by it
hereunder except as otherwise agreed in writing.
     (q) Beyond the exercise of reasonable care in the custody thereof, the
Collateral Agent shall have no duty as to any Collateral in its possession or
control or in the possession or control of any agent or bailee or any income
thereon or as to preservation of rights against prior parties or any other
rights pertaining thereto and the Collateral Agent shall not be responsible for
filing any financing or continuation statements or recording any documents or
instruments in any public office at any time or times or otherwise perfecting or
maintaining the perfection of any security interest in the Collateral. All such
duties shall be the duty of the Issuer. The Collateral Agent shall be deemed to
have exercised reasonable care in the custody of the Collateral in its
possession if the Collateral is accorded treatment substantially equal to that
which it accords similar collateral and shall not be liable or responsible for
any loss or diminution in the value of any of the Collateral, by reason of the
act or omission of any carrier, forwarding agency or other agent or bailee.
     (r) The Collateral Agent shall have no duty to ascertain or inquire as to
or monitor the performance or observance of any of the terms of the Indenture,
this Agreement or documents by any other Person.
     (s) The Issuer shall defend, indemnify, and hold harmless the Collateral
Agent (which for purposes of this paragraph (s) shall be deemed to include its
officers, directors, employees and agents) from and against any claims, demands,
penalties, fines, liabilities, settlements, damages or reasonable costs or
expenses of whatever kind or nature, known or unknown, contingent or otherwise,
arising out of the following in respect of the Collateral: (w) the presence,
disposal, release, or threatened release of any Hazardous Materials which are
on, from, or affecting the soil, water, vegetation, buildings, personal
property, persons or animals; (x) any personal injury (including wrongful death)
or property damage (real or personal) arising out of or related to such

37

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Hazardous Materials; (y) any lawsuit brought or threatened, settlement reached,
or government order relating to such Hazardous Materials, and/or (z) any
violation of laws, orders, regulations, requirements or demands of government
authorities, which are based upon or in any way related to such Hazardous
Materials including, reasonable attorney and consultant fees and expenses,
reasonable investigation and laboratory fees, court costs, and reasonable
litigation expenses, except, in each case, where such claims, demands,
penalties, fines, liabilities, settlements, damages, costs or expenses arise
solely from the gross negligence, bad faith or willful misconduct of the
Collateral Agent as determined in a final, non-appealable order of a court of
competent jurisdiction. For purposes of this paragraph, “Hazardous Materials”
includes radioactive materials, hazardous materials, hazardous wastes, hazardous
or toxic substances defined in the U.S. Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. §9601, et. seq.)
(“CERCLA”), the Hazardous Materials Transportation Act, as amended (49 U.S.C.
Sections 5108, et seq.), the Resource Conservation and Recovery Act, as amended
(42 U.S.C. Sections 6901, et seq.), and in the regulations adopted and
publications promulgated pursuant thereto, or any other Federal, state or local
environmental law, ordinance, rule, or regulation. The provisions of this
paragraph shall be in addition to any and all other obligations and liabilities
Holdings may have to the Collateral Agent at common law, and shall survive the
termination of this Agreement, and the resignation or removal of the Trustee.
     (t) The Collateral Agent reserves the right to conduct an environmental
audit prior to foreclosing on any real estate Collateral or mortgage Collateral.
The Collateral Agent reserves the right to forebear from foreclosing in its own
name if to do so may expose it to undue risk.
     (u) Upon any payment or distribution of assets hereunder, the Collateral
Agent, and the Indenture Secured Parties shall be entitled to conclusively rely
upon any order or decree entered by any court of competent jurisdiction in which
an Insolvency or Liquidation Proceeding is pending, or a certificate of the
trustee in bankruptcy, liquidating trustee, custodian, receiver, assignee for
the benefit of creditors, agent or other person making such payment or
distribution in the Insolvency or Liquidation Proceeding, delivered to the
Collateral Agent, for the purpose of ascertaining the persons entitled to
participate in such payment or distribution, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto.
     (v) In the event that, following a foreclosure in respect of any mortgaged
Real Property, the Collateral Agent acquires title to any portion of such
mortgaged Real Property or takes any managerial action of any kind in regard
thereto in order to carry out any fiduciary or trust obligation for the benefit
of another, which in the Collateral Agent’s sole discretion may cause the
Collateral Agent to be considered an “owner or operator” under the provisions of
CERCLA or otherwise cause the Collateral Agent to incur liability under CERCLA
or any other Federal, state or local law, the Collateral Agent reserves the
right, instead of taking such action, to either resign as Collateral Agent or
arrange for the transfer of the title or control of the asset to a
court-appointed receiver.

38

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     (w) The rights and protections of the Collateral Agent set forth herein
shall also be applicable to the Collateral Agent in its roles as mortgagee,
beneficiary, pledgee or any of its other roles (including as Collateral Agent)
under any documents related to the Collateral.
     (x) Nothing in this Agreement, expressed or implied, is intended to or
shall be so construed as to impose upon the Collateral Agent any obligations in
respect of any Noteholder Document or any Collateral except as expressly set
forth herein or therein.
     (y) The Collateral Agent may resign at any time by giving written notice
thereof to the Issuer and the Trustee, provided that no such resignation shall
take effect until a successor Collateral Agent has been appointed and has agreed
to act as such under this Agreement. Upon any such resignation, the Issuer shall
promptly (and no later than within 30 days) appoint a successor to the
Collateral Agent. Upon the acceptance of any appointment as Collateral Agent
hereunder by a successor Collateral Agent, such successor Collateral Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Collateral Agent, and the retiring Collateral Agent
shall be discharged from its duties and obligations. After any retiring
Collateral Agent’s resignation as Collateral Agent, the provisions of this
Agreement shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Collateral Agent. If the Issuer fails to appoint a
successor Collateral Agent within 30 days, the Collateral Agent may petition a
court of competent jurisdiction to do so.
     (z) The Collateral Agent may act through its agents and attorneys and shall
not be liable for the acts or omissions of any such agent or attorney appointed
with due care by it hereunder.
     (aa) No failure to exercise nor any delay in exercising on the part of the
Collateral Agent, any right, power or privilege hereunder, shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or future exercise thereof or the
exercise or any other right, power or privilege. The rights and remedies
hereunder provided are cumulative and may be exercised singly or concurrently,
and are not exclusive of any rights and remedies provided by law.
[Signature Page Follows]

39

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

            CLAIRE’S STORES, INC.
      By:   /s/ J. Per Brodin       Name:   J. Per Brodin       Title:  
Executive Vice President
and Chief Financial Officer       CLAIRE’S BOUTIQUES, INC.
CSI CANADA LLC
CLAIRE’S PUERTO RICO CORP.
CBI DISTRIBUTING CORP.
CLAIRE’S CANADA CORP.
BMS DISTRIBUTING CORP.
      By:   /s/ J. Per Brodin         Name:   J. Per Brodin       Title:  
Executive Vice President
and Chief Financial Officer  
 
      CSI CANADA LLC.
      By:   /s/ J. Per Brodin       Name:   J. Per Brodin       Title:   Manager
 

[Collateral Agreement]

 

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            THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A.,
as Collateral Agent
      By:   /s/ Geraldine Creswell       Name:   Geraldine Creswell      
Title:   Vice President  

[Collateral Agreement]

 

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ACKNOWLEDGEMENT AND CONSENT
March 4, 2011
          The undersigned hereby acknowledges receipt of a copy of the
Collateral Agreement dated as of March 4, 2011 (the “Agreement”), made by the
Pledgors parties thereto for the benefit of The Bank of New York Mellon Trust
Company, N.A., as Collateral Agent. The undersigned agrees for the benefit of
the Collateral Agent and the Holders as follows:
          The undersigned acknowledges that its Equity Interests (as defined in
the Agreement) have been pledged pursuant to the terms of the Agreement and will
comply with all actions that may be required of it pursuant to Section 2.05 and
2.04(b) of the Agreement.
[Signature on the following page]
[Acknowledgement and Consent]

 

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

            CLAIRE’S STORES CANADA CORP.
      By:   /s/ J. Per Brodin       Name:   J. Per Brodin       Title:  
Executive Vice President
and Chief Financial Officer    

       
 
  Address for Notices:  
 
   
 
   
 
   
 
   
 
   
 
   
 
  Fax:

[Acknowledgement and Consent]

 

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Exhibit I
to Collateral Agreement
          SUPPLEMENT NO. ______ dated as of _____________ (this “Supplement”),
to the Collateral Agreement dated as of March 4, 2011 (the “Collateral
Agreement”), among CLAIRE’S STORES, INC., a Florida corporation (the “Issuer”),
each Pledgor party thereto from time to time and THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., as collateral agent (in such capacity, the “Collateral
Agent”) for the Indenture Secured Parties (as defined in the Collateral
Agreement).
     A. Reference is made to the Indenture dated as of March 4, 2011 (as
supplemented by the Supplemental Indenture dated March 4, 2011 and as further
amended, restated, supplemented, waived or otherwise modified from time to time,
the “Indenture”), among the Issuer, the Guarantors party thereto from time to
time, and The Bank of New York Mellon Trust Company, N.A., as trustee and
collateral agent.
     B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Indenture and the Collateral
Agreement.
     C. The Pledgors have entered into the Collateral Agreement pursuant to the
Indenture. Section 5.16 of the Collateral Agreement provides that additional
Subsidiaries may become Pledgors under the Collateral Agreement by execution and
delivery of an instrument in the form of this Supplement. The undersigned
Subsidiary (the “New Subsidiary”) is executing this Supplement in accordance
with the requirements of the Collateral Agreement to become a Pledgor under the
Collateral Agreement as consideration for the Notes previously purchased.
          Accordingly, the Collateral Agent and the New Subsidiary agree as
follows:
          SECTION 1. In accordance with Section 5.16 of the Collateral
Agreement, the New Subsidiary by its signature below becomes a Pledgor under the
Collateral Agreement with the same force and effect as if originally named
therein as a Pledgor, and the New Subsidiary hereby (a) agrees to all the terms
and provisions of the Collateral Agreement applicable to it as a Pledgor
thereunder and (b) represents and warrants that the representations and
warranties made by it as a Pledgor thereunder are true and correct, in all
material respects, on and as of the date hereof. In furtherance of the
foregoing, the New Subsidiary, as security for the payment and performance in
full of the Noteholder Claims (as defined in the Collateral Agreement), does
hereby create and grant to the Collateral Agent, for the ratable benefit of the
Indenture Secured Parties, a security interest in and Lien on all the New
Subsidiary’s right, title and interest in and to the Collateral (as defined in
the Collateral Agreement) of the New Subsidiary. Each reference to a “Pledgor”
in the Collateral Agreement shall be deemed to include the New Subsidiary. The
Collateral Agreement is hereby incorporated herein by reference.
          SECTION 2. The New Subsidiary represents and warrants to the
Collateral Agent and the other Indenture Secured Parties that this Supplement
has been duly authorized, executed and delivered by it and constitutes its
legal, valid and binding obligation, enforceable against it in accordance with
its terms, subject to (i) the effects of bankruptcy, insolvency, moratorium,
reorganization, fraudulent conveyance or other similar laws affecting creditors’

I-1

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

 

rights generally, (ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and
(iii) implied covenants of good faith and fair dealing.
          SECTION 3. This Agreement may be executed in two or more counterparts,
each of which shall constitute an original but all of which when taken together
shall constitute but one contract. This Supplement shall become effective when
(a) the Collateral Agent shall have received a counterpart of this Supplement
that bears the signature of the New Subsidiary and (b) the Collateral Agent has
executed a counterpart hereof.
          SECTION 4. The New Subsidiary hereby represents and warrants that
(a) set forth on Schedule I attached hereto is a true and correct schedule of
all the Pledged Securities of the New Subsidiary as of the date hereof, (b) set
forth on Schedule II attached hereto is a true and correct schedule of all of
the Patents, Trademarks and Copyrights of the New Subsidiary as of the date
hereof, (c) set forth on Schedule III attached hereto is a true and correct
schedule of all Commercial Tort Claims of the New Subsidiary individually in
excess of $5.0 million as of the date hereof and (d) set forth under its
signature hereto, is the true and correct legal name of the New Subsidiary, its
jurisdiction of formation and the location of its chief executive office.
          SECTION 5. Except as expressly supplemented hereby, the Collateral
Agreement shall remain in full force and effect.
          SECTION 6. THIS SUPPLEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAWS OF THE STATE OF NEW YORK.
          SECTION 7. In the event any one or more of the provisions contained in
this Supplement should be held invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein and in the Collateral Agreement shall not in any way be affected or
impaired thereby. The parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
          SECTION 8. All communications and notices hereunder shall be in
writing and given as provided in Section 5.01 of the Collateral Agreement.
          SECTION 9. The New Subsidiary agrees to reimburse the Collateral Agent
for its reasonable out-of-pocket expenses in connection with this Supplement,
including the reasonable fees, disbursements and other charges of counsel for
the Collateral Agent.

I-2

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

 

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

            [Name of New Subsidiary]
      By:           Name:           Title:           Legal Name:

Jurisdiction of Formation:

Location of Chief Executive Office:

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Collateral Agent
      By:           Name:           Title:      

I-3

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

 

         

Schedule I
to Supplement No. ____ to the
Collateral Agreement
Pledged Securities of the New Subsidiary
EQUITY INTERESTS

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

DEBT SECURITIES

                          Issuer   Principal Amount   Date of Note   Maturity
Date

 

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Schedule II
to Supplement No. ____ to the
Collateral Agreement
PATENTS, TRADEMARKS AND COPYRIGHTS

 

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

 

Schedule III
to Supplement No. ____ to the
Collateral Agreement
COMMERCIAL TORT CLAIMS

 

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

 

Schedule I
to Collateral Agreement
SUBSIDIARY LOAN PARTIES

1.   BMS Distributing Corp.

2.   CBI Distributing Corp.

3.   Claire’s Boutiques, Inc.

4.   Claire’s Canada Corp.

5.   Claire’s Puerto Rico Corp.

6.   CSI Canada LLC

 

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

 

Schedule II
to Collateral Agreement
PLEDGED SECURITIES
EQUITY INTERESTS

                  Name of Owner   Name of Issuer   Certificate Number   Class of
Stock   Number of Shares or Other Interests
Claire’s Stores, Inc.
  Claire’s Puerto Rico Corp.   001   Common   10
Claire’s Stores, Inc.
  CBI Distributing Corp.   1   Common   100
Claire’s Boutiques, Inc.
  CBI Distributing Corp.   2   Common   80
Claire’s Stores, Inc.
  Claire’s Boutiques, Inc.   1   Common   100
Claire’s Stores, Inc.
  Claire’s Canada Corp.   R-1   Common   100
Claire’s Stores, Inc.
  Claire’s Canada Corp.   R-2   Common   1
Claire’s Canada Corp.
  Claire’s Stores Canada Corp.   C-4   Common   6,500,065
Claire’s Canada Corp.
  Claire’s Stores Canada Corp.   C-6   Common   3,250,000
CBI Distributing Corp.
  BMS Distributing Corp.   01   Common   1,000
Claire’s Canada Corp.
  CSI Canada LLC   1   Membership Interests   1 Membership Unit
Claire’s Stores, Inc.
  Claire’s Swiss Holdings LLC   1   Membership Interests   65 Membership
Interests

 

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

 

DEBT SECURITIES

              Name of Issuer   Principal Amount   Date of Note   Maturity Date
Claire’s Stores Canada Corp.
  $63,000,000 CAD   January 31, 2010   January 31, 2020

 

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

 

Schedule III
to Collateral Agreement
PATENTS, TRADEMARKS AND COPYRIGHTS
Trademark Registrations

                          Trademark     Reg. No.     Owner     Classes    
Status
...IT’S AT CLAIRE’S
    3,817,929     CBI Distributing Corp.     35     Registered
 
                       
C Swirl
    3,512,546     CBI Distributing Corp.     4, 14, 16, 20, 26     Registered
 
                       
CLAIRE
    2,813,344     CBI Distributing Corp.     28     Registered
 
                       
CLAIRE’S
    2,908,860     CBI Distributing Corp.     20     Registered
 
                       
CLAIRE’S
    2,978,984     CBI Distributing Corp.     16     Registered
 
                       
CLAIRE’S
    2,967,212     CBI Distributing Corp.     20     Registered
 
                       
CLAIRE’S
    2,908,861     CBI Distributing Corp.     26     Registered
 
                       
CLAIRE’S
    3,190,840     CBI Distributing Corp.     21     Registered
 
                       
CLAIRE’S
    3,190,839     CBI Distributing Corp.     35     Registered
 
                       
CLAIRE’S
    2,925,470     CBI Distributing Corp.     25     Registered
 
                       
CLAIRE’S
    1,891,172     CBI Distributing Corp.     25     Registered
 
                       
CLAIRE’S
    2,919,171     CBI Distributing Corp.     21     Registered
 
                       
CLAIRE’S
    2,951,866     CBI Distributing Corp.     3     Registered
 
                       
CLAIRE’S
    2,908,858     CBI Distributing Corp.     11     Registered
 
                       
CLAIRE’S
    2,908,859     CBI Distributing Corp.     16     Registered
 
                       
CLAIRE’S
    2,996,103     CBI Distributing Corp.     14     Registered
 
                       
CLAIRE’S
    2,908,857     CBI Distributing Corp.     9     Registered
 
                       
CLAIRE’S
    2,900,024     CBI Distributing Corp.     24     Registered
 
                       
CLAIRE’S
    2,974,652     CBI Distributing Corp.     35     Registered
 
                       
CLAIRE’S
    1,890,335     CBI Distributing Corp.     42     Registered
 
                       
CLAIRE’S
    1,925,359     CBI Distributing Corp.     14     Registered
 
                       
CLAIRE’S
    3,319,826     CBI Distributing Corp.     3     Registered
 
                       
CLAIRE’S
    1,929,317     CBI Distributing Corp.     5     Registered
 
                       
CLAIRE’S ACCESSORIES
    1,946,557     CBI Distributing Corp.     42     Registered
 
                       
CLAIRE’S ACCESSORIES
    1,956,047     CBI Distributing Corp.     42     Registered
 
                       
CLAIRE’S ACCESSORIES & Design
    2,294,937     CBI Distributing Corp.     35     Registered
 
                       
CLAIRE’S BOUTIQUES & Design
    1,514,045     CBI Distributing Corp.     42     Registered
 
                       
CLAIRE’S CLUB
    2,908,867     CBI Distributing Corp.     20     Registered
 
                       
CLAIRE’S CLUB
    2,908,191     CBI Distributing Corp.     26     Registered
 
                       
CLAIRE’S CLUB
    2,908,868     CBI Distributing Corp.     25     Registered
 
                       
CLAIRE’S CLUB
    2,908,863     CBI Distributing Corp.     9     Registered
 
                       
CLAIRE’S CLUB
    2,908,862     CBI Distributing Corp.     3     Registered
 
                       
CLAIRE’S CLUB
    3,343,775     CBI Distributing Corp.     35     Registered
 
                       
CLAIRE’S CLUB
    2,908,866     CBI Distributing Corp.     18     Registered
 
                       
CLAIRE’S CLUB
    2,908,865     CBI Distributing Corp.     14     Registered

 

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                          Trademark     Reg. No.     Owner     Classes    
Status
CLAIRE’S CLUB
    2,992,613     CBI Distributing Corp.     21     Registered
 
                       
CLAIRE’S CLUB
    2,908,864     CBI Distributing Corp.     11     Registered
 
                       
CLAIRE’S ETC.
    2,064,149     CBI Distributing Corp.     42     Registered
 
                       
CLAIRE’S ETC.
    2,065,959     CBI Distributing Corp.     42     Registered
 
                       
CLAIRE’S (logo)
    3,602,239     CBI Distributing Corp.     35     Registered
 
                       
CLAIRE’S (stylized)
    2,623,039     CBI Distributing Corp.     35     Registered
 
                       
ICING
    3,743,653     CBI Distributing Corp.     3, 9, 14, 18, 20, 25, 26, 35    
Registered
 
                       
ICING BY CLAIRE’S
    3,050,863     CBI Distributing Corp.     35     Registered
 
                       
ICING BY CLAIRE’S
    3,475,495     CBI Distributing Corp.     14     Registered
 
                       
THE ICING
    3,461,876     CBI Distributing Corp.     35     Registered
 
                       
THE ICING
    1,466,727     CBI Distributing Corp.     35     Registered
 
                       
THE ICING
    2,762,642     CBI Distributing Corp.     35     Registered
 
                       
THE ICING ACCESSORIES & Design
    2,234,841     CBI Distributing Corp.     35     Registered
 
                       
SENSITIVE SOLUTIONS
    1,951,435     CBI Distributing Corp.     14     Registered
 
                       
WHERE GETTING READY IS HALF THE FUN
    2,664,513     CBI Distributing Corp.     35     Registered
 
                       
WHERE THROWING A PARTY IS ALL THE FUND
    3,136,920     CBI Distributing Corp.     41     Registered
 
                       
BEE WHO YOU WANNA BE
    2,888,867     CBI Distributing Corp.     35     Registered

 

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Schedule IV
to Collateral Agreement
FILING JURISDICTIONS
          COLORADO:

1.   Claire’s Boutiques, Inc.

          DELAWARE:

1.   BMS Distributing Corp.

2.   CBI Distributing Corp.

3.   Claire’s Canada Corp.

4.   Claire’s Puerto Rico Corp.

5.   CSI Canada LLC

          FLORIDA:

1.   Claire’s Stores, Inc.

 

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Schedule V
to Collateral Agreement
COMMERCIAL TORT CLAIMS
NONE.

 

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Schedule VI
to Collateral Agreement
MATTERS RELATING TO ACCOUNTS AND INVENTORY
NONE.