EXHIBIT 10.3
 
SECOND AMENDED AND RESTATED SECURITY AGREEMENT
among
REYNOLDS AMERICAN INC.,
R.J. REYNOLDS TOBACCO HOLDINGS, INC.,
VARIOUS SUBSIDIARIES OF
REYNOLDS AMERICAN INC.
and
JPMORGAN CHASE BANK, N.A.,
as Collateral Agent
Dated as of May 31, 2006
 

 

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TABLE OF CONTENTS

                      Page  
ARTICLE I
  SECURITY INTERESTS     3  
1.1
  Grant of Security Interests     3  
1.2
  Power of Attorney     6  
 
           
ARTICLE II
  GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS     6  
2.1
  Necessary Filings     6  
2.2
  No Liens     6  
2.3
  Other Financing Statements     6  
2.4
  Chief Executive Office; Records     7  
2.5
  Location of Inventory and Equipment     7  
2.6
  Legal Names; Organizational Identification Number; Trade Names; Change of
Name; etc.     7  
2.7
  Recourse     8  
2.8
  Jurisdiction and Type of Organization     8  
2.9
  Collateral in the Possession of a Bailee     8  
2.10
  As-Extracted Collateral; Timber-to-be-Cut     8  
 
           
ARTICLE III
  SPECIAL PROVISIONS CONCERNING RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS     9
 
3.1
  Additional Representations and Warranties     9  
3.2
  Maintenance of Records     9  
3.3
  Modification of Terms; etc.     9  
3.4
  Collection     10  
3.5
  Direction to Account Debtors; etc.     10  
3.6
  Instruments     10  
3.7
  Further Actions     10  
3.8
  Assignors Remain Liable Under Receivables and Contracts     11  
3.9
  Deposit Accounts; Etc.     11  
3.10
  Letter-of-Credit Rights     12  
3.11
  Commercial Tort Claims     12  
3.12
  Chattel Paper     13  
 
           
ARTICLE IV
  SPECIAL PROVISIONS CONCERNING TRADEMARKS     13  
4.1
  Additional Representations and Warranties     13  
4.2
  Licenses and Assignments     14  
4.3
  Infringements     14  
4.4
  Preservation of Marks     14  
4.5
  Maintenance of Registration     14  
4.6
  Future Registered Marks     14  
4.7
  Remedies     14  

(i)

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                      Page  
ARTICLE V
  SPECIAL PROVISIONS CONCERNING TRADE SECRET RIGHTS, PATENTS AND COPYRIGHTS    
15  
5.1
  Additional Representations and Warranties     15  
5.2
  Licenses and Assignments     16  
5.3
  Infringements     16  
5.4
  Maintenance of Patents or Copyrights     16  
5.5
  Prosecution of Patent or Copyright Application     16  
5.6
  Other Patents and Copyrights     16  
5.7
  Remedies     17  
 
           
ARTICLE VI
  PROVISIONS CONCERNING ALL COLLATERAL     17  
6.1
  Protection of Collateral Agent’s Security     17  
6.2
  Further Actions     18  
6.3
  Financing Statements     18  
6.4
  Additional Information     18  
 
           
ARTICLE VII
  REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT     18  
7.1
  Remedies; Obtaining the Collateral Upon Default     18  
7.2
  Remedies; Disposition of the Collateral     20  
7.3
  Waiver of Claims     21  
7.4
  Application of Proceeds     22  
7.5
  Remedies Cumulative     23  
7.6
  Discontinuance of Proceedings     23  
 
           
ARTICLE VIII
  INDEMNITY     24  
8.1
  Indemnity     24  
8.2
  Indemnity Obligations Secured by Collateral; Survival     25  
 
           
ARTICLE IX
  DEFINITIONS     25  
 
           
ARTICLE X
  MISCELLANEOUS     37  
10.1
  Notices     37  
10.2
  Waiver; Amendment     38  
10.3
  Obligations Absolute     39  
10.4
  Successors and Assigns     39  
10.5
  Headings Descriptive     39  
10.6
  Severability     39  
10.7
  Governing Law     39  
10.8
  Assignors’ Duties     39  
10.9
  Termination; Release     39  
10.10
  Collateral Agent     41  
10.11
  Counterparts     41  
10.12
  Additional Assignors     41  
10.13
  No Third Party Beneficiaries     42  
10.14
  Amendment and Restatement     42  

(ii)

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              Page  
SCHEDULE OF CHIEF EXECUTIVE OFFICES; RECORD LOCATIONS
    1  

(iii)

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ANNEX A
  Schedule of Chief Executive Offices; Record Locations
ANNEX B
  Schedule of Equipment and Inventory Locations
ANNEX C
  Schedule of Legal Names, Trade and Fictitious Names, Etc.
ANNEX D
  Schedule of Marks and Applications
ANNEX E
  Schedule of Patents and Patent Applications
ANNEX F
  Schedule of Copyrights and Copyright Applications
ANNEX G
  Assignment of Security Interest in United States Patents and Trademarks
ANNEX H
  Assignment of Security Interest in United States Copyrights
ANNEX I
  Schedule of Type of Organization and Jurisdiction of Organization
ANNEX J
  Schedule of Deposit Accounts
ANNEX K
  Description of Commercial Tort Claims
ANNEX L
  Form of Control Agreement Regarding Deposit Accounts
ANNEX M
  Collateral Agent

Security Agreement

 

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SECOND AMENDED AND RESTATED SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of July 15, 2003, as amended and restated as of
July 30, 2004, and as further amended and restated as of May 31, 2006 (as so
amended and restated and as the same may be further amended, restated,
supplemented and/or otherwise modified from time to time, this “Agreement”),
among each of the undersigned (together with any other entity that becomes a
party hereto pursuant to Section 10.12 hereof, each, an “Assignor” and,
collectively, the “Assignors”) and JPMORGAN CHASE BANK, N.A., as Collateral
Agent (in such capacity, together with any successor collateral agent, the
“Collateral Agent”) for the Secured Creditors (as defined below). Capitalized
terms used herein shall have the meaning specified in Article IX herein or, if
not defined therein, as specified in the Credit Agreement referred to below.
W I T N E S S E T H:
WHEREAS, Reynolds American Inc. (the “Borrower”), the various lending
institutions from time to time party thereto (the “Lenders”), and JPMORGAN CHASE
BANK, N.A., as Administrative Agent (the “Administrative Agent”), have entered
into a Credit Agreement, dated as of May 7, 1999, as amended and restated as of
November 17, 2000, as further amended and restated as of May 10, 2002, as
further amended and restated as of July 30, 2004, and as further amended and
restated as of May 31, 2006, providing for the making of Loans to the Borrower
and the issuance of, and participation in, Letters of Credit for the account of
the Borrower, all as contemplated therein (with (i) the Lenders, the Swingline
Lender, each Letter of Credit Issuer, the Administrative Agent, the other
Agents, the Pledgee (as defined in the Pledge Agreement) and the Collateral
Agent being herein called the “Lender Creditors” and (ii) the term “Credit
Agreement” as used herein to mean the Credit Agreement described above in this
paragraph, as the same may be further amended, modified, extended, renewed,
replaced, restated, supplemented and/or refinanced from time to time, and
including any agreement extending the maturity of, or refinancing or
restructuring (including, but not limited to, the inclusion of additional
borrowers or guarantors thereunder or any increase in the amount borrowed) all
or any portion of, the indebtedness under such agreement or any successor
agreement, whether or not with the same agent, trustee, representative, lenders
or holders; provided that, with respect to any agreement providing for the
refinancing or replacement of indebtedness under the Credit Agreement, such
agreement shall only be treated as, or as part of, the Credit Agreement
hereunder if (x) either (A) all obligations under the Credit Agreement being
refinanced or replaced shall be paid in full at the time of such refinancing or
replacement, and all commitments and letters of credit issued pursuant to the
refinanced or replaced Credit Agreement shall have terminated in accordance with
their terms or (B) the Required Lenders shall have consented in writing to the
refinancing or replacement indebtedness being treated as indebtedness pursuant
to the Credit Agreement, and (y) a notice to the effect that the refinancing or
replacement indebtedness shall be treated as issued under the Credit Agreement
shall be delivered by the Borrower to the Collateral Agent);

 

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WHEREAS, the Borrower and/or one or more of its Subsidiaries has from time to
time entered into, and/or may in the future from time to time enter into, one or
more agreements or arrangements with JPMCB or any of its affiliates (even if
JPMCB ceases to be a Lender under the Credit Agreement for any reason (JPMCB and
any such affiliate and their respective successors and assigns, each, a “Credit
Card Issuer”)), providing for credit card loans to be made available to certain
employees of the Borrower and/or one or more of its Subsidiaries (each such
agreement or arrangement with a Credit Card Issuer, a “Secured Credit Card
Agreement”);
WHEREAS, the Borrower and/or one or more of its Subsidiaries has from time to
time entered into, and/or may in the future from time to time enter into, one or
more (i) interest rate protection agreements (including, without limitation,
interest rate swaps, caps, floors, collars and similar agreements), and/or
(ii) foreign exchange contracts, currency swap agreements, commodity agreements
or other similar agreements or arrangements designed to protect against the
fluctuations in currency or commodity values (each such agreement or arrangement
with a Hedging Creditor (as hereinafter defined), together with the Existing
Interest Rate Swap Agreement, a “Secured Hedging Agreement”), with any Lender,
or any affiliate thereof or a syndicate of financial institutions organized by a
Lender or an affiliate of a Lender (even if any such Lender ceases to be a
Lender under the Credit Agreement for any reason) (any such Lender, affiliate or
other such financial institution that participates therein, together with Calyon
(as counterparty to the Existing Interest Rate Swap Agreement), and in each case
their subsequent successors and assigns, collectively, the “Hedging Creditors”,
and together with the Lender Creditors and each Credit Card Issuer, the “Lender
Secured Creditors”);
WHEREAS, R.J. Reynolds Tobacco Holdings, Inc., a Wholly-Owned Subsidiary of the
Borrower (“RJRTH”) and the Existing Senior Notes Trustee, on behalf of the
holders of the Existing Senior Notes, have entered into the Existing Senior
Notes Indenture, providing for the issuance of Existing Senior Notes by RJRTH;
WHEREAS, the Borrower and the New Senior Notes Trustee, on behalf of the holders
of the New Senior Notes, have entered into the New Senior Notes Indenture,
providing for the issuance from time to time of New Senior Notes by the
Borrower;
WHEREAS, the Borrower and the Refinancing Senior Notes Trustee, on behalf of the
holders of the Refinancing Senior Notes, may from time to time enter into the
Refinancing Senior Notes Indenture, providing for the issuance from time to time
of Refinancing Senior Notes by the Borrower;
WHEREAS, pursuant to the Subsidiary Guaranty, each Assignor (other than the
Borrower) has jointly and severally guaranteed to the Lender Secured Creditors
the payment when due of the Guaranteed Obligations (as defined in the Subsidiary
Guaranty);
WHEREAS, pursuant to the Borrower Guaranty, the Borrower has guaranteed to the
Hedging Creditors and the Credit Card Issuers the payment when due of the
Guaranteed Obligations;
WHEREAS, each Specified Existing Senior Notes Assignor (other than RJRTH) has
jointly and severally guaranteed to the Existing Senior Notes Creditors the
payment when due of principal and interest on the Existing Senior Notes;

 

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WHEREAS, each Specified RAI Senior Notes Assignor (other than the Borrower) has
jointly and severally guaranteed to the New Senior Notes Creditors the payment
when due of principal and interest on the New Senior Notes;
WHEREAS, each Specified RAI Senior Notes Assignor (other than the Borrower) may
from time to time jointly and severally guarantee to the Refinancing Senior
Notes Creditors the payment when due of principal and interest on the
Refinancing Senior Notes;
WHEREAS, certain of the Assignors have heretofore entered into a Security
Agreement, dated as of July 15, 2003, and amended and restated as July 30, 2004
(as so amended and restated and as the same may further amended, restated,
modified and/or supplemented from time to time, but not including, the date
hereof, the “First Amended and Restated Security Agreement”);
WHEREAS, the Assignors desire to further amend and restate the First Amended and
Restated Security Agreement in the form of this Agreement;
WHEREAS, the Credit Agreement requires this Agreement be executed and delivered
to the Collateral Agent by the Assignors, and the Secured Hedging Agreements,
the Existing Senior Notes Indenture and the New Senior Notes Indenture, require
that this Agreement secure the respective Obligations as provided herein;
WHEREAS, each Assignor desires to execute this Agreement to satisfy the
conditions described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to each Assignor, the
receipt and sufficiency of which are hereby acknowledged, each Assignor hereby
makes the following representations and warranties and hereby covenants and
agrees as follows:
ARTICLE I
SECURITY INTERESTS
          1.1 Grant of Security Interests. (a) As security for the prompt and
complete payment and performance when due of all of its Applicable Obligations,
each Assignor does hereby sell, assign and transfer unto the Collateral Agent,
and does hereby grant to the Collateral Agent for the benefit of the relevant
Secured Creditors as their interests may appear, a continuing security interest
in, all of the right, title and interest of such Assignor in, to and under all
of the following, whether now existing or hereafter from time to time acquired:
     (i) each and every Receivable;
     (ii) all Contracts, together with all Contract Rights arising thereunder;
     (iii) all Inventory;
     (iv) all Equipment;

 

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     (v) all Marks, together with the registrations and right to all renewals
thereof, and the goodwill of the business of such Assignor symbolized by the
Marks;
     (vi) the Cash Collateral Account established for such Assignor and all
moneys, securities and instruments deposited or required to be deposited in such
Cash Collateral Account;
     (vii) all Patents and Copyrights and all reissues, renewals or extensions
thereof;
     (viii) all computer programs of such Assignor and all intellectual property
rights therein and all other proprietary information of such Assignor,
including, but not limited to, Trade Secrets Rights;
     (ix) all insurance policies;
     (x) all other Goods, General Intangibles, Chattel Paper (including without
limitation all Tangible Chattel Paper and all Electronic Chattel Paper),
Documents and Instruments;
     (xi) all Permits;
     (xii) all cash;
     (xiii) all Commercial Tort Claims;
     (xiv) all Deposit Accounts and all other demand, deposit, time, savings,
cash management, passbook and similar accounts maintained by such Assignor with
any Person and all moneys, securities, Instruments and other investments
deposited or required to be deposited in any of the foregoing;
     (xv) all Investment Property;
     (xvi) all Letter-of-Credit Rights (whether or not the respective letter of
credit is evidenced by a writing);
     (xvii) all Software and all Software licensing rights, all writings, plans,
specifications and schematics, all engineering drawings, customer lists,
goodwill and licenses, and all recorded data of any kind or nature, regardless
of the medium of recording;
     (xviii) all Supporting Obligations; and
     (xix) all Proceeds and products of any and all of the foregoing (all of the
above, including this clause (xix), collectively, the “Collateral”);
provided that notwithstanding the foregoing, (x) the Collateral that secures the
Existing Senior Notes Obligations of a Specified Existing Senior Notes Assignor
shall be limited to Designated Existing Senior Notes Collateral owned by such
Specified Existing Senior Notes Assignor, all of

 

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which Collateral shall also ratably secure all other Applicable Obligations of
such Specified Existing Senior Notes Assignor, and the Collateral Proceeds with
respect to any item of Collateral owned by a Specified Existing Senior Notes
Assignor that are to be applied to the Existing Senior Notes Obligations shall
be limited to Collateral Proceeds from the sale, other disposition of or other
realization upon, and other moneys received in respect of, the Designated
Existing Senior Notes Collateral of such Specified Existing Senior Notes
Assignor, with such Collateral Proceeds to also be applied ratably to all other
Applicable Obligations of such Specified Existing Senior Notes Assignor and
(y) the Collateral that secures the RAI Senior Notes Obligations of a Specified
RAI Senior Notes Assignor shall be limited to Designated RAI Senior Notes
Collateral owned by such Specified RAI Senior Notes Assignor, all of which
Collateral shall also ratably secure all other Applicable Obligations of such
Specified RAI Senior Notes Assignor, and the Collateral Proceeds with respect to
any item of Collateral owned by a Specified RAI Senior Notes Assignor that are
to be applied to the RAI Senior Notes Obligations shall be limited to Collateral
Proceeds from the sale, other disposition of or other realization upon, and
other moneys received in respect of, the Designated RAI Senior Notes Collateral
of such Specified RAI Senior Notes Assignor, with such Collateral Proceeds to
also be applied ratably to all other Applicable Obligations of such Specified
RAI Senior Notes Assignor.
(b) Notwithstanding anything contained herein to the contrary, (i) the term
“Collateral” as used herein shall not include any Copyright, Mark, Patent, Trade
Secret, computer program or Software to the extent such property is subject to a
license or agreement the terms of which prohibit an assignment of, or the
granting of a security interest in, any Assignor’s rights thereunder or such
Assignor’s grant of a security interest pursuant to this Agreement would give
any party thereto (other than such Assignor) the right to terminate its
obligations thereunder; provided that the foregoing limitation shall not affect,
limit, restrict or impair the grant by an Assignor of the security interest
pursuant to this Agreement in any account or any money or other amounts due or
to become due under any such Copyright, Mark, Patent, Trade Secret, computer
program or Software or such license or agreement governing the same, (ii) the
term “Collateral” as used herein shall not include (x) the RJRTH Intercompany
Note and any Contract Rights or General Intangibles of the Borrower arising
under the Pledge Agreement in its capacity as RJRTH Intercompany Note Creditor,
(y) any Equity Interests owned or held by any Assignor and (z) at any time prior
to the exchange of at least 51% in aggregate principal amount of each series of
Existing Senior Notes for Exchange Senior Notes pursuant to the Existing Senior
Notes Exchange (and the elimination of the lien covenant in the Existing Senior
Notes Indenture as consented to by the requisite holders of the Existing Senior
Notes), all indebtedness and other obligations owing by a Subsidiary of RJRTH to
RJRTH or any of its Subsidiaries and (iii) in the case of any sale, assignment,
transfer or grant of a security interest hereunder by a Restricted Assignor
only, the term “Collateral” shall not include any Collateral (determined as
provided herein without regard to this clause (iii)) of such Restricted Assignor
other than (x) Collateral of the type described in clauses (v), (vi), (vii),
(viii) and (xix) of Section 1.1(a) and (y) all other Collateral of the type
which may be perfected by the filling of a UCC-1 financing statement in any
relevant jurisdiction.
          (c) The security interest of the Collateral Agent under this Agreement
extends to all Collateral of the kind which is the subject of this Agreement
which any Assignor may acquire at any time during the continuation of this
Agreement.

 

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          1.2 Power of Attorney. Each Assignor hereby constitutes and appoints
the Collateral Agent its true and lawful attorney, irrevocably, with full power
after the occurrence of and during the continuance of an Event of Default (in
the name of such Assignor or otherwise) to act, require, demand, receive,
compound and give acquittance for any and all moneys and claims for moneys due
or to become due to such Assignor under or arising out of the Collateral, to
endorse any checks or other instruments or orders in connection therewith and to
file any claims or take any action or institute any proceedings which the
Collateral Agent may deem to be necessary or advisable in the premises, which
appointment as attorney is coupled with an interest.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Assignor represents, warrants and covenants, which representations,
warranties and covenants shall survive execution and delivery of this Agreement,
as follows:
          2.1 Necessary Filings. All filings, registrations and recordings
necessary or appropriate to create, preserve, protect and perfect the security
interest granted by such Assignor to the Collateral Agent hereby in respect of
all the Collateral have been accomplished or shall have been accomplished within
45 days of a new Trigger Event occurring after the Fourth Restatement Effective
Date (or, in the case of Collateral constituting Excluded Unperfected
Collateral, on the date on which such Collateral ceases to qualify as such in
accordance with the definition of Excluded Unperfected Collateral) and the
security interest granted to the Collateral Agent pursuant to this Agreement in
and to all of the Collateral (other than Excluded Unperfected Collateral)
constitutes, upon satisfaction of such filings, registrations and recordings, a
perfected security interest therein superior and prior to the rights of all
other Persons therein (other than any such rights pursuant to any Permitted
Liens that have a priority as provided under applicable law) and subject to no
other Liens (other than Permitted Liens) and is entitled to all the rights,
priorities and benefits afforded by the Uniform Commercial Code or other
relevant law as enacted in any relevant jurisdiction to perfected security
interests.
          2.2 No Liens. Such Assignor is, and as to all Collateral acquired by
it from time to time after the date hereof such Assignor will be, the owner of
all Collateral free from any Lien, security interest, encumbrance or other
right, title or interest of any Person (other than Permitted Liens), and such
Assignor shall defend the Collateral against all claims and demands of all
Persons at any time claiming the same or any interest therein (other than in
connection with Permitted Liens) adverse to the Collateral Agent.
          2.3 Other Financing Statements. As of the date hereof, there is no
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) covering or purporting to cover any interest of any
kind in the Collateral (other than financing statements filed in respect of
Permitted Liens and financing statements filed pursuant to the same liens as
Permitted Liens) and at all times prior to the Termination Date, such Assignor
will not execute or authorize to be filed in any public office any financing
statement (or similar statement or instrument of registration under the law of
any jurisdiction) or statements relating to the

 

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Collateral, except financing statements filed or to be filed in respect of and
covering the security interests granted hereby by such Assignor or as permitted
by the Credit Agreement.
          2.4 Chief Executive Office; Records. As of the date hereof, the chief
executive office of such Assignor is located at the address or addresses
indicated on Annex A hereto. Such Assignor will not move its chief executive
office except to such new location as such Assignor may establish in accordance
with the last sentence of this Section 2.4. The originals of all documents
evidencing all Receivables and Contract Rights and Trade Secret Rights of such
Assignor and the only original books of account and records of such Assignor
relating thereto are, and will continue to be, kept at such chief executive
office and/or one or more of the locations shown on Annex A, or at such new
locations as such Assignor may establish in accordance with the last sentence of
this Section 2.4. All Receivables and Contract Rights and Trade Secret Rights of
such Assignor are, and will continue to be, maintained at, and controlled and
directed (including, without limitation, for general accounting purposes) from,
the office locations described above, or such new locations as such Assignor may
establish in accordance with the last sentence of this Section 2.4. Such
Assignor shall not establish new locations for such chief executive offices
until (i) it shall have given to the Collateral Agent not less than 15 days’
prior written notice (or such lesser notice as shall be acceptable to the
Collateral Agent in the case of a new record location to be established in
connection with newly acquired Contracts) of its intention to do so, clearly
describing such new location and providing such other information in connection
therewith as the Collateral Agent may reasonably request, and (ii) with respect
to such new location, it shall have taken all action, reasonably satisfactory to
the Collateral Agent, to maintain the security interest of the Collateral Agent
in the Collateral intended to be granted hereby at all times fully perfected and
in full force and effect.
          2.5 Location of Inventory and Equipment. All Inventory and Equipment
held on the date hereof by each Assignor (other than immaterial amounts of
Inventory and Equipment) is located at one of the locations shown on Annex B
attached hereto, is in transit between such locations, or is in transit to
customers.
          2.6 Legal Names; Organizational Identification Number; Trade Names;
Change of Name; etc. The exact legal name of each Assignor, and the
organizational identification number (if any) of each Assignor, as of the date
hereof, is listed on Annex C hereto for such Assignor. No Assignor has or
operates in any jurisdiction under, or in the five years preceding the date
hereof has had or has operated in any jurisdiction under, any trade names,
fictitious names or other names except its legal name and such other trade or
fictitious names as are listed on Annex C hereto for such Assignor. No Assignor
shall change its legal name, organizational identification number (if any) or
assume or operate in any jurisdiction under any trade, fictitious or other name
except its legal name, organizational identification number and those trade
names in each case listed on Annex C hereto for such Assignor and those that may
be established in accordance with the immediately succeeding sentence of this
Section 2.6. No Assignor shall change its legal name or organizational
identification number or assume or operate in any jurisdiction under any new
trade, fictitious or other name or operate under any existing name in any
additional jurisdiction until (i) it shall have given to the Collateral Agent
not less than 15 days’ prior written notice of its intention so to do, clearly
describing such new name and/or jurisdiction and, in the case of a new name, the
jurisdictions in which such new name shall be used and providing such other
information in connection therewith as the

 

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Collateral Agent may reasonably request, (ii) with respect to such new name
and/or jurisdiction, it shall have taken all action necessary, or in the
reasonable opinion of the Collateral Agent, desirable to maintain the security
interest of the Collateral Agent in the Collateral intended to be granted hereby
at all times fully perfected and in full force and effect and (iii) the
Collateral Agent shall have received evidence that all other actions (including,
without limitation, the payment of all filing fees and taxes, if any, payable in
connection with such filings) have been taken, in order to perfect (and maintain
the perfection and priority of) the security interest granted hereby. In
addition, to the extent that any Assignor does not have an organizational
identification number on the date hereof and later obtains one, such Assignor
shall promptly thereafter notify the Collateral Agent of such organizational
identification number and shall take all actions reasonably satisfactory to the
Collateral Agent to the extent necessary to maintain the security interest of
the Collateral Agent in the Collateral intended to be granted hereby fully
perfected and in full force and effect.
          2.7 Recourse. This Agreement is made with full recourse to such
Assignor and pursuant to and upon all the warranties, representations,
covenants, and agreements on the part of such Assignor contained herein, in the
other Credit Documents and the other Secured Debt Agreements, and otherwise in
writing in connection herewith or therewith.
          2.8 Jurisdiction and Type of Organization. The jurisdiction of
organization of each Assignor, and the type of organization of each Assignor, as
of the date hereof, is listed on Annex I hereto for such Assignor. No Assignor
shall change its jurisdiction of organization or its type of organization until
(i) it shall have given to the Collateral Agent not less than 15 days’ prior
written notice of intention so to do, clearly describing such new jurisdiction
of organization and/or type of organization and providing such other information
in connection therewith as the Collateral Agent may reasonably request and
(ii) with respect to such new jurisdiction of organization and/or type of
organization, it shall have taken all actions reasonably requested by the
Collateral Agent to maintain the security interest of the Collateral Agent in
the Collateral intended to be granted hereby at all times fully perfected and in
full force and effect.
          2.9 Collateral in the Possession of a Bailee. If any Inventory or
other Goods (other than immaterial amounts of Inventory and Equipment) are at
any time in the possession of a bailee, the respective Assignor shall promptly
notify the Collateral Agent thereof and, if requested by the Collateral Agent,
shall use its reasonable best efforts to promptly obtain an acknowledgment from
such bailee, in form and substance reasonably satisfactory to the Collateral
Agent, that the bailee holds such Collateral for the benefit of the Collateral
Agent and shall act upon the instructions of the Collateral Agent, without the
further consent of the respective Assignor. The Collateral Agent agrees with the
Assignors that the Collateral Agent shall not give any such instructions unless
an Event of Default has occurred and is continuing or would occur after taking
into account any action by the respective Assignor with respect to any such
bailee.
          2.10 As-Extracted Collateral; Timber-to-be-Cut. As of the date hereof,
no Unrestricted Assignor owns, or expects to acquire, any property which
constitutes, or would constitute, As-Extracted Collateral or Timber-to-be-Cut.
If at any time after the date hereof any Unrestricted Assignor owns, acquires or
obtains rights to any As-Extracted Collateral or Timber-to-be-Cut, such
Unrestricted Assignor shall furnish the Collateral Agent with prompt written

 

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notice thereof (which notice shall describe in reasonable detail the
As-Extracted Collateral and/or Timber-to-be-Cut and the locations thereof) and
shall take all actions as may be deemed reasonably necessary or desirable by the
Collateral Agent to perfect the security interest of the Collateral Agent
therein.
ARTICLE III
SPECIAL PROVISIONS CONCERNING
RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS
          3.1 Additional Representations and Warranties. As of the time when
each of its Receivables arises, each Assignor shall be deemed to have
represented and warranted that such Receivable, and all material records, papers
and documents relating thereto (if any) are genuine and in all material respects
what they purport to be, and that all papers and documents (if any) relating
thereto (i) will be the only original writings evidencing and embodying such
obligation of the account debtor named therein (other than copies created for
general accounting purposes) and (ii) will, to the knowledge of such Assignor,
evidence true and valid obligations of the account debtor named therein.
          3.2 Maintenance of Records. Each Assignor will keep and maintain at
its own cost and expense satisfactory and complete records of its Receivables
and Contracts, and such Assignor will make the same available to the Collateral
Agent for inspection, at such Assignor’s own cost and expense, at any and all
reasonable times (i.e., during normal business hours) and upon reasonable prior
notice to such Assignor. If requested by the Collateral Agent while an Event of
Default is in existence, such Assignor shall, at its own cost and expense,
deliver all tangible evidence of its Receivables and Contract Rights (including,
without limitation, copies of all documents evidencing the Receivables and all
Contracts) and such books and records to the Collateral Agent or to its
representatives (copies of which evidence and books and records may be retained
by such Assignor). If the Collateral Agent so directs, upon the occurrence and
during the continuance of an Event of Default, such Assignor shall legend, in
form and manner reasonably satisfactory to the Collateral Agent, the Receivables
and Contracts, as well as books, records and documents of such Assignor
evidencing or pertaining to such Receivables with an appropriate reference to
the fact that such Receivables and Contracts have been assigned to the
Collateral Agent and that the Collateral Agent has a security interest therein.
          3.3 Modification of Terms; etc. No Assignor shall rescind or cancel
any indebtedness evidenced by any Receivable or under any Contract, or modify
any term thereof or make any adjustment with respect thereto, or extend or renew
the same, or compromise or settle any material dispute, claim, suit or legal
proceeding relating thereto, or sell any Receivable or Contract, or interest
therein, without the prior written consent of the Collateral Agent, except
(i) as permitted by Section 3.4 hereof and (ii) in accordance with such
Assignor’s reasonable business practices. Each Assignor will duly fulfill all
obligations on its part to be fulfilled under or in connection with all material
Receivables and Contracts and will do nothing to impair the rights of the
Collateral Agent in the Receivables or Contracts.

 

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          3.4 Collection. Each Assignor shall endeavor in accordance with
reasonable business practices to cause to be collected from the account debtor
named in each of its Receivables or obligor under any Contract, as and when due
(including, without limitation, amounts which are delinquent, such amounts to be
collected in accordance with generally accepted lawful collection procedures)
any and all amounts owing under or on account of such Receivable or Contract,
and apply forthwith upon receipt thereof all such amounts as are so collected to
the outstanding balance of such Receivable or under such Contract, except that,
so long as no Event of Default is then in existence in respect of which the
Collateral Agent has given notice that this exception is no longer applicable,
any Assignor may allow in the ordinary course of business as adjustments to
amounts owing under its Receivables and Contracts (i) an extension or renewal of
the time or times of payment, or settlement for less than the total unpaid
balance, which such Assignor finds appropriate in accordance with sound business
judgment and (ii) a refund or credit due as a result of returned or damaged
merchandise or improperly performed services. The reasonable costs and expenses
(including, without limitation, attorneys’ fees) of collection, whether incurred
by any Assignor or the Collateral Agent, shall be borne by such Assignor.
          3.5 Direction to Account Debtors; etc. Upon the occurrence and during
the continuance of a Noticed Event of Default, and if the Collateral Agent so
directs any Assignor, to the extent permitted by applicable law, such Assignor
agrees (x) to cause all payments on account of the Receivables and Contracts to
be made directly to the Cash Collateral Account, (y) that the Collateral Agent
may, at its option, directly notify the obligors with respect to any Receivables
and/or under any Contracts to make payments with respect thereto as provided in
preceding clause (x) and (z) that the Collateral Agent may enforce collection of
any Receivables or Contracts and may adjust, settle or compromise the amount of
payment thereof, in the same manner and to the same extent as the Assignor. The
Collateral Agent may apply any or all amounts then in, or thereafter deposited
in, the Cash Collateral Account in the manner provided in Section 7.4 of this
Agreement. The reasonable costs and expenses (including reasonable attorneys’
fees) of collection, whether incurred by any Assignor or the Collateral Agent,
shall be borne by such Assignor. The Collateral Agent shall deliver a copy of
each notice referred to in the preceding clause (y) to the relevant Assignor;
provided that, the failure of the Collateral Agent to so notify such Assignor
shall not affect the effectiveness of such notice or the other rights of the
Collateral Agent created by this Section 3.5.
          3.6 Instruments. If any Assignor owns or acquires any Instrument, such
Assignor will within 30 Business Days notify the Collateral Agent thereof, and
upon request by the Collateral Agent promptly deliver such Instrument (other
than checks payable to any Assignor and processed in the ordinary course of
business) to the Collateral Agent appropriately endorsed to the order of the
Collateral Agent as further security hereunder.
          3.7 Further Actions. Each Assignor will, at its own expense, make,
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from
time to time such vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments and take such further
steps, including any and all actions as may be necessary or required under the
Federal Assignment of Claims Act, relating to its Receivables, Contracts,
Instruments and other property or rights covered by the security interest hereby
granted, as the Collateral Agent may reasonably require to give effect to the
purposes of this Agreement.

 

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          3.8 Assignors Remain Liable Under Receivables and Contracts. Anything
herein to the contrary notwithstanding, the Assignors shall remain liable under
each of the Receivables and each Contract to observe and perform all of the
conditions and obligations to be observed and performed by them thereunder, all
in accordance with the terms of the agreement giving rise to such Receivables or
such Contract. Neither the Collateral Agent nor any other Secured Creditor shall
have any obligation or liability under any Receivable (or any agreement giving
rise thereto) or any Contract by reason of or arising out of this Agreement or
the receipt by the Collateral Agent or any other Secured Creditor of any payment
relating to such Receivable or such Contract pursuant hereto, nor shall the
Collateral Agent or any other Secured Creditor be obligated in any manner to
perform any of the obligations of any Assignor under or pursuant to any
Receivable (or any agreement giving rise thereto) or any Contract, to make any
payment, to make any inquiry as to the nature or the sufficiency of any payment
received by them or as to the sufficiency of any performance by any party under
any Receivable (or any agreement giving rise thereto) or any Contract, to
present or file any claim, to take any action to enforce any performance or to
collect the payment of any amounts which may have been assigned to them or to
which they may be entitled at any time or times.
          3.9 Deposit Accounts; Etc. (a) No Unrestricted Assignor maintains, or
at any time after the date hereof shall establish or maintain, any demand, time,
savings, passbook or similar account, except for such accounts maintained with a
bank (as defined in Section 9-102 of the UCC) whose jurisdiction (determined in
accordance with Section 9-304 of the UCC) is within a State of the United
States, provided that an Unrestricted Assignor may maintain or establish an
account or accounts outside of the United States on terms, and in circumstances,
reasonably acceptable to the Collateral Agent, so long as (i) the aggregate
amount of cash in all such accounts maintained outside the United States
(exclusive of any amounts deposited in any such account representing monies from
revenue generated exclusively from operations outside the United States) shall
not exceed $150,000,000 and (ii) the aggregate amount of cash in all such
accounts maintained outside the United States in excess of the amount permitted
in preceding clause (i) does not exceed an amount reasonably satisfactory to the
Collateral Agent (each such account outside the United States meeting the
foregoing requirements, a “Non-U.S. Deposit Account”). Annex J hereto accurately
sets forth, as of the date of this Agreement, for each Unrestricted Assignor,
each Deposit Account maintained by such Unrestricted Assignor (including a
description thereof and the respective account number), the name of the
respective bank with which such Deposit Account is maintained, and the
jurisdiction of the respective Bank with respect to such Deposit Account. For
each Perfected Deposit Account, the respective Unrestricted Assignor shall cause
the bank with which the Perfected Deposit Account is maintained to execute and
deliver to the Collateral Agent, within 60 days after the Fourth Restatement
Effective Date or, if later, at the time of the establishment of the respective
Perfected Deposit Account, a “control agreement” in the form of Annex L hereto
(appropriately completed), with such changes thereto as may be approved by the
Collateral Agent (such approval not to be unreasonably withheld). If any bank
with which a Perfected Deposit Account is maintained refuses to, or does not,
enter into such a “control agreement”, then the respective Unrestricted Assignor
shall promptly (and in any event within 60 days after the Fourth Restatement
Effective Date or, if later, 60 days after the opening of such account) close
the respective Perfected Deposit Account and transfer all balances therein to
the Cash Collateral Account or another Perfected Deposit Account meeting the
requirements of this Section 3.9. If any bank with which a Perfected Deposit
Account is maintained refuses to subordinate all its

 

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claims with respect to such Perfected Deposit Account to the Collateral Agent’s
security interest therein on terms satisfactory to the Collateral Agent, then
the Collateral Agent, at its option, may (x) require that such Perfected Deposit
Account be terminated in accordance with the immediately preceding sentence or
(y) agree to a “control agreement” without such subordination, provided that in
such event the Collateral Agent may at any time, at its option, subsequently
require that such Perfected Deposit Account be terminated (within 60 days after
notice from the Collateral Agent) in accordance with the requirements of the
immediately preceding sentence.
          (b) After the date hereof, no Unrestricted Assignor shall establish
any new demand, time, savings, passbook or similar account, except for Perfected
Deposit Accounts established and maintained with banks and meeting the
requirements of preceding clause (a). At the time any such Perfected Deposit
Account is established, the appropriate “control agreement” shall be entered
into in accordance with the requirements of preceding clause (a) and the
respective Unrestricted Assignor shall furnish to the Collateral Agent a
supplement to Annex J hereto containing the relevant information with respect to
the respective Perfected Deposit Account and the bank with which same is
established.
          3.10 Letter-of-Credit Rights. If any Unrestricted Assignor is at any
time a beneficiary under a letter of credit with a stated amount of $1,000,000
or more, such Unrestricted Assignor shall promptly notify the Collateral Agent
thereof and, at the request of the Collateral Agent, such Unrestricted Assignor
shall, pursuant to an agreement in form and substance reasonably satisfactory to
the Collateral Agent, use its reasonable best efforts to (i) arrange for the
issuer and any confirmer of such letter of credit to consent to an assignment to
the Collateral Agent of the proceeds of any drawing under such letter of credit
or (ii) arrange for the Collateral Agent to become the transferee beneficiary of
such letter of credit, with each Unrestricted Assignor and the Collateral Agent
agreeing, in each case, that the proceeds of any drawing under the letter of
credit are to be applied as provided in this Agreement after the occurrence and
during the continuance of a Noticed Event of Default (it being understood and
agreed that at any time prior to the occurrence of a Noticed Event of Default,
such proceeds shall be directed to the relevant Assignor).
          3.11 Commercial Tort Claims. All Commercial Tort Claims of each
Unrestricted Assignor and any events or circumstances that would reasonably be
expected to give rise to any Commercial Tort Claims of each Unrestricted
Assignor as of the date of this Agreement are described in Annex K hereto. If
any Unrestricted Assignor shall at any time and from time to time after the date
hereof become aware of any Commercial Tort Claims or events or circumstances
that would reasonably be expected to give rise to a Commercial Tort Claim of
such Unrestricted Assignor, in an amount (taking the greater of the aggregate
claimed damages thereunder or the reasonably estimated value thereof) of
$1,000,000 or more, such Unrestricted Assignor shall (i) promptly notify the
Collateral Agent thereof in a writing signed by such Assignor and describing the
details thereof and shall grant to the Collateral Agent in such writing a
security interest in all such Commercial Tort Claims and in the proceeds
thereof, all upon the terms of this Agreement, with such writing to be in form
and substance reasonably satisfactory to the Collateral Agent and (ii) perform
all actions reasonably requested by the Collateral Agent to perfect such
security interest in such Commercial Tort Claims.

 

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     3.12 Chattel Paper. Upon the request of the Collateral Agent made at any
time or from time to time, each Unrestricted Assignor shall promptly furnish to
the Collateral Agent a list of all Electronic Chattel Paper held or owned by
such Unrestricted Assignor. Furthermore, if requested by the Collateral Agent,
each Unrestricted Assignor shall promptly take all actions which are reasonably
practicable so that the Collateral Agent has “control” of all Electronic Chattel
Paper in accordance with the requirements of Section 9-105 of the UCC. Each
Unrestricted Assignor will promptly (and in any event within 10 days) following
any request by the Collateral Agent, deliver all of its Tangible Chattel Paper
to the Collateral Agent.
ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS
          4.1 Additional Representations and Warranties. Each Assignor
represents and warrants as of the date hereof that it is the true and lawful
owner of the United States Patent and Trademark Office registrations, and
applications for registrations, of the Marks listed in Annex D, Part I attached
hereto. Annex D lists or otherwise describes all the United States Patent and
Trademark Office, or the equivalent office thereof in any foreign country,
registrations and applications for registrations, of the Marks that such
Assignor now uses in connection with its business. Each Assignor represents and
warrants as of the date hereof that the material registrations listed on Annex D
Part I are valid, subsisting, have not been cancelled and that such Assignor is
not aware of any third-party claim that any of said material registrations or
applications for material registration with respect to a Mark is invalid or
unenforceable or is not aware that there is any reason that any of said material
registrations or applications for registration with respect to a Mark is invalid
or unenforceable, or that there is any reason that any of said applications will
not pass to registration. Each Assignor represents and warrants as of the date
hereof that except with respect to those marks set forth in Annex D, Part II, it
owns, or otherwise has the right to use all material Marks that it uses. Each
Assignor further warrants as of the date hereof that it is not aware of any
third party claiming that such Assignor’s use of a Mark material to the
operation of the Assignor’s business violates in any material respect any
property right of that party. Each Assignor represents and warrants that upon
the recordation of an Assignment of Security Interest in United States
Trademarks and Patents in the form of Annex G hereto in the United States Patent
and Trademark Office, together with filings on Form UCC-1 pursuant to this
Agreement, all filings, registrations and recordings necessary or appropriate to
perfect the security interest granted to the Collateral Agent in the United
States Marks covered by this Agreement under federal law will have been
accomplished. Each Assignor agrees to execute such an Assignment of Security
Interest in United States Trademarks and Patents covering all of such Assignor’s
right, title and interest in each United States Mark, and the associated
goodwill, of such Assignor, and to record the same. Each Assignor hereby grants
to the Collateral Agent an absolute power of attorney to sign, upon the
occurrence and during the continuance of a Noticed Event of Default, any
document which may be required by the United States Patent and Trademark Office
in order to effect an absolute assignment of all such Assignor’s right, title
and interest in each United States Mark owned by an Assignor, and record the
same.

 

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          4.2 Licenses and Assignments. Subject to the provisions of
Sections 4.4 and 4.5, each Assignor hereby agrees not to divest itself of any
right under a Mark other than in the ordinary course of business absent prior
written approval of the Collateral Agent.
          4.3 Infringements. Each Assignor agrees, promptly upon learning
thereof, to notify the Collateral Agent in writing of the name and address of,
and to furnish such pertinent information that may be available with respect to,
any party who may be infringing or otherwise violating in any material respect
any of such Assignor’s rights in and to any Mark material to the operation of
its business, or with respect to any party claiming that such Assignor’s use of
any Mark material to the operation of its business violates in any material
respect any property right of that party. Each Assignor further agrees, to
prosecute diligently any Person infringing in any material respect any Mark
owned by such Assignor in a manner consistent with its past practice and in
accordance with reasonable business practices.
          4.4 Preservation of Marks. Each Assignor agrees to use or license the
use of its Marks in interstate commerce during the time in which this Agreement
is in effect, sufficiently to preserve such Marks as trademarks or service marks
registered under the laws of the United States or the relevant foreign
jurisdiction; provided, that no Assignor shall be obligated to preserve any Mark
in the event such Assignor determines, in its reasonable business judgment, that
the preservation of such Mark is no longer necessary in the conduct of its
business.
          4.5 Maintenance of Registration. Each Assignor shall, at its own
expense, diligently process all documents required to maintain trademark
registrations, including but not limited to affidavits of use and applications
for renewals of registration in the United States Patent and Trademark Office or
equivalent governmental agency in any foreign jurisdiction for all of its Marks
(excluding unregistered Marks), and shall pay all fees and disbursements in
connection therewith, and shall not abandon any such filing of affidavit of use
or any such application of renewal prior to the exhaustion of all administrative
and judicial remedies without prior written consent of the Collateral Agent;
provided, that no Assignor shall be obligated to maintain any Mark or prosecute
any such application for registration in the event that such Assignor
determines, in its reasonable business judgment, that such Mark or application
is no longer necessary in the conduct of its business.
          4.6 Future Registered Marks. If any Mark registration issues hereafter
to any Assignor as a result of any application now or hereafter pending before
the United States Patent and Trademark Office or equivalent governmental agency
in any foreign jurisdiction, at the time of the delivery (or required delivery)
of the annual or quarterly financial information of the Borrower to the Lenders
pursuant to Section 7.01(a) or (b), as the case may be, of the Credit Agreement,
such Assignor shall deliver a copy of the related registration certificate, and
a grant of security in such mark to the Collateral Agent, confirming the grant
thereof hereunder, the form of such confirmatory grant to be substantially the
same as the form of Annex G hereof or in such other form as may be reasonably
acceptable to the Collateral Agent.
          4.7 Remedies. If a Noticed Event of Default shall occur and be
continuing, the Collateral Agent may, by written notice to the relevant
Assignor, take any or all of the following actions: (i) declare the entire
right, title and interest of such Assignor in and to each of

 

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the Marks, together with all trademark rights and rights of protection to the
same, vested, in which event such rights, title and interest shall immediately
vest, in the Collateral Agent for the benefit of the relevant Secured Creditors
pursuant to a trademark security agreement in form and substance satisfactory to
the Collateral Agent, executed by such Assignor and filed on the date hereof,
pursuant to which all of such Assignor’s rights, title and interest in and to
the Marks are assigned to the Collateral Agent for the benefit of the relevant
Secured Creditors; (ii) take and use or sell the Marks and the goodwill of such
Assignor’s business symbolized by the Marks and the right to carry on the
business and use the assets of such Assignor in connection with which the Marks
have been used; and (iii) direct such Assignor to refrain, in which event such
Assignor shall refrain, from using the Marks in any manner whatsoever, directly
or indirectly, and, if requested by the Collateral Agent, change such Assignor’s
corporate name to eliminate therefrom any use of any Mark and execute such other
and further documents that the Collateral Agent may request to further confirm
this and to transfer ownership of the Marks and registrations and any pending
trademark application in the United States Patent and Trademark Office or any
equivalent governmental agency or office in any foreign jurisdiction to the
Collateral Agent.
ARTICLE V
SPECIAL PROVISIONS CONCERNING
TRADE SECRET RIGHTS, PATENTS AND COPYRIGHTS
          5.1 Additional Representations and Warranties. Except as set forth in
the Annexes attached hereto, each Assignor represents and warrants as of the
date hereof that it is the true and lawful owner or licensee of all rights in
(i) all Trade Secrets, (ii) the Patents of such Assignor listed in Annex E
attached hereto and that said Patents constitute all the patents and
applications for patents that such Assignor now owns and (iii) the Copyrights of
such Assignor listed in Annex F attached hereto and that said Copyrights
constitute all the registered copyrights and applications for copyright
registrations that such Assignor now owns. Except as set forth on Annex F, each
Assignor further warrants as of the date hereof that it is not aware of any
third party claim that such Assignor’s use of any patent or any copyright
material to the operation of the Assignor’s business infringes or will infringe
any material patent or any material copyright owned by or licensed to any third
party or that such Assignor has misappropriated any material Trade Secret owned
by or licensed to any third party. Each Assignor represents and warrants that
upon the recordation of an Assignment of Security Interest in United States
Trademarks and Patents in the form of Annex G hereto in the United States Patent
and Trademark Office and the recordation of an Assignment of Security Interest
in United States Copyrights in the form of Annex H hereto in the United States
Copyright Office, together with filings on Form UCC-1 pursuant to this
Agreement, all filings, registrations and recordings necessary or appropriate to
perfect the security interest granted to the Collateral Agent in the United
States Patents and United States Copyrights covered by this Agreement under
federal law will have been accomplished. Upon obtaining any Patent, each
Assignor agrees to execute an Assignment of Security Interest in United States
Trademarks and Patents covering all right, title and interest in each United
States Patent of such Assignor and to record the same, and upon obtaining any
registration of a Copyright, to execute such an Assignment of Security Interest
in United States Copyrights covering all right, title and interest in each such
registered United States Copyright of

 

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such Assignor and to record the same. Each Assignor hereby grants to the
Collateral Agent an absolute power of attorney to sign, upon the occurrence and
during the continuance of any Event of Default, any document which may be
required by the U.S. Patent and Trademark Office or equivalent governmental
agency in any foreign jurisdiction or the U.S. Copyright Office or equivalent
governmental agency in any foreign jurisdiction in order to effect an absolute
assignment of all right, title and interest in each Patent and Copyright, and to
record the same.
          5.2 Licenses and Assignments. Subject to the provisions of
Sections 5.4 and 5.5, each Assignor hereby agrees not to divest itself of any
right under a Patent or Copyright other than in the ordinary course of business
absent prior written approval of the Collateral Agent.
          5.3 Infringements. Each Assignor agrees, promptly upon learning
thereof, to furnish the Collateral Agent in writing with all pertinent
information available to such Assignor with respect to any material infringement
or other violation of such Assignor’s rights in any Patent or Copyright, in each
case material to its business, or with respect to any claim that the practice of
any Patent or the use of any work of authorship with respect to which there
exists a Copyright, in each case material to its business, violates in any
material respect any property right of a third party or with respect to any
misappropriation of any Trade Secret material to its business or any claim that
the practice of any Trade Secret material to its business violates any property
right of a third party. To the extent consistent with its past practice and in
accordance with reasonable business practices, each Assignor further agrees, to
prosecute diligently any Person materially infringing any Patent or Copyright
owned by such Assignor or any Person misappropriating any Trade Secret.
          5.4 Maintenance of Patents or Copyrights. At its own expense, each
Assignor shall make timely payment of all post-issuance fees required to
maintain in force rights under each of its Patents and Copyrights; provided,
that no Assignor shall be obligated to maintain any Patent in the event such
Assignor determines, in its reasonable business judgment, that the maintenance
of such Patent is no longer necessary in the conduct of its business.
          5.5 Prosecution of Patent or Copyright Application. At its own
expense, each Assignor shall diligently prosecute all applications for
(i) Patents of such Assignor listed on Annex E hereto and (ii) Copyrights listed
on Annex F hereto, and, in each case, shall not abandon any such application
prior to exhaustion of all administrative and judicial remedies, absent written
consent of the Collateral Agent, provided that no Assignor shall be obligated to
maintain any Patent or Copyright in the event such Assignor determines it is no
longer necessary in the conduct of its business.
          5.6 Other Patents and Copyrights. At the time of the delivery (or
required delivery) of the annual or quarterly financial information of the
Borrower to the Lenders pursuant to Section 7.01(a) or (b), as the case may be,
of the Credit Agreement, the relevant Assignor shall deliver to the Collateral
Agent information of the type required by Annex E or Annex F hereto (as
applicable) relating to each newly acquired or issued Patent or Copyright and
each newly filed application for a Patent or Copyright, as the case may be, with
a grant of security as to such Patent or Copyright, as the case may be,
confirming the grant thereof hereunder, the form of such confirmatory grant to
be substantially in the form of Annex G or

 

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Annex H, as the case may be, hereto; provided, that no Assignor (i) shall be
obligated to prosecute any application in the event such Assignor determines, in
its reasonable business judgment, that such application is no longer necessary
in the conduct of its business and (ii) shall be obligated to provide a copy of
a Patent application or any other information with respect to an application for
a Patent or Copyright registration (other than the application date and filing
number and such other identifying information necessary to perfect a security
interest in the respective Patent or Copyright) if such Assignor reasonably
believes such information is confidential or such disclosure would materially
impair or prejudice Assignor’s rights under such application or registration.
          5.7 Remedies. If a Noticed Event of Default shall occur and be
continuing, the Collateral Agent may by written notice to the relevant Assignor
take any or all of the following actions: (i) declare the entire right, title
and interest of such Assignor in each of the Patents and Copyrights vested, in
which event such right, title and interest shall immediately vest in the
Collateral Agent for the benefit of the relevant Secured Creditors, pursuant to
a patent security agreement or copyright security agreement, as the case may be,
in form and substance satisfactory to the Collateral Agent, executed by such
Assignor and filed on the date hereof, pursuant to which all of such Assignor’s
right, title, and interest to such Patents and Copyrights are assigned to the
Collateral Agent for the benefit of the relevant Secured Creditors; (ii) take
and practice, use or sell the Patents and Copyrights; (iii) direct such Assignor
to refrain, in which event such Assignor shall refrain, from practicing the
Patents and using the Copyrights directly or indirectly, and such Assignor shall
execute such other and further documents as the Collateral Agent may request
further to confirm this and to transfer ownership of the Patents and Copyrights
to the Collateral Agent for the benefit of the relevant Secured Creditors.
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL
          6.1 Protection of Collateral Agent’s Security. Each Assignor will at
all times keep its Inventory and Equipment insured in favor of the Collateral
Agent, at its own expense, to the extent required by the Credit Agreement;
copies of all policies or certificates with respect to such insurance (i) shall
be endorsed to the Collateral Agent’s reasonable satisfaction for the benefit of
the Collateral Agent (including, without limitation, by naming the Collateral
Agent as loss payee and the Collateral Agent and the other relevant Secured
Creditors as additional insureds), (ii) shall state that such insurance policies
shall not be cancelled or materially revised without at least 30 days’ (or at
least 10 days’ in the case of nonpayment of premium) prior written notice
thereof by the insurer to the Collateral Agent and (iii) shall be deposited with
the Collateral Agent. If any Assignor shall fail to insure such Inventory or
Equipment to the extent required by the Credit Agreement, or if any Assignor
shall fail to so endorse and deposit copies of all policies or certificates with
respect thereto, the Collateral Agent shall have the right (but shall be under
no obligation), upon prior written notice to such Assignor, to procure such
insurance and such Assignor agrees to reimburse the Collateral Agent for all
reasonable costs and expenses of procuring such insurance. Except as otherwise
provided in the Credit Agreement, the Collateral Agent shall apply any proceeds
of such insurance required after a Noticed Event of Default in accordance with
Section 7.4 (it being understood that so long as no

 

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Noticed Event of Default has occurred and is continuing, the Collateral Agent
will release any interest it has in the proceeds of any casualty insurance to
the Assignors). Each Assignor assumes all liability and responsibility in
connection with the Collateral acquired by it and the liability of such Assignor
to pay its Obligations shall in no way be affected or diminished by reason of
the fact that such Collateral may be lost, destroyed, stolen, damaged or for any
reason whatsoever unavailable to such Assignor.
          6.2 Further Actions. Each Assignor will, at its own expense, make,
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from
time to time such lists, descriptions and designations of its Collateral,
warehouse receipts, receipts in the nature of warehouse receipts, bills of
lading, documents of title, vouchers, invoices, schedules, confirmatory
assignments, conveyances, financing statements, transfer endorsements, powers of
attorney, certificates, reports and other assurances or instruments and take
such further steps relating to the Collateral and other property or rights
covered by the security interest hereby granted, which the Collateral Agent
deems reasonably appropriate or advisable to perfect, preserve or protect its
security interest in the Collateral.
          6.3 Financing Statements. Each Assignor agrees to execute and deliver
to the Collateral Agent such financing statements, in form acceptable to the
Collateral Agent, as the Collateral Agent may from time to time reasonably
request or as are reasonably necessary or desirable in the reasonable opinion of
the Collateral Agent to establish and maintain a valid, enforceable, first
priority perfected security interest in the Collateral (subject to the Permitted
Liens) as provided herein and the other rights and security contemplated hereby
all in accordance with the Uniform Commercial Code as enacted in any and all
relevant jurisdictions or any other relevant law. Each Assignor will pay any
applicable filing fees, recordation taxes and related expenses. Each Assignor
hereby authorizes the Collateral Agent to file any such financing statements
(including, without limitation, (x) financing statements which list the
Collateral specifically and/or “all assets” as collateral and (y) “in lieu of”
financing statements) without the signature of such Assignor where permitted by
law.
          6.4 Additional Information. Each Assignor will, at its own expense,
from time to time upon the reasonable request of the Collateral Agent, promptly
(and in any event within 10 days after its receipt of the respective request)
furnish to the Collateral Agent such information with respect to the Collateral
(including the identity of the Collateral or such components thereof as may have
been requested by the Collateral Agent, the value and location of such
Collateral, etc.) as may be requested by the Collateral Agent. Without limiting
the forgoing, each Assignor agrees that it shall promptly (and in any event
within 10 days after its receipt of the respective request) furnish to the
Collateral Agent such updated Annexes hereto as may from time to time be
reasonably requested by the Collateral Agent.
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
          7.1 Remedies; Obtaining the Collateral Upon Default. Each Assignor
agrees that, if a Noticed Event of Default shall have occurred and be
continuing, then and in every such

 

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case, subject to any mandatory requirements of applicable law then in effect,
the Collateral Agent, in addition to any rights now or hereafter existing under
applicable law and under the other provisions of this Agreement, shall have all
rights as a secured creditor under the Uniform Commercial Code in all relevant
jurisdictions and such additional rights and remedies to which a secured
creditor is entitled under the laws in effect in all relevant jurisdictions and
may also:
     (i) personally, or by agents or attorneys, immediately take possession of
the Collateral or any part thereof, from such Assignor or any other Person who
then has possession of any part thereof with or without notice or process of
law, and for that purpose may enter upon such Assignor’s premises where any of
the Collateral is located and remove the same and use in connection with such
removal any and all services, supplies, aids and other facilities of such
Assignor;
     (ii) instruct the obligor or obligors on any agreement, instrument or other
obligation (including, without limitation, the Receivables and the Contracts)
constituting the Collateral to make any payment required by the terms of such
instrument or agreement directly to the Collateral Agent and may exercise any
and all remedies of such Assignor in respect of such Collateral;
     (iii) instruct all banks which have entered into a control agreement with
the Collateral Agent to transfer all moneys, securities and instruments held by
such depository bank to the Cash Collateral Account and withdraw all moneys,
securities and instruments in the Cash Collateral Account for application to the
Obligations in accordance with Section 7.4 hereof;
     (iv) sell, assign or otherwise liquidate, or direct such Assignor to sell,
assign or otherwise liquidate, any or all of the Collateral or any part thereof
in accordance with Section 7.2 hereof, and take possession of the proceeds of
any such sale or liquidation;
     (v) take possession of the Collateral or any part thereof, by directing
such Assignor in writing to deliver the same to the Collateral Agent at any
place or places reasonably designated by the Collateral Agent, in which event
such Assignor shall at its own expense:
     (A) forthwith cause the same to be moved to the place or places so
designated by the Collateral Agent and there delivered to the Collateral Agent,
     (B) store and keep any Collateral so delivered to the Collateral Agent at
such place or places pending further action by the Collateral Agent as provided
in Section 7.2, and
     (C) while the Collateral shall be so stored and kept, provide such guards,
other security and maintenance services as shall be necessary to protect the
same and to preserve and maintain them in good condition;
     (vi) license or sublicense whether on an exclusive or nonexclusive basis,
any Marks, Patents or Copyrights included in the Collateral for such term and on
such

 

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conditions and in such manner as the Collateral Agent shall in its sole judgment
determine;
     (vii) apply any moneys constituting Collateral or proceeds thereof in
accordance with Section 8.4; and
     (viii) take any other action as specified in clauses (1) through (5),
inclusive, of Section 9-607 of the UCC.
it being understood that such Assignor’s obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Collateral Agent shall be entitled to a
decree requiring specific performance by such Assignor of said obligation. By
accepting the benefits of this Agreement and each other Security Document, the
Secured Creditors expressly acknowledge and agree that (x) this Agreement and
each other Security Document may be enforced only by the action of the
Collateral Agent acting upon the instructions of the Required Lenders or, if the
CA Termination Date has occurred, the holders of a majority of the outstanding
principal amount of all remaining Obligations, provided that if prior to the CA
Termination Date a payment default with respect to at least $300,000,000
principal amount in the aggregate of Existing Senior Notes, New Senior Notes
and/or Refinancing Senior Notes has continued for at least 180 days (and such
defaulted payment has not been received pursuant to a drawing under any letter
of credit), the holders of a majority of the outstanding principal amount of the
Indebtedness subject to such payment default or defaults can direct the
Collateral Agent to commence and continue enforcement of the Liens created
hereunder, which the Collateral Agent shall comply with subject to receiving any
indemnity which it reasonably requests, provided further that the Collateral
Agent shall thereafter comply only with the directions of the Required Lenders
as to carrying out such enforcement so long as such directions are not adverse
to the aforesaid directions of the holders of Indebtedness subject to such
payment default or defaults, and (y) no other Secured Creditor shall have any
right individually to seek to enforce or to enforce this Agreement or any other
Security Document or to realize upon the security to be granted hereby or
thereby, it being understood and agreed that such rights and remedies shall be
exercised exclusively by the Collateral Agent for the benefit of the Secured
Creditors as their interest may appear upon the terms of this Agreement and the
other Security Documents.
          7.2 Remedies; Disposition of the Collateral. Upon the occurrence and
continuance of a Noticed Event of Default, any Collateral repossessed by the
Collateral Agent under or pursuant to Section 7.1 and any other Collateral
whether or not so repossessed by the Collateral Agent, may be sold, assigned,
leased or otherwise disposed of under one or more contracts or as an entirety,
and without the necessity of gathering at the place of sale the property to be
sold, and in general in such manner, at such time or times, at such place or
places and on such terms as the Collateral Agent may, in compliance with any
mandatory requirements of applicable law, determine to be commercially
reasonable. Any of the Collateral may be sold, leased or otherwise disposed of,
in the condition in which the same existed when taken by the Collateral Agent or
after any overhaul or repair which the Collateral Agent shall determine to be
commercially reasonable. Any such disposition which shall be a private sale or
other private proceedings permitted by such requirements shall be made upon not
less than ten (10) days’ written notice to the relevant Assignor specifying the
time at which such disposition is to

 

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be made and the intended sale price or other consideration therefor, and shall
be subject, for the ten (10) days after the giving of such notice, to the right
of the relevant Assignor or any nominee of such Assignor to acquire the
Collateral involved at a price or for such other consideration at least equal to
the intended sale price or other consideration so specified. Any such
disposition which shall be a public sale permitted by such requirements shall be
made upon not less than ten (10) days’ written notice to the relevant Assignor
specifying the time and place of such sale and, in the absence of applicable
requirements of law, shall be by public auction (which may, at the Collateral
Agent’s option, be subject to reserve), after publication of notice of such
auction not less than 10 days prior thereto in one newspaper in general
circulation in the City of New York and one newspaper in general circulation in
Winston Salem, North Carolina. To the extent permitted by any such requirement
of law, the Collateral Agent on behalf of the Secured Creditors (or certain of
them) may bid for and become the purchaser (by bidding in the Obligations or
otherwise) of the Collateral or any item thereof, offered for sale in accordance
with this Section without accountability to the relevant Assignor (except to the
extent of surplus money received as provided in Section 7.4). If, under
mandatory requirements of applicable law, the Collateral Agent shall be required
to make disposition of the Collateral within a period of time which does not
permit the giving of notice to the relevant Assignor as hereinabove specified,
the Collateral Agent need give such Assignor only such notice of disposition as
shall be reasonably practicable in view of such mandatory requirements of
applicable law.
          7.3 Waiver of Claims. Except as otherwise provided in this Agreement,
EACH ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE
AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT’S TAKING POSSESSION
OR THE COLLATERAL AGENT’S DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING,
WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT
REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH SUCH ASSIGNOR WOULD OTHERWISE HAVE
UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES OR OF ANY STATE, and
such Assignor hereby further waives, to the extent permitted by law:
     (i) all damages occasioned by such taking of possession or any such
disposition except any damages which are the direct result of the Collateral
Agent’s gross negligence or wilful misconduct;
     (ii) all other requirements as to the time, place and terms of sale or
other requirements with respect to the enforcement of the Collateral Agent’s
rights hereunder; and
     (iii) all rights of redemption, appraisement, valuation, stay, extension or
moratorium now or hereafter in force under any applicable law in order to
prevent or delay the enforcement of this Agreement or the absolute sale of the
Collateral or any portion thereof, and each Assignor, for itself and all who may
claim under it, insofar as it or they now or hereafter lawfully may, hereby
waives the benefit of all such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the relevant Assignor therein and
thereto, and shall be a perpetual bar both at law and in equity

 

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against such Assignor and against any and all Persons claiming or attempting to
claim the Collateral so sold, optioned or realized upon, or any part thereof,
from, through and under such Assignor.
          7.4 Application of Proceeds. (a) All moneys collected by the
Collateral Agent upon any sale, other disposition of or other realization upon
any Collateral, together with all other moneys received by the Collateral Agent
hereunder (collectively, the “Collateral Proceeds”), shall be applied as
follows:
     (i) first, to the payment of all Obligations owing to the Collateral Agent
of the type described in clauses (vii), (viii) and (ix) of the definition of
“Obligations” contained in Article IX hereof;
     (ii) second, to the extent proceeds of the sale, any disposition of or
other realization upon any item of Collateral remain after the application
pursuant to preceding clause (i), an amount equal to the outstanding Applicable
Obligations secured by such item of Collateral shall be paid to the Secured
Creditors as their interests may appear, with (x) each Secured Creditor
receiving an amount equal to its outstanding Applicable Obligations secured by
such item of Collateral or, if the proceeds are insufficient to pay in full all
such Applicable Obligations, its Pro Rata Share of the amount so remaining to be
distributed and (y) in the case of the Credit Document Obligations, the Existing
Senior Notes Obligations, the New Senior Notes Obligations and the Refinancing
Senior Notes Obligations included in such Applicable Obligations, any such
amount to be applied (1) first to the payment of interest in respect of the
unpaid principal amount of Loans, Existing Senior Notes, New Senior Notes or
Refinancing Senior Notes, as the case may be, (2) second to the payment of
principal of Loans, Existing Senior Notes, New Senior Notes or Refinancing
Senior Notes, as the case may be, and (3) third to the other Credit Document
Obligations, Existing Senior Notes Obligations, New Senior Notes Obligations or
Refinancing Senior Notes Obligations, as the case may be; and
     (iii) third, to the extent proceeds remain after the application pursuant
to the preceding clauses (i) and (ii), to the relevant Assignor or, to the
extent directed by such Assignor or a court of competent jurisdiction, to
whomever may be lawfully entitled to receive such surplus.
          (b) For purposes of this Agreement, “Pro Rata Share” shall mean when
calculating a Secured Creditor’s portion of any distribution or amount pursuant
to Section 7.4(a), the amount (expressed as a percentage) equal to a fraction
the numerator of which is the then outstanding amount of the relevant Applicable
Obligations secured by the relevant item of Collateral owed such Secured
Creditor and the denominator of which is the then outstanding amount of all
Applicable Obligations secured by the relevant item of Collateral.
          (c) All payments required to be made to the (i) Lender Creditors
hereunder shall be made to the Administrative Agent for the account of the
respective Lender Creditors, (ii) Credit Card Issuers hereunder shall be made to
the Credit Card Issuer(s) under the applicable Secured Credit Card Agreement,
(iii) Hedging Creditors hereunder shall be made to the paying agent under the
applicable Secured Hedging

 

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Agreement or, in the case of Secured Hedging Agreements without a paying agent,
directly to the applicable Hedging Creditors, (iv) Existing Senior Notes
Creditors hereunder shall be made to the Existing Senior Notes Trustee for the
account of the respective Existing Senior Notes Creditors, (v) New Senior Notes
Creditors hereunder shall be made to the New Senior Notes Trustee for the
account of the respective New Senior Notes Creditors, and (vi) Refinancing
Senior Notes Creditors hereunder shall be made to the Refinancing Senior Notes
Trustee for the account of the respective Refinancing Senior Notes Creditors.
          (d) For purposes of applying payments received in accordance with this
Section 7.4, the Collateral Agent shall be entitled to rely upon (i) the
Administrative Agent for a determination of the outstanding Credit Document
Obligations, (ii) any Credit Card Issuer for a determination of the outstanding
Credit Card Obligations owed to such Credit Card Issuer, (iii) any Hedging
Creditor for a determination of the outstanding Hedging Obligations owed to such
Hedging Creditor, (iv) the Existing Senior Notes Trustee for a determination of
the outstanding Existing Senior Notes Obligations, (v) the New Senior Notes
Trustee for a determination of the outstanding New Senior Notes Obligations, and
(vi) the Refinancing Senior Notes Trustee for a determination of the outstanding
Refinancing Senior Notes Obligations. Unless it has actual knowledge (including
by way of written notice from a Secured Creditor) to the contrary, the
Administrative Agent under the Credit Agreement, in furnishing information
pursuant to the preceding sentence, and the Collateral Agent, in acting
hereunder, shall be entitled to assume that no Credit Document Obligations other
than principal, interest and regularly accruing fees are owing to any Lender
Creditor.
          (e) It is understood that each Assignor shall remain liable to the
extent of any deficiency between (x) the amount of the obligations for which it
is liable directly or as a Guarantor that are satisfied with proceeds of the
Collateral and (y) the aggregate outstanding amount of such Obligations.
          7.5 Remedies Cumulative. Each and every right, power and remedy hereby
specifically given to the Collateral Agent shall be in addition to every other
right, power and remedy specifically given under this Agreement or any other
Secured Debt Agreement or now or hereafter existing at law or in equity, or by
statute and each and every right, power and remedy whether specifically herein
given or otherwise existing may be exercised from time to time or simultaneously
and as often and in such order as may be deemed expedient by the Collateral
Agent. All such rights, powers and remedies shall be cumulative and the exercise
or the beginning of exercise of one shall not be deemed a waiver of the right to
exercise of any other or others. No delay or omission of the Collateral Agent in
the exercise of any such right, power or remedy and no renewal or extension of
any of the Obligations shall impair any such right, power or remedy or shall be
construed to be a waiver of any Default or Event of Default or an acquiescence
therein. In the event that the Collateral Agent shall bring any suit to enforce
any of its rights hereunder and shall be entitled to judgment, then in such suit
the Collateral Agent may recover expenses, including attorneys’ fees, and the
amounts thereof shall be included in such judgment.
          7.6 Discontinuance of Proceedings. In case the Collateral Agent shall
have instituted any proceeding to enforce any right, power or remedy under this
Agreement by foreclosure, sale, entry or otherwise, and such proceeding shall
have been discontinued or

 

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abandoned for any reason or shall have been determined adversely to the
Collateral Agent, then and in every such case the relevant Assignor, the
Collateral Agent and each holder of any of the Obligations shall be restored to
their former positions and rights hereunder with respect to the Collateral
subject to the security interest created under this Agreement, and all rights,
remedies and powers of the Collateral Agent shall continue as if no such
proceeding had been instituted (except to the extent of a determination adverse
to the Collateral Agent in such a proceeding).
ARTICLE VIII
INDEMNITY
          8.1 Indemnity. (a) Each Assignor jointly and severally agrees to
indemnify, reimburse and hold the Collateral Agent, each other Secured Creditor
and their respective successors, permitted assigns, employees, agents and
servants (hereinafter in this Section 8.1 referred to individually, as
“Indemnitee,” and collectively as “Indemnitees”) harmless from any and all
liabilities, obligations, losses, damages, penalties, claims, demands, actions,
suits, judgments and any and all reasonable costs and expenses (including
reasonable attorneys’ fees and expenses) (for the purposes of this Section 8.1
the foregoing are collectively called “expenses”) of whatsoever kind and nature
imposed on, asserted against or incurred by any of the Indemnitees in any way
relating to or arising out of this Agreement, or the documents executed in
connection herewith or in any other way connected with the enforcement of any of
the terms of, or the preservation of any rights hereunder, or in any way
relating to or arising out of the manufacture, ownership, ordering, purchase,
delivery, control, acceptance, lease, financing, possession, operation,
condition, sale, return or other disposition, or use of the Collateral
(including, without limitation, latent or other defects, whether or not
discoverable), the violation of the laws of any country, state or other
governmental body or unit, any tort (including, without limitation, claims
arising or imposed under the doctrine of strict liability, or for or on account
of injury to or the death of any Person (including any Indemnitee), or property
damage), or contract claim; provided that no Indemnitee shall be indemnified
pursuant to this Section 8.1(a) for expenses, losses, damages or liabilities to
the extent caused by the gross negligence or wilful misconduct of such
Indemnitee. Each Assignor agrees that upon written notice by any Indemnitee of
the assertion of such a liability, obligation, loss, damage, penalty, claim,
demand, action, judgment or suit, such Assignor shall assume full responsibility
for the defense thereof. Each Indemnitee agrees to use its best efforts to
promptly notify such Assignor of any such assertion of which such Indemnitee has
knowledge.
          (b) Without limiting the application of Section 8.1(a), each Assignor
agrees, jointly and severally, to pay, or reimburse the Collateral Agent for (if
the Collateral Agent shall have incurred fees, costs or expenses because such
Assignor shall have failed to comply with its obligations under this Agreement)
any and all reasonable fees, costs and expenses of whatever kind or nature
incurred in connection with the creation, preservation or protection of the
Collateral Agent’s Liens on, and security interest in, the Collateral,
including, without limitation, all fees and taxes in connection with the
recording or filing of instruments and documents in public offices, payment or
discharge of any taxes or Liens upon or in respect of the Collateral, premiums
for insurance with respect to the Collateral and all other reasonable fees,
costs and expenses in connection with protecting, maintaining or preserving the
Collateral and the

 

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Collateral Agent’s interest therein, whether through judicial proceedings or
otherwise, or in defending or prosecuting any actions, suits or proceedings
arising out of or relating to the Collateral. Any reference in this Agreement,
to “fees of counsel” or other similar phraseology shall mean the actual and
reasonable fees incurred at customary and reasonable hourly rates in the
jurisdiction in which the services of such counsel are performed, not pursuant
to any statutory formula or percentage calculation.
          (c) Without limiting the application of Section 8.1(a) or (b), each
Assignor jointly and severally agrees to pay, indemnify and hold each Indemnitee
harmless from and against any loss, costs, damages and expenses which such
Indemnitee may suffer, expend or incur in consequence of or growing out of any
material misrepresentation by an Assignor in this Agreement, or in any statement
or writing contemplated by or made or delivered pursuant to or in connection
with this Agreement.
          (d) If and to the extent that the obligations of any Assignor under
this Section 8.1 are unenforceable for any reason, each Assignor hereby agrees
to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
          8.2 Indemnity Obligations Secured by Collateral; Survival. Any amounts
paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of each Assignor contained in this Article VIII shall
continue in full force and effect notwithstanding the full payment of all the
Notes issued under the Credit Agreement, the termination of all Secured Hedging
Agreements, the full payment of all Existing Senior Notes issued under the
Existing Senior Notes Indenture, the full payment of all New Senior Notes issued
under the New Senior Notes Indenture, the full payment of all Refinancing Senior
Notes issued under the Refinancing Senior Notes Indenture and the payment of all
of the other Obligations and notwithstanding the discharge thereof.
ARTICLE IX
DEFINITIONS
The following terms shall have the meanings herein specified unless the context
otherwise requires. Such definitions shall be equally applicable to the singular
and plural forms of the terms defined.
“Additional Senior Notes” shall have the meaning provided in the Credit
Agreement.
“Administrative Agent” shall have the meaning provided in the recitals to this
Agreement.
“Agreement” shall mean this Security Agreement, as the same may be modified,
supplemented or amended from time to time in accordance with its terms.
“As-Extracted Collateral” shall mean “as-extracted collateral” as such term is
defined in the Uniform Commercial Code as in effect on the date hereof in the
State of New York.

 

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          “Assignor” shall have the meaning specified in the first paragraph of
this Agreement.
“Applicable Obligations” shall mean (i) for each Assignor that is a Specified
RAI Senior Notes Assignor but not a Specified Existing Senior Notes Assignor,
all the Obligations other than the Existing Senior Notes Obligations, (ii) for
each Assignor that is a Specified Existing Senior Notes Assignor but not a
Specified RAI Senior Notes Assignor, all the Obligations other than the New
Senior Notes Obligations and the Refinancing Senior Notes Obligations, (iii) for
each Assignor that is both a Specified RAI Senior Notes Assignor and a Specified
Existing Senior Notes Assignor, all the Obligations and (iv) for each Assignor
that is neither a Specified RAI Senior Notes Assignor nor a Specified Existing
Senior Notes Assignor, all the Obligations other than the Existing Senior Notes
Obligations, the New Senior Notes Obligations and the Refinancing Senior Notes
Obligations, provided that (x) the Existing Senior Notes Obligations shall be
excluded from the Applicable Obligations of a Specified Existing Senior Notes
Assignor to the extent the Existing Senior Notes Documents do not require the
Existing Senior Notes Obligations to be secured pursuant to this Agreement (or,
in the case of the Applicable Obligations of the Borrower, to the same extent
the Existing Senior Notes Obligations are excluded from the Applicable
Obligations of RJRTH as provided above in this clause (x)), (y) the New Senior
Notes Obligations shall be excluded from the Applicable Obligations of a
Specified RAI Senior Notes Assignor to the extent the New Senior Notes Documents
do not require the New Senior Notes Obligations to be secured pursuant to this
Agreement, and (z) the Refinancing Senior Notes Obligations shall be excluded
from the Applicable Obligations of a Specified RAI Senior Notes Assignor to the
extent the Refinancing Senior Notes Documents do not require the Refinancing
Senior Notes Obligations to be secured pursuant to this Agreement.
“Business Day” means any day excluding Saturday, Sunday and any day which shall
be in the City of New York a legal holiday or a day on which banking
institutions are authorized by law to close.
“CA Termination Date” shall have the meaning provided in Section 10.9 hereof.
“Cash Collateral Account” shall mean a non-interest bearing cash collateral
account maintained with, and in the sole dominion and control of, the Collateral
Agent for the benefit of the Secured Creditors as their interests may appear.
“Chattel Paper” shall mean “chattel paper” as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York. Without limiting the foregoing, the term “Chattel Paper” shall in any
event include all Tangible Chattel Paper and all Electronic Chattel Paper.
“Class” shall have the meaning provided in Section 10.2 hereof.
“Collateral” shall have the meaning provided in Section 1.1(a) hereof.
“Collateral Agent” shall have the meaning specified in the first paragraph of
this Agreement.
“Collateral Proceeds” shall have the meaning provided in Section 7.4(a) hereof.

 

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“Commercial Tort Claims” shall mean “commercial tort claims” as such term is
defined in the Uniform Commercial Code as in effect on the date hereof in the
State of New York.
“Contract Rights” shall mean all rights of any Assignor under each Contract,
including, without limitation, (i) any and all rights to receive and demand
payments under any or all Contracts and Excluded Contracts, (ii) any and all
rights to receive and compel performance under any or all Contracts and
(iii) any and all other rights, interests and claims now existing or in the
future arising in connection with any or all Contracts.
“Contracts” shall mean all contracts between an Assignor and one or more
additional parties (including, without limitation, any Secured Credit Card
Agreement, any Secured Hedging Agreement and related documents entered into in
connection therewith) to the extent the grant by an Assignor of a security
interest pursuant to this Agreement in its right, title and interest in any such
contract is not prohibited by such contract (or, if prohibited, the consent of
each other party to such grant of a security interest is obtained) and would not
give any other party to such contract the right to terminate, or automatically
result in the termination of, such other party’s obligations thereunder or the
Assignor’s rights thereunder (those contracts where such grant is so prohibited
(and consent not obtained) or resulting in such a right of, or automatic,
termination are referred to herein as “Excluded Contracts”).
“Copyrights” shall mean any United States or foreign copyright filed or
registered by any Assignor now or hereafter, in the United States Copyright
Office or the equivalent thereof in any foreign country, as well as any
application for a United States or foreign copyright registration now or
hereafter made with the United States Copyright Office or the equivalent thereof
in any foreign jurisdiction by any Assignor.
“Credit Agreement” shall have the meaning provided in the recitals of this
Agreement.
“Credit Card Issuer” shall have the meaning provided in the recitals of this
Agreement.
“Credit Card Obligations” shall have the meaning provided in the definition of
“Obligations” in this Article IX.
“Credit Document Obligations” shall have the meaning provided in the definition
of “Obligations” in this Article IX.
“Deposit Accounts” shall mean all “deposit accounts” as such term is defined in
the Uniform Commercial Code as in effect on the date hereof in the State of New
York; provided that the term “Deposit Account” shall not include (i) any
Excluded Escrow Account and (ii) any Deposit Account (defined as provided above
without regard to this proviso) of Lane or Santa Fe.
“Designated Existing Senior Notes Collateral” shall mean, with respect to any
Specified Existing Senior Notes Assignor, Collateral owned by such Specified
Existing Senior Notes Assignor consisting of (i) any shares of stock,
indebtedness or other obligations of a Subsidiary of RJRTH held by or owing to
such Specified Existing Senior Notes Assignor (other than the Borrower) or (ii)
any Principal Property of such Specified Existing Senior Notes Assignor (other
than the Borrower).

 

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“Designated RAI Senior Notes Collateral” shall mean, with respect to any
Specified RAI Senior Notes Assignor, Collateral owned by such Specified RAI
Senior Notes Assignor consisting of (i) any Principal Property of such Specified
RAI Senior Notes Assignor or (ii) at any time on or after the time RJRTH becomes
a Specified RAI Senior Notes Assignor, all indebtedness and other obligations
owing by Reynolds Tobacco owned or held by such Specified RAI Senior Notes
Assignor.
“Documents” shall mean “documents” as such term is defined in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
“Electronic Chattel Paper” shall mean “electronic chattel paper” as such term is
defined in the Uniform Commercial Code as in effect on the date hereof in the
State of New York.
“Equipment” shall mean any “equipment,” as such term is defined in the Uniform
Commercial Code as in effect on the date hereof in the State of New York, now or
hereafter owned by any Assignor and, in any event, shall include, but shall not
be limited to, all machinery, equipment, furnishings, fixtures now or hereafter
owned by such Assignor and any and all additions, substitutions and replacements
of any of the foregoing and all accessories hereto, wherever located, together
with all attachments, components, parts, equipment and accessories installed
thereon or affixed thereto but excluding Equipment to the extent it is subject
to a Permitted Lien and the terms of the Indebtedness securing such Permitted
Liens prohibits assignment or granting of a security interest in such Assignor’s
rights and obligations thereunder.
“Event of Default” shall mean any Event of Default under the Credit Agreement,
any “event of default” under the Existing Senior Notes Documents, the New Senior
Notes Documents or the Refinancing Senior Notes Documents or any payment
default, after any applicable grace period, under any Secured Credit Card
Agreement or any Secured Hedging Agreement.
“Exchange Senior Notes” shall have the meaning provided in the Credit Agreement.
“Excluded Contracts” shall have the meaning provided in the definition of
Contracts.
“Excluded Deposit Account” shall mean (i) the Cash Collateral Account,
(ii) payroll accounts, (iii) accounts used solely for disbursement purposes,
(iv) up to ten certificates of deposit established with various Lenders
identified as “Excluded Deposit Accounts” and set forth from time to time on
Annex J hereto (provided that such certificates of deposit shall be “Excluded
Deposit Accounts” only so long as the aggregate amount of cash and cash
equivalents on deposit in such accounts does not exceed $1,000,000 at any time)
and (v) each Non-U.S. Deposit Account.
“Excluded Escrow Accounts” shall mean (i) the account maintained with the Bank
of New York in which cash has been deposited for the benefit of certain former
shareholders of Nabisco Group Holdings and (ii) escrow accounts which
collateralize litigation appeal bonds or judgments being appealed by an
Assignor.
“Excluded Unperfected Collateral” shall mean and include (i) Excluded Deposit
Accounts (other than the Cash Collateral Account), (ii) any motor vehicles or
similar titled property a security interest over which may not be perfected by
the filing of a UCC-1 financing statement in the

 

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relevant jurisdiction, (iii) Patents, Trademarks and Copyrights acquired or
issued after the date of this Agreement during (and only during) the period from
such date of acquisition or issuance to and including the 15th day following the
date of the required delivery of a confirmatory grant of security interest
therein pursuant to Section 4.6 or Section 5.6, as the case may be, (iv) during
the 60 day period prior to the required delivery of a “control agreement” with
respect to a Perfected Deposit Account pursuant to Section 3.9, the respective
such Perfected Deposit Account and (v) any Collateral acquired after the Fourth
Restatement Effective Date (or, if later, a given Trigger Date) during (and only
during) the period from such date of acquisition thereof to and including the
15th day following such acquisition.
“Existing Senior Notes” shall mean, collectively, (i) RJRTH’s 6.50% Notes due
June 1, 2007 in an initial aggregate principal amount equal to $300,000,000,
(ii) RJRTH’s 7.875% Notes due May 15, 2009 in an initial aggregate principal
amount equal to $200,000,000, (iii) RJRTH’s 6.50% Notes due July 1, 2010 in an
initial aggregate principal amount equal to $300,000,000, (iv) RJRTH’s 7.25%
Notes due June 1, 2012 in an initial aggregate principal amount equal to
$450,000,000, and (v) RJRTH’s 7.30% Notes due July 15, 2015 in an initial
aggregate principal amount equal to $200,000,000, in each case as the same may
be amended, modified and/or supplemented from time to time in accordance with
the terms thereof and the Credit Agreement.
“Existing Senior Notes Creditors” shall mean the Existing Senior Notes Trustee
and the holders of the Existing Senior Notes.
“Existing Senior Notes Documents” shall mean the Existing Senior Notes and the
Existing Senior Notes Indenture.
“Existing Senior Notes Exchange” shall have the meaning provided in the Pledge
Agreement.
“Existing Senior Notes Indenture” shall mean, collectively, (i) the indenture,
dated as of May 20, 2002, as amended among RJRTH, the guarantors of the notes
issued pursuant thereto, and The Bank of New York, as trustee and (ii) the
indenture, dated as of May 15, 1999, as amended among RJRTH, the guarantors of
the notes issued pursuant thereto, and The Bank of New York, as trustee, in each
case as the same may be amended, modified and/or supplemented from time to time
in accordance with the terms thereof and the Credit Agreement.
“Existing Senior Notes Obligations” shall have the meaning provided in the
definition of “Obligations” in this Article IX.
“Existing Senior Notes Trustee” shall mean, collectively, the trustee and/or
trustees under the Existing Senior Notes Indenture.
“General Intangibles” mean “general intangibles” as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York, but excluding those General Intangibles constituting Excluded Contracts
(other than any Receivable or any money(ies) due or to become due under any such
Excluded Contract).
“Goods” shall mean “goods” as such term is defined in the Uniform Commercial
Code as in effect on the date hereof in the State of New York.

 

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“Health-Care-Insurance Receivable” shall mean any “health-care-insurance
receivable” as such term is defined in the Uniform Commercial Code as in effect
on the date hereof in the State of New York.
“Hedging Creditors” shall have the meaning provided in the recitals of this
Agreement.
“Hedging Obligations” shall have the meaning provided in the definition of
“Obligations” in this Article IX.
“Indemnitee” shall have the meaning provided in Section 8.1 hereof.
“Initial New Senior Notes” shall mean, collectively, (i) the Borrower’s 7.25%
Senior Secured Notes due 2013 in an initial aggregate principal amount equal to
$625,000,000, (ii) the Borrower’s 7.625% Senior Secured Notes due 2016 in an
initial aggregate principal amount equal to $775,000,000, and (iii) the
Borrower’s 7.75% Senior Secured Notes due 2018 in an initial aggregate principal
amount equal to $250,000,000, in each case issued pursuant to the New Senior
Notes Indenture, as in effect on the Fourth Restatement Effective Date and as
the same may be amended, modified and/or supplemented from time to time in
accordance with the terms thereof and the Credit Agreement.
“Instrument” shall mean “instrument” as such term is defined in the Uniform
Commercial Code as in effect on the date hereof in the State of New York;
provided that the term “Instrument” shall not include (x) any Instrument (as
defined above in the absence of this proviso) pledged pursuant to the Pledge
Agreement or (y) the LSB Note (as defined in the Pledge Agreement).
“Inventory” shall mean merchandise, inventory and goods, and all additions,
substitutions and replacements thereof and all accessions thereto, wherever
located, together with all goods, supplies, incidentals, packaging materials,
labels, materials and any other items used or usable in manufacturing,
processing, packaging or shipping same; in all stages of production — from raw
materials through work-in-process to finished goods — and all products and
proceeds of whatever sort and wherever located and any portion thereof which may
be returned, rejected, reclaimed or repossessed by the Collateral Agent from any
Assignor’s customers, and shall specifically include all “inventory” as such
term is defined in the Uniform Commercial Code as in effect on the date hereof
in the State of New York, now or hereafter owned by any Assignor.
“Investment Property” shall mean “investment property” as such term is defined
in the Uniform Commercial Code as in effect on the date hereof in the State of
New York, provided that the term “Investment Property” shall not include
(i) Collateral (as defined in the Pledge Agreement) pledged pursuant to the
Pledge Agreement or (ii) “investment property” excluded pursuant to the
definition of “Investment Property” contained in the Pledge Agreement.
“Lender Creditors” shall have the meaning provided in the recitals of this
Agreement.
          “Lender Secured Creditors” shall have the meaning provided in the
recitals of this Agreement.
          “Lenders” shall have the meaning provided in the recitals of this
Agreement.

 

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“Letter-of-Credit Rights” shall mean “letter-of-credit rights” as such term is
defined in the Uniform Commercial Code as in effect on the date hereof in the
State of New York.
“Liens” shall mean any security interest, mortgage, pledge, lien, claim, charge,
encumbrance, title retention agreement, lessor’s interest in a financing lease
or analogous instrument, in, of, or on an Assignor’s property.
“Location” of any Assignor, shall mean such Assignor’s “location” as determined
pursuant to Section 9-307 of the UCC.
“Marks” shall mean all right, title and interest in and to any United States or
foreign trademarks, service marks and trade names now held or hereafter acquired
by any Assignor, including any registration or application for registration of
any trademarks and service marks now held or hereafter acquired by an Assignor,
which are registered in the United States Patent and Trademark Office or the
equivalent thereof in any State of the United States or in any foreign country,
as well as any unregistered marks used by any Assignor, and any trade dress
including logos, designs, company names, business names, fictitious business
names and other business identifiers used by any Assignor in the United States
or any foreign country.
“New Senior Notes” shall mean (i) the Initial New Senior Notes, (ii) the
Exchange Senior Notes and (iii) the Additional Senior Notes, in each case as the
same may be amended, modified and/or supplemented from time to time in
accordance with the terms thereof and the Credit Agreement.
“New Senior Notes Creditors” shall mean the New Senior Notes Trustee and the
holders of the New Senior Notes.
“New Senior Notes Documents” shall mean the New Senior Notes and the New Senior
Notes Indenture.
“New Senior Notes Indenture” shall mean the Indenture, dated as of May 31, 2006,
among the Borrower, the Subsidiary Guarantors and The Bank of New York, as
trustee, as in effect on the Fourth Restatement Effective Date and as the same
may be amended, modified and/or supplemented from time to time in accordance
with the terms thereof and the Credit Agreement.
“New Senior Notes Obligations” shall have the meaning provided in the definition
of “Obligations” in this Article IX.
“New Senior Notes Trustee” shall mean the trustee under the New Senior Notes
Indenture.
“Non-U.S. Deposit Account” has the meaning provided in Section 3.9(a).
“Noticed Event of Default” shall mean (i) an Event of Default with respect to a
Credit Party under Section 9.05 of the Credit Agreement and (ii) any other Event
of Default in respect of which the Collateral Agent has given any Credit
Agreement Party notice that such Event of Default constitutes a “Noticed Event
of Default.”
“Notified Non-Credit Agreement Event of Default” means (i) the acceleration of
the maturity of any Existing Senior Notes, New Senior Notes or Refinancing
Senior Notes or the failure to pay

 

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at maturity any Existing Senior Notes, New Senior Notes or Refinancing Senior
Notes, or the occurrence of any bankruptcy or insolvency Event of Default under
the Existing Senior Notes Indenture, the New Senior Notes Indenture or the
Refinancing Senior Notes Indenture, (ii) any Event of Default under a Secured
Credit Card Agreement or (iii) any Event of Default under a Secured Hedging
Agreement, in the case of any event described in clause (i), (ii) or (iii) to
the extent the Existing Senior Notes Trustee, the New Senior Notes Trustee, the
Refinancing Senior Notes Trustee, the relevant Credit Card Issuer or the
relevant Hedging Creditor, as the case may be, has given written notice to the
Collateral Agent that a “Notified Non-Credit Agreement Event of Default” exists;
provided that such written notice may only be given if such Event of Default is
continuing and, provided further, that any such Notified Non-Credit Agreement
Event of Default shall cease to exist (I) once there is no longer any Event of
Default under the Existing Senior Notes Indenture, the New Senior Notes
Indenture, the Refinancing Senior Notes Indenture, the respective Secured Credit
Card Agreement or the respective Secured Hedging Agreement, as the case may be,
in existence, (II) in the case of an Event of Default under the Existing Senior
Notes Indenture, the New Senior Notes Indenture or the Refinancing Senior Notes
Indenture, after all Existing Senior Notes Obligations, New Senior Notes
Obligations or Refinancing Senior Notes Obligations, as the case may be, have
been repaid in full, (III) in the case of an Event of Default under a Secured
Credit Card Agreement or Secured Hedging Agreement, such Secured Credit Card
Agreement or Secured Hedging Agreement, as the case may be, has been terminated
and all Credit Card Obligations or Hedging Obligations, as the case may be,
thereunder have been repaid in full, (IV) in the case of an Event of Default
under the Existing Senior Notes Indenture, the New Senior Notes Indenture or the
Refinancing Senior Notes Indenture, if the Existing Senior Notes Creditors, the
New Senior Notes Creditors or the Refinancing Senior Notes Creditors, as the
case may be, holding at least a majority of the aggregate principal amount of
the outstanding Existing Senior Notes, New Senior Notes or the Refinancing
Senior Notes, as the case may be, at such time have rescinded such written
notice and (V) in the case of an Event of Default under a Secured Credit Card
Agreement or Secured Hedging Agreement, the requisite Credit Card Issuers with
Credit Card Obligations or Hedging Creditors with Hedging Obligations, as the
case may be, thereunder at such time have rescinded such written notice.
“Obligations” shall mean (i) the full and prompt payment when due (whether at
stated maturity, by acceleration or otherwise) of all obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and liabilities of each Assignor, now
existing or hereafter incurred under, arising out of or in connection with each
Credit Document to which it is a party (including, without limitation,
indemnities, fees and interest (including all interest that accrues after the
commencement of any case, proceeding or other action relating to the bankruptcy,
insolvency, reorganization or similar proceeding of the Borrower or any other
Credit Party at the rate provided for in the respective documentation, whether
or not a claim for post-petition interest is allowed in any such proceeding))
and the due performance and compliance by each Assignor with the terms of each
such Credit Document (all such obligations and liabilities under this clause
(i), except to the extent consisting of obligations or indebtedness with respect
to Secured Hedging Agreements, being herein collectively called the “Credit
Document Obligations”); (ii) the full and prompt payment when due (whether at
the stated maturity, by acceleration or otherwise) of all obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and liabilities of each Assignor, now
existing or hereafter incurred under, arising out of or in

 

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connection with each Secured Credit Card Agreement, including all obligations,
if any, under a Guaranty in respect of any Secured Credit Card Agreement and all
interest that accrues after the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency, reorganization or similar
proceeding of the Borrower or any other Credit Party at the rate provided for in
the respective documentation, whether or not a claim for post-petition interest
is allowed in any such proceeding (all such obligations and indebtedness under
this clause (ii) being herein collectively called the “Credit Card
Obligations”); (iii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and liabilities of each Assignor, now
existing or hereafter incurred under, arising out of or in connection with each
Secured Hedging Agreement, including all obligations, if any, under a Guaranty
in respect of any Secured Hedging Agreement and all interest that accrues after
the commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency, reorganization or similar proceeding of the Borrower or
any other Credit Party at the rate provided for in the respective documentation,
whether or not a claim for post-petition interest is allowed in any such
proceeding (all such obligations and indebtedness under this clause (iii) being
herein collectively called the “Hedging Obligations”); (iv) the full and prompt
payment when due (whether at stated maturity, by acceleration or otherwise) of
all obligations (including obligations which, but for the automatic stay under
Section 362(a) of the Bankruptcy Code, would become due) and liabilities of each
Assignor, now existing or hereafter incurred under, arising out of or in
connection with each Existing Senior Notes Document to which it is a party
(including all interest that accrues after the commencement of any case,
proceeding or other action relating to the bankruptcy, insolvency,
reorganization or similar proceeding of the Borrower or any other Credit Party
at the rate provided for in the respective documentation, whether or not a claim
for post-petition interest is allowed in any such proceeding) and the due
performance and compliance by each Assignor with the terms of each such Existing
Senior Notes Document (all such obligations and liabilities under this clause
(iv), being herein collectively called the “Existing Senior Notes Obligations”);
(v) the full and prompt payment when due (whether at the stated maturity, by
acceleration or otherwise) of all obligations (including obligations which, but
for the automatic stay under Section 362(a) of the Bankruptcy Code, would become
due) and liabilities of each Assignor, now existing or hereafter incurred under,
arising out of or in connection with each New Senior Notes Document to which it
is a party (including all interest that accrues after the commencement of any
case, proceeding or other action relating to the bankruptcy, insolvency,
reorganization or similar proceeding of the Borrower or any other Credit Party
at the rate provided for in the respective documentation, whether or not a claim
for post-petition interest is allowed in any such proceeding) and the due
performance and compliance by each Assignor with the terms of each such New
Senior Notes Document (all such obligations and liabilities under this clause
(v) being herein collectively called the “New Senior Notes Obligations”);
(vi) the full and prompt payment when due (whether at stated maturity, by
acceleration or otherwise) of all obligations (including obligations which, but
for the automatic stay under Section 362(a) of the Ba nkruptcy Code, would
become due) and liabilities of each Assignor, now existing or hereafter incurred
under, arising out of or in connection with each Refinancing Senior Notes
Document to which it is a party (including all interest that accrues after the
commencement of any case, proceeding or other action relating to the bankruptcy,
insolvency, reorganization or similar proceeding of the Borrower or any other
Credit Party at the rate provided for in the respective documentation, whether
or not a claim for

 

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post-petition interest is allowed in any such proceeding) and the due
performance and compliance by each Assignor with the terms of each such
Refinancing Senior Notes Document (all such obligations and liabilities under
this clause (vi), being herein collectively called the “Refinancing Senior Notes
Obligations”); (vii) any and all sums advanced by the Collateral Agent or
Pledgee in order to preserve the Collateral or preserve its security interest in
the Collateral; (viii) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations, or liabilities of each Assignor
referred to in clauses (i), (ii), (iii), (iv), (v), (vi) and (vii), after an
Event of Default shall have occurred and be continuing, the reasonable expenses
of re-taking, holding, preparing for sale or lease, selling or otherwise
disposing of or realizing on the Collateral, or of any exercise by the
Collateral Agent or Pledgee of its rights hereunder, together with reasonable
attorneys’ fees and court costs; and (ix) all amounts paid by any Indemnitee as
to which such Indemnitee has the right to reimbursement under Section 8.1
hereof.
“Patents” shall mean any United States or foreign patent with respect to which
any Assignor now or hereafter has any right, title or interest, and any
divisions, continuations (including, but not limited to, continuations-in-parts)
and improvements thereof, as well as any application for a United States or
foreign patent now or hereafter made by any Assignor.
“Perfected Deposit Account” shall mean, as to any Assignor, each Deposit Account
of such Assignor other than an Excluded Deposit Account.
“Permits” shall mean, to the extent permitted to be assigned by the terms
thereof or by applicable law, all licenses, permits, rights, orders, variances,
franchises or authorizations (including certificates of need) of or from any
governmental authority or agency.
“Permitted Lien” shall mean the Liens permitted to be outstanding under
Section 8.03 of the Credit Agreement (or, after the CA Termination Date, the
Credit Agreement as in effect immediately prior to the occurrence of the CA
Termination Date).
“Principal Property” shall have the meaning provided in the Existing Senior
Notes Indenture, the New Senior Notes Indenture or the Refinancing Senior Notes
Indenture (in each case as in effect on the date hereof), as the context may
require.
“Proceeds” shall have the meaning assigned that term under the Uniform
Commercial Code as in effect in the State of New York on the date hereof or
under other relevant law and, in any event, shall include, but not be limited
to, (i) any and all proceeds of any insurance, indemnity, warranty or guaranty
payable to the Collateral Agent or an Assignor from time to time with respect to
any of the Collateral, (ii) any and all payments (in any form whatsoever) made
or due and payable to an Assignor from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any governmental authority (or any person acting under
color of governmental authority) and (iii) any and all other amounts from time
to time paid or payable under or in connection with any of the Collateral.
“Pro Rata Share” shall have the meaning provided in Section 7.4(b) of this
Agreement.
“RAI Senior Notes Obligations” shall mean, collectively, the New Senior Notes
Obligations and the Refinancing Senior Notes Obligations.

 

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“Receivable” shall mean any “account” as such term is defined in the Uniform
Commercial Code as in effect on the date hereof in the State of New York, and in
any event shall include but shall not be limited to, all rights to payment of
any monetary obligation, whether or not earned by performance, (i) for property
that has been or is to be sold, leased, licensed, assigned or otherwise disposed
of, (ii) for services rendered or to be rendered, (iii) for a policy of
insurance issued or to be issued, (iv) for a secondary obligation incurred or to
be incurred, (v) for energy provided or to be provided, (vi) for the use or hire
of a vessel under a charter or other contract, (vii) arising out of the use of a
credit or charge card or information contained on or for use with the card, or
(viii) as winnings in a lottery or other game of chance operated or sponsored by
a State, governmental unit of a State, or person licensed or authorized to
operate the game by a State or governmental unit of a State. Without limiting
the foregoing, the term “account” shall include all Health-Care-Insurance
Receivables.
“Refinancing Senior Notes” shall have the meaning provided in the Credit
Agreement.
“Refinancing Senior Notes Creditors” shall mean the Refinancing Senior Notes
Trustee and the holders of the Refinancing Senior Notes.
“Refinancing Senior Notes Documents” shall mean, collectively, the Refinancing
Senior Notes and the Refinancing Senior Notes Indenture.
“Refinancing Senior Notes Indenture” shall mean one or more indentures entered
into from time to time providing for the issuance of Refinancing Senior Notes by
the Borrower, in each case as the same may be amended, modified and/or
supplemented from time to time in accordance with the terms thereof and the
Credit Agreement.
“Refinancing Senior Notes Obligations” shall have the meaning provided in the
definition of “Obligations” in this Article IX.
“Refinancing Senior Notes Trustee” shall mean, collectively, the trustee and/or
trustees under the Refinancing Senior Notes Indenture.
“Registered Organization” shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
“Requisite Creditors” shall have the meaning provided in Section 10.2 hereof.
“Restricted Assignor” shall mean Lane and Santa Fe.
“RJRTH” shall have the meaning provided in the recitals to this Agreement.
“RJRTH Intercompany Note Creditor” shall have the meaning provided in the Pledge
Agreement.
“RJRTH Intercompany Note Obligations” shall have the meaning provided in the
Pledge Agreement.

 

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“Secured Credit Card Agreement” shall have the meaning provided in the recitals
of this Agreement.
“Secured Creditors” shall mean, collectively, the Lender Secured Creditors, the
Existing Senior Notes Creditors, the New Senior Notes Creditors and the
Refinancing Senior Notes Creditors.
“Secured Debt Agreements” shall mean each Credit Document, each Secured Credit
Card Agreement, each Secured Hedging Agreement, each Existing Senior Notes
Document, each New Senior Notes Document and each Refinancing Senior Notes
Document.
          “Secured Hedging Agreements” shall have the meaning provided in the
recitals of this Agreement.
“Security” shall mean “security” as such term is defined in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
“Software” shall mean “software” as such term is defined in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
“Specified Existing Senior Notes Assignor” shall mean the Borrower, RJRTH and
each other Assignor with Existing Senior Notes Obligations that is a Restricted
Subsidiary (as defined in the Existing Senior Notes Indenture).
“Specified RAI Senior Notes Assignor” shall mean the Borrower and each Assignor
with RAI Senior Notes Obligations that is a Restricted Subsidiary (as defined in
the New Senior Notes Indenture).
“Supporting Obligations” shall mean any “supporting obligation” as such term is
defined in the Uniform Commercial Code as in effect on the date hereof in the
State of New York, now or hereafter owned by any Assignor, or in which any
Assignor has any rights, and, in any event, shall include, but shall not be
limited to all of such Assignor’s rights in any Letter-of-Credit Right or
secondary obligation that supports the payment or performance of, and all
security for, any Receivable, Chattel Paper, Document, General Intangible,
Instrument or Investment Property.
“Tangible Chattel Paper” shall mean “tangible chattel paper” as such term is
defined in the Uniform Commercial Code as in effect on the date hereof in the
State of New York.
“Termination Date” shall have the meaning provided in Section 10.9 hereof.
“Timber-to-be-Cut” shall mean “timber-to-be-cut” as such term is used in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.
“Trade Secret Rights” shall mean the rights of an Assignor in any Trade Secret
it holds.
“Trade Secrets” means any secretly held existing engineering and other data,
information, production procedures and other know-how relating to the design,
manufacture, assembly,

 

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installation, use, operation, marketing, sale and servicing of any products or
business of an Assignor worldwide whether written or not written.
“Unrestricted Assignor” shall mean each Assignor other than a Restricted
Assignor.
ARTICLE X
MISCELLANEOUS
          10.1 Notices. All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telex, facsimile
transmission or cable communication) and mailed, telegraphed, telexed,
telecopied, cabled or delivered (including by way of overnight courier):
     (i) if to any Assignor, at its address contained in the Credit Agreement
(for the Credit Agreement Parties) or the Subsidiary Guaranty (for the other
Assignors);
     (ii) if to the Collateral Agent, at:
JPMorgan Chase Bank, N.A.
270 Park Avenue
New York, New York 10017
Attn.: Raju Nanoo
Tel. No.: 212-270-2272
Fax. No.: 212-270-5120
     (iii) if to any Lender (other than the Collateral Agent), at such address
as such Lender shall have specified in the Credit Agreement;
     (iv) if to any Credit Card Issuer, at such address as such Credit Card
Issuer shall have specified in writing to the Assignors and the Collateral
Agent;
     (v) if to any Hedging Creditor, at such address as such Hedging Creditor
shall have specified in writing to the Assignors and the Collateral Agent;
     (vi) if to any Existing Senior Notes Creditor, at such address of the
Existing Senior Notes Trustee as the Existing Senior Notes Trustee shall have
specified in writing to the Assignors and the Collateral Agent;
     (vii) if to any New Senior Notes Creditor, at such address of the New
Senior Notes Trustee as the New Senior Notes Trustee shall have specified in
writing to the Assignors and the Collateral Agent;
     (viii) if to any Refinancing Senior Notes Creditor, at such address of the
Refinancing Senior Notes Trustee as the Refinancing Senior Notes Trustee shall
have specified in writing to the Assignors and the Collateral Agent;

 

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or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder. Except as
otherwise expressly provided herein, all such notices and communications shall
be deemed to have been duly given or made when received.
          10.2 Waiver; Amendment. (a) None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
unless in writing duly signed by the Collateral Agent (with the consent of
(x) if prior to the CA Termination Date, the Required Lenders or, to the extent
required by Section 12.12 of the Credit Agreement, all of the Lenders and (y) if
on or after the CA Termination Date, the holders of a majority of the
outstanding principal amount of the Obligations remaining outstanding) and each
Assignor affected thereby (it being understood that the addition or release of
any Assignor hereunder shall not constitute a change, waiver, modification or
variance affecting any Assignor other than the Borrower and the Assignor so
added or released), provided that any change, waiver, modification or variance
affecting the rights and benefits of a single Class of Secured Creditors (and
not all Secured Creditors in a like or similar manner) shall require the written
consent of the Requisite Creditors of such Class of Secured Creditors; provided,
however, that technical modifications may be made to this Agreement without the
consent of a given Class of Secured Creditors affected thereby if such
modifications are intended to conform the Collateral pledge requirements of this
Agreement with the pledge requirements of the relevant Secured Debt Agreements
to which such Class of Secured Creditors is a party. For the purpose of this
Agreement, the term “Class” shall mean each class of Secured Creditors, i.e.,
whether (1) the Lender Creditors as holders of the Credit Document Obligations,
(2) the Credit Card Issuers as holders of the Credit Card Obligations, (3) the
Hedging Creditors as holders of the Hedging Obligations, (4) the Existing Senior
Notes Creditors as holders of the Existing Senior Notes Obligations, (5) the New
Senior Notes Creditors as holders of the New Senior Notes Obligations or (6) the
Refinancing Senior Notes Creditors as holders of the Refinancing Senior Notes
Obligations. For the purpose of this Agreement, the term “Requisite Creditors”
of any Class shall mean each of (1) with respect to each of the Credit Document
Obligations, the Required Lenders, (2) with respect to the Credit Card
Obligations, the holders of at least a majority of all Credit Card Obligations
outstanding from time to time, (3) with respect to the Hedging Obligations, the
holders of at least a majority of all Hedging Obligations outstanding from time
to time, (4) with respect to the Existing Senior Notes Obligations, the holders
of at least a majority of the outstanding principal amount of the Existing
Senior Notes, (5) with respect to the New Senior Notes Obligations, the holders
of at least a majority of the outstanding principal amount of the New Senior
Notes and (6) with respect to the Refinancing Senior Notes Obligations, the
holders of at least a majority of the outstanding principal amount of the
Refinancing Senior Notes.
          (b) No delay on the part of the Collateral Agent in exercising any of
its rights, remedies, powers and privileges hereunder or partial or single
exercise thereof, shall constitute a waiver thereof. No notice to or demand on
any Assignor shall constitute a waiver of any of the rights of the Collateral
Agent to any other or further action without notice or demand to the extent such
action is permitted to be taken by the Collateral Agent without notice or demand
under the terms of this Agreement.

 

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          10.3 Obligations Absolute. The obligations of each Assignor hereunder
shall remain in full force and effect without regard to, and shall not be
impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of any Assignor; (b) any
exercise or non-exercise, or any waiver of, any right, remedy, power or
privilege under or in respect of this Agreement, any other Credit Document or
any other Secured Debt Agreement, except as specifically set forth in a waiver
granted pursuant to Section 10.2 hereof; or (c) any amendment to or modification
of any other Credit Document or any other Secured Debt Agreement or any security
for any of the Obligations; whether or not any Assignor shall have notice or
knowledge of any of the foregoing. The rights and remedies of the Collateral
Agent herein provided are cumulative and not exclusive of any rights or remedies
which the Collateral Agent would otherwise have.
          10.4 Successors and Assigns. This Agreement shall be binding upon each
Assignor and its successors and assigns and shall inure to the benefit of the
Collateral Agent and its successors and assigns. All agreements, statements,
representations and warranties made by such Assignor herein or in any
certificate or other instrument delivered by each Assignor or on its behalf
under this Agreement shall be considered to have been relied upon by the Secured
Creditors and shall survive the execution and delivery of this Agreement, the
other Credit Documents and the other Secured Debt Agreements, regardless of any
investigation made by the Secured Creditors on their behalf.
          10.5 Headings Descriptive. The headings of the several sections of
this Agreement are inserted for convenience only and shall not in any way affect
the meaning or construction of any provision of this Agreement.
          10.6 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
          10.7 Governing Law. This Agreement and the rights and obligations of
the parties hereunder shall be construed in accordance with and governed by the
law of the State of New York.
          10.8 Assignors’ Duties. It is expressly agreed, anything herein
contained to the contrary notwithstanding, that each Assignor shall remain
liable to perform all of the obligations, if any, assumed by it with respect to
the Collateral and the Collateral Agent shall not have any obligations or
liabilities with respect to any Collateral by reason of or arising out of this
Agreement, nor shall the Collateral Agent be required or obligated in any manner
to perform or fulfill any of the obligations of any Assignor under or with
respect to any Collateral.
          10.9 Termination; Release. (a) After the Termination Date (as defined
below), this Agreement shall terminate (provided that all indemnities set forth
herein including, without limitation, in Article VIII hereof shall survive any
such termination) and the Collateral Agent, at the request and expense of the
respective Assignor, will execute and deliver to such Assignor a proper
instrument or instruments acknowledging the satisfaction and termination of this

 

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Agreement as provided above, and will duly assign, transfer and deliver to such
Assignor (without recourse and without any representation or warranty) such of
the Collateral as may be in the possession of the Collateral Agent and as has
not theretofore been sold or otherwise applied or released pursuant to this
Agreement, together with any moneys at the time held by the Collateral Agent
hereunder. As used in this Agreement, (i) “CA Termination Date” shall mean the
date upon which the Total Commitment has been terminated, no Letter of Credit or
Note under the Credit Agreement is outstanding and all other Credit Document
Obligations have been paid in full in cash (other than arising from indemnities
for which no request for payment has been made) and (ii) “Termination Date”
shall mean the date upon which (x) the CA Termination Date shall have occurred
and (y) if (but only if) a Notified Non-Credit Agreement Event of Default shall
have occurred and be continuing on the CA Termination Date (and after giving
effect thereto), either (I) such Notified Non-Credit Agreement Event of Default
shall have been cured or waived by the requisite holders of the relevant
Obligations subject to such Notified Non-Credit Agreement Event of Default or
(II) all Secured Credit Card Agreements and Secured Hedging Agreements (if any)
giving rise to a Notified Non-Credit Agreement Event of Default shall have been
terminated and all Obligations subject to such Notified Non-Credit Agreement
Event of Default shall have been paid in full (other than arising from
indemnities for which no request for payment has been made).
          (b) So long as no Notified Non-Credit Agreement Event of Default has
occurred and is continuing, in the event that (x) prior to the CA Termination
Date, (i) any part of the Collateral is sold or otherwise disposed of in
connection with a sale or other disposition permitted by Section 8.02 of the
Credit Agreement (it being agreed for such purposes that a release will be
deemed “permitted by Section 8.02 of the Credit Agreement” if the proposed
transaction constitutes an exception to Section 8.02 of the Credit Agreement) or
(ii) all or any part of the Collateral is released at the direction of the
Required Lenders (or all the Lenders if required by Section 12.12 of the Credit
Agreement), and the proceeds of such sale or disposition or from such release
(if any) are applied in accordance with the terms of the Credit Agreement to the
extent required to be so applied or (y) on and after the CA Termination Date,
any part of the Collateral is sold or otherwise disposed of without violating
the Existing Senior Notes Documents, the New Senior Notes Documents, the
Refinancing Senior Notes Documents, the Secured Credit Card Agreements and the
Secured Hedging Agreements, the Collateral Agent, at the request and expense of
the respective Assignor will release such Collateral from this Agreement, duly
assign, transfer and deliver to such Assignor (without recourse and without any
representation or warranty) such of the Collateral as is then being (or has
been) so sold or released and as may be in possession of the Collateral Agent
and has not theretofore been released pursuant to this Agreement (it being
understood and agreed that upon the release of all or any portion of the
Collateral by the Collateral Agent at the direction of the Lenders as provided
above, the Lien on the Collateral in favor of the Credit Card Issuers, the
Hedging Creditors, the Existing Senior Notes Creditors, the New Senior Notes
Creditors and the Refinancing Senior Notes Creditors shall automatically be
released).
          (c) In addition to the foregoing, all Collateral shall be
automatically released (subject to reinstatement upon the occurrence of a new
Trigger Event) in accordance with Section 7.10(i) of the Credit Agreement.

 

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          (d) At any time that the relevant Assignor desires that the Collateral
Agent take any action to give effect to any release of Collateral pursuant to
the foregoing Section 10.9(a), (b) or (c), it shall deliver to the Collateral
Agent a certificate signed by an authorized officer describing the Collateral to
be released and certifying its entitlement to a release pursuant to the
applicable provisions of Sections 10.9(a), (b) or (c) and in such case the
Collateral Agent, at the request and expense of such Assignor, will execute such
documents as required to duly release such Collateral and to assign, transfer
and deliver to such Assignor or its designee (without recourse and without any
representation or warranty) such of the Collateral as is then being released and
as may be in the possession of the Collateral Agent. The Collateral Agent shall
have no liability whatsoever to any Secured Creditor as the result of any
release of Collateral by it as permitted by (or which the Collateral Agent in
good faith believes to be permitted by) this Section 10.9. Upon any release of
Collateral pursuant to Section 10.9(a), (b) or (c), so long as no Noticed Event
of Default is then in existence, none of the Secured Creditors shall have any
continuing right or interest in such Collateral, or the proceeds thereof
(subject to reinstatement rights upon the occurrence of a new Trigger Event in
the case of a release pursuant to Section 10.9(c)).
          10.10 Collateral Agent. The Collateral Agent will hold in accordance
with this Agreement all items of the Collateral at any time received under this
Agreement. By accepting the benefits of this Agreement, each Secured Creditor
acknowledges and agrees that the obligations of the Collateral Agent as holder
of the Collateral and interests therein and with respect to the disposition
thereof, and otherwise under this Agreement, are only those expressly set forth
in this Agreement and Annex M hereto. The Collateral Agent shall act hereunder
on the terms and conditions set forth in Section 11 of the Credit Agreement and
in Annex M hereto, the terms of which shall be deemed incorporated herein by
reference as fully as if the same were set forth herein in their entirety. In
the event that any provision set forth in Section 11 of the Credit Agreement in
respect of the Collateral Agent conflicts with any provision set forth in Annex
M hereto, the provisions of Annex M hereto shall govern (except that the Lenders
shall remain obligated to indemnify the Collateral Agent pursuant to Section 11
of the Credit Agreement, to the extent the Collateral Agent is not indemnified
by Secured Creditors pursuant to Annex M). Notwithstanding anything to the
contrary contained in Section 10.2 of this Agreement, this Section 10.10, and
the duties and obligations of the Collateral Agent set forth in this
Section 10.10, may not be amended or modified without the consent of the
Collateral Agent.
          10.11 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Collateral Agent.
          10.12 Additional Assignors. It is understood and agreed that any
Subsidiary of the Borrower that is required to become a party to this Agreement
after the date hereof pursuant to the requirements of the Credit Agreement shall
become an Assignor hereunder by (x) executing a counterpart hereof and/or an
assumption agreement in form and substance satisfactory to the Collateral Agent,
(y) delivering supplements to Annexes A through F hereto and Annexes I, J and K
hereto, as are necessary to cause such Annexes to be complete and accurate with
respect to such additional Assignor on such date and (z) taking all actions as

 

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specified in this Agreement and the Credit Agreement, in each case with all
documents required above to be delivered to the Collateral Agent and with all
documents and action required above to be taken to the reasonable satisfaction
of the Collateral Agent.
          10.13 No Third Party Beneficiaries. This Agreement is entered into
solely for the benefit of the parties hereto and their respective successors and
assigns and for the benefit of the Secured Creditors from time to time and their
respective successors and assigns and, except for the Secured Creditors and
their successors and assigns, there shall be no third party beneficiaries
hereof, nor shall any Person other than the parties hereto and their respective
successors and assigns, and the Secured Creditors and their respective
successors and assigns, be entitled to enforce the provisions hereof or have any
claims against any party hereto (or any Secured Creditor) or their successors
and assigns arising from, or under, this Agreement.
          10.14 Amendment and Restatement. Each of the Collateral Agent and each
of the Assignors hereby acknowledges and agrees that from and after the Fourth
Restatement Effective Date, this Agreement amends, restates and supersedes the
First Amended and Restated Security Agreement in its entirety.
*           *           *

 

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

            REYNOLDS AMERICAN INC., as an
      Assignor
      By:   /s/ Daniel A. Fawley       Name:   Daniel A. Fawley       Title:  
Senior Vice President & Treasurer    

            R.J. REYNOLDS TOBACCO HOLDINGS,
      INC., as an Assignor
      By:   /s/ Daniel A. Fawley       Name:   Daniel A. Fawley       Title:  
Senior Vice President & Treasurer    

            R.J. REYNOLDS TOBACCO COMPANY, as
      an Assignor
      By:   /s/ Daniel A. Fawley       Name:   Daniel A. Fawley       Title:  
Senior Vice President & Treasurer    

            RJR ACQUISITION CORP., as an Assignor
      By:   /s/ McDara P. Folan, III       Name:   McDara P. Folan, III      
Title:   Vice President & Assistant Secretary    

            GMB, INC., as an Assignor
      By:   By:  /s/ Daniel A. Fawley       Name:   Daniel A. Fawley      
Title:   Treasurer    

            FHS, INC., as an Assignor
      By:   /s/ Kathryn A. Premo       Name:   Kathryn A. Premo       Title:  
Treasurer  

 

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            R. J. REYNOLDS TOBACCO CO., as an
      Assignor
      By:   /s/ Daniel A. Fawley       Name:   Daniel A. Fawley       Title:  
Vice President & Treasurer    

            SANTA FE NATURAL TOBACCO
      COMPANY, INC., as an Assignor
      By:   /s/ Daniel A. Fawley       Name:   Daniel A. Fawley       Title:  
Assistant Treasurer    

            LANE LIMITED, as an Assignor
      By:   /s/ Daniel A. Fawley       Name:   Daniel A. Fawley       Title:  
Assistant Treasurer    

            CONWOOD COMPANY, L.P., as an Assignor
      By:   /s/ Daniel A. Fawley       Name:   Daniel A. Fawley       Title:  
Vice President & Treasurer    

            CONWOOD SALES CO., L.P., as an Assignor
      By:   Daniel A. Fawley       Name:   Daniel A. Fawley       Title:   Vice
President & Treasurer    

            ROSSWIL LLC, as an Assignor
      By:   /s/ Daniel A. Fawley       Name:   Daniel A. Fawley       Title:  
Vice President & Treasurer    

            CONWOOD HOLDINGS, INC.,
as an Assignor
      By:   /s/ Daniel A. Fawley       Name:   Daniel A. Fawley       Title:  
Vice President & Treasurer  

            NA HOLDINGS Inc., as an Assignor       By:   /s/ McDara P. Folan,
III       Name:   McDara P. Folan III       Title:   President  

 

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Acknowledged And Agreed:
JPMORGAN CHASE BANK,
     as Collateral Agent and Assignee

           
By
  /s/ Robert T. Sacks      
 
  Name:   Robert T. Sacks
 
  Title:   Managing Director

 

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  ANNEX G
 
  TO
 
  SECURITY AGREEMENT

ASSIGNMENT OF SECURITY INTEREST IN UNITED STATES
PATENTS AND TRADEMARKS
FOR GOOD AND VALUABLE CONSIDERATION, the sufficiency and receipt of which are
hereby acknowledged, [___], a [___] corporation (the “Assignor”) with principal
offices at                                         , hereby assigns and grants
to JPMORGAN CHASE BANK, N.A., as Collateral Agent, with principal offices at 270
Park Avenue, New York, New York 10017 (the “Assignee”), a security interest in
(i) all of Assignor’s right, title and interest in and to Assignor’s trademarks,
trademark registrations, and trademark applications more particularly set forth
on Schedule A attached hereto (the “Marks”), and all renewals thereof, (ii) all
of the Assignor’s right, title and interest in and to the patents and patent
applications (the “Patents”) set forth on Schedule B attached hereto, in each
case together with (iii) all Proceeds (as such term is defined in the Security
Agreement referred to below) of the Marks and Patents, (iv) the goodwill of the
business(es) with which the Marks are associated and (v) all causes of action
arising prior to or after the date hereof for infringement of any of the Marks
and Patents or unfair competition regarding the same.
This ASSIGNMENT OF SECURITY INTEREST is made to secure the satisfactory
performance and payment of all the Obligations of the Assignor, as such term is
defined in the Security Agreement, among the Assignor, the other assignors from
time to time party thereto and the Assignee, dated as of July 15, 2003, amended
and restated as of July 30, 2004, and as further amended and restated as of May
31, 2006 (as so amended and restated and as the same may be further amended,
modified, restated and/or supplemented from time to time, the “Security
Agreement”) and shall be effective as of the date of the Security Agreement.
Upon the termination of the Security Agreement pursuant to Section 10.9(a) of
the Security Agreement, the Assignee shall, upon satisfaction, execute,
acknowledge, and deliver to the Assignor an instrument in writing releasing the
security interest in the Marks acquired under this Assignment of Security
Interest.
This Assignment of Security Interest has been granted in conjunction with the
security interest granted to Assignee under the Security Agreement. The rights
and remedies of the Assignee with respect to the security interest granted
herein are without prejudice to, and are in addition to those set forth in the
Security Agreement, all terms and provisions of which are incorporated herein by
reference. In the event that any provisions of this Assignment of Security
Interest are deemed to conflict with the Security Agreement, the provisions of
the Security Agreement shall govern.
*      *      *

 

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Annex G
Page 2
IN WITNESS WHEREOF, the undersigned have executed this Assignment of Security
Interest as of the ___ day of ___,___.

            [                    ],
      as Assignor
      By:           Name:           Title:      

 

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Annex G
Page 3

            JPMORGAN CHASE BANK, N.A.,
      as Collateral Agent, and as Assignee
      By:           Name:           Title:      

 

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STATE OF NEW YORK
  )    
 
  ) ss.:
COUNTY OF NEW YORK
  )    

On this ___ day of ___, ___, before me personally came
                                         who, being duly sworn, did depose and
say that [s]he is                                          of [___], that [s]he
is authorized to execute the foregoing Assignment of Security Interest on behalf
of said corporation and that [s]he did so by authority of the Board of Directors
of said corporation.

                        Notary Public         

 

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STATE OF NEW YORK
  )    
 
  ) ss.:
COUNTY OF NEW YORK
  )  

On this ___ day of ___, ___, before me personally came
                                         who, being by me duly sworn, did state
as follows: that [s]he is                                          of JPMorgan
Chase Bank, N.A., that [s]he is authorized to execute the foregoing Assignment
of Security Interest on behalf of said corporation and that [s]he did so by
authority of the Board of Directors of said corporation.

                        Notary Public         

 

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  ANNEX H
 
  TO
 
  SECURITY AGREEMENT

FORM OF ASSIGNMENT OF SECURITY INTEREST
IN CERTAIN COPYRIGHTS
WHEREAS,                                                            , a        
                                  corporation (the “Assignor”), having its chief
executive office at
                                                            , is the owner of
all right, title and interest in and to the copyrights and associated copyright
registrations and applications for registration set forth in Schedule A attached
hereto;
WHEREAS, JPMORGAN CHASE BANK, N.A., as Collateral Agent, having its principal
offices at 270 Park Avenue, New York, NY 10017 (the “Assignee”), desires to
acquire a security interest in said copyrights and copyright registrations and
applications therefor; and
WHEREAS, the Assignor is willing to assign to the Assignee, and to grant to the
Assignee a security interest in and lien upon the copyrights and copyright
registrations and applications therefor described above.
NOW, THEREFORE, for good and valuable consideration, the receipt of which is
hereby acknowledged, and subject to the terms and conditions of the Security
Agreement, dated as of July 15, 2003. as amended and restated as of July 30,
2004, and as further amended and restated as of May 31, 2006 (as so amended and
restated and as the same may be further amended, modified, restated and/or
supplemented from time to time, the “Security Agreement”), the Assignor hereby
assigns to the Assignee, and grants to the Assignee a security interest in the
copyrights and copyright registrations and applications therefor set forth in
Schedule A attached hereto (the “Copyrights”), together with all Proceeds (as
such terms is defined in the Security Agreement) of the Copyrights.
This Assignment of Security Interest (this “Assignment”) has been granted in
conjunction with the security interest granted to the Assignee under the
Security Agreement. The rights and remedies of the Assignee with respect to the
security interest granted herein are without prejudice to, and are in addition
to those set forth in the Security Agreement, all terms and provisions of which
are incorporated herein by reference. In the event that any provisions of this
Assignment are deemed to conflict with the Security Agreement, the provisions of
the Security Agreement shall govern.

 

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Annex H
Page 2
     Executed at New York, New York, the ___ day of ___, ___.

                    ,    Assignor           

                  By           Name           Title:        

            JPMORGAN CHASE BANK, N.A.,
as Collateral Agent, as Assignee
      By           Name:           Title:      

 

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STATE OF NEW YORK
  )    
 
  ) ss.:
COUNTY OF NEW YORK
  )    

On this ___ day of ___, ___, before me personally came
                                                             , who being duly
sworn, did depose and say that [s]he is                                         
of                                          , that [s]he is authorized to
execute the foregoing Assignment on behalf of said corporation and that [s]he
did so by authority of the Board of Directors of said corporation.

                        Notary Public         

 

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STATE OF NEW YORK
  )    
 
  ) ss.:
COUNTY OF NEW YORK
  )    

On this ___day of ___, ___, before me personally came
                                                             , who being duly
sworn, did depose and say that [s]he is
                                                             of JPMORGAN CHASE
BANK, N.A., that [s]he is authorized to execute the foregoing Assignment on
behalf of said corporation and that [s]he did so by authority of the Board of
Directors of said corporation.

                        Notary Public         

 

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  ANNEX L
 
  TO
 
  SECURITY AGREEMENT

Form of Control Agreement Regarding Deposit Accounts
AGREEMENT (as amended, modified or supplemented from time to time, this
“Agreement”), dated as of ___, ___, among the undersigned assignor (the
“Assignor”), JPMORGAN CHASE BANK, N.A., not in its individual capacity but
solely as Collateral Agent (in such capacity and together with its successors or
assigns in such capacity, the “Collateral Agent”), and                      (the
“Deposit Account Bank”), as the bank (as defined in Section 9-102 of the UCC as
in effect on the date hereof in the State of
                                         (the “UCC”)) with which one or more
deposit accounts (as defined in Section 9-102 of the UCC) are maintained by the
Assignor (with all such deposit accounts now or at any time in the future
maintained by the Assignor with the Deposit Account Bank being herein called the
“Deposit Accounts”).
W I T N E S S E T H :
WHEREAS, the Assignor, various other Assignors and the Collateral Agent have
entered into a Security Agreement, dated as of July 15, 2003, as amended and
restated as of July 30, 2004, and as further amended and restated as of May 31,
2006 (as so amended and restated and as the same may be further amended,
modified, restated and/or supplemented from time to time, the “Security
Agreement”), under which, among other things, in order to secure the payment of
the Obligations (as defined in the Security Agreement), the Assignor has granted
a security interest to the Collateral Agent for the benefit of the Secured
Creditors (as defined in the Security Agreement) in all of the right, title and
interest of the Assignor in and into any and all deposit accounts (as defined in
Section 9-102 of the UCC) and in all moneys, securities, instruments and other
investments deposited therein from time to time (collectively, herein called the
“Collateral”); and
WHEREAS, the Assignor desires that the Deposit Account Bank enter into this
Agreement in order to establish “control” (as defined in Section 9-104 of the
UCC) in each Deposit Account at any time or from time to time maintained with
the Deposit Account Bank, and to provide for the rights of the parties under
this Agreement with respect to such Deposit Accounts;
NOW THEREFORE, in consideration of the premises and the mutual promises and
agreements contained herein, and for other valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
          1. Assignor’s Dealings with Deposit Accounts; Notice of Exclusive
Control. Until the Deposit Account Bank shall have received from the Collateral
Agent a Notice of Exclusive Control (as defined below), the Assignor shall be
entitled to present items drawn on and otherwise to withdraw or direct the
disposition of funds from the Deposit Accounts and give

 

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instructions in respect of the Deposit Accounts; provided, however, that the
Assignor may not, and the Deposit Account Bank agrees that it shall not permit
the Assignor to, without the Collateral Agent’s prior written consent, close any
Deposit Account. If the Collateral Agent shall give to the Deposit Account Bank
a notice of the Collateral Agent’s exclusive control of the Deposit Accounts,
which notice states that it is a “Notice of Exclusive Control” (a “Notice of
Exclusive Control”), only the Collateral Agent shall be entitled to withdraw
funds from the Deposit Accounts, to give any instructions in respect of the
Deposit Accounts and any funds held therein or credited thereto or otherwise to
deal with the Deposit Accounts.
          2. Collateral Agent’s Right to Give Instructions as to Deposit
Accounts. (a) Notwithstanding the foregoing or any separate agreement that the
Assignor may have with the Deposit Account Bank, the Collateral Agent shall be
entitled, for purposes of this Agreement, at any time following the delivery of
a Notice of Exclusive Control to give the Deposit Account Bank instructions as
to the withdrawal or disposition of any funds from time to time credited to any
Deposit Account, or as to any other matters relating to any Deposit Account or
any other Collateral, without further consent from the Assignor. The Assignor
hereby irrevocably authorizes and instructs the Deposit Account Bank, and the
Deposit Account Bank hereby agrees, to comply with any such instructions from
the Collateral Agent without any further consent from the Assignor. Such
instructions may include the giving of stop payment orders for any items being
presented to any Deposit Account for payment. The Deposit Account Bank shall be
fully entitled to rely on, and shall comply with, such instructions from the
Collateral Agent even if such instructions are contrary to any instructions or
demands that the Assignor may give to the Deposit Account Bank. In case of any
conflict between instructions received by the Deposit Account Bank from the
Collateral Agent and the Assignor, the instructions from the Collateral Agent
shall prevail.
(b) It is understood and agreed that the Deposit Account Bank’s duty to comply
with instructions from the Collateral Agent regarding the Deposit Accounts is
absolute, and the Deposit Account Bank shall be under no duty or obligation, nor
shall it have the authority, to inquire or determine whether or not such
instructions are in accordance with the Security Agreement or any other Credit
Document (as defined in the Security Agreement), nor seek confirmation thereof
from the Assignor or any other Person.
3. Assignor’s Exculpation and Indemnification of Depository Bank. The Assignor
hereby irrevocably authorizes and instructs the Deposit Account Bank, at any
time following the delivery of a Notice of Exclusive Control, to follow
instructions from the Collateral Agent regarding the Deposit Accounts even if
the result of following such instructions from the Collateral Agent is that the
Deposit Account Bank dishonors items presented for payment from any Deposit
Account. The Assignor further confirms that the Deposit Account Bank shall have
no liability to the Assignor for wrongful dishonor of such items in following
such instructions from the Collateral Agent. The Deposit Account Bank shall have
no duty to inquire or determine whether the Assignor’s obligations to the
Collateral Agent are in default or whether the Collateral Agent is entitled,
under any separate agreement between the Assignor and the Collateral Agent, to
give any such instructions. The Assignor further agrees to be responsible for
the Deposit Account Bank’s customary charges and to indemnify the Deposit
Account Bank from and to hold the Deposit Account Bank harmless against any
loss, cost or expense that the

 

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Deposit Account Bank may sustain or incur in acting upon instructions which the
Deposit Account Bank believes in good faith to be instructions from the
Collateral Agent.
4. Subordination of Security Interests; Deposit Account Bank’s Recourse to
Deposit Accounts. The Deposit Account Bank hereby subordinates any claims and
security interests it may have against, or with respect to, any Deposit Account
at any time established or maintained with it by the Assignor (including any
amounts, investments, instruments or other Collateral from time to time on
deposit therein) to the security interests of the Collateral Agent (for the
benefit of the Secured Creditors) therein, and agrees that no amounts shall be
charged by it to, or withheld or set-off or otherwise recouped by it from, any
Deposit Account of the Assignor or any amounts, investments, instruments or
other Collateral from time to time on deposit therein; provided that the Deposit
Account Bank may, however, from time to time debit the Deposit Accounts for any
of its customary charges in maintaining the Deposit Accounts or for
reimbursement for the reversal of any provisional credits granted by the Deposit
Account Bank to any Deposit Account, to the extent, in each case, that the
Assignor has not separately paid or reimbursed the Deposit Account Bank
therefor.
5. Representations, Warranties and Covenants of Deposit Account Bank. The
Deposit Account Bank represents and warrants to the Collateral Agent that:
          (a) The Deposit Account Bank constitutes a “bank” (as defined in
Section 9-102 of the UCC) and that the jurisdiction (determined in accordance
with Section 9-304 of the UCC) of the Deposit Account Bank for purposes of each
Deposit Account maintained by the Assignor with the Deposit Account Bank shall
be one or more States within the United States.
          (b) The Deposit Account Bank shall not permit any Assignor to
establish any demand, time, savings, passbook or other account with it which it
does not constitute a Deposit Account (as defined in Section 9-102 of the UCC).
(c) The account agreements between the Deposit Account Bank and the Assignor
relating to the establishment and general operation of the Deposit Accounts
provide, whether specifically or generally, that the laws of
                                         govern secured transactions relating to
the Deposit Accounts and that the Deposit Account Bank’s “jurisdiction” for
purposes of Section 9-304 of the UCC in respect of the Deposit Accounts is
                                        . The Deposit Account Bank will not,
without the Collateral Agent’s prior written consent, amend any such account
agreement so that the Deposit Account Bank’s jurisdiction for purposes of
Section 9-304 of the UCC is other than a jurisdiction permitted pursuant to
preceding clause (a). All account agreements in respect of each Deposit Account
in existence on the date hereof are listed on Annex A hereto and copies of all
such account agreements have been furnished to the Collateral Agent. The Deposit
Account Bank will promptly furnish to the Collateral Agent a copy of the account
agreement for each Deposit Account hereafter established by the Deposit Account
Bank for the Assignor.
(d) The Deposit Account Bank has not entered and will not enter, into any
agreement with any other Person by which the Deposit Account Bank is obligated
to comply with instructions from such other Person as to the disposition of
funds from any Deposit Account or other dealings with any Deposit Account or
other of the Collateral.

 

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Page 4
(e) On the date hereof, the Deposit Account Bank maintains no Deposit Accounts
for the Assignor other than the Deposit Accounts specifically identified in
Annex A hereto.
(f) Any items or funds received by the Deposit Account Bank for the Assignor’s
account will be credited to said Deposit Accounts specified in paragraph
(e) above or to any other Deposit Accounts hereafter established by the Deposit
Account Bank for the Assignor in accordance with this Agreement.
6. Deposit Account Statements and Information. The Deposit Account Bank agrees,
and is hereby authorized and instructed by the Assignor, to furnish to the
Collateral Agent upon its reasonable request, at its address indicated below,
copies of all account statements and other information relating to each Deposit
Account that the Deposit Account Bank sends to the Assignor and to disclose to
the Collateral Agent all other information reasonably requested by the
Collateral Agent regarding any Deposit Account. The Collateral Agent, for its
part, agrees not to make any request for information pursuant to this Section 6
unless a Default or Event of Default has occurred and is continuing.
7. Conflicting Agreements. This Agreement shall have control over any
conflicting agreement between the Deposit Account Bank and the Assignor.
8. Merger or Consolidation of Deposit Account Bank. Without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
any bank into which the Deposit Account Bank may be merged or with which it may
be consolidated, or any bank resulting from any merger to which the Deposit
Account Bank shall be a party, shall be the successor of the Deposit Account
Bank hereunder and shall be bound by all provisions hereof which are binding
upon the Deposit Account Bank and shall be deemed to affirm as to itself all
representations and warranties of the Deposit Account Bank contained herein.
9. Notices.
(a) All notices and other communications provided for in this Agreement shall be
in writing (including facsimile) and sent to the intended recipient at its
address or telex or facsimile number set forth below:
If to the Collateral Agent, at:
JPMorgan Chase Bank, N.A.
270 Park Avenue
New York, New York 10017
Attn.: Raju Nanoo
Tel. No.: 212-270-2272
Fax. No.: 212-270-5120

 

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Annex L
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If to the Assignor, at:
                                        
                                        
                                        
If to the Deposit Account Bank, at:
                                        
                                        
                                        
or, as to any party, to such other address or telex or facsimile number as such
party may designate from time to time by notice to the other parties.
(b) Except as otherwise provided herein, all notices and other communications
hereunder shall be delivered by hand or by commercial overnight courier
(delivery charges prepaid), or mailed, postage prepaid, or telexed or faxed,
addressed as aforesaid, and shall be effective (i) three business days after
being deposited in the mail (if mailed), (ii) when delivered (if delivered by
hand or courier) and (iii) or when transmitted with receipt confirmed (if
telexed or faxed); provided that notices to the Collateral Agent shall not be
effective until actually received by it.
10. Amendment. This Agreement may not be amended, modified or supplemented
except in writing executed and delivered by all the parties hereto.
11. Binding Agreement. This Agreement shall bind the parties hereto and their
successors and assign and shall inure to the benefit of the parties hereto and
their successors and assigns. Without limiting the provisions of the immediately
preceding sentence, the Collateral Agent at any time or from time to time may
designate in writing to the Deposit Account Bank a successor Collateral Agent
(at such time, if any, as such entity becomes the Collateral Agent under the
Security Agreement, or at any time thereafter) who shall thereafter succeed to
the rights of the existing Collateral Agent hereunder and shall be entitled to
all of the rights and benefits provided hereunder.
12. Continuing Obligations. The rights and powers granted herein to the
Collateral Agent have been granted in order to protect and further perfect its
security interests in the Deposit Accounts and other Collateral and are powers
coupled with an interest and will be affected neither by any purported
revocation by the Assignor of this Agreement or the rights granted to the
Collateral Agent hereunder or by the bankruptcy, insolvency, conservatorship or
receivership of the Assignor or the Deposit Account Bank or by the lapse of
time. The rights of the Collateral Agent hereunder and in respect of the Deposit
Accounts and the other Collateral, and the obligations of the Assignor and
Deposit Account Bank hereunder, shall continue in effect until the security
interests of Collateral Agent in the Deposit Accounts and such other Collateral
have been terminated and the Collateral Agent has notified the Deposit Account
Bank of such termination in writing.

 

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13. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
14. Counterparts. This Agreement may be executed in any number of counterparts,
all of which shall constitute one and the same instrument, and any party hereto
may execute this Agreement by signing and delivering one or more counterparts.
*      *       *

 

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ANNEX M
THE COLLATERAL AGENT1
1. Appointment. The Secured Creditors, by their acceptance of the benefits of
the Security Agreement to which this Annex M is attached (the “Security
Agreement”) hereby irrevocably designate JPMorgan Chase Bank, N.A., (and any
successor Collateral Agent) to act as specified herein and therein. Each Secured
Creditor hereby irrevocable authorizes, and each holder of any Obligation by the
acceptance of such Obligation and by the acceptance of the benefits of the
Security Agreement shall be deemed irrevocably to authorize, the Collateral
Agent to take such action on its behalf under the provisions of the Security
Agreement and any instruments and agreements referred to therein and to exercise
such powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of the Collateral Agent by the terms
hereof and thereof and such other powers as are reasonably incidental thereto.
The Collateral Agent may perform any of its duties hereunder or thereunder by or
through its authorized agents, sub-agents or employees. The Collateral Agent,
for itself and its successors and assigns, hereby accepts such appointment
created hereby upon the terms and conditions specified herein.
2. Nature of Duties. (a) The Collateral Agent shall have no duties or
responsibilities except those expressly set forth herein or in the Security
Agreement. The duties of the Collateral Agent shall be mechanical and
administrative in nature; the Collateral Agent shall not have by reason of this
Agreement, any other Credit Document or any other Secured Debt Agreement a
fiduciary relationship in respect of any Secured Creditor; and nothing in this
Agreement, any other Credit Document or any other Secured Debt Agreement,
expressed or implied, is intended to or shall be so construed as to impose upon
the Collateral Agent any obligations in respect of the Security Agreement except
as expressly set forth herein and therein.
          (b) The Collateral Agent shall not be responsible for insuring the
Collateral or for the payment of taxes, charges or assessments or discharging of
Liens upon the collateral or otherwise as to the maintenance of the Collateral.
          (c) The Collateral Agent shall not be required to ascertain or inquire
as to the performance by any Assignor of any of the covenants or agreements
contained in the Security Agreement, any other Credit Document or any other
Secured Debt Agreement.
          (d) The Collateral Agent shall be under no obligation or duty to take
any action under, or with respect to, the Security Agreement if taking such
action (i) would subject the Collateral Agent to a tax in any jurisdiction where
it is not then subject to a tax or (ii) would require the Collateral Agent to
qualify to do business, or obtain any license, in any jurisdiction where it is
not then so qualified or licensed or (iii) would subject the Collateral Agent to
in personam jurisdiction in any locations where it is not then so subject.
          (e) Notwithstanding any other provision of this Annex M, neither the
Collateral Agent nor any of its officers, directors, employees, affiliates or
agents shall, in its individual capacity, be personally liable for any action
taken or omitted to be taken by it in accordance
 

1   Unless otherwise defined herein, all capitalized terms used herein (x) and
defined in the Security Agreement, are used herein as therein defined and
(y) not defined in the Security Agreement, are used herein as defined in the
Credit Agreement referenced in the Security Agreement.

 

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Annex M
Page 2
with, or pursuant to this Annex M of, the Security Agreement, unless caused by
its or their own gross negligence or willful misconduct (as determined by a
court of competent jurisdiction in a final and non-appealable decision).
          (f) Notwithstanding any other provision of the Security Agreement or
this Annex M, the Collateral Agent shall not be responsible or liable for
perfecting, or maintaining the priority of, the Liens created pursuant to the
Security Agreement.
          3. Lack of Reliance on the Collateral Agent. Independently and without
reliance upon the Collateral Agent, each Secured Creditor, to the extent it
deems appropriate, has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of each Assignor and its
Subsidiaries in connection with the making and the continuance of the
Obligations and the taking or not taking of any action in connection therewith,
and (ii) its own appraisal of the creditworthiness of each Assignor and its
Subsidiaries, and the Collateral Agent shall have no duty or responsibility,
either initially or on a continuing basis, to provide any Secured Creditor with
any credit or other information with respect thereto, whether coming into its
possession before the extension of any Obligations or the purchase of any Notes,
Existing Senior Notes, New Senior Notes or Refinancing Senior Notes or at any
time or times thereafter. The Collateral Agent shall not be responsible or
liable in any manner whatsoever to any Secured Creditor for the correctness of
any recitals, statements, information, representations or warranties herein, in
the other Secured Debt Agreements or in any document, certificate or other
writing delivered in connection herewith or therewith or for the execution,
effectiveness, genuineness, validity, enforceability, perfection,
collectibility, priority or sufficiency of the Security Agreement or the
security interests granted thereunder or the financial condition of any Assignor
or any Subsidiary of any Assignor or be required to make any inquiry concerning
either the performance or observance of any of the terms, provisions or
conditions of the Security Agreement or any other Secured Debt Agreement, or the
financial condition of any Assignor or any Subsidiary of any Assignor, or the
existence or possible existence of any Default or Event of Default under any
Secured Debt Agreement. The Collateral Agent makes no representations as to the
value or condition of the Collateral or any part thereof, or as to the title of
any Assignor thereto or as to the security afforded by the Security Agreement.
          4. Certain Rights of the Collateral Agent. (a) No Secured Creditor
shall have the right to take any action with respect to (or against) any
Collateral, or cause the Collateral Agent to take any action with respect to (or
against) any Collateral, with only the Required Lenders (or in the specific
circumstances contemplated by (and subject to the terms of) Section 7.1, the
holders of a majority of the Applicable Obligations) having the right to direct
the Collateral Agent (such holders of Obligations so entitled to direct the
Collateral Agent, the “Required Secured Creditors”) by written instruction in
accordance with Section 4(d) hereof to take any such action. Except for actions
required to be taken by the Collateral Agent in accordance with the Security
Agreement, if the Collateral Agent shall request instructions from the Required
Secured Creditors with respect to any act or action (including failure to act)
in connection with the Security Agreement and the Required Secured Creditors
shall fail to instruct the Collateral Agent with respect to any act or action
(including failure to act and refrain from acting) in connection with the
Security Agreement, the Collateral Agent shall be entitled to refrain from such
act or taking such action unless and until it shall have received express
instructions from the

 

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Required Secured Creditors and to the extent requested, appropriate
indemnification in respect of actions to be taken, and the Collateral Agent
shall not incur liability to any Secured Creditor or any other Person by reason
of so refraining. Without limiting the foregoing, (x) no Secured Creditor shall
have any right of action whatsoever against the Collateral Agent as a result of
the Collateral Agent acting or refraining from acting hereunder or under the
Security Agreement in accordance with the instructions of the Required Secured
Creditors or as expressly provided in the Security Agreement and (y) without
limiting preceding clause (x), the Collateral Agent shall not be liable to any
Secured Creditor or any other Person for any action taken or omitted to be taken
by it hereunder or under the Security Agreement, unless caused by its gross
negligence or willful misconduct (as determined by a court of competent
jurisdiction in a final and non-appealable decision).
(b) Notwithstanding anything to the contrary contained herein (and subject to
Section 2(f) of this Annex M), the Collateral Agent is authorized, but not
obligated, (i) to take any action reasonably required to perfect or continue the
perfection of the liens on the Collateral for the benefit of the relevant
Secured Creditors and (ii) when instructions from the Required Secured Creditors
have been requested by the Collateral Agent but have not yet been received, to
take any action which the Collateral Agent, in good faith, believes to be
reasonably required to promote and protect the interests of the Secured
Creditors in the Collateral; provided that once instructions have been received,
the actions of the Collateral Agent shall be governed thereby and the Collateral
Agent shall not take any further action which would be contrary thereto.
(c) Notwithstanding anything to the contrary contained herein or in the Security
Agreement, the Collateral Agent shall not be required to take or refrain from
taking, and shall have no liability to any Secured Creditor for taking or
refraining from taking, any action that exposes or, in the good faith judgment
of the Collateral Agent may expose, the Collateral Agent or its officers,
directors, agents or employees to personal liability, unless the Collateral
Agent shall be adequately indemnified as provided herein or that is, or in the
good faith judgment of the Collateral Agent may be, contrary to the Security
Agreement, any other Secured Debt Agreement or applicable law.
(d) For purposes of the Security Agreement, each Secured Creditor shall appoint
a Person as such Secured Creditor’s authorized representative (each, an
“Authorized Representative”) for the purpose of giving or delivering any notices
or instructions thereunder. Any instructions given by the Required Secured
Creditors to the Collateral Agent pursuant to the Security Agreement shall be in
writing signed by the Authorized Representative(s) of the various Secured
Creditors comprising the Required Secured Creditors with respect to such
instructions and such instructions shall certify to and for the benefit of the
Collateral Agent that the Secured Creditors issuing or delivering such
instructions constitute the Required Secured Creditors for purposes of this
Section 4 and the instructions being delivered. The Collateral Agent shall be
entitled to conclusively and absolutely rely on such instructions and
certification as to the identity of the Required Secured Creditors with respect
to such instructions, and the Collateral Agent shall not be required to take any
action, and shall not be liable to any Secured Creditor for failing or refusing
to act, pursuant to any instructions which are not given or delivered by the
Authorized Representatives of various Secured Creditors comprising the Required
Secured Creditors with respect to such instructions. The parties hereto
acknowledge that the Authorized Representative

 

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of each of the Secured Creditors shall be (1) the Administrative Agent, in the
case of the Lender Creditors, (2) the Existing Senior Notes Trustee, in the case
of the Existing Senior Notes Creditors, (3) the New Senior Notes Trustee in the
case of the New Senior Notes Creditors, (4) the Refinancing Senior Notes
Trustee, in the case of the Refinancing Senior Notes Creditors, (5) in the case
of any Credit Card Issuer, such representative as may be designated by such
Credit Card Issuer by written notice to the Collateral Agent from time to time
and (6) in the case of any Hedging Creditor, such representative as may be
designated by such Hedging Creditor by written notice to the Collateral Agent
from time to time.
5. Reliance; Interpretation. The Collateral Agent shall be entitled to rely, and
shall be fully protected in relying, upon, any note, writing, resolution,
notice, statement, certificate, telex, teletype or telescopes message,
cablegram, radiogram, order or other document or telephone message signed, sent
or made by the proper Person or entity, and, with respect to all legal matters
pertaining hereto or to the Security Agreement and its duties thereunder and
hereunder, upon advice of counsel selected by it. If, in its good faith
judgment, the Collateral Agent reasonably believes that any instructions given
or delivered pursuant to the Security Agreement require judicial interpretation
or are invalid or otherwise contrary to the provisions of the Security
Agreement, any other Secured Debt Agreement or applicable law, the Collateral
Agent shall have the right to petition a court of competent jurisdiction to
determine the validity of, or otherwise interpret, any such instructions. In
such event, the Collateral Agent shall not be required to carry out such
instructions unless directed to do so, or it is determined that it may do so, by
such court.
6. Indemnification. To the extent the Collateral Agent is not reimbursed and
indemnified by the Assignors under the Security Agreement, the Secured Creditors
will reimburse and indemnify the Collateral Agent, in proportion to their
respective outstanding principal amounts (including, for this purpose, the
Stated Amount of outstanding Letters of Credit, as well as any unpaid primary
Obligations in respect of Secured Credit Card Agreements and Secured Hedging
Agreements, as outstanding principal) of Obligations, for and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against the Collateral Agent in
performing its duties hereunder, or in any way relating to or arising out of its
actions as Collateral Agent in respect of the Security Agreement except for
those resulting solely from the Collateral Agent’s own gross negligence or
willful misconduct (as determined by a court of competent jurisdiction in a
final and non-appealable decision). The indemnities set forth in this Section 6
shall survive the repayment of all Obligations, with the respective
indemnification at such time to be based upon the outstanding principal amounts
(determined as described above) of Obligations at the time of the respective
occurrence upon which the claim against the Collateral Agent is based or, if
same is not reasonably determinable, based upon the outstanding principal
amounts (determined as described above) of Obligations as in effect immediately
prior to the termination of the Security Agreement. The indemnities set forth in
this Section 6 are in addition to any indemnities provided by the Lenders to the
Collateral Agent pursuant to the Credit Agreement, with the effect being that
the Lenders shall be responsible for indemnifying the Collateral Agent to the
extent the Collateral Agent does not receive payments pursuant to this Section 6
from the Secured Creditors (although in such event, and upon the payment in full
of all such amounts owing to the Collateral Agent by the Lenders,

 

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the Lenders shall be subrogated to any rights of the Collateral Agent to receive
payment from the Secured Creditors).
          7. The Collateral Agent in its Individual Capacity. With respect to
its obligations as a lender under the Credit Agreement and any other Credit
Documents to which the Collateral Agent is a party, and to act as agent under
one or more of such Credit Documents, the Collateral Agent shall have the rights
and powers specified therein and herein for a “Lender”, or an “Agent”, as the
case may be, and may exercise the same rights and powers as though it were not
performing the duties specified herein; and the terms “Lenders”, “Required
Lenders”, “holders of Notes”, or any similar terms shall, unless the context
clearly otherwise indicates, include the Collateral Agent in its individual
capacity. The Collateral Agent and its affiliates may accept deposits from, lend
money to, and generally engage in any kind of banking, investment banking, trust
or other business with any Assignor or any Affiliate or Subsidiary of any
Assignor as if it were not performing the duties specified herein or in the
other Credit Documents, and may accept fees and other consideration from the
Assignors for services in connection with the Credit Agreement, the other Credit
Documents and otherwise without having to account for the same to the Secured
Creditors.
8. Holders. The Collateral Agent may deem and treat the payee of any Note or the
registered owner of any Existing Senior Note, New Senior Note or Refinancing
Senior Note as the owner thereof for all purposes hereof unless and until
written notice of the assignment, transfer or endorsement thereof, as the case
may be, shall have been filed with the Collateral Agent. Any request, authority
or consent of any Person who, at the time of making such request or giving such
authority or consent, is the holder of any Note or the registered owner of any
Existing Senior Note, New Senior Note or Refinancing Senior Note, shall be final
and conclusive and binding on any subsequent holder, transferee, assignee or
endorsee, as the case may be, of such Note, Existing Senior Note, New Senior
Note or Refinancing Senior Note, as the case may be, or of any Note, Existing
Senior Note, New Senior Note or Refinancing Senior Note, as the case may be,
issued in exchange therefor.
9. Resignation and Removal of the Collateral Agent. (a) The Collateral Agent may
resign from the performance of all of its functions and duties hereunder and
under the Security Agreement at any time by giving 30 Business Days’ prior
written notice to the Borrower and the Secured Creditors. Such resignation shall
take effect upon the appointment of a successor Collateral Agent pursuant to
clause (b) or (c) below.
(b) If a successor Collateral Agent shall not have been appointed within said 30
Business Day period by the Required Secured Creditors (with, so long as no Event
of Default then exists, the consent of the Borrower (such consent not to be
unreasonably withheld or delayed)), the Collateral Agent, with the consent
(unless an Event of Default shall exist, in which case no such consent shall be
required) of the Borrower (which consent shall not be unreasonably withheld or
delayed) shall then appoint a successor Collateral Agent who shall serve as
Collateral Agent hereunder or thereunder until such time, if any, such successor
Collateral Agent resigns and is replaced in accordance with the terms hereof.
(c) If no successor Collateral Agent has been appointed pursuant to clause
(b) above by the 30th Business Day after the date of such notice of resignation
was given by the Collateral Agent as a

 

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result of a failure by the Borrower to consent to the appointment of such a
successor Collateral Agent, (i) the Required Secured Creditors shall then
appoint a successor Collateral Agent who shall serve as Collateral Agent
hereunder or thereunder or (ii) if the Required Secured Creditors shall have
failed to appoint a successor Collateral Agent by the 35th Business Day after
the date such notice of resignation was given by the Collateral Agent, the
Collateral Agent may appoint (or petition a court of competent jurisdiction to
appoint) a successor Collateral Agent who shall serve as Collateral Agent
hereunder or thereunder, in either such case until such time, if any, as the
Required Secured Creditors appoint a successor Collateral Agent as provided
above.
(d) Notwithstanding anything to the contrary contained herein, the Required
Secured Creditors may remove the Collateral Agent by an instrument in writing
executed by the Required Secured Creditors and, thereupon, appoint a successor
Collateral Agent designated by the Required Secured Creditors (with, so long as
no Event of Default then exists, the consent of the Borrower (such consent not
to be unreasonably withheld or delayed)), effective as provided in Section 9(e)
below.
          (e) The resignation or removal of a Collateral Agent shall become
effective only upon the execution and delivery of such documents or instruments
as are necessary to transfer the rights and obligations of the Collateral Agent
under the Security Agreement and the recording or filing of such documents,
instruments or financing statements as may be necessary to maintain the priority
and perfection of any security interest granted by the Security Agreement.
Copies of each such document or instrument shall be delivered to each of the
Borrower, the Administrative Agent, the Existing Senior Notes Trustee, the New
Senior Notes Trustee and the Refinancing Senior Notes Trustee. The appointment
of a successor Collateral Agent pursuant to this Section 9 shall become
effective upon the acceptance of such appointment (and execution by such
successor of the documents, instruments or financing statements referred to
above) and such successor Collateral Agent shall succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Collateral
Agent.
          (f) After any resignation or removal hereunder of the Collateral
Agent, the indemnification provisions specified in this Annex M and in the
Security Agreement shall continue to inure to its benefit as to any actions
taken or omitted to be taken by it in connection with its agency hereunder while
it was Collateral Agent.
          10. Co-Collateral Agents; Separate Collateral Agents. (a) If at any
time or times it shall be necessary or prudent in order to conform to any law of
any jurisdiction in which any of the Collateral shall be located, or the
Collateral Agent shall be advised by counsel, satisfactory to it, that it is
necessary or prudent in the interest of the Collateral Agent or the Secured
Creditors, then the Collateral Agent shall be entitled to appoint one or more
sub-collateral agents or co-collateral agents, and in such case the Collateral
Agent, the Borrower and each of the other Assignors having an interest in the
Collateral located in the jurisdiction in which such separate or sub-collateral
agent or co-collateral agent is to act shall execute and deliver all instruments
and agreements necessary or proper to constitute another bank or trust company,
or one or more individuals approved by the Collateral Agent, either to act as
co-collateral agent or co-collateral agents jointly with the Collateral Agent
originally named herein or any successor or successors, or to act as a separate
or sub-collateral agent or agents of the Collateral Agent and the Secured
Creditors in respect of any or all of the Collateral. If the Borrower and each
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Assignors having an interest in the Collateral located in the jurisdiction in
which such separate or sub-collateral agent or co-collateral agent is to act
shall not have joined in the execution of such instruments or agreements within
10 days after the receipt of a written request from the Collateral Agent so to
do, or if a Default or an Event of Default shall be continuing, the Collateral
Agent may act under the foregoing provisions of this Section 10 without the
concurrence of the Borrower and the other Assignors, and the Borrower and each
of the other Assignors hereby irrevocably appoint the Collateral Agent as their
agent and attorney to act for them under the foregoing provisions of this
Section 10 in either of such contingencies.
          (b) Every separate or sub-collateral agent (and all references herein
to a “separate collateral agent” shall be deemed to refer also to a
“sub-collateral agent” or a “collateral sub-agent”) and every co-collateral
agent, other than any collateral agent which may be appointed as successor to
any Collateral Agent, shall, to the extent permitted by applicable law, be
appointed and act and be such, subject to the following provisions and
conditions, namely:
     (i) all rights, remedies, powers, duties and obligations conferred upon,
reserved to or imposed upon the Collateral Agent in respect of the custody,
control and management of monies, papers or securities shall be exercised solely
by the Collateral Agent hereunder;
     (ii) all rights, remedies, powers, duties and obligations conferred upon,
reserved to or imposed upon the Collateral Agent hereunder shall be conferred,
reserved or imposed and exercised or performed by the Collateral Agent and such
separate collateral agent or separate collateral agents or co-collateral agent
or co-collateral agents, jointly or severally, as shall be provided in the
instrument appointing such separate collateral agent or separate collateral
agents or co-collateral agent or co-collateral agents, except to the extent
that, under any law of any jurisdiction in which any particular act or acts are
to be performed, the Collateral Agent shall be incompetent or unqualified to
perform such act or acts, in which event such rights, remedies, powers, duties
and obligations shall be exercised and performed by such separate collateral
agent or separate collateral agents or co-collateral agent or co-collateral
agents;
     (iii) no power given hereby to, or which it is provided hereby may be
exercised by, any such separate collateral agent or separate collateral agents
or co-collateral agent or co-collateral agents shall be exercised hereunder by
such separate collateral agent or separate collateral agents or co-collateral
agent or co-collateral agents except (subject to applicable law) jointly with,
or with the consent or at the direction in writing of, the Collateral Agent
(which direction shall be made in accordance with the provisions of the Security
Agreement);
     (iv) all provisions of the Security Agreement relating to the Collateral
Agent or to releases of Collateral shall apply to any such separate collateral
agent or separate collateral agents or co-collateral agent or co-collateral
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     (v) no collateral agent constituted under this Section 10 shall be
personally liable by reason of any act or omission of any other separate or
co-collateral agent or the Collateral Agent hereunder; and
     (vi) the Collateral Agent at any time by an instrument in writing, executed
by it, may accept the resignation of any such separate collateral agent or
co-collateral agent and the Collateral Agent or the Required Secured Creditors
may individually or jointly remove any such separate collateral agent or
co-collateral agent, and in that case, by an instrument in writing executed by
the Collateral Agent or the Required Secured Creditors, as the case may be, and
the Collateral Agent or the Required Secured Creditors, as the case may be, may
appoint a successor to such separate collateral agent or co-collateral agent, as
the case may be, anything herein contained to the contrary notwithstanding. If
the Borrower and each of the other Assignors shall not have joined in the
execution of any such instrument within 10 days after the receipt of a written
request from the Collateral Agent so to do, or if a Default or an Event of
Default shall be continuing, the Collateral Agent shall have the power to accept
the resignation of or remove any such separate collateral agent or co-collateral
agent and to appoint a successor to such separate collateral agent or
co-collateral agent, as the case may be, and to execute any such instrument
without the concurrence of the Borrower or such other Assignor, and the Borrower
and each of the other Assignors hereby irrevocably appoint the Collateral Agent
their agent and attorney to act for them in such connection in either of such
contingencies. If the Collateral Agent shall have appointed a separate
collateral agent or separate collateral agents or co-collateral agent or
co-collateral agents as above provided, the Collateral Agent may at any time, by
an instrument in writing, accept the resignation of or remove any such separate
collateral agent or co-collateral agent, the successor to any such separate
collateral agent or co-collateral agent to be appointed by the Borrower and each
of the other Assignors and the Collateral Agent, or by the Collateral Agent
alone, as hereinabove provided in this Section 10.
11. Certain Acknowledgment. (a) Each Secured Creditor, by its acceptance of the
benefits hereunder and of the Security Agreement, hereby agrees for the benefit
of the other Secured Creditors that, to the extent any additional or substitute
collateral for any of the Obligations of the type covered by the Security
Agreement is delivered by an Assignor to or for the benefit of any Secured
Creditor, such collateral shall be subject to the provisions of this Annex M and
of the Security Agreement.
(b) Each of the Secured Creditors hereby agrees not to challenge or question in
any proceeding the validity or enforceability of any Security Document (in each
case as a whole or any term or provision contained therein) or the validity of
any Lien or financing statement in favor of the Collateral Agent for the benefit
of the Secured Creditors (or Class of Secured Creditors) as provided in the
respective Security Document.
12. Sharing Arrangements. (a) The Secured Creditors hereby agree that the
provisions of the Security Documents with respect to allocations and
distributions of proceeds of the Collateral shall prevail notwithstanding any
event or circumstance, including, without limitation, in the event that, through
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otherwise, any prior creditors’ security interest in the Collateral is avoided
in whole or in part or is enforced with respect to some, but not all, of the
respective Obligations then outstanding.
(b) The Secured Creditors agree that none of them shall be entitled to benefit
from any avoidance action affecting or otherwise relating to any distribution or
allocation made in accordance with the Security Documents, whether by preference
or otherwise, it being understood and agreed that the benefit of any such
avoidance action otherwise allocable to them shall instead be allocated and
turned over for application in accordance with the priorities set forth in the
respective Security Documents.
(c) In the event that any payment or distribution shall be received by any
Secured Creditor in a manner that is inconsistent with the provisions of
Section 7.4 of the Security Agreement, such payment or distribution shall be
held by the respective Secured Creditor for the benefit of, and shall be paid
over or delivered to, the respective Secured Creditors entitled thereto for
application to such Secured Creditors’ Obligations (including, without
limitation, all interest that accrues after the commencement of any case,
proceeding or other action relating to the bankruptcy, insolvency,
reorganization or similar proceeding of any Assignor at the rate provided for in
the respective documentation for such Obligations, whether or not a claim for
post-petition interest is allowed in any such proceeding) in accordance with
Section 7.4 of the Security Agreement.
13. Provisions in the Event of Insolvency Proceedings. Without limiting the
other provisions of this Annex M, upon the commencement of a case under the
Bankruptcy Code by or against any Assignor the Security Documents shall remain
in full force and effect and enforceable pursuant to their respective terms in
accordance with Section 510(a) of the Bankruptcy Code, and all references herein
to such Assignor shall be deemed to apply to such entity as debtor-in-possession
and to any trustee in bankruptcy for the estate of such entity.
14. Special Releases and Waivers. (a) Each Secured Creditor agrees that neither
the Collateral Agent nor the Required Secured Creditors (in directing the
Collateral Agent to take any action with respect to the Collateral) shall have
any duty or obligation to realize first upon any type of Collateral or to sell,
dispose of or otherwise liquidate all or any portion of the Collateral in any
manner that would maximize the return to any Class of Secured Creditors holding
Obligations of any type (whether Credit Document Obligations, Credit Card
Obligations, Hedging Obligations, Existing Senior Notes Obligations, RAI Senior
Notes Obligations or otherwise), notwithstanding that the order and timing of
any such realization, sale, disposition or liquidation may affect the amount of
proceeds actually received by such Class of Secured Creditors from such
realization, sale, disposition or liquidation.
(b) Each of the Secured Creditors waives any claim which each such Secured
Creditor may now or hereafter have against the Collateral Agent (and the
Required Secured Creditors directing the Collateral Agent) arising out of any
and all actions which the Collateral Agent takes or omits to take (including,
without limitation, actions with respect to the creation, perfection or
continuation of Liens on the Collateral, actions with respect to the occurrence
of an Event of Default, actions with respect to the foreclosure upon, sale,
release, or depreciation of, or failure to realize upon, any of the security for
the Obligations and actions with respect to the collection of any claim for all
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other party) in accordance with the respective Secured Debt Agreements or any
other agreement related thereto or to the collection of the Obligations or the
valuation, use, protection or release of the security for the Obligations.
          15. Right to Amend. Etc. As between the Existing Senior Notes
Creditors, the New Senior Notes Creditors, the Refinancing Senior Notes
Creditors and the RJRTH Intercompany Note Creditor, on the one hand, and the
other Secured Creditors (including, without limitation, the Lenders), on the
other hand, it is agreed that the Secured Creditors (excluding the Existing
Senior Notes Creditors, the New Senior Notes Creditors, the Refinancing Senior
Notes Creditors and the RJRTH Intercompany Note Creditor in their capacities as
such) may at any time and from time to time, in their sole discretion, and
without any obligation to give any notice or receive any consent from the
Existing Senior Notes Creditors, the New Senior Notes Creditors, the Refinancing
Senior Notes Creditors and the RJRTH Intercompany Note Creditor in their
capacities as such, (i) change the manner, place or terms of payment, or change
or extend the time of payment of, or renew, alter, refinance, increase or add to
the Credit Documents Obligations, the Credit Card Obligations or the Hedging
Obligations, as applicable, (ii) obtain, release, or dispose of any Collateral
for Credit Documents Obligations, the Credit Card Obligations or the Hedging
Obligations, as applicable (subject, however, to Sections 10.2 and 10.8 of the
Security Agreement), or (iii) amend or supplement in any manner the Security
Agreement and the other Credit Documents or any other agreements or instruments
evidencing, securing or relating to the Credit Documents Obligations, the Credit
Card Obligations or the Hedging Obligations, as applicable (subject, however, in
the case of the Credit Document Obligations, to Section 12.12 of the Credit
Agreement and Section 10.2 of the Security Agreement), and the provisions of
this Annex M shall continue in full force and effect with respect to all such
Credit Documents Obligations, the Credit Card Obligations or the Hedging
Obligations, as the case may be.
          16. Post-Petition Interest. Each Secured Creditor hereby acknowledges
and agrees that the Credit Document Obligations, the Credit Card Obligations,
the Hedging Obligations, the Existing Senior Notes Obligations, the RAI Senior
Notes Obligations and the RJRTH Intercompany Note Obligations include all
interest that accrues after the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency, reorganization or similar
proceeding of any Assignor at the rate provided for in the respective Secured
Debt Agreements governing the same, whether or not a claim for post-petition
interest is allowed in any such case, proceeding or other action.
          17. Effectiveness of Acknowledgements. Each of the agreements and
acknowledgments made by each Secured Creditor is made on behalf of itself and
its successors and assigns and is deemed effective by virtue of such Secured
Creditors’ acceptance of the benefits of the Security Agreement and the other
Security Documents.