Exhibit 10.4

AMENDED AND RESTATED

GUARANTEE AND COLLATERAL AGREEMENT

Dated as of June 11, 2009,

(originally dated August 1, 2006)

among

VERSO PAPER FINANCE HOLDINGS LLC

VERSO PAPER HOLDINGS LLC,

as Company,

each other PLEDGOR identified herein,

CREDIT SUISSE, CAYMAN ISLANDS BRANCH,

as Administrative Agent,

CREDIT SUISSE, CAYMAN ISLANDS BRANCH,

as Credit Agreement Authorized Representative,

WILMINGTON TRUST FSB,

as Note Authorized Representative

and

each ADDITIONAL AUTHORIZED REPRESENTATIVE

from time to time party hereto

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

TABLE OF CONTENTS

 

 

 

     PAGE ARTICLE 1 DEFINITIONS

Section 1.01.    Credit Agreement

   1

Section 1.02.    Other Defined Terms

   2 ARTICLE 2 GUARANTEE

Section 2.01.    Guarantee

   12

Section 2.02.    Guarantee of Payment

   12

Section 2.03.    No Limitations, Etc.

   13

Section 2.04.    Reinstatement

   14

Section 2.05.    Agreement To Pay; Contribution; Subrogation

   14

Section 2.06.    Information

   15

Section 2.07.    Maximum Liability

   15

Section 2.08.    Payment Free and Clear of Taxes

   15 ARTICLE 3 PLEDGE OF SECURITIES

Section 3.01.    Pledge

   16

Section 3.02.    Delivery of the Pledged Collateral

   17

Section 3.03.    Representations, Warranties and Covenants

   18

Section 3.04.    Registration In Nominee Name; Denominations

   20

Section 3.05.    Voting Rights; Dividends and Interest, Etc.

   20 ARTICLE 4 SECURITY INTERESTS IN OTHER PERSONAL PROPERTY

Section 4.01.    Security Interest

   22

Section 4.02.    Representations and Warranties

   25

Section 4.03.    Covenants

   27

Section 4.04.    Other Actions

   30

Section 4.05.    Covenants Regarding Patent, Trademark and Copyright Collateral

   31 ARTICLE 5 REMEDIES

Section 5.01.    Remedies Upon Default

   32

Section 5.02.    Application of Proceeds

   34

Section 5.03.    Securities Act, Etc.

   36

 

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

ARTICLE 6 INDEMNITY, SUBROGATION AND SUBORDINATION

Section 6.01.    Indemnity

   37

Section 6.02.    Contribution and Subrogation

   37

Section 6.03.    Subordination

   38 ARTICLE 7 INTERCREDITOR MATTERS

Section 7.01.    Priority of Claims

   38

Section 7.02.    Actions With Respect To Collateral

   39

Section 7.03.    Reinstatement

   40

Section 7.04.    Insurance

   40

Section 7.05.    Refinancings

   40

Section 7.06.    Administrative Agent as Gratuitous Bailee for Perfection

   41

Section 7.07.    Existence and Amount of Liens and Obligations

   41

Section 7.08.    Provisions Solely to Define Relative Rights

   41

Section 7.09.    Replacement Of Authorized Representatives

   42

Section 7.10.    Relationship with Second Lien Obligations

   42 ARTICLE 8 ADMINISTRATIVE AGENT

Section 8.01.    Appointment and Authority

   42

Section 8.02.    Rights as a Secured Party

   43

Section 8.03.    Exculpatory Provisions

   43

Section 8.04.    Reliance by Administrative Agent

   44

Section 8.05.    Delegation of Duties

   44

Section 8.06.    Resignation of Administrative Agent

   45

Section 8.07.    Non-reliance on Administrative Agent and Other Secured Parties

   45

Section 8.08.    Collateral and Guaranty Matters

   46 ARTICLE 9 MISCELLANEOUS

Section 9.01.    Notices

   46

Section 9.02.    Security Interest Absolute

   46

Section 9.03.    Limitation By Law

   47

Section 9.04.    Binding Effect; Several Agreement

   47

Section 9.05.    Successors and Assigns

   47

Section 9.06.    Administrative Agent’s Fees and Expenses; Indemnification

   47

 

ii

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

Section 9.07.    Administrative Agent Appointed Attorney-in-Fact

   48

Section 9.08.    GOVERNING LAW

   49

Section 9.09.    Waivers; Amendment

   49

Section 9.10.    WAIVER OF JURY TRIAL

   50

Section 9.11.    Severability

   50

Section 9.12.    Counterparts

   50

Section 9.13.    Headings

   50

Section 9.14.    Jurisdiction; Consent To Service Of Process

   50

Section 9.15.    Termination Or Release

   51

Section 9.16.    Additional Subsidiaries

   52

Section 9.17.    Additional Obligation

   52

Section 9.18.    Additional LC Obligations

   52

Section 9.19.    Right Of Set-off

   53

Section 9.20.    Amendment and Restatement

   53

Schedules

 

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

 

iii

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

AMENDED AND RESTATED GUARANTEE AND COLLATERAL AGREEMENT dated as of June 11,
2009 (this “Agreement”), among VERSO PAPER FINANCE HOLDINGS LLC, a Delaware
limited liability company (“Holdings”), VERSO PAPER HOLDINGS LLC, a Delaware
limited liability company (the “Company”) each Subsidiary of Holdings and the
Company identified on Schedule I or otherwise identified herein as a party
(each, a “Subsidiary Party”), CREDIT SUISSE, CAYMAN ISLANDS BRANCH, as
Administrative Agent (in such capacity, together with any successor
administrative agent, the “Administrative Agent”) for the Secured Parties (as
defined below), CREDIT SUISSE, CAYMAN ISLANDS BRANCH, as administrative agent
under the Credit Agreement (in such capacity, together with any successor
administrative agent, the “Credit Agreement Authorized Representative”),
WILMINGTON TRUST FSB, as trustee under the Indenture (in such capacity, together
with any successor trustee, the “Note Authorized Representative”), and each
other AUTHORIZED REPRESENTATIVE from time to time party hereto.

Under the Original Security Agreement, the Pledgors, in order to induce the
Secured Parties (as defined in the Original Security Agreement) to make the
extensions of credit and otherwise enter into and perform certain transactions,
assigned and pledged the Collateral to secure the Obligations (as defined in the
Original Security Agreement).

The Company has issued the Notes pursuant to the Indenture, and the Loan Parties
are required to execute and deliver this Agreement for the benefit of the
holders of the Notes under the Indenture to secure the Loan Parties’ obligations
under the Notes, the Indenture and the Note Guaranty.

The parties hereto now wish to amend and restate the Original Security
Agreement, effective on the Closing Date, in the form hereof in order to induce
the Lenders to make or continue Loans and participate in Letters of Credit, the
Issuing Bank to issue Letters of Credit under the Credit Agreement and the other
Secured Parties to extend credit. Therefore each Pledgor hereby agrees with the
Administrative Agent for the ratable benefit of the Secured Parties as follows:

ARTICLE 1

DEFINITIONS

Section 1.01. Credit Agreement. (a) Capitalized terms used in this Agreement and
not otherwise defined herein have the respective meanings assigned thereto in
the Credit Agreement as in effect on the Closing Date. References herein to
“this Agreement”, “hereunder”, “herein” and each similar reference to this
Agreement shall include this Agreement and, where the context requires, the
Original Security Agreement as in effect from time to time prior to the Closing
Date. All terms defined in the New York UCC (as defined herein) and not defined
in this Agreement have the meanings specified therein. The term “instrument”
shall have the meaning specified in Article 9 of the New York UCC.

(b) The definitions set forth or referred to in Section 1.02 shall apply equally
to both the singular and plural forms of the terms defined. Whenever the context
may

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

require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words “include,” “includes” and “including” shall be deemed to
be followed by the phrase “without limitation.” All references herein to
Articles, Sections, Exhibits and Schedules shall be deemed references to
Articles and Sections of, and Exhibits and Schedules to, this Agreement unless
the context shall otherwise require. Except as otherwise expressly provided
herein, any reference in this Agreement to any Secured Agreement shall mean such
document as amended, restated, supplemented or otherwise modified from time to
time.

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

“ABL Date” means the date on which the Company, by written notice to the
Administrative Agent and the Authorized Representatives, certifies that the
Credit Agreement is an Asset Based Facility.

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

“Additional Authorized Representative” means, with respect to any Series of
Additional Obligations or Additional Secured Parties, the Authorized
Representative named for such Series in the applicable Additional Secured Party
Consent.

“Additional LC Obligations” all obligations (if any) designated by the Company
as Additional LC Obligations pursuant to Section 9.18.

“Additional Obligations” means (a) the due and punctual payment by the
applicable Loan Party of (i) the unpaid principal of and interest (including
interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) under any Additional Secured Agreement, when and
as due, whether at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise and (ii) all other monetary obligations of such Loan
Party to any of the Additional Secured Parties under any Additional Secured
Agreement, including obligations to pay fees, expense and indemnification
obligations, whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), (b) the due and punctual performance
of all other obligations of such Loan Party under or pursuant to such Additional
Secured Agreement and (c) the due and punctual payment and performance of all
the obligations of each other Loan Party under or pursuant to such Additional
Secured Agreement and any guarantee thereof; provided that such obligations
shall only constitute “Additional Obligations” to the extent designated as such
pursuant to and in accordance with Section 9.17.

“Additional Secured Agreement” means any indenture, credit agreement or other
agreement, notes, guarantees, registration rights agreements or other similar
agreements issued in connection with or relating to the Additional Obligations;
provided that in each case, the obligations thereunder have been designated as
Additional Obligations pursuant to and in accordance with Section 9.17 hereto.

 

2

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

“Additional Secured Parties” means the holders of any Additional Obligations and
any Authorized Representative with respect thereto.

“Additional Secured Party Consent” shall mean a consent in the form of Exhibit
II hereto.

“Administrative Agent” has the meaning specified in the preamble.

“Affiliate” shall mean, when used with respect to a specified person, another
person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the person specified.

“Article 9 Collateral” has the meaning assigned to such term in Section 4.01.

“Asset Based Facility” means an asset-based revolving credit facility of the
Company entered into through an amendment to the Credit Agreement or through a
Refinancing of the Credit Agreement.

“Authorized Representative” means (i) in the case of any Credit Agreement
Obligations or the Credit Agreement Secured Parties, the Credit Agreement
Authorized Representative, (ii) in the case of the Note Obligations or the Note
Secured Parties, the Note Authorized Representative and (iii) in the case of any
Additional Obligations or the Additional Secured Parties that become subject to
this Agreement after the date hereof, the applicable Additional Authorized
Representative.

“Bucksport Co-Gen Assets” means all right, title and interest of Verso Bucksport
LLC in, to and under the Amended and Restated Co-Owners Ownership, Operating &
Mutual Sales Agreement by and between Champion International Corporation and
Bucksport Energy LLC, including without limitation any ownership interests as
tenants in common in the property rights established pursuant thereto.

“Business Day” shall mean any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed.

“Closing Date” as the meaning given to the term “ARCA Effective Date” in the
Credit Agreement as in effect on the date hereof.

“Collateral” means Article 9 Collateral, Pledged Collateral and Real Property
Collateral.

“Company” has the meaning specified in the preamble.

“Control Agreement” means a deposit account control agreement, a securities
account control agreement or a commodity account control agreement, as
applicable, enabling the Administrative Agent to obtain “control” (within the
meaning of the New York UCC) of any such accounts, in form and substance
reasonably satisfactory to the Administrative Agent.

 

3

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

“Control” shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a person, whether
through the ownership of voting securities, by contract or otherwise, and
“Controlling” and “Controlled” shall have meanings correlative thereto.

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

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

“Credit Agreement Authorized Representative” has the meaning specified in the
preamble.

“Credit Agreement Obligations” means (a) the Loan Document Obligations, (b) the
due and punctual payment and performance of all obligations of each Loan Party
under each Swap Agreement that (i) is in effect on the Closing Date with a
counterparty that is a Lender or an Affiliate of a Lender as of the Closing Date
or (ii) is entered into after the Closing Date with any counterparty that is a
Lender or an Affiliate of a Lender at the time such Swap Agreement is entered
into, (c) the due and punctual payment and performance of all obligations of the
Company and any of its Subsidiaries in respect of overdrafts and related
liabilities and/or arising from cash management services (including treasury,
depository, overdraft, credit or debit card, electronic funds transfer, netting,
ACH services and other cash management arrangements), in each case owed to a
counterparty that is a Lender or an Affiliate of a Lender at the time the
arrangements governing such obligation is entered into and (d) any Additional LC
Obligations.

“Credit Agreement Secured Parties” means (a) the Lenders, (b) the Credit
Agreement Authorized Representative, (c) each Issuing Bank, (d) each
counterparty to any Swap Agreement entered into with a Loan Party the
obligations under which constitute Credit Agreement Obligations, (e) each
counterparty to any cash management or similar obligation described in clause
(c) of the definition of Credit Agreement Obligations entered into with a Loan
Party, (f) the beneficiaries of each indemnification obligation undertaken by
any Loan Party under any Loan Document and (g) the successors and permitted
assigns of each of the foregoing.

 

4

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

“Credit Agreement” means the Amended and Restated Credit Agreement dated as of
June 3, 2009 (as amended, restated, supplemented, waived or otherwise modified,
Refinanced, or replaced from time to time), among Holdings, the Company, the
Credit Agreement Authorized Representative and the LENDERS, agents and other
persons party thereto.

“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally.

“Default” shall mean any event or condition that upon notice, lapse of time or
both would constitute an Event of Default.

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

“Enforcement Notice” has the meaning specified in Section 7.02(b).

“Equity Interests” of any person shall mean any and all shares, interests,
rights to purchase or otherwise acquire, warrants, options, participations or
other equivalents of or interests in (however designated) equity or ownership of
such person, including any preferred stock, any limited or general partnership
interest and any limited liability company membership interest, and any
securities or other rights or interests convertible into or exchangeable for any
of the foregoing.

“Event of Default” means an “Event of Default” under and as defined in the
Credit Agreement, the Indenture or any other Secured Agreement.

“Excluded Minority Interests” means any Equity Interests owned by Verso Paper
LLC in each of (a) Androscoggin Reservoir Company and (b) Gulf Island
Oxygenation Project L.P., provided that such Equity Interests shall constitute
Excluded Minority Interest only for so long as they are subject to an
enforceable contractual obligation (including, for this purpose, rights of first
refusal) restricting the grant of a security interest therein.

“Federal Securities Laws” has the meaning assigned to such term in Section 5.03.

“Foreign Pledge Agreement” shall mean a pledge agreement with respect to the
Pledged Collateral that constitutes Equity Interests of a “first tier” Foreign
Subsidiary, in form and substance reasonably satisfactory to the Administrative
Agent.

“Foreign Subsidiary” shall mean any Subsidiary that is incorporated or organized
under the laws of any jurisdiction other than the United States of America, any
State thereof or the District of Columbia.

 

5

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

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

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

“Guarantors” means Holdings and the Subsidiary Parties.

“Holdings” has the meaning specified in the preamble.

“Indenture” means the Indenture dated as of June 11, 2009 (as amended, restated,
supplemented, waived or otherwise modified, Refinanced, or replaced from time to
time) among the Company, the Pledgors named therein and Wilmington Trust FSB, as
trustee.

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

“Intellectual Property Security Agreement” means a security agreement in the
form hereof or a short form hereof, in each case, which form shall be reasonably
acceptable to the Administrative Agent.

“IP Agreements” means all material Copyright Licenses, Patent Licenses,
Trademark Licenses, and all other agreements, permits, consents, orders and
franchises relating to the license, development, use or disclosure of any
material Intellectual Property to which a Pledgor, now or hereafter, is a party
or a beneficiary, including, without limitation, the agreements set forth on
Schedule III hereto.

“Issuing Bank” means a letter of credit issuing bank under the Credit Agreement.

“Lender” means a lender under the Credit Agreement.

“Letter of Credit” means a letter of credit issued under the Credit Agreement.

 

6

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

“Lien” shall mean, with respect to any asset, (a) any mortgage, deed of trust,
lien, hypothecation, pledge, charge, security interest or similar encumbrance in
or on such asset and (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset.

“Loan Document Obligations” means (a) the due and punctual payment by the
Company of (i) the unpaid principal of and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the loans made to the Company under the Credit Agreement, when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment
or otherwise, (ii) each payment required to be made by the Company under the
Credit Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon
(including interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) and obligations to provide cash collateral and
(iii) all other monetary obligations of the Company to any of the Credit
Agreement Secured Parties under the Credit Agreement and each of the other Loan
Documents, including obligations to pay fees, expense and reimbursement
obligations and indemnification obligations, whether primary, secondary, direct,
contingent, fixed or otherwise (including monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding),
(b) the due and punctual performance of all other obligations of the Company
under or pursuant to the Credit Agreement and each of the other Loan Documents
and (c) the due and punctual payment and performance of all the obligations of
each other Loan Party under or pursuant to this Agreement and each of the other
Loan Documents.

“Loan Documents” means the Loan Documents as defined in the Credit Agreement.

“Loan Party” means the Company or a Guarantor and “Loan Parties” means all of
them.

“Material Adverse Effect” shall mean a material adverse effect on the business,
property, operations or condition of the Company and its Subsidiaries, taken as
a whole, or the validity or enforceability of any of the Loan Documents or
Secured Agreements or the rights and remedies of the Secured Parties.

“Mortgages” shall mean, collectively, the mortgages, trust deeds, deeds of
trust, deeds to secure debt, assignments of leases and rents, and other security
documents delivered with respect to collateral securing the Obligations that is
real property.

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

“Note Authorized Representative” has the meaning specified in the preamble.

 

7

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

“Note Collateral” means any and all of the following assets and properties now
owned or at any time hereafter acquired by any Pledgor to the extent
constituting Pledged Collateral, Article 9 Collateral or Real Property
Collateral: (a) all real property, Fixtures and Equipment; (b) all intellectual
property; (c) all Equity Interests in each Pledgor’s subsidiaries; (d) all
General Intangibles, Chattel Paper, Instruments and Documents (other than
General Intangibles, Chattel Paper, Instruments and Documents that are Revolving
Collateral); (e) all Payment Intangibles that represent tax refunds in respect
of or otherwise relate to real property, Fixtures or Equipment; (f) all
intercompany indebtedness of Holdings and its subsidiaries; (g) all permits and
licenses related to any of the foregoing (including any permits or licenses
related to the ownership or operation of real property, Fixtures or Equipment of
any Pledgor); (h) all proceeds of insurance policies (other than any such
proceeds that are Revolving Collateral); (i) all books and records related to
the foregoing and not constituting Revolving Collateral; (j) all products and
Proceeds of any and all of the foregoing (other than any such proceeds that are
Revolving Collateral); and (k) all other Collateral not constituting Revolving
Collateral. All capitalized terms used in this definition and not defined
elsewhere in this Agreement have the meanings assigned to them in the New York
UCC.

“Note Guaranty” has the meaning specified in the Indenture.

“Note Obligations” means (a) the due and punctual payment by the Company and
Verso Paper Inc. of (i) the unpaid principal of and interest (including interest
accruing during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or allowable in such
proceeding) on the Notes, when and as due, whether at maturity, by acceleration,
upon one or more dates set for prepayment or otherwise and (ii) all other
monetary obligations of the Company and Verso Paper Inc. to any of the Secured
Parties under the Indenture, including obligations to pay fees, expenses and
indemnification obligations, whether primary, secondary, direct, contingent,
fixed or otherwise (including monetary obligations incurred during the pendency
of any bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding), (b) the due and
punctual performance of all other obligations of the Company and Verso Paper
Inc. under or pursuant to the Indenture and (c) the due and punctual payment and
performance of all the obligations of each other Loan Party under or pursuant to
the Indenture, the Notes and the Note Guaranties.

“Note Secured Parties” means the Note Authorized Representative and the holders
of any Note Obligations.

“Notes” means the Company’s 11.500% Senior Secured Notes due 2014 issued
pursuant to the Indenture.

“Obligations” means (i) the Credit Agreement Obligations, (ii) the Note
Obligations and (iii) each Series of Additional Obligations.

“Original Security Agreement” means the Guarantee and Collateral Agreement dated
as of August 1, 2006 among Holdings, the Company, the Subsidiary Parties named
therein and Credit Suisse Cayman Islands Branch, as administrative agent, as
amended and in effect from time to time for all periods before the Closing Date.

 

8

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

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

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

“Permitted Liens” means any Lien permitted by each of the Secured Agreements.

“person” shall mean any natural person, corporation, business trust, joint
venture, association, company, partnership, limited liability company or
government, individual or family trusts, or any agency or political subdivision
thereof.

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

“Pledged Debt Securities” has the meaning assigned to such term in Section 3.01.

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

“Pledged Stock” has the meaning assigned to such term in Section 3.01.

“Pledgor” shall mean the Company and each Guarantor.

“Possessory Collateral” means any Collateral in the possession of the
Administrative Agent (or its agents or bailees), to the extent that possession
thereof perfects a security interest thereon under the Uniform Commercial Code
of any jurisdiction. Possessory Collateral includes, without limitation, any
Certificated Securities, Promissory Notes, Instruments, and Chattel Paper, in
each case, delivered to or in the possession of the Administrative Agent under
the terms of the Security Documents.

“Real Property Collateral” means the property subject to a Lien securing the
Obligations pursuant to a Mortgage and includes, for the avoidance of doubt, any
“Trust Property” referred to in any Mortgage.

 

9

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

“Refinance” means, in respect of any indebtedness, to refinance, extend, renew,
defense, amend, increase, modify, supplement, restructure, refund, replace or
repay, or to issue other indebtedness or enter alternative financing
arrangements, in exchange or replacement for such indebtedness (in whole or in
part), including by adding or replacing lenders, creditors, agents, borrowers
and/or guarantors, and including in each case, but not limited to, after the
original instrument giving rise to such indebtedness has been terminated and
including, in each case, through any credit agreement, indenture or other
agreement. “Refinanced” and “Refinancing” have correlative meanings.

“Replacement Credit Agreement” means any credit agreement, loan agreement or
other agreement or instrument evidencing or governing the terms of any senior
secured credit facility that has been incurred to Refinance the Credit Agreement
Obligations, which agreement has been designated in writing by the
administrative agent under such Replacement Credit Agreement to the
Administrative Agent and each Authorized Representative as the “Credit
Agreement” for the purpose of this Agreement.

“Responsible Officer” of any person shall mean any executive officer, chief
financial officer, principal accounting officer, treasurer, assistant treasurer
or controller of such person, and any other officer or similar official thereof
responsible for the administration of the obligations of such person in respect
of this Agreement.

“Revolving Collateral” means any and all of the following assets and properties
now owned or at any time hereafter acquired by any Pledgor to the extent
constituting Pledged Collateral, Article 9 Collateral or Real Property
Collateral: (a) all Accounts; (b) all Inventory; (c) to the extent evidencing,
governing, securing or otherwise related to the items referred to in the
preceding clauses (a) and (b), all (i) General Intangibles, (ii) Chattel Paper,
(iii) Instruments and (iv) Documents; (d) all Payment Intangibles (including
corporate tax refunds), other than any Payment Intangibles that represent tax
refunds in respect of or otherwise relate to real property, Fixtures or
Equipment; (e) all payments received from the Pledgors’ credit card
clearinghouses and processors or otherwise in respect of all credit card charges
for sales of Inventory by the Pledgors; (f) all collection accounts, deposit
accounts and commodity accounts and any cash or other assets in any such
accounts; (g) to the extent relating to any of the items referred to in the
preceding clauses (a) through (f) constituting Revolving Collateral, all
Supporting Obligations and Letter-of-Credit Rights; (h) all books and records
related to the foregoing; and (i) all products and Proceeds of any and all of
the foregoing in whatever form received, including proceeds of insurance
policies related to Inventory of any Pledgor and business interruption insurance
(in each case, except to the extent constituting proceeds of Note Collateral).
All capitalized terms used in this definition and not defined elsewhere in this
Agreement have the meanings assigned to them in the New York UCC.

“Rule 3-16 Excluded Collateral” has the meaning specified in Section 3.01.

“SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.

“Secured Agreements” means (i) the Credit Agreement and each Loan Document,
(ii) the Indenture, and each Note and each Note Guaranty and (iii) each
Additional Secured Agreement.

 

10

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

“Secured Parties” means (i) the Administrative Agent, (ii) the Credit Agreement
Secured Parties, (iii) the Note Secured Parties and (iv) each Series of
Additional Secured Parties.

“Security Documents” means this Agreement and each other agreement entered into
in favor of the Administrative Agent for purposes of securing any of the
Obligations.

“Security Interest” has the meaning assigned to such term in Section 4.01.

“Series” means (a) with respect to the Secured Parties, each of (i) the Credit
Agreement Secured Parties (in their capacities as such), (ii) the Note Secured
Parties (in their capacities as such) and (iii) the Additional Secured Parties
that become subject to this Agreement after the date hereof that are represented
by a common Authorized Representative (in its capacity as such for such
Additional Secured Parties) and (b) with respect to any Obligations, each of
(i) the Credit Agreement Obligations, (ii) the Note Obligations and (iii) the
Additional Obligations incurred pursuant to any Additional Secured Agreement,
which pursuant to an Additional Secured Party Consent, are to be represented
hereunder by a common Authorized Representative (in its capacity as such for
such Additional Obligations).

“Specified Excluded Collateral” means (i) the Rule 3-16 Excluded Collateral and
(ii) any assets owned directly by Holdings or any Subsidiary of Holdings that is
not the Company or a Subsidiary of the Company included in the Collateral.

“Subsidiary Party” has the meaning assigned to such term in the preliminary
statement of this Agreement, and any Subsidiary that becomes a party hereto
pursuant to Section 9.16.

“Subsidiary” means, with respect to any person (herein referred to as the
“parent”), any corporation, partnership, association or other business entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or more than 50% of
the general partnership interests are, at the time any determination is being
made, directly or indirectly, owned, Controlled or held, or (b) that is, at the
time any determination is made, otherwise Controlled, by the parent or one or
more subsidiaries of the parent or by the parent and one or more subsidiaries of
the parent. Unless the context otherwise requires, “Subsidiary” means a
Subsidiary of the Company.

“Swap Agreement” shall mean any agreement with respect to any swap, forward,
future or derivative transaction or option or similar agreement involving, or
settled by reference to, one or more rates, currencies, commodities, equity or
debt instruments or securities, or economic, financial or pricing indices or
measures of economic, financial or pricing risk or value or any similar
transaction or any combination of these transactions; provided, that no phantom
stock or similar plan providing for payments only on account of services
provided by current or former directors, officers, employees or consultants of
Holdings, the Company or any of the Subsidiaries shall be a Swap Agreement.

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

 

11

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

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

“Uniform Commercial Code” means the Uniform Commercial Code as the same may from
time to time be in effect in the State of New York or the Uniform Commercial
Code (or similar code or statute) of another jurisdiction, to the extent it may
be required to apply to any item or items of Collateral.

ARTICLE 2

GUARANTEE

Section 2.01. Guarantee. Each Guarantor unconditionally guarantees, jointly with
the other Guarantors and severally, to the Administrative Agent, for the ratable
benefit of the Credit Agreement Secured Parties, as a primary obligor and not
merely as a surety, the due and punctual payment and performance of the Credit
Agreement Obligations. Each Guarantor further agrees that the Credit Agreement
Obligations may be extended or renewed, in whole or in part, without notice to
or further assent from it, and that it will remain bound upon its guarantee
notwithstanding any extension or renewal of any Credit Agreement Obligation.
Each Guarantor waives presentment to, demand of payment from and protest to the
Company or any other Loan Party of any of the Credit Agreement Obligations, and
also waives notice of acceptance of its guarantee and notice of protest for
nonpayment.

Section 2.02. Guarantee of Payment. Each Guarantor further agrees that its
guarantee hereunder constitutes a guarantee of payment when due (whether at the
stated maturity, by acceleration or otherwise) and not of collection, and waives
any right to require that any resort be had by the Administrative Agent or any
other Credit Agreement Secured Party to any security held for the payment of the
Credit Agreement Obligations

 

12

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

or to any balance of any deposit account or credit on the books of the
Administrative Agent or any other Credit Agreement Secured Party in favor of the
Company or any other person.

Section 2.03. No Limitations, Etc. (a) Except for termination of a Guarantor’s
obligations hereunder as expressly provided for in Section 9.15 and except as
provided in Section 2.07, the obligations of each Guarantor hereunder shall not
be subject to any reduction, limitation, impairment or termination for any
reason, including any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense or setoff, counterclaim,
recoupment or termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Credit Agreement Obligations or otherwise (other than
defense of payment or performance). Without limiting the generality of the
foregoing, the obligations of each Guarantor hereunder, to the fullest extent
permitted by applicable law, shall not be discharged or impaired or otherwise
affected by, and each Guarantor hereby waives any defense to the enforcement
hereof by reason of:

(i) the failure of the Administrative Agent or any other Credit Agreement
Secured Party to assert any claim or demand or to exercise or enforce any right
or remedy under the provisions of any Loan Document or otherwise;

(ii) any rescission, waiver, amendment or modification of, or any release from
any of the terms or provisions of, any Loan Document or any other agreement,
including with respect to any other Guarantor under this Agreement;

(iii) the failure to perfect any security interest in, or the exchange,
substitution, release or any impairment of, any security held by the
Administrative Agent or any other Credit Agreement Secured Party for the Credit
Agreement Obligations;

(iv) any default, failure or delay, willful or otherwise, in the performance of
the Credit Agreement Obligations;

(v) any other act or omission that may or might in any manner or to any extent
vary the risk of any Guarantor or otherwise operate as a discharge of any
Guarantor as a matter of law or equity (other than the payment in full in cash
or immediately available funds of all the Credit Agreement Obligations),

(vi) any illegality, lack of validity or enforceability of any Credit Agreement
Obligation,

(vii) any change in the corporate existence, structure or ownership of the
Company, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting the Company or its assets or any resulting release or
discharge of any Credit Agreement Obligation,

(viii) the existence of any claim, set-off or other rights that the Guarantors
may have at any time against the Company, the Administrative Agent, or any other
corporation or person, whether in connection herewith or any unrelated
transactions, provided that nothing herein will prevent the assertion of any
such claim by separate suit or compulsory counterclaim,

 

13

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

(ix) any action permitted or authorized hereunder, or

(x) any other circumstance (including without limitation, any statute of
limitations) or any existence of or reliance on any representation by the
Administrative Agent that might otherwise constitute a defense to, or a legal or
equitable discharge of, the Company or the Guarantors or any other guarantor or
surety.

Each Guarantor expressly authorizes the Credit Agreement Secured Parties to take
and hold security for the payment and performance of the Credit Agreement
Obligations, to exchange, waive or release any or all such security (with or
without consideration), to enforce or apply such security and direct the order
and manner of any sale thereof in their sole discretion or to release or
substitute any one or more other guarantors or obligors upon or in respect of
the Credit Agreement Obligations, all without affecting the obligations of any
Guarantor hereunder.

(b) To the fullest extent permitted by applicable law, each Guarantor waives any
defense based on or arising out of any defense of any other Loan Party or the
unenforceability of the Credit Agreement Obligations or any part thereof from
any cause, or the cessation from any cause of the liability of any other Loan
Party, other than the payment in full in cash or immediately available funds of
all the Credit Agreement Obligations (other than contingent indemnity or expense
reimbursement obligations as to which no claim has been made). The
Administrative Agent and the other Credit Agreement Secured Parties may, at
their election, foreclose on any security held by one or more of them by one or
more judicial or nonjudicial sales, accept an assignment of any such security in
lieu of foreclosure, compromise or adjust any part of the Credit Agreement
Obligations, make any other accommodation with any other Loan Party or exercise
any other right or remedy available to them against any other Loan Party,
without affecting or impairing in any way the liability of any Guarantor
hereunder except to the extent the Credit Agreement Obligations (other than
contingent indemnity or expense reimbursement obligations as to which no claim
has been made) have been paid in full in cash or immediately available funds. To
the fullest extent permitted by applicable law, each Guarantor waives any
defense arising out of any such election even though such election operates,
pursuant to applicable law, to impair or to extinguish any right of
reimbursement or subrogation or other right or remedy of such Guarantor against
any other Loan Party, as the case may be, or any security.

Section 2.04. Reinstatement. Each Guarantor agrees that its guarantee hereunder
shall continue to be effective or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any Credit Agreement Obligation is
rescinded or must otherwise be restored by the Administrative Agent or any other
Credit Agreement Secured Party upon the bankruptcy or reorganization of the
Company or any other Loan Party or otherwise.

Section 2.05. Agreement To Pay; Contribution; Subrogation. In furtherance of the
foregoing and not in limitation of any other right that the Administrative Agent
or any

 

14

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

other Credit Agreement Secured Party has at law or in equity against any
Guarantor by virtue hereof, upon the failure of the Company to pay any Credit
Agreement Obligation when and as the same shall become due, whether at maturity,
by acceleration, after notice of prepayment or otherwise, each Guarantor hereby
promises to and will forthwith pay, or cause to be paid, to the Administrative
Agent for distribution to the applicable Credit Agreement Secured Parties in
cash the amount of such unpaid Credit Agreement Obligation. Each Guarantor
hereby unconditionally and irrevocably agrees that in the event any payment
shall be required to be made to any Credit Agreement Secured Party under this
guarantee or any other guarantee, such Guarantor will contribute, to the maximum
extent permitted by law, such amounts to each other Guarantor and each other
guarantor so as to maximize the aggregate amount paid to the Credit Agreement
Secured Parties under or in respect of the Loan Documents. Upon payment by any
Guarantor of any sums to the Administrative Agent as provided above, all rights
of such Guarantor against the Company, or other Loan Party or any other
Guarantor arising as a result thereof by way of right of subrogation,
contribution, reimbursement, indemnity or otherwise shall in all respects be
subject to Article 6.

Section 2.06. Information. Each Guarantor assumes all responsibility for being
and keeping itself informed of the financial condition and assets of the Company
and each other Loan Party, and of all other circumstances bearing upon the risk
of nonpayment of the Credit Agreement Obligations and the nature, scope and
extent of the risks that such Guarantor assumes and incurs hereunder, and agrees
that none of the Administrative Agent or the other Credit Agreement Secured
Parties will have any duty to advise such Guarantor of information known to it
or any of them regarding such circumstances or risks.

Section 2.07. Maximum Liability. Each Guarantor, and by its acceptance of this
guarantee, the Administrative Agent and each Lender hereby confirms that it is
the intention of all such persons that this guarantee and the Credit Agreement
Obligations of each Guarantor hereunder not constitute a fraudulent transfer or
conveyance for purposes of the U.S. Bankruptcy Code or any other federal, state
or foreign bankruptcy, insolvency, receivership or similar law, the Uniform
Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar
foreign, federal or state law to the extent applicable to thus guarantee and the
Credit Agreement Obligations of each Guarantor hereunder. To effectuate the
foregoing intention, the Administrative Agent, the Lenders and the Guarantors
hereby irrevocably agree that the Credit Agreement Obligations of each
Subsidiary Party under this guarantee at any time shall be limited to the
maximum amount as will result in the Credit Agreement Obligations of such
Guarantor under this guarantee not constituting a fraudulent transfer or
conveyance.

Section 2.08. Payment Free and Clear of Taxes. Any and all payments by or on
account of any obligation of any Guarantor hereunder or under any other Loan
Document shall be made free and clear of, and without deduction for, any
Indemnified Taxes or Other Taxes (or equivalent terms used in any Replacement
Credit Agreement) on the same terms and to the same extent that payments by the
Company and Holdings are required to be made pursuant to the terms of
Section 2.17 of the Credit Agreement (or equivalent provision of any Replacement
Credit Agreement). The provisions of Section 2.17 of the Credit Agreement (or
equivalent provision of any Replacement Credit Agreement) shall apply to each
Guarantor mutatis mutandis.

 

15

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

ARTICLE 3

PLEDGE OF SECURITIES

Section 3.01. Pledge. As security for the payment or performance, as the case
may be, in full of its Obligations, each Pledgor hereby assigns and pledges to
the Administrative Agent, its successors and permitted assigns, for the ratable
benefit of the Secured Parties, and hereby grants to the Administrative Agent,
its successors and permitted assigns, for the ratable benefit of the Secured
Parties, a security interest in all of such Pledgor’s right, title and interest
in, to and under (a) the Equity Interests directly owned by it (including those
listed on Schedule II) and any other Equity Interests obtained in the future by
such Pledgor and any certificates representing all such Equity Interests (the
“Pledged Stock”); provided that the Pledged Stock shall not include (i) the
issued and outstanding voting Equity Interests of any Foreign Subsidiary
directly owned by such Pledgor, to the extent the pledge of any such Equity
Interests would cause more than 65% of the outstanding voting Equity Interests
of such Foreign Subsidiary to be pledged hereunder, (ii) to the extent
applicable law requires that a Subsidiary of such Pledgor issue directors’
qualifying shares, such shares or nominee or other similar shares, (iii) any
Equity Interests of a Subsidiary to the extent that, as of the Closing Date, and
for so long as, such a pledge of such Equity Interests would violate applicable
law or an enforceable contractual obligation binding on or relating to such
Equity Interests, or (iv) any Equity Interests of a person that is not directly
or indirectly a Subsidiary, as to which Article 4 shall apply; (b)(i) the debt
obligations listed opposite the name of such Pledgor on Schedule II, (ii) any
debt securities in the future issued to such Pledgor having, in the case of each
instance of debt securities, an aggregate principal amount in excess of $5.0
million, and (iii) the certificates, promissory notes and any other instruments,
if any, evidencing such debt securities (the “Pledged Debt Securities”);
(c) subject to Section 3.05 hereof, all payments of principal or interest,
dividends, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of, in exchange for or upon the
conversion of, and all other proceeds received in respect of, the securities
referred to in clauses (a) and (b) above; (d) subject to Section 3.05 hereof,
all rights and privileges of such Pledgor with respect to the securities and
other property referred to in clauses (a), (b) and (c) above; and (e) all
proceeds of any of the foregoing (the items referred to in clauses (a) through
(e) above being collectively referred to as the “Pledged Collateral”).

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

Notwithstanding anything else contained in this Agreement in the event that Rule
3-16 of Regulation S-X under the United States Securities Act of 1933 would
require (or is replaced with another rule or regulation, or any other law, rule
or regulation is adopted, which would require) (such law, rule or regulation, as
amended or replaced with another rule or regulation, “Rule 3-16”) the filing
with the SEC of separate financial statements of any Subsidiary of the Company
due to the fact that a security interest in such Subsidiary’s Equity Interests
or other securities has been granted hereunder as security for the payment or
performance, as the case may be, of the Note Obligations or any

 

16

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

Additional Obligations, then, solely to the extent securing the Note Obligations
or such Additional Obligations, as applicable, the Lien granted pursuant to this
Agreement or any other Security Document in such Equity Interests (the “Rule
3-16 Excluded Collateral”) shall not secure, or constitute “Collateral” with
respect to, the Note Obligations or such Additional Obligations, as applicable,
in any event solely to the extent necessary and only for so long as required to
cause the Company and its Subsidiaries to not be subject to such requirement. In
such event, the Administrative Agent may and (at the written request and expense
of the Company) shall take actions, without the consent of any Secured Party, to
the extent necessary to evidence such exclusion from the Lien granted hereunder
in favor of the Administrative Agent of the Rule 3-16 Excluded Collateral solely
with respect to the Note Obligations or such Additional Obligations, as
applicable; provided that the Administrative Agent shall not be required to take
any such action unless the Company shall have delivered to the Administrative
Agent, together with such written request, a certificate of a Responsible
Officer of the Company certifying that such action is permitted by the
applicable Secured Agreement, and any such action taken by the Administrative
Agent shall be without recourse to or warranty by the Administrative Agent. In
the event that Rule 3-16 is amended, modified or interpreted by the SEC to
permit (or is replaced with another rule or regulation, or any other law, rule
or regulation is adopted, which would permit) any Rule 3-16 Excluded Collateral
to secure the Note Obligations or such Additional Obligations, as applicable, in
excess of the amount then pledged without the filing with the SEC (or any other
Governmental Authority) of separate financial statements for such Subsidiary of
the Company, then the Equity Interest of such Subsidiary will automatically be
deemed to be a part of the Collateral for the Note Obligations or such
Additional Obligations, as applicable, to the extent otherwise required by this
Agreement. For avoidance of doubt, nothing in this paragraph shall prevent or
limit any pledge of Equity Interests or any other securities hereunder from
securing the Credit Agreement Obligations at all times.

Section 3.02. Delivery of the Pledged Collateral. (a) Each Pledgor agrees
promptly to deliver or cause to be delivered to the Administrative Agent, for
the ratable benefit of the Secured Parties, any and all Pledged Securities to
the extent such Pledged Securities, in the case of promissory notes or other
instruments evidencing Indebtedness, are required to be delivered pursuant to
paragraph (b) of this Section 3.02.

(b) Each Pledgor will cause any Indebtedness for borrowed money having an
aggregate principal amount in excess of $5.0 million (other than
(i) intercompany current liabilities incurred in the ordinary course of business
in connection with the cash management operations and intercompany sales of
Holdings, the Company and its Subsidiaries or (ii) to the extent that a pledge
of such promissory note or instrument would violate applicable law) owed to such
Pledgor by any person to be evidenced by a duly executed promissory note that is
pledged and delivered to the Administrative Agent, for the ratable benefit of
the Secured Parties, pursuant to the terms hereof. To the extent any such
promissory note is a demand note, each Pledgor party thereto agrees, if
requested by the Administrative Agent, to immediately demand payment thereunder
upon an Event of Default specified under Section 8.01(b), (c), (f), (h) or
(i) of the Credit Agreement (or corresponding sections of any Replacement Credit
Agreement) or under corresponding provisions of any other Secured Agreement,
unless such demand would not be commercially reasonable or would otherwise
expose Pledgor to liability to the maker.

 

17

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

(c) Upon delivery to the Administrative Agent, (i) any Pledged Securities
required to be delivered pursuant to the foregoing paragraphs (a) and (b) of
this Section 3.02 shall be accompanied by stock powers or note powers, as
applicable, duly executed in blank or other instruments of transfer reasonably
satisfactory to the Administrative Agent and by such other instruments and
documents as the Administrative Agent may reasonably request and (ii) all other
property composing part of the Pledged Collateral delivered pursuant to the
terms of this Agreement shall be accompanied to the extent necessary to perfect
the security interest in or allow realization on the Pledged Collateral by
proper instruments of assignment duly executed by the applicable Pledgor and
such other instruments or documents (including issuer acknowledgments in respect
of uncertificated securities) as the Administrative Agent may reasonably
request. Each delivery of Pledged Securities shall be accompanied by a schedule
describing the securities, which schedule shall be attached hereto as Schedule
II (or a supplement to Schedule II, as applicable) and made a part hereof;
provided that failure to attach any such schedule hereto shall not affect the
validity of such pledge of such Pledged Securities. Each schedule so delivered
shall supplement any prior schedules so delivered.

Section 3.03. Representations, Warranties and Covenants. The Pledgors, jointly
and severally, represent, warrant and covenant to and with the Administrative
Agent, for the ratable benefit of the Secured Parties, that:

(a) Schedule II correctly sets forth the percentage of the issued and
outstanding shares of each class of the Equity Interests of the issuer thereof
represented by such Pledged Stock and includes all Equity Interests, debt
securities and promissory notes or instruments evidencing Indebtedness required
to be (i) pledged in order to satisfy the requirements of the Secured
Agreements, or (ii) delivered pursuant to Section 3.02(b);

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

(c) except for the security interests granted hereunder, each Pledgor (i) is
and, subject to any transfers made in compliance with the Secured Agreements,
will continue to be the direct owner, beneficially and of record, of the Pledged
Securities indicated on Schedule II as owned by such Pledgor, (ii) holds the
same free and clear of all Liens,

 

18

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

other than Permitted Liens, (iii) will make no assignment, pledge, hypothecation
or transfer of, or create or permit to exist any security interest in or other
Lien on, the Pledged Collateral, other than pursuant to a transaction permitted
by the Secured Agreements and other than Permitted Liens and (iv) subject to the
rights of such Pledgor under the Loan Documents and any Secured Agreement to
dispose of Pledged Collateral, will use commercially reasonable efforts to
defend its title or interest hereto or therein against any and all Liens (other
than Permitted Liens), however arising, of all persons;

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

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

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

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

(h) each Pledgor that is an issuer of the Pledged Collateral confirms that is
has received notice of the security interest granted hereunder;

(i) as of the Closing Date, none of the Equity Interests in limited liability
companies or partnerships that is pledged by the Pledgors hereunder constitutes
a security under Section 8-103 of the New York UCC or the corresponding code or
statute of any other applicable jurisdiction; and

(j) the Pledgors shall not amend, or permit to be amended, the limited liability
company agreement (or operating agreement or similar agreement) or partnership
agreement of any Subsidiary of any Loan Party whose Equity Interests are, or are

 

19

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

required to be, Collateral in a manner to cause such Equity Interests to
constitute a security under Section 8-103 of the New York UCC or the
corresponding code or statute of any other applicable jurisdiction unless such
Loan Party shall have first delivered 10 days written notice to the
Administrative Agent and shall have taken all actions contemplated hereby and as
otherwise reasonably required by the Administrative Agent to maintain the
security interest of the Administrative Agent therein as a valid, perfected,
first priority security interest.

Section 3.04. Registration In Nominee Name; Denominations. The Administrative
Agent, on behalf of the Secured Parties, shall have the right (in its sole and
absolute discretion) to hold the Pledged Securities in the name of the
applicable Pledgor, endorsed or assigned in blank or in favor of the
Administrative Agent or, if an Event of Default shall have occurred and be
continuing, in its own name as pledgee or the name of its nominee (as pledgee or
as sub-agent). Each Pledgor will promptly give to the Administrative Agent
copies of any notices or other communications received by it with respect to
Pledged Securities registered in the name of such Pledgor. If an Event of
Default shall have occurred and be continuing, the Administrative Agent shall
have the right to exchange the certificates representing Pledged Securities for
certificates of smaller or larger denominations for any purpose consistent with
this Agreement. Each Pledgor shall use its commercially reasonable efforts to
cause any Loan Party that is not a party to this Agreement to comply with a
request by the Administrative Agent, pursuant to this Section 3.04, to exchange
certificates representing Pledged Securities of such Loan Party for certificates
of smaller or larger denominations.

Section 3.05. Voting Rights; Dividends and Interest, Etc. (a) Unless and until
an Event of Default shall have occurred and be continuing and the Administrative
Agent shall have given notice to the relevant Pledgors of the Administrative
Agent’s intention to exercise its rights hereunder:

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

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

(iii) Each Pledgor shall be entitled to receive and retain any and all
dividends, interest, principal and other distributions paid on or distributed in
respect of the Pledged Collateral to the extent and only to the extent that such

 

20

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

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

(b) Upon the occurrence and during the continuance of an Event of Default and
after notice by the Administrative Agent to the Company of the Administrative
Agent’s intention to exercise its rights hereunder, all rights of any Pledgor to
dividends, interest, principal or other distributions that such Pledgor is
authorized to receive pursuant to paragraph (a)(iii) of this Section 3.05 shall
cease, and all such rights shall thereupon become vested, for the ratable
benefit of the Secured Parties, in the Administrative Agent which shall have the
sole and exclusive right and authority to receive and retain such dividends,
interest, principal or other distributions; provided, however, that even after
the occurrence of an Event of Default, any Pledgor may continue to exercise
dividend and distribution rights solely to the extent permitted under subclause
(i), subclause (iii) and subclause (v) of Section 6.06(b) of the Credit
Agreement (or equivalent provision of any Replacement Credit Agreement) , and
not otherwise prohibited by any Secured Agreement. All dividends, interest,
principal or other distributions received by any Pledgor contrary to the
provisions of this Section 3.05 shall not be commingled by such Pledgor with any
of its other funds or property but shall be held separate and apart therefrom,
shall be held in trust for the benefit of the Administrative Agent, for the
ratable benefit of the Secured Parties, and shall be forthwith delivered to the
Administrative Agent, for the ratable benefit of the Secured Parties, in the
same form as so received (endorsed in a manner reasonably satisfactory to the
Administrative Agent). Any and all money and other property paid over to or
received by the Administrative Agent pursuant to the provisions of this
paragraph (b) shall be retained by the Administrative Agent in an account to be
established by the Administrative Agent upon receipt of such money or other
property and shall be applied in accordance with the provisions of Section 5.02
hereof. After all Events of Default have been cured or waived and the Company
has delivered to the Administrative Agent a certificate to that effect, the
Administrative Agent shall promptly release to each Pledgor

 

21

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

(without interest) all dividends, interest, principal or other distributions
that such Pledgor would otherwise be permitted to retain pursuant to the terms
of paragraph (a)(iii) of this Section 3.05 and that remain in such account.

(c) Upon the occurrence and during the continuance of an Event of Default and
after notice by the Administrative Agent to the Company of the Administrative
Agent’s intention to exercise its rights hereunder, all rights of any Pledgor to
exercise the voting and/or consensual rights and powers it is entitled to
exercise pursuant to paragraph (a)(i) of this Section 3.05, and the obligations
of the Administrative Agent under paragraph (a)(ii) of this Section 3.05, shall
cease, and all such rights shall thereupon become vested in the Administrative
Agent, for the ratable benefit of the Secured Parties, which shall have the sole
and exclusive right and authority to exercise such voting and consensual rights
and powers; provided that, unless otherwise directed by any Authorized
Representative, the Administrative Agent shall have the right from time to time
following and during the continuance of an Event of Default to permit the
Pledgors to exercise such rights. After all Events of Default have been cured or
waived and the Company has delivered to the Administrative Agent a certificate
to that effect, each Pledgor shall have the right to exercise the voting and/or
consensual rights and powers that such Pledgor would otherwise be entitled to
exercise pursuant to the terms of paragraph (a)(i) above.

ARTICLE 4

SECURITY INTERESTS IN OTHER PERSONAL PROPERTY

Section 4.01. Security Interest. (a) As security for the payment or performance
when due (whether at the stated maturity, by acceleration or otherwise), as the
case may be, in full of its Obligations, each Pledgor hereby assigns and pledges
to the Administrative Agent, its successors and permitted assigns, for the
ratable benefit of the Secured Parties, and hereby grants to the Administrative
Agent, its successors and permitted assigns, for the ratable benefit of the
Secured Parties, a security interest (the “Security Interest”) in all right,
title and interest in or to any and all of the following assets and properties
now owned or at any time hereafter acquired by such Pledgor or in which such
Pledgor now has or at any time in the future may acquire any right, title or
interest (collectively, the “Article 9 Collateral”):

(i) all Accounts;

(ii) all Chattel Paper;

(iii) all cash and Deposit Accounts;

(iv) all Documents;

(v) all Equipment;

(vi) all General Intangibles;

(vii) all Instruments;

 

22

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

(viii) all Inventory;

(ix) all Investment Property;

(x) all Letter of Credit Rights;

(xi) all Commercial Tort Claims;

(xii) (1) Securities Accounts, (2) Financial Assets credited to Securities
Accounts or Deposit Accounts from time to time and all Security Entitlements in
respect thereof, (3) all cash held any Securities Account or Deposit Account and
(4) all other money in the possession of the Administrative Agent;

(xiii) all timber to be cut;

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

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

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

Notwithstanding anything to the contrary in this Agreement, this Agreement shall
not constitute a grant of a security interest in (a) any vehicle covered by a
certificate of title or ownership, whether now owned or hereafter acquired,
(b) (i) the Bucksport Co-Gen Assets, (ii) the Excluded Minority Interests,
(iii) any Equity Interests acquired after the Closing Date in a person that is
not a Subsidiary if, and to the extent that, and for so long as, a grant of a
security interest in such Equity Interests would violate applicable law or an
enforceable contractual obligation binding on or relating to such Equity
Interests (if such obligation existed at the time of acquisition of such Equity
Interests and was not created or made binding on such Equity Interests in
contemplation of or in connection with the acquisition of such Equity
Interests), and (iv) any assets acquired after the Closing Date to the extent
that, and for so long as, granting a security interest in such assets would
violate an enforceable contractual obligation binding on such assets that
existed at the time of acquisition thereof and was not created or made binding
on such assets in contemplation or in connection with the acquisition of such
assets (except in the case of assets acquired with Indebtedness pursuant to
Section 6.01(i) of the Credit Agreement or any equivalent exception in any other
Secured Agreement that is secured by a Permitted Lien), (c) any (x) property
excluded from the definition of Pledged Collateral by virtue of the proviso to
Section 3.01 hereof (other than Section 3.01(a)(iv)) and (y) Rule 3-16
Collateral solely to the extent and with respect to the obligations described in
the last paragraph of Section 3.01, (d) any Letter of Credit Rights to the
extent any Pledgor is required by applicable law to apply the proceeds of a
drawing of such Letter of Credit for a specified purpose or (e) any Pledgor’s
right, title or interest in any license, contract or agreement to which such
Pledgor is a party or any of its right,

 

23

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

title or interest thereunder to the extent, but only to the extent, that such a
grant would, under the terms of such license, contract or agreement, result in a
breach of the terms of, or constitute a default under, or result in the
abandonment, invalidation or unenforceability of, any license, contract or
agreement to which such Pledgor is a party (other than to the extent that any
such term would be rendered ineffective pursuant to Section 9-406, 9-407, 9-408
or 9-409 of the New York UCC or any other applicable law (including, without
limitation, Title 11 of the United States Code) or principles of equity);
provided, that immediately upon the ineffectiveness, lapse or termination of any
such provision, the Collateral shall include, and such Pledgor shall be deemed
to have granted a security interest in, all such rights and interests as if such
provision had never been in effect.

(b) Each Pledgor hereby irrevocably authorizes the Administrative Agent at any
time and from time to time to file in any relevant jurisdiction any financing
statements (including fixture filings and filings with respect to timber to be
cut) with respect to the Article 9 Collateral or any part thereof and amendments
thereto that contain the information required by Article 9 of the Uniform
Commercial Code of each applicable jurisdiction for the filing of any financing
statement or amendment, including (i) whether such Pledgor is an organization,
the type of organization and any organizational identification number issued to
such Pledgor, (ii) in the case of a financing statement filed as a fixture
filing, a sufficient description of the real property to which such Article 9
Collateral relates and (iii) a description of collateral that describes such
property in any other manner as the Administrative Agent may reasonably
determine is necessary or advisable to ensure the perfection of the security
interest in the Article 9 Collateral granted under this Agreement, including
describing such property as “all assets” or “all property”. Each Pledgor agrees
to provide such information to the Administrative Agent promptly upon request,
including providing within 30 days of any reasonable request therefor legal
descriptions of real property (other than real property subject to a Mortgage)
on which timber to be cut of such Pledgor is located.

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

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

(d) Notwithstanding anything to the contrary in this Agreement or the Secured
Agreements, none of the Pledgors shall be required to enter into any Control
Agreement with respect to any cash or Deposit Account or (except as otherwise
provided in Section

 

24

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

4.04(b)) any Securities Account; provided that this subsection (d) shall have no
force or effect from and after the ABL Date and on or after the ABL Date the
Pledgors shall enter into such customary lockbock account and control agreement
arrangements as may be required by the Credit Agreement.

Section 4.02. Representations and Warranties. The Pledgors jointly and severally
represent and warrant to the Administrative Agent and the Secured Parties that:

(a) Each Pledgor has good and valid rights in and title to the Article 9
Collateral with respect to which it has purported to grant a Security Interest
hereunder and has full power and authority to grant to the Administrative Agent
the Security Interest in such Article 9 Collateral pursuant hereto and to
execute, deliver and perform its obligations in accordance with the terms of
this Agreement, without the consent or approval of any other person other than
any consent or approval that has been obtained and is in full force and effect
or has otherwise been disclosed herein or in the Credit Agreement.

(b) The information set forth in the Schedules attached hereto is correct and
complete, in all material respects, as of the Closing Date. The Uniform
Commercial Code financing statements (including fixture filings, as applicable)
or other appropriate filings, recordings or registrations containing a
description of the Article 9 Collateral that have been prepared by the
Administrative Agent for filing in each governmental, municipal or other office
specified in Schedule IV (or specified by notice from the Company to the
Administrative Agent after the Closing Date in the case of filings, recordings
or registrations required by Section 5.10 of the Credit Agreement or
corresponding provisions of any other Secured Agreement) and in each relevant
governmental, municipal or other office pertaining to real property for which a
legal description is provided pursuant to Section 4.01(b) constitute all the
filings, recordings and registrations (except to the extent that filings are
required to be made in the United States Patent and Trademark Office and the
United States Copyright Office, or any similar office in any other jurisdiction,
in order to perfect the Security Interest in Article 9 Collateral consisting of
United States Patents, United States registered Trademarks and United States
registered Copyrights) that are necessary to publish notice of and protect the
validity of and to establish a legal, valid and perfected security interest in
favor of the Administrative Agent (for the ratable benefit of the Secured
Parties) in respect of all Article 9 Collateral in which the Security Interest
may be perfected by filing, recording or registration in the United States (or
any political subdivision thereof) and its territories and possessions, and no
further or subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary in any such jurisdiction, except as provided under
applicable law with respect to the filing of continuation statements or
amendments. Each Pledgor represents and warrants that a fully executed
Intellectual Property Security Agreement containing a description of all Article
9 Collateral consisting of Intellectual Property with respect to United States
Patents (and Patents for which United States applications are pending), United
States registered Trademarks (and Trademarks for which United States
registration applications are pending) and United States registered Copyrights
(and Copyrights for which United States registration applications are pending)
has been delivered to the Administrative Agent for recording with the United
States Patent and Trademark Office and the United States Copyright Office
pursuant to 35 U.S.C. § 261, 15 U.S.C. § 1060 or 17 U.S.C. § 205 and the
regulations thereunder, as

 

25

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

applicable, and reasonably requested by the Administrative Agent, to protect the
validity of and to establish a legal, valid and perfected security interest in
favor of the Administrative Agent, for the ratable benefit of the Secured
Parties, in respect of all Article 9 Collateral consisting of such Intellectual
Property in which a security interest may be perfected by recording with the
United States Patent and Trademark Office and the United States Copyright
Office, and no further or subsequent filing, refiling, recording, rerecording,
registration or reregistration is necessary (other than the Uniform Commercial
Code financings statements referred to above, and other than such actions as are
necessary to perfect the Security Interest with respect to any Article 9
Collateral consisting of United States Patents, Trademarks and Copyrights (or
registration or application for registration thereof) acquired or developed
after the date hereof).

(c) The Security Interest constitutes (i) a legal and valid security interest in
all the Article 9 Collateral securing the payment and performance of the
Obligations, (ii) subject to the filings described in Section 4.02(b), a
perfected security interest in all Article 9 Collateral in which a security
interest may be perfected by filing, recording or registering a financing
statement or analogous document in the United States (or any political
subdivision thereof) and its territories and possessions pursuant to the Uniform
Commercial Code or other applicable law in such jurisdictions and (iii) a
security interest that shall be perfected in all Article 9 Collateral in which a
security interest may be perfected upon the receipt and recording of the
Intellectual Property Security Agreement with the United States Patent and
Trademark Office and the United States Copyright Office, as applicable. The
Security Interest is and shall be prior to any other Lien on any of the Article
9 Collateral other than Permitted Liens.

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

(e) None of the Pledgors holds any Commercial Tort Claim individually in excess
of $2.0 million as of the Closing Date except as indicated on Schedule V.

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

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

(i) The Intellectual Property Collateral set forth on Schedule III includes all
of the material Patents, Trademarks, Copyrights and IP Agreements owned by such
Pledgor as of the date hereof.

 

26

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

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

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

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

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

Section 4.03. Covenants. (a) Each Pledgor agrees to provide at least 10 days’
prior written notice to Administrative Agent of any change (i) in its corporate
or organization name, (ii) in its identity or type of organization or corporate
structure, (iii) in its Federal Taxpayer Identification Number or organizational
identification number or (iv) in its “location” (determined as provided in the
Uniform Commercial Code Section 9-307). Each Pledgor agrees promptly to provide
the Administrative Agent with certified organizational documents reflecting any
of the changes described in the immediately preceding sentence. Each Pledgor
agrees not to effect or permit any change referred to in

 

27

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

the first sentence of this paragraph (a) unless all filings have been made, or
will have been made within any applicable statutory period, under the Uniform
Commercial Code or otherwise that are required in order for the Administrative
Agent to continue at all times following such change to have a valid, legal and
perfected first priority security interest in all the Article 9 Collateral, for
the ratable benefit of the Secured Parties. Each Pledgor agrees promptly to
notify the Administrative Agent if any material portion of the Article 9
Collateral owned or held by such Pledgor is damaged or destroyed.

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

(c) Each Pledgor agrees, at its own expense, to execute, acknowledge, deliver
and cause to be duly filed all such further instruments and documents and take
all such actions as the Administrative Agent may from time to time reasonably
request to better assure, preserve, protect and perfect the Security Interest
and the rights and remedies created hereby, including the payment of any fees
and taxes required in connection with the execution and delivery of this
Agreement and the granting of the Security Interest and the filing of any
financing statements (including fixture filings) or other documents in
connection herewith or therewith. If any amount payable under or in connection
with any of the Article 9 Collateral that is in excess of $5.0 million shall be
or become evidenced by any promissory note or other instrument, such note or
instrument shall be promptly pledged and delivered to the Administrative Agent,
for the ratable benefit of the Secured Parties, duly endorsed in a manner
reasonably satisfactory to the Administrative Agent.

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

(d) After the occurrence of an Event of Default and during the continuance
thereof, the Administrative Agent shall have the right to verify under
reasonable procedures the validity, amount, quality, quantity, value, condition
and status of, or any other matter relating to, the Article 9 Collateral,
including, in the case of Accounts or Article 9 Collateral in the possession of
any third person, by contacting Account Debtors or the third person possessing
such Article 9 Collateral for the purpose of making such a verification. The
Administrative Agent shall have the right to share any information it gains from
such inspection or verification with any Secured Party.

 

28

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

(e) At its option, the Administrative Agent may discharge past due taxes,
assessments, charges, fees, Liens, security interests or other encumbrances at
any time levied or placed on the Article 9 Collateral and not a Permitted Lien,
and may pay for the maintenance and preservation of the Article 9 Collateral to
the extent any Pledgor fails to do so as required by the Secured Agreements or
this Agreement, and each Pledgor jointly and severally agrees to reimburse the
Administrative Agent on demand for any reasonable payment made or any reasonable
expense incurred by the Administrative Agent pursuant to the foregoing
authorization; provided, however, that nothing in this Section 4.03(e) shall be
interpreted as excusing any Pledgor from the performance of, or imposing any
obligation on the Administrative Agent or any Secured Party to cure or perform,
any covenants or other promises of any Pledgor with respect to taxes,
assessments, charges, fees, Liens, security interests or other encumbrances and
maintenance as set forth herein or in the other Loan Documents.

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

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

(h) None of the Pledgors will, without the Administrative Agent’s prior written
consent (which consent shall not be unreasonably withheld), grant any extension
of the time of payment of any Accounts included in the Article 9 Collateral,
compromise, compound or settle the same for less than the full amount thereof,
release, wholly or partly, any person liable for the payment thereof or allow
any credit or discount whatsoever thereon, other than extensions, credits,
discounts, compromises or settlements granted or made in the ordinary course of
business and consistent with prudent business practices or as otherwise
permitted under the Secured Agreements.

(i) Each Pledgor irrevocably makes, constitutes and appoints the Administrative
Agent (and all officers, employees or agents designated by the Administrative
Agent) as such Pledgor’s true and lawful agent (and attorney-in-fact) for the
purpose, during the continuance of an Event of Default, of making, settling and
adjusting claims in respect of Article 9 Collateral under policies of insurance,
endorsing the name of such Pledgor on any check, draft, instrument or other item
of payment for the proceeds of such policies of insurance and for making all
determinations and decisions with respect thereto. In the event that any Pledgor
at any time or times shall fail to obtain

 

29

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

or maintain any of the policies of insurance required hereby or to pay any
premium in whole or part relating thereto, the Administrative Agent may, without
waiving or releasing any obligation or liability of the Pledgors hereunder or
any Event of Default, in its sole discretion, obtain and maintain such policies
of insurance and pay such premium and take any other actions with respect
thereto as the Administrative Agent reasonably deems advisable. All sums
disbursed by the Administrative Agent in connection with this Section 4.03(i),
including reasonable attorneys’ fees, court costs, expenses and other charges
relating thereto, shall be payable, upon demand, by the Pledgors to the
Administrative Agent and shall be additional Obligations secured hereby.

Section 4.04. Other Actions. In order to further ensure the attachment,
perfection and priority of, and the ability of the Administrative Agent to
enforce, for the ratable benefit of the Secured Parties, the Administrative
Agent’s security interest in the Article 9 Collateral, each Pledgor agrees, in
each case at such Pledgor’s own expense, to take the following actions with
respect to the following Article 9 Collateral:

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

(b) Investment Property. Except to the extent otherwise provided in Article 3,
if any Pledgor shall at any time hold or acquire any Certificated Security
constituting Pledged Collateral or Article 9 Collateral, such Pledgor shall
forthwith endorse, assign and deliver the same to the Administrative Agent,
accompanied by such instruments of transfer or assignment duly executed in blank
as the Administrative Agent may from time to time reasonably specify. If any
security of a domestic issuer now owned or hereafter acquired by any Pledgor is
uncertificated and is issued to such Pledgor or its nominee directly by the
issuer thereof, such Pledgor shall promptly notify the Administrative Agent of
such uncertificated securities and (i) upon the Administrative Agent’s
reasonable request or (ii) upon the occurrence and during the continuance of an
Event of Default, such Pledgor shall pursuant to an agreement in form and
substance reasonably satisfactory to the Administrative Agent, either (i) cause
the issuer to agree to comply with instructions from the Administrative Agent as
to such security, without further consent of any Pledgor or such nominee, or
(ii) cause the issuer to register the Administrative Agent as the registered
owner of such security. If any security or other Investment Property, whether
certificated or uncertificated, representing an Equity Interest in a third party
and having a fair market value in excess of $5.0 million now or hereafter
acquired by any Pledgor is held by such Pledgor or its nominee through a
securities intermediary or commodity intermediary, such Pledgor shall promptly
notify the Administrative Agent thereof and, at the Administrative Agent’s
request and option, pursuant to a Control Agreement in form and substance
reasonably satisfactory to the Administrative Agent, either (A) cause such
securities intermediary or commodity intermediary, as applicable, to agree, in
the case of a securities intermediary, to comply with entitlement orders or
other instructions from the Administrative Agent to such securities intermediary
as to such securities or other Investment Property or, in the case of a
commodity intermediary, to apply any value distributed on account of any

 

30

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

commodity contract as directed by the Administrative Agent to such commodity
intermediary, in each case without further consent of any Pledgor or such
nominee, or (B) in the case of Financial Assets or other Investment Property
held through a securities intermediary, arrange for the Administrative Agent to
become the entitlement holder with respect to such Investment Property, for the
ratable benefit of the Secured Parties, with such Pledgor being permitted, only
with the consent of the Administrative Agent, to exercise rights to withdraw or
otherwise deal with such Investment Property. The Administrative Agent agrees
with each of the Guarantors that the Administrative Agent shall not give any
such entitlement orders or instructions or directions to any such issuer,
securities intermediary or commodity intermediary, and shall not withhold its
consent to the exercise of any withdrawal or dealing rights by any Pledgor,
unless an Event of Default has occurred and is continuing or, after giving
effect to any such withdrawal or dealing rights, would occur. The provisions of
this paragraph (b) shall not apply to any Financial Assets credited to a
Securities Account for which the Administrative Agent is the securities
intermediary.

(c) Commercial Tort Claims. If any Pledgor shall at any time hold or acquire a
Commercial Tort Claim in an amount reasonably estimated to exceed $2.0 million,
such Pledgor shall promptly notify the Administrative Agent thereof in a writing
signed by such Pledgor, including a summary description of such claim, and grant
to the Administrative Agent in writing a security interest therein and in the
proceeds thereof, all under the terms and provisions of this Agreement, with
such writing to be in form and substance reasonably satisfactory to the
Administrative Agent.

Section 4.05. Covenants Regarding Patent, Trademark and Copyright Collateral.
Except as permitted by the Secured Agreements: (a) Each Pledgor agrees that it
will not knowingly do any act or omit to do any act (and will exercise
commercially reasonable efforts to prevent its licensees from doing any act or
omitting to do any act) whereby any Patent that is material to the normal
conduct of such Pledgor’s business may become prematurely invalidated,
abandoned, lapsed or dedicated to the public, and agrees that it shall take
commercially reasonable steps with respect to any material products covered by
any such Patent as necessary and sufficient to establish and preserve its rights
under applicable patent laws.

(b) Each Pledgor will, and will use its commercially reasonable efforts to cause
its licensees or its sublicensees to, for each material Trademark necessary to
the normal conduct of such Pledgor’s business, (i) maintain such Trademark in
full force free from any adjudication of abandonment or invalidity for non-use,
(ii) maintain the quality of products and services offered under such Trademark,
(iii) display such Trademark with notice of federal or foreign registration or
claim of trademark or service mark as required under applicable law and (iv) not
knowingly use or knowingly permit its licensees’ use of such Trademark in
violation of any third-party rights.

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

 

31

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

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

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

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

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

ARTICLE 5

REMEDIES

Section 5.01. Remedies Upon Default. Upon the occurrence and during the
continuance of an Event of Default, each Pledgor agrees to deliver each item of
Collateral to the Administrative Agent on demand, and it is agreed that the
Administrative Agent

 

32

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

shall have the right to take any of or all the following actions at the same or
different times: (a) with respect to any Article 9 Collateral consisting of
Intellectual Property, on demand, to cause the Security Interest to become an
assignment, transfer and conveyance of any of or all such Article 9 Collateral
by the applicable Pledgors to the Administrative Agent or to license or
sublicense, whether general, special or otherwise, and whether on an exclusive
or a nonexclusive basis, any such Article 9 Collateral throughout the world on
such terms and conditions and in such manner as the Administrative Agent shall
determine (other than in violation of any then-existing licensing arrangements
to the extent that waivers thereunder cannot be obtained with the use of
commercially reasonable efforts, which each Pledgor hereby agrees to use) and
(b) with or without legal process and with or without prior notice or demand for
performance, to take possession of the Article 9 Collateral and without
liability for trespass to the applicable Pledgor to enter any premises where the
Article 9 Collateral may be located for the purpose of taking possession of or
removing the Article 9 Collateral and, generally, to exercise any and all rights
afforded to a secured party under the applicable Uniform Commercial Code or
other applicable law. Without limiting the generality of the foregoing, each
Pledgor agrees that the Administrative Agent shall have the right, subject to
the mandatory requirements of applicable law, to sell or otherwise dispose of
all or any part of the Collateral at a public or private sale or at any broker’s
board or on any securities exchange, for cash, upon credit or for future
delivery as the Administrative Agent shall deem appropriate. The Administrative
Agent shall be authorized in connection with any sale of a security (if it deems
it advisable to do so) pursuant to the foregoing to restrict the prospective
bidders or purchasers to persons who represent and agree that they are
purchasing such security for their own account, for investment, and not with a
view to the distribution or sale thereof. Upon consummation of any such sale of
Collateral pursuant to this Section 5.01 the Administrative Agent shall have the
right to assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any such sale shall hold the property
sold absolutely, free from any claim or right on the part of any Pledgor, and
each Pledgor hereby waives and releases (to the extent permitted by law) all
rights of redemption, stay, valuation and appraisal that such Pledgor now has or
may at any time in the future have under any rule of law or statute now existing
or hereafter enacted.

The Administrative Agent shall, except in the case of Collateral that is
perishable or threatens to decline speedily in value or is of a type customarily
sold on a recognized market, give the applicable Pledgors 10 Business Days’
written notice (which each Pledgor agrees is reasonable notice within the
meaning of Section 9-611 of the New York UCC or its equivalent in other
jurisdictions) of the Administrative Agent’s intention to make any sale of
Collateral. Such notice, in the case of a public sale, shall state the time and
place for such sale and, in the case of a sale at a broker’s board or on a
securities exchange, shall state the board or exchange at which such sale is to
be made and the day on which the Collateral, or portion thereof, will first be
offered for sale at such board or exchange. Any such public sale shall be held
at such time or times within ordinary business hours and at such place or places
as the Administrative Agent may fix and state in the notice (if any) of such
sale. At any such sale, the Collateral, or the portion thereof, to be sold may
be sold in one lot as an entirety or in separate parcels, as the Administrative
Agent may (in its sole and absolute discretion) determine. The Administrative
Agent shall not be obligated to make any sale of any Collateral if it shall

 

33

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

determine not to do so, regardless of the fact that notice of sale of such
Collateral shall have been given. The Administrative Agent may, without notice
or publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. In the case of any sale of all or any part
of the Collateral made on credit or for future delivery, the Collateral so sold
may be retained by the Administrative Agent until the sale price is paid by the
purchaser or purchasers thereof, but the Administrative Agent shall not incur
any liability in the event that any such purchaser or purchasers shall fail to
take up and pay for the Collateral so sold and, in the case of any such failure,
such Collateral may be sold again upon notice given in accordance with
provisions above. At any public (or, to the extent permitted by law, private)
sale made pursuant to this Section 5.01, any Secured Party may bid for or
purchase for cash, free (to the extent permitted by law) from any right of
redemption, stay, valuation or appraisal on the part of any Pledgor (all such
rights being also hereby waived and released to the extent permitted by law),
the Collateral or any part thereof offered for sale and such Secured Party may,
upon compliance with the terms of sale, hold, retain and dispose of such
property in accordance with Section 5.02 hereof without further accountability
to any Pledgor therefor. For purposes hereof, a written agreement to purchase
the Collateral or any portion thereof shall be treated as a sale thereof; the
Administrative Agent shall be free to carry out such sale pursuant to such
agreement and no Pledgor shall be entitled to the return of the Collateral or
any portion thereof subject thereto, notwithstanding the fact that after the
Administrative Agent shall have entered into such an agreement all Events of
Default shall have been remedied and the Obligations paid in full. As an
alternative to exercising the power of sale herein conferred upon it, the
Administrative Agent may proceed by a suit or suits at law or in equity to
foreclose this Agreement and to sell the Collateral or any portion thereof
pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver. Any sale
pursuant to the provisions of this Section 5.01 shall be deemed to conform to
the commercially reasonable standards as provided in Section 9-610(b) of the New
York UCC or its equivalent in other jurisdictions.

For the avoidance of doubt, with respect to Real Property Collateral, the
remedies set forth in the Mortgages applicable to such Real Property Collateral
shall control and the foregoing provisions of this Section shall apply to such
Real Property Collateral only to the extent permitted by applicable law and the
provisions of any applicable Mortgage or other document.

Section 5.02. Application of Proceeds.

(a) The Administrative Agent shall promptly apply the proceeds, moneys or
balances of any collection or sale of Collateral, as well as any Collateral
consisting of cash, as follows:

FIRST, to the payment of all costs and expenses incurred by the Administrative
Agent and each Authorized Representative in connection with such collection or
sale or otherwise in connection with this Agreement, any Security Document or
any Secured Agreement or any of the Obligations, including without limitation
all court costs and the fees and expenses of agents

 

34

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

and legal counsel for the Administrative Agent and each Authorized
Representative, the repayment of all advances made by the Administrative Agent
and each Authorized Representative hereunder or under any Secured Agreement or
Security Document on behalf of any Pledgor, any other costs or expenses incurred
in connection with the exercise of any right or remedy hereunder or under any
other Secured Agreement, and all other fees, indemnities and other amounts owing
or reimbursable to the Administrative Agent and each Authorized Representative
under any Secured Agreement or any Security Document in its capacity as such;

SECOND, (A) prior to the ABL Date, to the payment in full of the other
Obligations, the amounts so applied to be distributed to the Authorized
Representative of each Series of Obligations pro rata in accordance with the
respective amounts of the Obligations of each such Series owed on the date of
any such distribution; or

(B) from the ABL Date: (i) if the proceeds, moneys or balances are from or
constitute Revolving Collateral, first to the payment in full of the Credit
Agreement Obligations, the amount so applied to be distributed to the Credit
Agreement Authorized Representative and second to the payment in full of the
other Obligations, the amount so applied to be distributed to the Authorized
Representative of each Series of Obligations (other than the Credit Agreement
Obligations) pro rata in accordance with the respective amounts of the
Obligations of each such Series owed on the date of any such distribution; and
(ii) if the proceeds, moneys or balances are from or constitute Note Collateral,
first to the payment in full of the Obligations other than the Credit Agreement
Obligations, the amount so applied to be distributed to each Authorized
Representative of each Series of Obligations (other than the Credit Agreement
Obligations) pro rata in accordance with the respective amounts of the
Obligations of each such Series owed on the date of any such distribution, and
second to the payment in full of the Credit Agreement Obligations, the amount so
applied to be distributed to the Credit Agreement Authorized Representative;
provided that if the Company shall have certified to the Administrative Agent
pursuant to Section 7.05(b) that the Credit Agreement so provides, up to
$50,000,000 (or such lesser amount as the Company has so certified or is
permitted by the Secured Agreements) of the Credit Agreement Obligations shall
be paid on a pari passu and pro rata basis with the Note Obligations and any
Additional Obligations with the proceeds of Note Collateral; and

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

provided that (i) in no event shall the proceeds of any collection or sale of
any Specified Excluded Collateral (the “Specified Excluded Proceeds”) be applied
to the payment of any Note Obligations or Additional Obligations and (ii) the
Credit Agreement Obligations shall not be reduced by the amount of Specified
Excluded Proceeds for the purpose of determining its ratable share of the
proceeds of any collection or sale of Collateral.

 

35

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

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

(b) Distributions made pursuant to the foregoing waterfall to the Authorized
Representative of any Series of Obligations shall be applied by such Authorized
Representative to reduce the Obligations of such Series in accordance with the
Secured Agreements governing the Obligations of such Series; provided that, any
such amount distributed to the Credit Agreement Authorized Representative shall,
unless otherwise specified in the Credit Agreement, be allocated as follows:

FIRST, to payment of all fees, indemnities and other amounts (other than
principal and interest) payable to the Issuing Bank in its capacity as such and
of any amount required to be paid to the Issuing Bank by any Revolving Facility
Lender (as defined in the Credit Agreement) pursuant to Section 2.05(d), (e)(ii)
and (h) of the Credit Agreement and not paid by such Revolving Facility Lender
(which shall be payable to the Credit Agreement Authorized Representative if the
Credit Agreement Authorized Representative advanced such payment to the Issuing
Bank in anticipation of such payment by such Revolving Facility Lender and
otherwise, to the Issuing Bank); and

SECOND, to the payment in full of the Credit Agreement Obligations (the amounts
so applied to be (i) allocated between principal (or equivalent) and interest in
the absolute discretion of the Credit Agreement Authorized Representative and
(ii) distributed among the Credit Agreement Secured Parties pro rata in
accordance with the respective amounts of the Credit Agreement Obligations owed
to them on the date of any such distribution, which in the case of Letters of
Credit, shall be paid by deposit in an account with the Credit Agreement
Authorized Representative, in the name of the Credit Agreement Authorized
Representative and for the benefit of the Issuing Bank and the Lenders, an
amount in cash in U.S. Dollars (as defined in the Credit Agreement) equal to the
aggregate Revolving L/C Exposure (as defined in the Credit Agreement) as of such
date plus any accrued and unpaid interest thereon); and

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

Section 5.03. Securities Act, Etc. In view of the position of the Pledgors in
relation to the Pledged Collateral, or because of other current or future
circumstances, a question may arise under the Securities Act of 1933, as now or
hereafter in effect, or any similar federal statute hereafter enacted analogous
in purpose or effect (such Act and any such similar statute as from time to time
in effect being called the “Federal Securities Laws”) with respect to any
disposition of the Pledged Collateral permitted hereunder. Each Pledgor
understands that compliance with the Federal Securities Laws might very strictly
limit the course of conduct of the Administrative Agent if the Administrative

 

36

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

Agent were to attempt to dispose of all or any part of the Pledged Collateral,
and might also limit the extent to which or the manner in which any subsequent
transferee of any Pledged Collateral could dispose of the same. Similarly, there
may be other legal restrictions or limitations affecting the Administrative
Agent in any attempt to dispose of all or part of the Pledged Collateral under
applicable Blue Sky or other state securities laws or similar laws analogous in
purpose or effect. Each Pledgor acknowledges and agrees that in light of such
restrictions and limitations, the Administrative Agent, in its sole and absolute
discretion, (a) may proceed to make such a sale whether or not a registration
statement for the purpose of registering such Pledged Collateral or part thereof
shall have been filed under the Federal Securities Laws or, to the extent
applicable, Blue Sky or other state securities laws and (b) may approach and
negotiate with a single potential purchaser to effect such sale. Each Pledgor
acknowledges and agrees that any such sale might result in prices and other
terms less favorable to the seller than if such sale were a public sale without
such restrictions. In the event of any such sale, the Administrative Agent shall
incur no responsibility or liability for selling all or any part of the Pledged
Collateral at a price that the Administrative Agent, in its sole and absolute
discretion, may in good faith deem reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might have
been realized if the sale were deferred until after registration as aforesaid or
if more than a single purchaser were approached. The provisions of this
Section 5.03 will apply notwithstanding the existence of a public or private
market upon which the quotations or sales prices may exceed substantially the
price at which the Administrative Agent sells.

ARTICLE 6

INDEMNITY, SUBROGATION AND SUBORDINATION

Section 6.01. Indemnity. In addition to all such rights of indemnity and
subrogation as the Guarantors may have under applicable law (but subject to
Section 6.03 hereof), the Company agrees that (a) in the event a payment shall
be made by any Guarantor under this Agreement in respect of any Credit Agreement
Obligation of the Company, the Company shall indemnify such Guarantor for the
full amount of such payment and such Guarantor shall be subrogated to the rights
of the person to whom such payment shall have been made to the extent of such
payment and (b) in the event any assets of any Guarantor shall be sold pursuant
to this Agreement or any other Security Document to satisfy in whole or in part
a Credit Agreement Obligation of the Company, the Company shall indemnify such
Guarantor in an amount equal to the greater of the book value or the fair market
value of the assets so sold.

Section 6.02. Contribution and Subrogation. Each Guarantor (other than Holdings
and the Company) (a “Contributing Guarantor”) agrees (subject to Section 6.03
hereof) that, in the event a payment shall be made by any other Guarantor (other
than Holdings and the Company) hereunder in respect of any Credit Agreement
Obligation or assets of any other Guarantor (other than Holdings and the
Company) shall be sold pursuant to any Security Document to satisfy any Credit
Agreement Obligation owed to any Secured Party and such other Guarantor (the
“Claiming Guarantor”) shall not have been fully indemnified by the Company as
provided in Section 6.01 hereof, the Contributing Guarantor shall indemnify the
Claiming Guarantor in an amount equal to

 

37

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

the amount of such payment or the greater of the book value or the fair market
value of such assets, as applicable, in each case multiplied by a fraction of
which the numerator shall be the net worth of such Contributing Guarantor on the
date hereof and the denominator shall be the aggregate net worth of all the
Guarantors on the date hereof (or, in the case of any Guarantor becoming a party
hereto pursuant to Section 9.16 hereof, the date of the supplement hereto
executed and delivered by such Guarantor). Any Contributing Guarantor making any
payment to a Claiming Guarantor pursuant to this Section 6.02 shall be
subrogated to the rights of such Claiming Guarantor under Section 6.01 hereof to
the extent of such payment.

Section 6.03. Subordination. (a) Notwithstanding any provision of this Agreement
to the contrary, all rights of the Guarantors under Section 6.01 and 6.02 hereof
and all other rights of indemnity, contribution or subrogation of the Guarantors
under applicable law or otherwise shall be fully subordinated to the payment in
full in cash or immediately available funds of the Credit Agreement Obligations
(other than contingent indemnity or expense reimbursement obligations in respect
of which no claim has been made). No failure on the part of the Company or any
Guarantor to make the payments required by Sections 6.01 and 6.02 hereof (or any
other payments required under applicable law or otherwise) shall in any respect
limit the obligations and liabilities of the Company with respect to the Credit
Agreement Obligations or any Guarantor with respect to its obligations
hereunder, and the Company shall remain liable for the full amount of the Credit
Agreement Obligations and each Guarantor shall remain liable for the full amount
of its obligations hereunder.

(b) The Company and each Guarantor hereby agree that all Indebtedness and other
monetary obligations owed by it to the Company, any other Guarantor or any
Subsidiary shall be fully subordinated to the payment in full in cash or
immediately available funds of the Credit Agreement Obligations (other than
contingent indemnity or expense reimbursement obligations in respect of which no
claim has been made) to the extent subordination is required pursuant to the
provisions of Section 6.01(e) of the Credit Agreement (or any equivalent
provision of any Replacement Credit Agreement).

ARTICLE 7

INTERCREDITOR MATTERS

Section 7.01. Priority of Claims. (a) Notwithstanding the date, time, method,
manner or order of grant, attachment or perfection of any Liens securing any
Obligations granted on the Collateral and notwithstanding any provision of the
Uniform Commercial Code, or any other applicable law or the Secured Agreements
or any defect or deficiencies in the Liens securing the Obligations or any other
circumstance whatsoever (but, in each case, subject to Section 5.02 and, in the
case of Rule 3-16 Excluded Collateral, to the last paragraph of Section 3.01),
each Secured Party hereby agrees that the Liens securing the Obligations on the
Collateral shall be of equal priority.

(b) It is acknowledged that Obligations of any Secured Party may, subject to the
limitations set forth in the then extant Secured Agreements, be increased,
extended, renewed, replaced, restated, supplemented, restructured, repaid,
refunded, Refinanced or

 

38

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

otherwise amended or modified from time to time, all without affecting the
priorities set forth in Section 7.01(a) or Section 5.02 or the provisions of
this Agreement defining the relative rights of such Secured Parties.

Section 7.02. Actions With Respect To Collateral.

(a) The Secured Parties, through their respective Authorized Representatives and
as a condition of accepting the benefits of the security interests granted
herein, agree that no Secured Party or Authorized Representative may commence
any judicial or nonjudicial foreclosure proceedings with respect to, seek to
have a trustee, receiver, liquidator or similar official appointed for or over,
attempt any action to take possession of, exercise any right, remedy or power
with respect to, or otherwise take any action to enforce its security interest
in or realize upon, or take any other action available to it in respect of, any
Collateral as a secured party, whether under any Security Document, applicable
law or otherwise, it being agreed that only the Administrative Agent, in
accordance with the applicable Security Documents, shall be entitled to take any
such actions or exercise any such remedies with respect to Collateral.

(b) Following the occurrence and during the continuation of an Event of Default
under a Secured Agreement, the Authorized Representative for the Obligations
under such Secured Agreement may deliver to the Administrative Agent and each
other Authorized Representative a notice specifying the Event of Default and
instructing the Administrative Agent to take enforcement actions (such notice,
an “Enforcement Notice”). Subject to Section 8.03(a)(ii), following the receipt
of (and prior to the rescission of) an Enforcement Notice from any Authorized
Representative, the Administrative Agent shall take such actions and exercise
such discretionary rights and remedies as are expressly contemplated hereby and
by any other Security Documents as directed in writing by such Authorized
Representative. Prior to the receipt of an Enforcement Notice, the
Administrative Agent may take, but shall be under no obligation to take, any and
all discretionary actions expressly contemplated hereby.

(c) Each of the Authorized Representatives agrees that it will not accept any
Lien on any Collateral to secure any Obligations (other than funds deposited for
the discharge or defeasance of any Secured Agreement) other than pursuant to the
Security Documents, and upon executing this Agreement (or any Additional Secured
Party Consent), each Authorized Representative and the Secured Parties for which
it is acting hereunder agree to be bound by the provisions of this Agreement and
the other Security Documents applicable to it.

(d) Each of the Secured Parties agrees that (i) it will not (and hereby waives
any right to) contest or support any other person in contesting, in any
proceeding (including any proceeding under any Debtor Relief Law), the
perfection, priority, validity or enforceability of a Lien held by or on behalf
of any of the Secured Parties in all or any part of the Collateral, or the
provisions of this Agreement; provided that nothing in this Agreement shall be
construed to prevent or impair the rights of any of the Administrative Agent or
any Authorized Representative to enforce this Agreement and that (ii) if,
notwithstanding clause (i), such Secured Party shall obtain possession of any
Collateral or shall realize any proceeds or payment in respect of any such
Collateral, pursuant to any Security Document or by the exercise of any rights
available to it under applicable law or

 

39

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

in any proceeding under any Debtor Relief Law or through any other exercise of
remedies at any time prior to the discharge of such Obligations, then it shall
hold such Collateral, proceeds or payment in trust for the other Secured Parties
and promptly transfer such Collateral, proceeds or payment, as the case may be,
to the Administrative Agent, to be distributed in accordance with the provisions
of Section 5.02 hereof.

Section 7.03. Reinstatement. In the event that any of the Obligations shall be
paid in full and such payment or any part thereof shall subsequently, for
whatever reason (including an order or judgment for disgorgement of a preference
under any Debtor Relief Law, or the settlement of any claim in respect thereof),
be required to be returned or repaid, the terms and conditions of this Agreement
shall be fully applicable thereto until all such Obligations shall again have
been paid in full in cash.

Section 7.04. Insurance. As between the Secured Parties, the Administrative
Agent, acting at the direction of an Authorized Representative, shall have the
right to adjust or settle any insurance policy or claim covering or constituting
Collateral in the event of any loss thereunder and to approve any award granted
in any condemnation or similar proceeding affecting the Collateral.

Section 7.05. Refinancings.

(a) The Obligations of any Secured Party may be Refinanced, in whole or in part,
in each case, without notice to, or the consent (except to the extent a consent
is otherwise required to permit the refinancing transaction under any Secured
Agreement) of any other Secured Party, all without affecting the priorities
provided for herein or the other provisions hereof.

(b) In connection with any such Refinancing, the Company shall designate such
Refinancing indebtedness at the time of incurrence to be secured as Obligations
of a specified Series on the terms and conditions set forth in this Agreement by
delivering to the Administrative Agent and each Authorized Representative (A) a
certificate signed by a Responsible Officer (i) identifying the obligations so
designated and the initial aggregate principal amount or face amount thereof,
(ii) stating that such obligations are designated as Obligations and identifying
the Series of such Obligations, (iii) representing that the incurrence of such
obligation and the designation of such obligations as Obligations complies with
the terms of the Secured Agreements, (iv) specifying the name and address of the
Authorized Representative for such obligations, and (v) in the case of a
Refinancing of the Credit Agreement, stating whether such Credit Agreement is an
Asset Based Facility and, if so, whether and to what extent (up to $50,000,000)
the Credit Agreement Obligations are to be paid on a pari passu and pro rata
basis with the Note Obligations and the Additional Obligations from the proceeds
of Note Collateral and (B) a fully executed Additional Secured Party Consent.
Each Authorized Representative agrees that upon the satisfaction of all
conditions set forth in the preceding sentence, the Administrative Agent shall
act as collateral agent under and subject to the terms of the Security Documents
for the benefit of all Secured Parties, including without limitation, any
Secured Parties that hold the Obligations under any such Refinancing, and each
Authorized Representative agrees to the appointment, and acceptance of the
appointment, of the Administrative Agent as collateral agent for the holders of
such Obligations as set forth in each Additional Secured Party Consent and
agrees, on behalf of itself and each Secured Party it represents, to be bound by
this Agreement.

 

40

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

Section 7.06. Administrative Agent as Gratuitous Bailee for Perfection.

(a) The Administrative Agent agrees to hold any Collateral constituting
Possessory Collateral in its possession or control (or in the possession or
control of its agents or bailees) as gratuitous bailee for the benefit of each
other Secured Party and any assignee solely for the purpose of perfecting the
security interest granted in such Possessory Collateral, if any, pursuant to the
applicable Security Documents, in each case, subject to the terms and conditions
of this Section 7.06. Pending delivery to the Administrative Agent, each other
Authorized Representative agrees to hold any Collateral constituting Possessory
Collateral, from time to time in its possession, as gratuitous bailee for the
benefit of each other Secured Party and any assignee, solely for the purpose of
perfecting the security interest granted in such Possessory Collateral, if any,
pursuant to the applicable Security Documents, in each case, subject to the
terms and conditions of this Section 7.06.

(b) The duties and responsibilities of the Administrative Agent and each other
Authorized Representative under this Section 7.06 shall be limited solely to
holding any Collateral constituting Possessory Collateral as gratuitous bailee
for the benefit of each other Secured Party for purposes of perfecting the Lien
held by such Secured Parties therein.

Section 7.07. Existence and Amount of Liens and Obligations. Whenever the
Administrative Agent shall be required, in connection with the exercise of its
rights or the performance of its obligations hereunder, to determine the
existence or amount of any Obligations, or the Collateral subject to any Lien
securing the Obligations, it may request that such information be furnished to
it in writing by the applicable Authorized Representative and shall be entitled
to make such determination on the basis of the information so furnished;
provided that if such Authorized Representative shall fail or refuse reasonably
promptly to provide the requested information, the requesting Administrative
Agent shall be entitled to make any such determination by such method as it may,
in the exercise of its good faith judgment, determine, including by reliance
upon a certificate of the Company. The Administrative Agent may rely
conclusively, and shall be fully protected in so relying, on any determination
made by it in accordance with the provisions of the preceding sentence (or as
otherwise directed by a court of competent jurisdiction) and shall have no
liability to any Pledgor, any Secured Party or any other person as a result of
such determination.

Section 7.08. Provisions Solely to Define Relative Rights. The provisions of
this Article 7 are and are intended solely for the purpose of defining the
relative rights of the Secured Parties in relation to one another. None of the
Company, any other Pledgor or any other creditor thereof shall have any rights
or, except as expressly set forth herein, obligations under this Article 7.
Nothing in this Agreement is intended to or shall impair the obligations of any
Pledgor, which are absolute and unconditional, to pay the Obligations as and
when the same shall become due and payable in accordance with their terms.

 

41

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

Section 7.09. Replacement Of Authorized Representatives. The Company may replace
any Authorized Representative by delivering to the Administrative Agent (a) a
certificate from a Responsible Officer representing that the appointment of the
replacement Authorized Representative is in accordance with the requirements of
the applicable Secured Agreements and (b) an Additional Secured Party Consent
duly executed by the replacement Authorized Representative. Such replacement
Authorized Representative shall become the sole Authorized Representative for
the applicable Secured Obligations with effect from the date of delivery of the
foregoing documents.

Section 7.10. Relationship with Second Lien Obligations. Each of the Secured
Parties hereby (i) irrevocably appoint the Administrative Agent to act on its
behalf as the “Senior Priority Agent” for the purpose of the Intercreditor
Agreement, and (ii) agrees that Credit Suisse, Cayman Islands Branch shall
continue to act as “Intercreditor Agent” for the purpose of the Intercreditor
Agreement. The parties hereto hereby agree, and each Secured Party through its
Authorized Representative hereby agrees, that the Administrative Agent and
Credit Suisse, Cayman Islands Branch, in each case acting in the capacities set
forth in the foregoing sentence, shall be entitled to the same protections as
are afforded the Administrative Agent hereunder and under the Security Documents
and Secured Agreements. The parties hereto hereby agree that the Obligations
constitute “First Lien Indebtedness” for the purpose of the Intercreditor
Agreement.

ARTICLE 8

ADMINISTRATIVE AGENT

Section 8.01. Appointment and Authority.

(a) Each of the Secured Parties hereby irrevocably appoints Credit Suisse,
Cayman Islands Branch to act on its behalf as the Administrative Agent hereunder
and under each of the other Security Documents and authorizes the Administrative
Agent to take such actions on its behalf and to exercise such powers as are
delegated to the Administrative Agent by the terms hereof or thereof, including
for purposes of acquiring, holding and enforcing any and all Liens on Collateral
granted by any Pledgor to secure any of the Obligations, together with such
powers and discretion as are reasonably incidental thereto. In this connection,
the Administrative Agent and any co-agents, sub-agents and attorneys-in-fact
appointed by the Administrative Agent pursuant to Section 8.05 for purposes of
holding or enforcing any Lien on the Collateral (or any portion thereof) granted
under any of the Security Documents, or for exercising any rights and remedies
thereunder at the direction of the Authorized Representatives, shall be entitled
to the benefits of all provisions of this Article 8 and Article 9 of the Credit
Agreement and the equivalent provision of any Secured Agreement (as though such
co-agents, sub-agents and attorneys-in-fact were the “Administrative Agent” or
“Collateral Agent” under the Security Documents) as if set forth in full herein
with respect thereto.

(b) Each Secured Party acknowledges and agrees that the Administrative Agent
shall be entitled, for the benefit of the Secured Parties, to sell, transfer or
otherwise dispose of or deal with any Collateral as provided herein and in the
Security Documents. Without limiting the foregoing, each Secured Party agrees
that the Administrative Agent

 

42

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

shall have no duty or obligation first to marshal or realize upon any type of
Collateral (or any other Collateral securing any of the Obligations), or to
sell, dispose of or otherwise liquidate all or any portion of such Collateral
(or any other Collateral securing any Obligations), in any manner that would
maximize the return to the Secured Parties of any Series, notwithstanding that
the order and timing of any such realization, sale, disposition or liquidation
may affect the amount of proceeds actually received by the Secured Parties from
such realization, sale, disposition or liquidation.

Section 8.02. Rights as a Secured Party. The person serving as the
Administrative Agent hereunder shall have the same rights and powers in its
capacity as a Secured Party under any Obligations that it holds as any other
Secured Party and may exercise the same as though it were not the Administrative
Agent and the term “Secured Party” or “Secured Parties” or (as applicable)
“Credit Agreement Secured Party”, “Credit Agreement Secured Parties”, “Note
Secured Party”, “Note Secured Parties”, “Additional Secured Party” or
“Additional Secured Parties” shall, unless otherwise expressly indicated or
unless the context otherwise requires, include the person serving as the
Administrative Agent hereunder in its individual capacity. Such person and its
Affiliates may accept deposits from, lend money to, act as the financial advisor
or in any other advisory capacity for and generally engage in any kind of
business with the Company or any Subsidiary or other Affiliate thereof as if
such person were not the Administrative Agent hereunder and without any duty to
account therefor to any other Secured Party.

Section 8.03. Exculpatory Provisions.

(a) The Administrative Agent shall not have any duties or obligations except
those expressly set forth herein and in the other Security Documents. Without
limiting the generality of the foregoing, the Administrative Agent:

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

(ii) shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Security Documents that the Administrative
Agent is required to exercise as directed in writing by an Authorized
Representative following the delivery by such authorized representative of an
Enforcement Notice; provided that the Administrative Agent shall not be required
to take any action that, in its opinion or the opinion of its counsel, (1) is
contrary to law or any provision of any Secured Agreement or Security Document,
(2) may expose the Administrative Agent to liability (unless the Administrative
Agent shall have been indemnified, to its reasonable satisfaction, for such
liability by the Secured Parties represented by the Authorized Representative
giving such direction), (3) is unduly prejudicial to the Secured Parties not
joining in such direction or (4) conflicts with any other notice provided by any
other Authorized Representative or Secured Party or group of Secured Parties;

 

43

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

(iii) shall not, except as expressly set forth herein and in the other Security
Documents, have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to the Company or any of its Affiliates that
is communicated to or obtained by the person serving as the Administrative Agent
or any of its Affiliates in any capacity;

(iv) shall not be liable for any action taken or not taken by it (i) with the
consent or at the request of an Authorized Representative, (ii) in the absence
of its own gross negligence or willful misconduct or (iii) in reliance on a
certificate of an authorized officer of the Company stating that such action is
permitted by the terms of this Agreement. The Administrative Agent shall be
deemed not to have knowledge of any Event of Default under any Obligations
unless and until notice describing such Event of Default is given to the
Administrative Agent by an Authorized Representative of such Obligations or the
Company; and

(v) shall not be responsible for or have any duty to ascertain or inquire into
(i) any statement, warranty or representation made in or in connection with this
Agreement or any other Security Document, (ii) the contents of any certificate,
report or other document delivered hereunder or thereunder or in connection
herewith or therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein or therein
or the occurrence of any event or condition that constitutes an Event of
Default, or that, with the giving of any notice, the passage of time, or both,
would be an Event of Default, (iv) the validity, enforceability, effectiveness
or genuineness of this Agreement, any other Security Document or any other
agreement, instrument or document, or the creation, perfection or priority of
any Lien purported to be created by the Security Documents, (v) the value or the
sufficiency of any Collateral for any Obligations, or (vi) the satisfaction of
any condition set forth in any Secured Agreement, other than to confirm receipt
of items expressly required to be delivered to the Administrative Agent.

Section 8.04. Reliance by Administrative Agent. The Administrative Agent shall
be entitled to rely upon, and shall not incur any liability for relying upon,
any notice, request, certificate, consent, statement, instrument, document or
other writing (including any electronic message, Internet or intranet website
posting or other distribution) believed by it to be genuine and to have been
signed, sent or otherwise authenticated by the proper person. The Administrative
Agent also may rely upon any statement made to it orally or by telephone and
believed by it to have been made by the proper person, and shall not incur any
liability for relying thereon. The Administrative Agent may consult with legal
counsel (who may be counsel for the Company), independent accountants and other
experts selected by it, and shall not be liable for any action taken or not
taken by it in accordance with the advice of any such counsel, accountants or
experts.

Section 8.05. Delegation of Duties. The Administrative Agent may perform any and
all of its duties and exercise its rights and powers hereunder or under any
other Security Document by or through any one or more sub-agents appointed by
the Administrative Agent. The Administrative Agent and any such sub-agent may
perform any and all of its duties and exercise its rights and powers by or
through their respective Affiliates. The exculpatory provisions of this Article
shall apply to any such sub-agent and to the Affiliates of the Administrative
Agent and any such sub-agent.

 

44

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

Section 8.06. Resignation of Administrative Agent. The Administrative Agent may
at any time give notice of its resignation as Administrative Agent under this
Agreement and the other Security Documents to each Authorized Representative and
the Company. Upon receipt of any such notice of resignation, the Authorized
Representatives shall have the right, in consultation with the Company, to
jointly appoint a successor, which shall be a bank with an office in the United
States, or an Affiliate of any such bank with an office in the United States. If
no such successor shall have been so appointed by the Authorized Representatives
and shall have accepted such appointment within 30 days after the retiring
Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may, on behalf of the Secured Parties, appoint a successor
Administrative Agent meeting the qualifications set forth above; provided that
if the Administrative Agent shall notify the Company and each Authorized
Representative that no qualifying person has accepted such appointment, then
such resignation shall nonetheless become effective in accordance with such
notice and (a) the retiring Administrative Agent shall be discharged from its
duties and obligations hereunder and under the other Security Documents (except
that in the case of any collateral security held by the Administrative Agent on
behalf of the Secured Parties under any of the Security Documents, the retiring
Administrative Agent shall continue to hold such collateral security solely for
purposes of maintaining the perfection of the security interests of the Secured
Parties therein until such time as a successor Administrative Agent is appointed
but with no obligation to take any further action at the request an Authorized
Representative or any other Secured Parties) and (b) all payments,
communications and determinations provided to be made by, to or through the
Administrative Agent shall instead be made by or to each Authorized
Representative directly, until such time as the Authorized Representatives
jointly appoint a successor Administrative Agent as provided for above in this
Section 8.06. Upon the acceptance of a successor’s appointment as Administrative
Agent hereunder and under the Security Documents, such successor shall succeed
to and become vested with all of the rights, powers, privileges and duties of
the retiring (or retired) Administrative Agent, and the retiring Administrative
Agent shall be discharged from all of its duties and obligations hereunder or
under the other Security Documents (if not already discharged therefrom as
provided above in this Section 8.06). After the retiring Administrative Agent’s
resignation hereunder and under the other Security Documents, the provisions of
this Article and Article 9 of the Credit Agreement and the equivalent provision
of any Secured Agreement shall continue in effect for the benefit of such
retiring Administrative Agent, its sub-agents and their respective Affiliates in
respect of any actions taken or omitted to be taken by any of them while the
retiring Administrative Agent was acting as Administrative Agent. Upon any
notice of resignation of the Administrative Agent hereunder and under the other
Security Documents, the Company agrees to use commercially reasonable efforts to
transfer (and maintain the validity and priority of) the Liens in favor of the
retiring Administrative Agent under the Security Documents to the successor
Administrative Agent.

Section 8.07. Non-reliance on Administrative Agent and Other Secured Parties.
Each Secured Party acknowledges that it has, independently and without reliance
upon

 

45

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

the Administrative Agent, any Authorized Representative or any other Secured
Party or any of their Affiliates and based on such documents and information as
it has deemed appropriate, made its own credit analysis, if applicable, and
decision to enter into this Agreement and the other Secured Agreements. Each
Secured Party also acknowledges that it will, independently and without reliance
upon the Administrative Agent, any Authorized Representative or any other
Secured Party or any of their Affiliates and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Secured Agreements or any related agreement or any document furnished
hereunder or thereunder.

Section 8.08. Collateral and Guaranty Matters. Each of the Secured Parties
irrevocably authorizes the Administrative Agent, at its option and in its
discretion:

(a) to release any Lien on any property granted to or held by the Administrative
Agent under any Security Document in accordance with Section 9.15 or upon
receipt of a written request from the Company stating that the releases of such
Lien is permitted by the terms of each then extant Secured Agreement; and

(b) to release any Pledgor from its obligations under the Security Documents
upon receipt of a written request from the Company stating that such release is
permitted by the terms of each then extant Secured Agreement.

ARTICLE 9

MISCELLANEOUS

Section 9.01. Notices. All communications and notices hereunder (including
communications and notices to the Administrative Agent) shall (except as
otherwise permitted or provided herein) be in writing and given as provided in
Section 10.01 of the Credit Agreement. All communications and notices hereunder
to any Subsidiary Party shall be given to it in care of the Company, with such
notice to be given as provided in Section 10.01 of the Credit Agreement. All
communications and notices for an Authorized Representative (other than the Note
Authorized Representative) shall be in writing and given as provided in the
relevant Additional Secured Party Consent, and in the case of the Note
Authorized Representative, shall be in writing and given as provided in the
Indenture. Any such notice and other communication shall be deemed to be given
or made at such time as set forth in the Credit Agreement, or in the case of
communications to the Note Authorized Representative, the Indenture. Any party
hereto may change its notice details by notice to the other parties hereto.

Section 9.02. Security Interest Absolute. All rights of the Administrative Agent
hereunder, the Security Interest in the Article 9 Collateral, the security
interest in the Pledged Collateral and all obligations of each Pledgor hereunder
shall be absolute and unconditional irrespective of (a) any lack of validity or
enforceability of any Secured Agreement, any agreement with respect to any of
the Obligations or any other agreement or instrument relating to any of the
foregoing, (b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other

 

46

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

amendment or waiver of or any consent to any departure from any Secured
Agreement or any other agreement or instrument, (c) any exchange, release or
non-perfection of any Lien on other collateral, or any release or amendment or
waiver of or consent under or departure from any guarantee, securing or
guaranteeing all or any of the Obligations or (d) any other circumstance that
might otherwise constitute a defense available to, or a discharge of, any
Pledgor in respect of the Obligations or this Agreement (other than a defense of
payment or performance).

Section 9.03. Limitation By Law. All rights, remedies and powers provided in
this Agreement may be exercised only to the extent that the exercise thereof
does not violate any applicable provision of law, and all the provisions of this
Agreement are intended to be subject to all applicable mandatory provisions of
law that may be controlling and to be limited to the extent necessary so that
they shall not render this Agreement invalid, unenforceable, in whole or in
part, or not entitled to be recorded, registered or filed under the provisions
of any applicable law.

Section 9.04. Binding Effect; Several Agreement. This Agreement shall become
effective as to any party to this Agreement when a counterpart hereof executed
on behalf of such party shall have been delivered to the Administrative Agent
and a counterpart hereof shall have been executed on behalf of the
Administrative Agent, and thereafter shall be binding upon such party and the
Administrative Agent and their respective permitted successors and assigns, and
shall inure to the benefit of such party, the Administrative Agent and the other
Secured Parties and their respective permitted successors and assigns, except
that no party shall have the right to assign or transfer its rights or
obligations hereunder or any interest herein or in the Collateral (and any such
assignment or transfer shall be void) except as expressly contemplated by this
Agreement or the Secured Agreements. This Agreement shall be construed as a
separate agreement with respect to each party and may be amended, modified,
supplemented, waived or released with respect to any party without the approval
of any other party and without affecting the obligations of any other party
hereunder.

Section 9.05. Successors and Assigns. Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
permitted successors and assigns of such party; and all covenants, promises and
agreements by or on behalf of any Pledgor or the Administrative Agent that are
contained in this Agreement shall bind and inure to the benefit of their
respective permitted successors and assigns; provided that no Pledgor may
assign, transfer or delegate any of its rights or obligations under this
Agreement without the prior written consent of the Administrative Agent.

Section 9.06. Administrative Agent’s Fees and Expenses; Indemnification. (a) The
parties hereto agree that the Administrative Agent shall be entitled to
reimbursement of its expenses incurred hereunder as provided in the Secured
Agreements. For the avoidance of doubt, the Note Authorized Representative shall
have no obligation to reimburse any fees or expenses of the Administrative
Agent.

(b) Without limitation of its indemnification obligations under the other
Secured Agreements, each Pledgor jointly and severally agrees to indemnify the
Administrative Agent, each Authorized Representative and each other Secured
Party and

 

47

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

their Affiliates and their respective directors, trustees, officers, employees,
agents and advisors (each, an “Indemnitee”) against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including reasonable counsel fees, charges and disbursements, incurred
by or asserted against any Indemnitee arising out of, in connection with, or as
a result of, (i) the execution, delivery or performance of this Agreement or any
other Secured Agreement or Security Document or any agreement or instrument
contemplated hereby or thereby, the performance by the parties hereto and
thereto of their respective obligations thereunder or the consummation of the
transactions contemplated hereby, (ii) the use of proceeds of Notes, the Loans
or other Obligations or the use of any Letter of Credit or (iii) any claim,
litigation, investigation or proceeding relating to any of the foregoing, or to
the Collateral, whether or not any Indemnitee is a party thereto; provided that
such indemnity shall not, as to any Indemnitee, be available to the extent that
such losses, claims, damages, liabilities or related expenses are determined by
a court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnitee.

(c) Any such amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 9.06 shall remain operative and in full force and effect
regardless of the termination of this Agreement or any other Secured Agreement,
the consummation of the transactions contemplated hereby, the repayment of any
of the Obligations, the invalidity or unenforceability of any term or provision
of this Agreement or any other Secured Agreement, or any investigation made by
or on behalf of the Administrative Agent or any other Secured Party. All amounts
due under this Section 9.06 shall be payable on written demand therefor.

Section 9.07. Administrative Agent Appointed Attorney-in-Fact. Each Pledgor
hereby appoints the Administrative Agent the attorney-in-fact of such Pledgor
for the purpose of carrying out the provisions of this Agreement and taking any
action and executing any instrument that the Administrative Agent may deem
necessary or advisable to accomplish the purposes hereof, which appointment is
irrevocable and coupled with an interest. The Administrative Agent shall have
the right, upon the occurrence and during the continuance of an Event of
Default, with full power of substitution either in the Administrative Agent’s
name or in the name of such Pledgor, (a) to receive, endorse, assign or deliver
any and all notes, acceptances, checks, drafts, money orders or other evidences
of payment relating to the Collateral or any part thereof, (b) to demand,
collect, receive payment of, give receipt for and give discharges and releases
of all or any of the Collateral; (c) to ask for, demand, sue for, collect,
receive and give acquittance for any and all moneys due or to become due under
and by virtue of any Collateral; (d) to sign the name of any Pledgor on any
invoice or bill of lading relating to any of the Collateral; (e) to send
verifications of Accounts to any Account Debtor; (f) to commence and prosecute
any and all suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect or otherwise realize on all or any of the
Collateral or to enforce any rights in respect of any Collateral; (g) to settle,
compromise, compound, adjust or defend any actions, suits or proceedings
relating to all or any of the Collateral; (h) to notify, or to require any
Pledgor to notify, Account Debtors to make payment directly to the
Administrative Agent; and (i) to use, sell, assign, transfer, pledge, make

 

48

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

any agreement with respect to or otherwise deal with all or any of the
Collateral, and to do all other acts and things necessary to carry out the
purposes of this Agreement, as fully and completely as though the Administrative
Agent were the absolute owner of the Collateral for all purposes; provided that
nothing herein contained shall be construed as requiring or obligating the
Administrative Agent to make any commitment or to make any inquiry as to the
nature or sufficiency of any payment received by the Administrative Agent, or to
present or file any claim or notice, or to take any action with respect to the
Collateral or any part thereof or the moneys due or to become due in respect
thereof or any property covered thereby. The Administrative Agent and the other
Secured Parties shall be accountable only for amounts actually received as a
result of the exercise of the powers granted to them herein, and neither they
nor their officers, directors, employees or agents shall be responsible to any
Pledgor for any act or failure to act hereunder, except for their own gross
negligence or willful misconduct.

Section 9.08. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

Section 9.09. Waivers; Amendment. (a) No failure or delay by the Administrative
Agent, or any Secured Party in exercising any right, power or remedy hereunder
or under any other Loan Document shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, power or remedy, or any
abandonment or discontinuance of steps to enforce such a right, power or remedy,
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. The rights, powers and remedies of the Administrative
Agent and the Secured Parties hereunder and under the other Secured Agreements
are cumulative and are not exclusive of any rights, powers or remedies that they
would otherwise have. No waiver of any provision of this Agreement or consent to
any departure by any Secured Party therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) of this Section 9.09, and
then such waiver or consent shall be effective only in the specific instance and
for the purpose for which given. Without limiting the generality of the
foregoing, the making of a Loan, the issuance of the Notes or the issuance of a
Letter of Credit or other extension of credit shall not be construed as a waiver
of any Default or Event of Default, regardless of whether the Administrative
Agent, any Lender, any Issuing Bank or any other Secured Party may have had
notice or knowledge of such Default or Event of Default at the time. No notice
or demand on any Loan Party in any case shall entitle any Loan Party to any
other or further notice or demand in similar or other circumstances.

(b) Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into
by the Administrative Agent, the Note Authorized Representative and, to the
extent required by any Secured Agreement, each other Authorized Representative
(in each case with the consent of the requisite Secured Parties specified in the
applicable Secured Agreement, if any) and the Loan Party or Loan Parties with
respect to which such waiver, amendment or modification is to apply.

(c) The Administrative Agent is authorized by the Secured Parties to enter into
(and shall have no liability for entering into) any amendment if it receives,
and shall

 

49

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

have no liability for refusing to enter into any amendment unless it shall have
received, a certificate of the Company stating that such amendment is permitted
by the terms of each then extant Secured Agreement; provided that for the
avoidance of doubt, no such amendment shall be effective unless signed by each
Authorized Representative to the extent required by clause (b) above.

Section 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER SECURITY DOCUMENT. EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.10.

Section 9.11. Severability. In the event any one or more of the provisions
contained in this Agreement or in any other Security Document should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby. The parties shall endeavor in
good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.

Section 9.12. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract, and shall become effective as
provided in Section 9.04 hereof. Delivery of an executed counterpart to this
Agreement by facsimile transmission shall be as effective as delivery of a
manually signed original.

Section 9.13. Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.

Section 9.14. Jurisdiction; Consent To Service Of Process. (a) Each party to
this Agreement hereby irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of any New York State court or
federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or any other Security Documents, or for recognition
or enforcement of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in such New York State or, to
the extent permitted by law, in such federal court. Each of the parties hereto
agrees that a

 

50

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

final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Administrative Agent, or any Secured Party may otherwise have to bring any
action or proceeding relating to this Agreement or any other Secured Agreements
or Security Documents against any Pledgor, or its properties, in the courts of
any jurisdiction.

(b) Each party to this Agreement hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection which
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any other Security
Documents in any New York State or federal court. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.

Section 9.15. Termination Or Release. (a) This Agreement, the guarantees made
herein, the pledges made herein, the Security Interest and all other security
interests granted hereby shall terminate when all the Loan Document Obligations,
Note Obligations and Additional Obligations (other than contingent indemnity or
expense reimbursement obligations in respect of which no claim has been made)
have been paid in full in cash in immediately available funds (or otherwise
defeased in accordance with its terms), the Secured Parties have no further
commitment to lend under any Secured Agreement, the Revolving L/C Exposure (or
equivalent under any Replacement Credit Facility) has been reduced to zero, each
Issuing Bank has no further obligations to issue Letters of Credit under the
Credit Agreement and any other requirements set forth in the Secured Agreements
then effective are satisfied.

(b) A Subsidiary Party shall automatically be released from its obligations
hereunder and the security interests in the Collateral of such Subsidiary Party
shall be automatically released (x) as it relates to the Credit Agreement
Obligations, if such Subsidiary Party is released from its guarantee pursuant to
Article 2 in accordance with the terms of the Credit Agreement and (y) as it
relates to the Obligations other than the Credit Agreement Obligations, if it
ceases to be a guarantor of such Obligations pursuant to the terms of the
applicable Secured Agreement.

(c) Upon any sale or other transfer by any Pledgor of any Collateral that is
permitted under the Secured Agreements (to the extent the release of such
Collateral following such sale is permitted by the Secured Agreements), or upon
the effectiveness of any written consent to the release of the security interest
granted hereby in any Collateral pursuant to the Secured Agreements, the
security interest in such Collateral shall be automatically released.

(d) In connection with any termination or release pursuant to paragraph (a),
(b) or (c) of this Section 9.15, the Administrative Agent shall execute and
deliver to any Pledgor, at such Pledgor’s, expense all documents that such
Pledgor shall reasonably request to evidence such termination or release
(including, without limitation, Uniform Commercial Code termination statements)
and will duly assign and transfer to such Pledgor such of the Pledged Collateral
that may be in the possession of the Administrative Agent and has not
theretofore been sold or otherwise applied or released

 

51

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

pursuant to this Agreement; provided, that the Administrative Agent shall not be
required to take any action under this Section 9.15(d) unless (A) such Pledgor
shall have delivered to the Administrative Agent together with such request,
which may be incorporated into such request, (i) a reasonably detailed
description of the Collateral, which in any event shall be sufficient to effect
the appropriate termination or release without affecting any other Collateral,
and (ii) a certificate of a Responsible Officer of the Company or such Pledgor
certifying that the transaction giving rise to such termination or release is
permitted by the Secured Agreements and was consummated in compliance with the
Secured Agreements and (B) it shall have received from each Authorized
Representative such consents and other instruments as shall be reasonably
requested by the Administrative Agent to confirm the Administrative Agent’s
authority to release any Collateral as provided in this Section 9.15. Any
execution and delivery of documents pursuant to this Section 9.15 shall be
without recourse to or warranty by the Administrative Agent.

Section 9.16. Additional Subsidiaries. Upon execution and delivery by the
Administrative Agent and any Subsidiary that is required to become a party
hereto by any Secured Agreement of an instrument in the form of Exhibit I
hereto, such Subsidiary shall become a Subsidiary Party hereunder with the same
force and effect as if originally named as a Subsidiary Party herein. The
execution and delivery of any such instrument shall not require the consent of
any other party to this Agreement. The rights and obligations of each party to
this Agreement shall remain in full force and effect notwithstanding the
addition of any new party to this Agreement.

Section 9.17. Additional Obligation. On or after the date hereof and so long as
not prohibited by any Secured Agreement then outstanding, the Company may from
time to time designate indebtedness at the time of incurrence to be secured as
Additional Obligations (and Obligations) on the terms and conditions set forth
in this Agreement by delivering to the Administrative Agent and each Authorized
Representative (a) a certificate signed by a Responsible Officer (i) identifying
the obligations so designated and the initial aggregate principal amount or face
amount thereof, (ii) stating that such obligations are designated as Additional
Obligations for the purposes hereof, (iii) representing that the incurrence of
such obligation and the designation of such obligations as Additional
Obligations complies with the terms of the Secured Agreements, and
(iv) specifying the name and address of the Authorized Representative for such
obligations and (b) a fully executed Additional Secured Party Consent. Each
Authorized Representative agrees that upon the satisfaction of all conditions
set forth in the preceding sentence, the Administrative Agent shall act as
collateral agent under and subject to the terms of the Security Documents for
the benefit of all Secured Parties, including without limitation, any Secured
Parties that hold any such Additional Obligations, and each Authorized
Representative agrees to the appointment, and acceptance of the appointment, of
the Administrative Agent as collateral agent for the holders of such Additional
Obligations as set forth in each Additional Secured Party Consent and agrees, on
behalf of itself and each Secured Party it represents, to be bound by this
Agreement.

Section 9.18. Additional LC Obligations. On or after the date hereof and so long
as not prohibited by any Secured Agreement then outstanding, the Company may
from time to time designate obligations under any reimbursement agreement or
similar

 

52

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

document in respect of backstop letters of credit contemplated by clause
(iii) of the parenthetical in clause (A) of Section 6.02(b) of the Credit
Agreement (as in effect on the date hereof) as “Additional LC Obligations”
hereunder by delivering to the Administrative Agent and each Authorized
Representative a certificate signed by a Responsible Officer (i) identifying the
obligations so designated and the maximum aggregate principal amount thereof,
(ii) stating that such obligations are designated as Additional LC Obligations
for the purpose hereof and (iii) representing that the incurrence of such
obligations and the designation of such obligations as Additional LC Obligations
complies with the terms of the Secured Agreements.

Section 9.19. Right Of Set-off. If an Event of Default shall have occurred and
be continuing, each Secured Party is hereby authorized at any time and from time
to time, to the fullest extent permitted by law, to set-off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held and other indebtedness at any time owing by such Secured Party to or
for the credit or the account of any party to this Agreement against any of and
all the obligations of such party now or hereafter existing under this Agreement
owed to such Secured Party, irrespective of whether or not Secured Party shall
have made any demand under this Agreement and although such obligations may be
unmatured. The rights of each Secured Party under this Section 9.18 are in
addition to other rights and remedies (including other rights of set-off) that
such Secured Party may have.

Section 9.20. Amendment and Restatement. On the Closing Date, following the
execution and delivery hereof by the parties hereto, without further action by
any of the parties to the Original Security Agreement, the Original Security
Agreement will be automatically amended and restated to read as this Agreement
reads. On and after the Closing Date, the rights and obligations of the parties
hereto shall be governed by the provisions hereof; provided that the rights and
obligations of the parties to the Original Credit Agreement with respect to the
period before the Closing Date shall continue to be governed by the provision
thereof as in effect before the Closing Date.

[Signature Page Follows]

 

53

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

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

 

VERSO PAPER HOLDINGS LLC VERSO PAPER FINANCE HOLDINGS LLC VERSO PAPER FINANCE
HOLDINGS INC. VERSO PAPER LLC VERSO PAPER INC. VERSO ANDROSCOGGIN LLC VERSO
BUCKSPORT LLC VERSO SARTELL LLC VERSO QUINNESEC LLC VERSO MAINE ENERGY LLC VERSO
PAPER FIVE CORP. VERSO FIBER FARM LLC NEXTIER SOLUTIONS CORPORATION By:  

/s/ Robert P. Mundy

Name:   Robert P. Mundy Title:   Senior Vice President and Chief Financial
Officer

 

S-1

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

CREDIT SUISSE, CAYMAN ISLANDS BRANCH, as Administrative Agent and as Credit
Agreement Authorized Representative By:  

/s/ Robert Hetu

Name:   Robert Hetu Title:   Managing Director

 

By:  

/s/ Christopher Reo Day

Name:   Christopher Reo Day Title:   Associate

 

S-2

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

Wilmington Trust FSB, as Note Authorized Representative By:  

/s/ Jane Schweiger

Name:   Jane Schweiger Title:   Vice President

 

S-3

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

ACKNOWLEDGEMENT AND CONSENT

[DATE]

The undersigned hereby acknowledges receipt of a copy of the Amended and
Restated Guarantee and Collateral Agreement dated as of June 11, 2009 (the
“Agreement”), made by the Pledgors parties thereto for the benefit of CREDIT
SUISSE, CAYMAN ISLANDS BRANCH, as Administrative Agent. The undersigned agrees
for the benefit of the Administrative Agent and the Secured Parties as follows:

The undersigned acknowledges that its Equity Interests (as defined in the
Agreement) have been pledged pursuant to the terms of the Agreement and will
comply with all actions that may be required of it pursuant to Section 3.05 and
4.04(c) of the Agreement.

[Signature on the following page]

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

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

 

[NAME OF ISSUER] By:  

 

Name:   Title:  

 

Address for Notices:

 

 

 

Fax:

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

Exhibit I

to Amended and Restated Guarantee and

Collateral Agreement

SUPPLEMENT NO.              dated as of                      (this
“Supplement”), to the Amended and Restated Guarantee and Collateral Agreement
dated as of June 11, 2009 (the “Guarantee and Collateral Agreement”), among
VERSO PAPER FINANCE HOLDINGS LLC, a Delaware limited liability company
(“Holdings”), VERSO PAPER HOLDINGS LLC, a Delaware limited liability company
(the “Company”) each Subsidiary of the Company identified on Schedule I or
otherwise identified therein as a party (each, a “Subsidiary Party”), CREDIT
SUISSE, CAYMAN ISLANDS BRANCH, as Administrative Agent (in such capacity,
together with any successor administrative agent, the “Administrative Agent”)
for the Secured Parties (as defined therein), CREDIT SUISSE, CAYMAN ISLANDS
BRANCH, as administrative agent under the Credit Agreement (in such capacity,
together with any successor administrative agent, the “Credit Agreement
Authorized Representative”), Wilmington Trust FSB, as trustee under the
Indenture (in such capacity, together with any successor trustee, the “Note
Authorized Representative”) and each other AUTHORIZED REPRESENTATIVE from time
to time party thereto. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Guarantee and
Collateral Agreement.

Section 9.16 of the Guarantee and Collateral Agreement provides that additional
Subsidiaries may become Subsidiary Parties under the Guarantee and Collateral
Agreement by execution and delivery of an instrument in the form of this
Supplement. The undersigned Subsidiary (the “New Subsidiary”) is executing this
Supplement to become a Subsidiary Party under the Guarantee and Collateral
Agreement in order to induce the Secured Parties to make or continue extensions
of credit.

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

SECTION 1. In accordance with Section 9.16 of the Guarantee and Collateral
Agreement, the New Subsidiary by its signature below becomes a Subsidiary Party,
a Guarantor and a Pledgor under the Guarantee and Collateral Agreement with the
same force and effect as if originally named therein as a Subsidiary Party, a
Guarantor and a Pledgor, and the New Subsidiary hereby (a) agrees to all the
terms and provisions of the Guarantee and Collateral Agreement applicable to it
as a Subsidiary Party, a Guarantor and a Pledgor thereunder and (b) represents
and warrants that the representations and warranties made by it as a Guarantor
and a Pledgor thereunder are true and correct, in all material respects, on and
as of the date hereof. In furtherance of the foregoing, the New Subsidiary, as
security for the payment and performance in full of the Obligations (as defined
in the Guarantee and Collateral Agreement), does hereby create and grant to the
Administrative Agent, for the ratable benefit of the Secured Parties, a security
interest in and Lien on all the New Subsidiary’s right, title and interest in
and to the Collateral (as defined in the Guarantee and Collateral Agreement) of
the New Subsidiary. Each reference to a “Subsidiary Party” or a “Guarantor” a
“Pledgor” in the Guarantee and Collateral Agreement shall be deemed to include
the New Subsidiary. The Guarantee and Collateral Agreement is hereby
incorporated herein by reference.

 

I-1

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

SECTION 2. The New Subsidiary represents and warrants to the Administrative
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms, subject
to (i) the effects of bankruptcy, insolvency, moratorium, reorganization,
fraudulent conveyance or other similar laws affecting creditors’ rights
generally, (ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and
(iii) implied covenants of good faith and fair dealing.

SECTION 3. This Agreement may be executed in two or more counterparts, each of
which shall constitute an original but all of which when taken together shall
constitute but one contract. This Supplement shall become effective when (a) the
Administrative Agent shall have received a counterpart of this Supplement that
bears the signature of the New Subsidiary and (b) the Administrative Agent has
executed a counterpart hereof.

SECTION 4. The New Subsidiary hereby represents and warrants that (a) set forth
on Schedule I attached hereto is a true and correct schedule of all the Pledged
Securities of the New Subsidiary as of the date hereof, (b) set forth on
Schedule II attached hereto is a true and correct schedule of all of the
material Patents, Trademarks and Copyrights of the New Subsidiary as of the date
hereof, (c) set forth on Schedule III attached hereto is a true and correct
schedule of all Commercial Tort Claims of the New Subsidiary individually in
excess of $2.0 million as of the date hereof and (d) set forth under its
signature hereto, is the true and correct legal name of the New Subsidiary, its
jurisdiction of formation and the location of its chief executive office.

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

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

SECTION 7. In the event any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Guarantee and Collateral Agreement shall not in any way be
affected or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.

SECTION 8. All communications and notices hereunder shall be in writing and
given as provided in Section 9.01 of the Guarantee and Collateral Agreement.

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

 

I-2

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

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

 

[Name of New Subsidiary] By:  

 

Name:   Title:  

 

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

CREDIT SUISSE, CAYMAN ISLANDS BRANCH,

as Administrative Agent

By:  

 

Name:   Title:  

 

I-3

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

Schedule I

to Supplement No.      to the

Guarantee and

Collateral Agreement

Pledged Securities of the New Subsidiary

EQUITY INTERESTS

 

Number of Issuer

Certificate

 

Registered Owner

 

Number and Class

of Equity Interest

 

Percentage of

Equity Interests

                       

DEBT SECURITIES

 

Issuer

 

Principal Amount

 

Date of Note

 

Maturity Date

                   

Schedule II

& to Supplement No.      to the

Guarantee and

Collateral Agreement

PATENTS, TRADEMARKS AND COPYRIGHTS

 

I-4

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

Schedule III

to Supplement No.      to the

Guarantee and

Collateral Agreement

COMMERCIAL TORT CLAIMS

 

I-5

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

Exhibit II

to Guarantee and

Collateral Agreement

[Form of]

ADDITIONAL SECURED PARTY CONSENT1

[Name of Additional Secured Party]

[Address of Additional Secured Party]

[Date]

 

 

 

 

 

The undersigned is the Authorized Representative for Persons [wishing to become]
[that are] Secured Parties (the “[New] [Specified] Secured Parties”) under the
Amended and Restated Guarantee and Collateral Agreement dated as of June 11,
2009 (as heretofore amended and/or supplemented, the “Guarantee and Collateral
Agreement” (terms used without definition herein have the meanings assigned to
such term by the Guarantee and Collateral Agreement)) among the Grantors party
thereto and Credit Suisse, Cayman Islands Branch., as Administrative Agent (the
“Administrative Agent”) and the other parties thereto.

In consideration of the foregoing, the undersigned hereby:

(i) represents that the Authorized Representative has been duly authorized by
the [New] [Specified] Secured Parties to become a party to the Guarantee and
Collateral Agreement on behalf of the [New] [Specified] Secured Parties under
that [DESCRIBE OPERATIVE AGREEMENT] (the “[New] [Specified] Obligation”) and to
act as the Authorized Representative for the [New] [Specified] Secured Parties
[and that the Authorized Representative hereby replaces [                    ]
as Authorized Representative with respect to the Obligations];

(ii) acknowledges that the [New] [Specified] Secured Parties have received a
copy of the Guarantee and Collateral Agreement;

 

1 MODIFY AS APPROPRIATE IF THIS CONSENT IS BEING DELIVERED IN CONNECTION WITH
REPLACING AN EXISTING AUTHORIZED REPRESENTATIVE OR A REFINANCING.

 

II-1

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

(iii) appoints and authorizes the Administrative Agent to take such action as
agent on its behalf and on behalf of all other Secured Parties and to exercise
such powers under the Guarantee and Collateral Agreement as are delegated to the
Administrative Agent by the terms thereof, together with all such powers as are
reasonably incidental thereto;

(iv) accepts and acknowledges the terms of the Guarantee and Collateral
Agreement applicable to it and the [New] [Specified] Secured Parties and agrees
to serve as Authorized Representative for the [New] [Specified] Secured Parties
with respect to the [New] [Specified] Obligations and agrees on its own behalf
and on behalf of the [New] [Specified] Secured Parties to be bound by the terms
thereof applicable to holders of Additional Obligations, with all the rights and
obligations of a Secured Party thereunder and bound by all the provisions
thereof (including, without limitation, Section 7.01(b) thereof) as fully as if
it had been a Secured Party on the date of the Guarantee and Collateral
Agreement and agrees that its address for receiving notices pursuant to the
Guarantee and Collateral Agreement, the Security Documents shall be as follows:

[Address]

The Administrative Agent, by acknowledging and agreeing to this Additional
Secured Party Consent, accepts the appointment set forth in clause (iii) above.

THIS ADDITIONAL SECURED PARTY CONSENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

II-2

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

IN WITNESS WHEREOF, the undersigned has caused this Additional Secured Party
Consent to be duly executed by its authorized officer as of the date first
written above.

 

[NAME OF AUTHORIZED REPRESENTATIVE] By:  

 

Name:   Title:  

 

Acknowledged and Agreed CREDIT SUISSE,

CAYMAN ISLANDS BRANCH as

Administrative Agent

By:  

 

Name:   Title:  

 

II-3

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

SCHEDULES TO

AMENDED AND RESTATED GUARANTEE AND COLLATERAL AGREEMENT

Dated as of June 11, 2009,

(originally dated August 1, 2006)

among

VERSO PAPER FINANCE HOLDINGS LLC

VERSO PAPER HOLDINGS LLC

as Company,

each other PLEDGOR identified herein,

CREDIT SUISSE, CAYMAN ISLANDS BRANCH,

as Administrative Agent,

CREDIT SUISSE, CAYMAN ISLANDS BRANCH,

as Credit Agreement Authorized Representative,

WILMINGTON TRUST FSB,

as Note Authorized Representative

each ADDITIONAL AUTHORIZED REPRESENTATIVE

from time to time party hereto

NOTE: ALL CAPITALIZED TERMS USED HEREIN BUT NOT DEFINED HAVE THE MEANINGS
ASCRIBED THERETO IN THE AMENDED AND RESTATED GUARANTY AND COLLATERAL AGREEMENT.

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

SCHEDULE I

SUBSIDIARY PARTIES

Verso Paper Finance Holdings Inc., a Delaware corporation

Verso Paper LLC, a Delaware limited liability company

Verso Paper Inc., a Delaware corporation

Verso Androscoggin LLC, a Delaware limited liability company

Verso Bucksport LLC, a Delaware limited liability company

Verso Maine Energy LLC, a Delaware limited liability company

Verso Quinnesec LLC, a Delaware limited liability company

Verso Sartell LLC, a Delaware limited liability company

Verso Paper Five Corp., a Delaware corporation

nexTier Solutions Corporation, a California corporation

Verso Fiber Farm LLC, a Delaware limited liability company

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

SCHEDULE II

PLEDGED STOCK; DEBT SECURITIES

Equity Interests:

 

Issuer

  

Registered Owner

  

Number and Class of Equity Interest

   Percentage
of Equity
Interests     Certificate
No.

Verso Paper Holdings LLC

   Verso Paper Finance Holdings LLC    Limited liability company interest    100
%    N/A

Verso Paper Finance Holdings Inc.

   Verso Paper Finance Holdings LLC    1,000 shares of common stock    100 %   
N/A

Verso Paper LLC

   Verso Paper Holdings LLC    Limited liability company interest    100 %   
N/A

Verso Paper Inc.

   Verso Paper Holdings LLC    1,000 shares of common stock    100 %    1

Verso Androscoggin LLC

   Verso Paper LLC    Limited liability company interest    100 %    N/A

Verso Bucksport LLC

   Verso Paper LLC    Limited liability company interest    100 %    N/A

Verso Maine Energy LLC

   Verso Paper LLC    Limited liability company interest    100 %    N/A

Verso Quinnesec LLC

   Verso Paper LLC    Limited liability company interest    100 %    N/A

Verso Sartell LLC

   Verso Paper LLC    Limited liability company interest    100 %    N/A

Verso Paper Five Corp.

   Verso Paper LLC    1,000 shares of common stock    100 %    N/A

nexTier Solutions Corporation

   Verso Paper LLC    1,000 shares of common stock    100 %    20

Verso Fiber Farm LLC

   Verso Paper Five Corp.    Limited liability company interest    100 %    N/A

Verso Escrow LLC

   Verso Paper Holdings LLC    Limited liability company interest    100 %   
N/A

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

Debt obligations:

 

  1. Approximately $77 million Demand Note No. 1, dated August 1, 2006, issued
by Verso Androscoggin LLC to Verso Paper Holdings LLC.

 

  2. Approximately $108 million Demand Note No. 2, dated August 1, 2006, issued
by Verso Androscoggin LLC to Verso Paper Holdings LLC.

 

  3. Approximately $92 million Demand Note No. 3, dated August 1, 2006, issued
by Verso Androscoggin LLC to Verso Paper Holdings LLC.

 

  4. Approximately $88 million Demand Note No. 4, dated August 1, 2006, issued
by Verso Androscoggin LLC to Verso Paper Holdings LLC.

 

  5. Approximately $53 million Demand Note No. 1, dated August 1, 2006, issued
by Verso Bucksport LLC to Verso Paper Holdings LLC.

 

  6. Approximately $74 million Demand Note No. 2, dated August 1, 2006, issued
by Verso Bucksport LLC to Verso Paper Holdings LLC.

 

  7. Approximately $63 million Demand Note No. 3, dated August 1, 2006, issued
by Verso Bucksport LLC to Verso Paper Holdings LLC.

 

  8. Approximately $60 million Demand Note No. 4, dated August 1, 2006, issued
by Verso Bucksport LLC to Verso Paper Holdings LLC.

 

  9. Approximately $77 million Demand Note No. 1, dated August 1, 2006, issued
by Verso Quinnesec LLC to Verso Paper Holdings LLC.

 

  10. Approximately $108 million Demand Note No. 2, dated August 1, 2006, issued
by Verso Quinnesec LLC to Verso Paper Holdings LLC.

 

  11. Approximately $93 million Demand Note No. 3, dated August 1, 2006, issued
by Verso Quinnesec LLC to Verso Paper Holdings LLC.

 

  12. Approximately $88 million Demand Note No. 4, dated August 1, 2006, issued
by Verso Quinnesec LLC to Verso Paper Holdings LLC.

 

  13. Approximately $29 million Demand Note No. 1, dated August 1, 2006, issued
by Verso Sartell LLC to Verso Paper Holdings LLC.

 

  14. Approximately $41 million Demand Note No. 2, dated August 1, 2006, issued
by Verso Sartell LLC to Verso Paper Holdings LLC.

 

  15. Approximately $35 million Demand Note No. 3, dated August 1, 2006, issued
by Verso Sartell LLC to Verso Paper Holdings LLC.

 

  16. Approximately $33 million Demand Note No. 4, dated August 1, 2006, issued
by Verso Sartell LLC to Verso Paper Holdings LLC.

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

SCHEDULE III

INTELLECTUAL PROPERTY

Copyrights

 

1. TXuI-043-100, dated June 25, 2002 covering EZ-Suite Computer Program.

Patents

 

1. Application PI0313537-3 filed July 15, 2003, titled Multi-party, Multi-tier
System for Managing Paper Purchase and Distribution pending in Brazil

 

2. Application 2494414 filed July 15, 2003, titled Multi-party, Multi-tier
System for Managing Paper Purchase and Distribution pending in Canada

 

3. Publication No. 1573616 filed July 15, 2003, titled Multi-party, Multi-tier
System for Managing Paper Purchase and Distribution published under the European
Patent Convention

 

4. Application P-374880 filed July 15, 2003, titled Multi-party, Multi-tier
System for Managing Paper Purchase and Distribution pending in Poland

 

5. Application 2005105303 filed July 15, 2003, titled Multi-party, Multi-tier
System for Managing Paper Purchase and Distribution pending in Russian
Federation

 

6. Application 10/209366 filed July 30, 2002, titled Multi-party, Multi-tier
System for Managing Paper Purchase and Distribution pending in United States of
America

 

7. Application 11/652037 (Continuation) filed January 11, 2007, titled
Multi-party, Multi-tier System for Managing Paper Purchase and Distribution
pending in United States of America

 

8. Application 2503966 filed November 25, 2003, titled Using Shoe Nip Calenders
to Produce Super High Bulk No. 5 Web Offset light Weight Coated (LWC) Groundwood
Containing Papers pending in Canada

 

9. Application 200380104201 filed November 25, 2003, titled Using Shoe Nip
Calenders to Produce Super High Bulk No. 5 Web Offset light Weight Coated (LWC)
Groundwood Containing Papers pending in People’s Republic of China

 

10. Publication No. 1565614 filed November 25, 2003, titled Using Shoe Nip
Calenders to Produce Super High Bulk No. 5 Web Offset light Weight Coated (LWC)
Groundwood Containing Papers published under the European Patent Convention

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

11. Application 2004-554833 filed November 25, 2003, titled Using Shoe Nip
Calenders to Produce Super High Bulk No. 5 Web Offset light Weight Coated (LWC)
Groundwood Containing Papers pending in Japan

 

12. Application 2005-7009425 filed November 25, 2003, titled Using Shoe Nip
Calenders to Produce Super High Bulk No. 5 Web Offset light Weight Coated (LWC)
Groundwood Containing Papers pending in the Republic of Korea

 

13. Publication No. 04-0099391 filed July 10, 2003, titled Process for Producing
Super High Bulk, Light Weight Coated Papers published in the United States of
America

 

14. Patent No. 6504625 titled System and Method for Print Analysis granted in
United States of America

 

15. Application PI0408509-4 filed March 19, 2004, titled Using a Metered Size
Press to Produce Lightweight Coated Rotogravure Paper pending in Brazil

 

16. Application 2519638 filed March 19, 2004, titled Using a Metered Size Press
to Produce Lightweight Coated Rotogravure Paper pending in Canada

 

17. Publication 1623068 filed March 19, 2004, titled Using a Metered Size Press
to Produce Lightweight Coated Rotogravure Paper published under the European
Patent Convention

 

18. Publication No. 04-0208999 filed March 19, 2004, titled Using a Metered Size
Press to Produce Lightweight Coated Rotogravure Paper published in the United
States of America

 

19. Application 60/726031 filed October 12, 2005, titled Spray Coating
Formulations and Coated Paper and Board Products pending in the United States of
America

 

20. Unfiled patent titled A Method To Maintain Liquid Curtain Film in Coating
Process for the United States of America (CSC-024173)

 

21. Application 11/361,916 filed February 24, 2006, titled Paper Roll Edge
Trimming Method and Apparatus pending in the United States of America

 

22. Unfiled patent titled A Surface Treatment Method For Contour/Non-impact
Coating Process for the United States of America (CSC-025447)

 

23. Unfiled patent titled Gravure and Offset Printable Coated Freesheet for the
United States of America (CSC-027812)

 

24. Patent No. 6024835 titled Quality Control Apparatus and Method For Paper
Mill granted in the United States of America

 

25. Patent No. 5283129 titled Light Weight Paper Stock granted in the United
States of America

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

26. Patent Number 7018509 titled Elimination of Alum Yellowing of Aspen
Thermomechanical Pulp Through Pulp Washing granted in the United States of
America

 

27. Divisional Application 11/330503 filed January 12, 2006, titled Elimination
of Alum Yellowing of Aspen Thermomechanical Pulp Through Pulp Washing pending in
the United States of America

Trademarks

 

1. Liberty, US Registration No. 3051555, registered on January 24, 2006

 

2. Advocate, US Registration No. 2703228, registered on April 1, 2003 (class 16)

 

3. Influence, US Registration No. 1542526, registered on June 6, 1989 (class 16)

 

4. Influence Soft-Gloss, US Registration No. 2331367, registered on March 21,
2000 (class 16)

 

5. People And Paper That Create Results, US Registration No. 2560485, registered
on April 9, 2002 (class 16)

 

6. Savvy, US Registration No. 2715986, registered on May 13, 2003 (class 16)

 

7. Slide Pal, US Registration No. 2241856, registered on April 27, 1999 (class
9)

 

8. Trilogy, US Registration No. 2698738, registered on March 18, 2003 (class 16)

 

9. Velocity, US Registration No. 2576468, registered on June 4, 2002 (class 16)

 

10. Webexpress, US Registration No. 1434704, registered on March 31, 1987 (class
16)

 

11. Webexpress, US Registration No. 2347019, registered on May 2, 2000 (class
35)

 

12. Nextier, US Registration No. 2929598, registered on March 1, 2005 (class 35)

 

13. Ez-Control, US Registration No. 2931588, registered on March 8, 2005 (class
9)

 

14. Ez-Printer, US Registration No. 2931589, registered on March 8, 2005 (class
9)

 

15. Ez-Suite, US Registration No. 3030600, registered on December 13, 2005
(class 35)

 

16. Ez-Supplier, US Registration No. 2931590, registered on March 8, 2005 (class
9)

 

17. Transit Advantage, US Registration No. 2696684, registered on March 11, 2003

 

18. Quinnesec, US Registration No. 1232416, registered on March 29, 1983

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

IP Agreements

 

1. Intellectual Property Agreement between International Paper Company and Verso
Paper LLC, effective as of August 1, 2006.

 

2. Intellectual Property Agreement between International Paper Company and Verso
Fiber Farm LLC, effective as of August 1, 2006.

 

3. Letter agreement between International Paper Company and Martha Stewart
Living Omnimedia, Inc. granting International Paper Company a royalty-free
license to manufacture and sell coated papers under the names “Martha Gloss
Offset” and “Martha Gloss Gravure” dated April 1, 2003.

 

4. Application Service Provider and Software License Agreement For EZ-Printer
Services and Software between Brown Printing Company and Nextier, dated Sept.
20, 2002.

 

5. Application Service Provider and Software License Agreement For EZ-Printer
Services and Software between Conley Printing and Nextier, dated Dec. 28, 2005.

 

6. Application Service Provider and Software License Agreement For EZ-Printer
Services and Software between JCM Print Services and Nextier, dated May 3, 2004.

 

7. Application Service Provider and Software License Agreement For EZ-Printer
Services and Software between Neston Colour Limited and Nextier, dated May 29,
2003.

 

8. Application Service Provider and Software License Agreement For EZ- Printer
Services and Software between Polestar Chromoworks and Nextier, dated
November 17, 2003.

 

9. Application Service Provider and Software License Agreement For EZ-Printer
Services and Software between Polestar—Purnell and Nextier, dated Dec. 23, 2002.

 

10. Letter Agreement on EZ-Printer Services and Software between Quad/Graphics
and International Paper Company (for Nextier Solutions Corporation), dated
March 25, 2003.

 

11. Application Service Provider and Software License Agreement for EZ-Printer
Services and Software between Nextier Solutions Corporation and Quebecor World
(USA) Inc., dated Dec. 21, 2005.

 

12. Application Service Provider and Software License Agreement for EZ-Printer
Services and Software between Nextier Solutions Corporation and Quebecor World
Inc., dated July 15, 2005.

 

13. Application Service Provider and Software License Agreement for EZ-Printer
Services and Software between Nextier Solutions Corporation and R.R. Donnelley &
Sons Company, dated Nov. 17, 2005.

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

14. Application Service Provider and Software License Agreement for EZ-Printer
Services and Software between Nextier Solutions Corporation and Three Z Printing
Co., dated April 4, 2005.

 

15. Application Service Provider and Software License Agreement for EZ-Printer
Services and Software between Nextier Solutions Corporation and Transcontinental
Inc., dated Feb. 16, 2005.

 

16. Application Service Provider and Software License Agreement for EZ-Printer
Services and Software between Nextier Solutions Corporation and Ringier Print
Zofingen AG, dated Nov. 11, 2002.

 

17. Application Service Provider and Software License Agreement for EZ-Supplier
Services and Software between Nextier Solutions Corporation and Abitibi
Consolidated, dated June 6, 2005.

 

18. Application Service Provider and Software License Agreement for EZ-Supplier
Services and Software between Nextier Solutions Corporation and Fraser Papers
Inc., dated February 11, 2002.

 

19. Application Service Provider and Software License Agreement for EZ-Supplier
Services and Software between Nextier Solutions Corporation and International
Paper Company, dated Feb. 22, 2002.

 

20. Application Service Provider and Software License Agreement for EZ-Supplier
Services and Software between Nextier Solutions Corporation and Gould Paper,
dated Feb. 25, 2005.

 

21. Application Service Provider and Software License Agreement for EZ-Supplier
Services and Software between Nextier Solutions Corporation and Kruger Inc.
dated Oct. 1, 2003.

 

22. Application Service Provider and Software License Agreement for EZ-Supplier
Services and Software between Nextier Solutions Corporation and Lindenmeyr
Central, dated Sept. 6, 2005.

 

23. Application Service Provider and Software License Agreement for EZ-Supplier
Services and Software between Nextier Solutions Corporation and Madison
International Sales Company, dated Sept. 6, 2005.

 

24. Application Service Provider and Software License Agreement for EZ-Supplier
Services and Software between Nextier Solutions Corporation and M-real UK Ltd.,
dated March 14, 2003.

 

25. Application Service Provider and Software License Agreement for EZ-Supplier
Services and Software between Nextier Solutions Corporation and Mead Corporation
and Westvaco Corporation, dated June 5, 2002.

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

26. Application Service Provider and Software License Agreement for EZ-Supplier
Services and Software between Nextier Solutions Corporation and Norske Skog and
Norske Canada, dated Dec. 30, 2003.

 

27. Application Service Provider and Software License Agreement for EZ-Supplier
Services and Software between Nextier Solutions Corporation and Norske Skog
Canada Limited, dated June 28, 2005.

 

28. Application Service Provider and Software License Agreement for EZ-Supplier
Services and Software between Nextier Solutions Corporation and SCA Graphic
Laakirchen AG, dated Sept. 1 2004.

 

29. Application Service Provider and Software License Agreement for EZ-Supplier
Services and Software between Nextier Solutions Corporation and SCA North
America, dated Nov. 3, 2004.

 

30. Application Service Provider and Software License Agreement for EZ-Supplier
Services and Software between Nextier Solutions Corporation and St. Marys Paper
Ltd., dated April 1, 2004.

 

31. Application Service Provider and Software License Agreement for EZ-Supplier
Services and Software between Nextier Solutions Corporation and Tembec, Inc.,
dated January 8, 2003.

 

32. Application Service Provider and Software License Agreement for EZ-Supplier
Services and Software between Nextier Solutions Corporation and UPM-Kymmene,
Inc., dated February 6, 2002.

 

33. Application Service Provider and Software License Agreement for EZ-Supplier
Services and Software between Nextier Solutions Corporation and West Linn Paper
Co., dated May 8, 2002.

 

34. Application Service Provider and Software License Agreement for EZ-Supplier
Services and Software between Nextier Solutions Corporation and Weyerhaeuser
Company Fine Paper, dated Nov. 29, 2001.

 

35. Application Service Provider and Software License Agreement For EZ-Control
Services and Software between Nextier Solutions Corporation and American Media,
Inc., dated January 24, 2005.

 

36. Application Service Provider and Software License Agreement For EZ-Control
Services and Software between Nextier Solutions Corporation and A.T.Clayton,
dated July 19, 2002.

 

37. Application Service Provider and Software License Agreement For EZ-Control
Services and Software between Nextier Solutions Corporation and Gruner + Jahr
USA Publishing (later assigned to Meredith Corporation), dated June 17, 2002.

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

38. Application Service Provider and Software License Agreement For EZ-Supplier
Services and Software between Nextier Solutions Corporation and Graphic
Communications Holdings, Inc., dated Feb. 4, 2002.

 

39. Application Service Provider and Software License Agreement For EZ-Control
Services and Software between Nextier Solutions Corporation and Land’s End,
Inc., dated May 16, 2002.

 

40. Application Service Provider and Software License Agreement For EZ-Control
Services and Software between Nextier Solutions Corporation and Primedia
Magazines, Inc., dated January 5, 2004.

 

41. Application Service Provider and Software License Agreement For EZ-Control
Services and Software between Nextier Solutions Corporation and Sears Canada
Inc., dated Feb. 17, 2004.

 

42. Application Service Provider and Software License Agreement For EZ-Control
Services and Software between Nextier Solutions Corporation and Strategic Paper
Group LLC, dated Feb. 11, 2002.

 

43. Application Service Provider and Software License Agreement For EZ-Control
Services and Software between Nextier Solutions Corporation and Xpedx, dated
May 31, 2002.

 

44. Application Service Provider and Software License Agreement For EZ-Supplier
Services and Software between Bowater America Inc. (confidential) and Nextier,
dated January 17, 2002.

 

45. Application Service Provider and Software License Agreement for EZ-Supplier
Services and Software between Nextier Solutions Corporation and StoraEnso dated
Oct. 1, 2003.

 

46. Statement of Work between Liaison, LLC and Nextier Solutions Corporation
dated January 1, 2005, attachment to Professional Service Agreement between
Liaison Technologies, LLC and International Paper Company.

 

47. SAVVIS Master Services Agreement between SAVVIS Communications Corporation
and Nextier Solutions Corporation, dated Dec. 2, 2005.

 

48. Support and Maintenance Contract for the EPC Messenger between Ponton
Consulting GmbH and Nextier Solutions Corporation, dated Sept. 1, 2005.

 

49. Addendum to Sourceflex Software Source Code Escrow Agreement, between
SourceFile LLC, NexTier Solutions Corporation and Champion International
Corporation, dated December 14, 2000.

 

50. Independent Contractor Agreement between Sum logic Innovations Company and
Nextier Solutions Corporation, dated Oct. 5, 2005.

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

51. Letter Agreement related to providing services between Ms. Ann Gambro and
Nextier Solutions Corporation, dated January 5, 2005.

 

52. Agreement between Prinovi Nurnberg and Nextier, dated March 3, 2006.

 

53. Application Service Provider and Software License Agreement for EL-Printer
Services and Software, dated February 22, 2006, between International Paper
Company and St. Joseph Printing Ltd.

 

54. Software License and Services Agreement between Nextier Solutions
Corporation and Thomas Donnelly and Associates (dba Graphic Communications)
dated January 1, 2000.

 

55. VisionSuite Master Service Agreement between International Paper Company,
Coated and SC Papers Division and Transcentric, Inc. dated September 1, 2005.

 

56. Intel Online Master Customer Agreement between Nextier Solutions Corporation
and Intel Online Services, Inc. dated September 29, 2002.

 

57. Beta Software Testing Agreement between Nextier Solutions Corporation and
Lands’ End, Inc. dated October 6, 2000.

 

58. Software License Agreement between Nextier Solutions Corporation and Lands’
End, Inc. dated October 6, 2000.

 

59. Application Service Provider Agreement for Hosting the Order Status
Application between Nextier Corporation and Fraser Papers Limited dated
September 30, 2005.

 

60. System Purchase Agreement for Production Management Information System
between Champion International Corporation (Quinnesec, MI) and Majiq Inc.
effective December 20, 1996.

 

61. System Purchase Agreement for Production Management System between Champion
International Corporation (Sartell, MN) and Majiq Inc. effective September 25,
1992.

 

62. System Purchase Agreement for Production Management System between Champion
International Corporation (Bucksport, ME) and Majiq Inc. effective August 1,
1994.

 

63. International Paper Company Services Contract between International Paper
Company and Advanced Service Providers, dated May 1, 2005.

 

64. PROVOX Instrumentation License Agreement between Fisher Controls
International, Inc. and Champion, dated April 5, 1993.

 

65. Master License Agreement between Fisher Controls International, Inc. and
Champion, dated March 25, 1992.

 

66. End User License Agreement between International Paper Company and Northern
Dynamic, Inc. (undated).

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

67. Software License Agreement between International Paper Company and Cognex
(undated).

 

68. Agreement between International Paper Company and Emerson Process Management
dated July 1, 2005.

 

69. End-User License Agreement between International Paper Company and
Environmental Support Solutions, Inc. (undated).

 

70. Software License Agreement between International Paper Company and TISCOR
(undated).

 

71. Lifetime Support Services Agreement and Software License Agreement between
International Paper Company and Invensys Systems, Inc. (undated).

 

72. Software License Agreement between International Paper Company and Digital
Equipment of Canada (undated).

 

73. Software License Agreement between International Paper Company and Mynah
Technologies dated January 2005.

 

74. iRMX Run-time Operating System Software License Agreement between
International Paper Company and RadiSys Corporation (undated).

 

75. Software License Agreement between International Paper Company and
Intersoft, Inc. (undated).

 

76. Software License Agreement between International Paper Company and Invensys
Software Systems (undated).

 

77. Software License Agreement between International Paper Company and The
Foxboro Company (undated).

 

78. Interact License Agreements between International Paper Company and Computer
Technology Corporation (undated).

 

79. Statement of Work #1 dated March 9, 2006 between Abbottsfield industrial
Training, Inc. and International Paper Company.

 

80. Software License Agreement, and related Schedule of Products Number 1,
Schedule of Products Number 2, Schedule of Products Number 3, and Schedule of
Products Number 4, effective on August 1, 2006, between Cincom Systems, Inc. and
Verso Paper LLC.

 

81. Software License Agreement between Apex Analytical, Inc. and Verso Paper LLC
dated June 6, 2007.

 

82. Software License Agreement between Captaris, Inc. and Verso Paper LLC dated
March 7, 2008.

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

83. Outsourcing Service Provider Agreement between CASS Service Agreement and
Verso Paper LLC dated September 14, 2006.

 

84. Software License Agreement between Cincom Systems, Inc., and Verso Paper LLC
dated August 1, 2006.

 

85. Cognos General Software License, Support & Services Terms between Cognos
Corporation and Verso Paper LLC dated April 30, 2007.

 

86. Ektron, Inc. Software License Agreement between Ektron, Inc. and Verso Paper
LLC dated June 22, 2007.

 

87. Participation Agreement, incorporating FileNet Software License and Support
Agreement, between FileNet Corporation and Verso Paper LLC dated April 30, 2007.

 

88. Transfer Agreement between GE Fanuc Automation Americas, Inc. and Verso
Paper LLC dated AS OF January 1, 2007.

 

89. Software License Agreement between Greycon Inc., and Verso Paper LLC dated
June 18, 2007.

 

90. U.S. Relicense Application for VAX and Alpha Software Hewlett–Packard
Company and Verso Paper LLC dated May 7, 2007.

 

91. Software License Agreement between IBM (Lotus Notes) and Verso Paper LLC
dated August 1, 2006.

 

92. End-User License Agreement between Loftware, Inc. and Verso Paper LLC dated
July 16, 2007.

 

93. System Purchase Agreement between TietoEnator Majiq, Inc. and Verso
Androscoggin LLC dated November 20, 2006.

 

94. Business and Services Agreement between Microsoft Licensing, GP and Verso
Paper LLC dated August 1, 2006.

 

95. OSIsoft Software License and Services Agreement between OSIsoft, Inc., and
Verso Paper Holdings LLC dated August 1, 2006.

 

96. OSIsoft Enterprise License and Services Agreement between OSIsoft, Inc., and
Verso Paper LLC dated March 21, 2007.

 

97. Support and Maintenance Contract for the EPC Messenger between Ponton
Consulting GmbH and Verso Paper LLC dated October 1, 2007.

 

98. Subscription License Agreement between Sabrix, Inc., and Verso Paper LLC
dated April 10, 2007.

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

99. Software End-User License Agreement between SAP America, Inc. and Verso
Paper Holdings LLC dated December 28, 2006.

 

100. Software License Agreement between SAP America, Inc. and Verso Paper
Holdings LLC (Appendix 2) dated September 28, 2007.

 

101. Software Contract between Solid Works and Verso Paper LLC, as assignee from
International Paper Company, dated August 1, 2006.

 

102. Software Contract between Symantec and Verso Paper LLC, as assignee from
International Paper Company, dated August 1, 2006.

 

103. Software License Agreement between VTN Technologies, Inc. and Verso Paper
LLC dated September 5, 2007.

 

104. Outsourcing Services Agreement between Perot Systems and Verso Paper LLC
dated March 14, 2007.

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

SCHEDULE IV

FILING JURISDICTIONS

 

Pledgor

  

Jurisdiction

   Organizational ID #

Verso Paper Finance Holdings LLC

   Secretary of State, Delaware    4180087

Verso Paper Holdings LLC

   Secretary of State, Delaware    4170453

Verso Paper Finance Holdings Inc.

   Secretary of State, Delaware    4289758

Verso Paper LLC

   Secretary of State, Delaware    4152614

Verso Androscoggin LLC

   Secretary of State, Delaware    4150499

Verso Bucksport LLC

   Secretary of State, Delaware    4150501

Verso Quinnesec LLC

   Secretary of State, Delaware    4150505

Verso Sartell LLC

   Secretary of State, Delaware    4150497

Verso Maine Energy LLC

   Secretary of State, Delaware    4361890

Verso Paper Five Corp

   Secretary of State, Delaware    4170606

Verso Fiber Farm LLC

   Secretary of State, Delaware    4170450

nexTier Solutions Corporation

   Secretary of State, California    C2220203

Verso Paper Inc.

   Secretary of State, Delaware    4180085

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

SCHEDULE V

COMMERCIAL TORT CLAIMS

None.

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

SCHEDULE VI

MATTERS RELATING TO ACCOUNTS AND INVENTORY

None.