EXHIBIT 10.5

 

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

 

PLEDGE AND SECURITY AGREEMENT

 

made by

 

THE BABCOCK & WILCOX COMPANY

 

and certain of its Subsidiaries

 

in favor of

 

CREDIT SUISSE, CAYMAN ISLANDS BRANCH, as Administrative Agent and Collateral
Agent

 

Dated as of February 22, 2006

 

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

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

TABLE OF CONTENTS

 

          Page

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

SECTION 1.    DEFINED TERMS    2 1.1.        Definitions    2

1.2.    

   Other Definitional Provisions    9 SECTION 2.    GUARANTEE    10

2.1.    

   Guarantee    10

2.2.    

   Rights of Reimbursement, Contribution and Subrogation    11

2.3.    

   Amendments, etc. with respect to the Borrower Obligations    12

2.4.    

   Guarantee Absolute and Unconditional    13

2.5.    

   Reinstatement    13

2.6.    

   Payments    14 SECTION 3.    GRANT OF SECURITY INTEREST; CONTINUING LIABILITY
UNDER COLLATERAL    14 SECTION 4.    REPRESENTATIONS AND WARRANTIES    15

4.1.    

   Representations in Credit Agreement    16

4.2.    

   Title; No Other Liens    16

4.3.    

   Perfected First Priority Liens    16

4.4.    

   Name; Jurisdiction of Organization, etc    17

4.5.    

   Inventory and Equipment    17

4.6.    

   Farm Products    17

4.7.    

   Investment Property    17

4.8.    

   Receivables    18

4.9.    

   Intellectual Property    18

4.10.    

   UCC Letters of Credit and UCC Letter of Credit Rights    20

4.11.    

   Commercial Tort Claims    20

4.12.    

   Contracts    20 SECTION 5.    COVENANTS    21

5.1.    

   Covenants in Credit Agreement    21

5.2.    

   Delivery and Control of Instruments, Chattel Paper, Negotiable Documents,
Investment Property    21

5.3.    

   Maintenance of Insurance    22

5.4.    

   Payment of Obligations    23

5.5.    

   Maintenance of Perfected Security Interest; Further Documentation    23

5.6.    

   Changes in Locations, Name, Jurisdiction of Incorporation, etc    23

5.7.    

   Notices    24

5.8.    

   Investment Property    24

5.9.    

   Receivables    25

5.10.    

   Intellectual Property    25

5.11.    

   Contracts    28 5.12.        Commercial Tort Claims    28

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

          Page

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

SECTION 6.    REMEDIAL PROVISIONS    28 6.1.        Certain Matters Relating to
Receivables    28 6.2.        Communications with Obligors; Grantors Remain
Liable    29 6.3.        Pledged Securities    30 6.4.        Proceeds to be
Turned Over To Collateral Agent    30 6.5.        Application of Proceeds    31
6.6.        Code and Other Remedies    31 6.7.        Registration Rights    33
6.8.        Deficiency    34 SECTION 7.    THE COLLATERAL AGENT    34 7.1.    
   Collateral Agent’s Appointment as Attorney-in-Fact, etc    34 7.2.       
Duty of Collateral Agent    36 7.3.        Execution of Financing Statements   
36 7.4.        Authority of Collateral Agent    37 7.5.        Appointment of
Co-Collateral Agents    37 SECTION 8.    MISCELLANEOUS    37 8.1.       
Amendments in Writing    37 8.2.        Notices    37 8.3.        No Waiver by
Course of Conduct; Cumulative Remedies    37 8.4.        Enforcement Expenses;
Indemnification    38 8.5.        Successors and Assigns    38 8.6.       
Set-Off    38 8.7.        Counterparts    39 8.8.        Severability    39
8.9.        Section Headings    39 8.10.        Integration    39 8.11.       
APPLICABLE LAW    39 8.12.        Submission to Jurisdiction; Waivers    39
8.13.        Acknowledgments    40 8.14.        Additional Grantors    40
8.15.        Releases    40 8.16.        WAIVER OF JURY TRIAL    41

SCHEDULE 4.3 — PERFECTED FIRST PRIORITY LIENS

    

SCHEDULE 4.4 — NAME; JURISDICTION OF ORGANIZATION, ETC

    

SCHEDULE 4.5 — INVENTORY AND EQUIPMENT

    

SCHEDULE 4.7 — INVESTMENT PROPERTY

    

 

ii

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

          Page

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

SCHEDULE 4.9 — INTELLECTUAL PROPERTY

    

SCHEDULE 4.11 — COMMERCIAL TORT CLAIMS

    

SCHEDULE 4.12 — EXCLUDED PLEDGED COLLATERAL

    

SCHEDULE 8.2 — NOTICES

    

EXHIBIT A — ACKNOWLEDGEMENT AND CONSENT

    

EXHIBIT B-1 — INTELLECTUAL PROPERTY SECURITY AGREEMENT

    

EXHIBIT B-2 — AFTER-ACQUIRED INTELLECTUAL PROPERTY SECURITY AGREEMENT

    

 

iii

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

PLEDGE AND SECURITY AGREEMENT, dated as of February 22, 2006, made by each of
the signatories hereto (together with any other grantor that may become a party
hereto as provided herein, the “Grantors”), in favor of CREDIT SUISSE, CAYMAN
ISLANDS BRANCH (“Credit Suisse”), as administrative agent (in such capacity and
together with its successors in such capacity, the “Administrative Agent”) and
as collateral agent (in such capacity and together with its successors in such
capacity, the “Collateral Agent”) for (i) the Lenders (“Lenders”), the Synthetic
Investors (“Synthetic Investors”) and the Issuers (“Issuers”) from time to time
parties to the Credit Agreement, dated as of February 22, 2006 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among The Babcock & Wilcox Company, a Delaware corporation (the
“Borrower”), the Lenders, the Synthetic Investors and the Issuers from time to
time parties thereto, Credit Suisse Securities (USA) LLC, as sole lead arranger
and sole bookrunner (in each such capacity, and together with its successors,
the “Arranger”), Credit Suisse, as Administrative Agent and Collateral Agent for
the Lenders, the Synthetic Investors and the Issuers, JPMORGAN CHASE BANK, N.A.,
as syndication agent (the “Syndication Agent”) and WACHOVIA BANK, NATIONAL
ASSOCIATION and THE BANK OF NOVA SCOTIA as co-documentation agents
(collectively, the “Co-Documentation Agents”), and (ii) the other Secured
Parties (as hereinafter defined).

 

W I T N E S S E T H:

 

WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to
make extensions of credit to the Borrower, the Synthetic Investors have agreed
to make Credit-Linked Deposits and participate in Letters of Credit and the
Issuers have severally agreed to issue Letters of Credit upon the terms and
subject to the conditions set forth therein;

 

WHEREAS, the Borrower is a member of an affiliated group of companies that
includes each other Grantor;

 

WHEREAS, the proceeds of the extensions of credit and the issuance of Letters of
Credit under the Credit Agreement will be used in part to enable the Borrower to
make valuable transfers to one or more of the other Grantors in connection with
the operation of their respective businesses;

 

WHEREAS, the Borrower and the other Grantors are engaged in related businesses,
and each Grantor will derive substantial direct and indirect benefit from the
making of the extensions of credit and issuance of Letters of Credit under the
Credit Agreement; and

 

WHEREAS, it is a condition precedent to the obligations of the Lenders and
Synthetic Investors to make their respective extensions of credit to the
Borrower, and the Issuers to issue their respective Letters of Credit under the
Credit Agreement, that the Grantors shall have executed and delivered this
Agreement to the Collateral Agent for the ratable benefit of the Secured
Parties;

 

NOW, THEREFORE, in consideration of the premises and to induce the Arranger, the
Administrative Agent, the Collateral Agent, the Lenders, the Synthetic Investors
and the Issuers to enter into the Credit Agreement and to induce the Lenders and
Synthetic

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

Investors to make their respective extensions of credit thereunder, and the
Issuers to issue their respective Letters of Credit thereunder, each Grantor
hereby agrees with the Administrative Agent and Collateral Agent, for the
ratable benefit of the Secured Parties, as follows:

 

SECTION 1. DEFINED TERMS

 

1.1. Definitions. (a) Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement, and the following terms are used herein as defined in the New
York UCC (and if defined in more than one Article of the New York UCC, such
terms shall have the meanings given in Article 9 thereof): Accounts, Account
Debtor, As-Extracted Collateral, Certificated Security, Chattel Paper,
Commercial Tort Claim, Commodity Account, Commodity Contract, Commodity
Intermediary, Documents, Deposit Account, Electronic Chattel Paper, Equipment,
Farm Products, Financial Asset, Fixtures, Goods, Instruments, Inventory, Money,
Payment Intangibles, Securities Account, Securities Intermediary, Security,
Security Entitlement, Supporting Obligations, Tangible Chattel Paper and
Uncertificated Security.

 

(b) The following terms shall have the following meanings:

 

“Administrative Agent” shall have the meaning assigned to such term in the
preamble.

 

“After-Acquired Intellectual Property” shall have the meaning assigned to such
term in Section 5.10(k).

 

“Agreement” shall mean this Pledge and Security Agreement, as the same may be
amended, restated, supplemented or otherwise modified from time to time.

 

“Arranger” shall have the meaning assigned to such term in the preamble.

 

“Borrower” shall have the meaning assigned to such term in the preamble.

 

“Borrower Obligations” shall mean the collective reference to the unpaid
principal of and interest on (including interest accruing after the maturity of
the Loans and reimbursement obligations in respect of amounts drawn under
Letters of Credit and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to any Grantor, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) the Loans, any Letter of
Credit Obligations (including any obligations of Borrower under any Loan
Document to provide cash collateral for Letter of Credit Obligations) and all
other obligations and liabilities of the Grantors to the Arranger, any Agent,
Lender, Synthetic Investor, Issuer or other Secured Party (or, in the case of
Specified Hedge Agreements, a Qualified Counterparty), whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with the
Credit Agreement, any other Loan Document, the Letters of Credit, any Specified
Hedge Agreement or any other document made, delivered or given in connection
herewith or therewith, whether on account of principal, interest, reimbursement
obligations, fees (including the Commitment Fee, Synthetic Fee and the Fronting
Fee), indemnities, reasonable out-of-pocket costs, expenses (including all
reasonable fees,

 

2

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

charges and disbursements of outside counsel to the Arranger, to any Agent or to
any Lender, Synthetic Investor or Issuer that are required to be paid by any
Grantor pursuant to the Credit Agreement or any other Loan Document) or
otherwise.

 

“Business Day” shall mean any day other than a Saturday, Sunday or day on which
commercial banks in New York City are authorized or required by law to close.

 

“Closing Date” shall mean the date hereof.

 

“Collateral” shall have the meaning assigned to such term in Section 3.

 

“Collateral Account” shall mean any collateral account established by the
Collateral Agent as provided in Sections 6.1 or 6.4.

 

“Collateral Account Funds” shall mean, collectively, the following: all funds
(including all trust monies) and investments (including all cash equivalents)
credited to, or purchased with funds from, any Collateral Account and all
certificates and instruments from time to time representing or evidencing such
investments; all Money, notes, certificates of deposit, checks and other
instruments from time to time hereafter delivered to or otherwise possessed by
the Collateral Agent for or on behalf of any Grantor in substitution for, or in
addition to, any or all of the Collateral; and all interest, dividends, cash,
instruments and other property from time to time received in, receivable or
otherwise distributed to the Collateral Account in respect of or in exchange for
any or all of the items constituting Collateral.

 

“Collateral Agent” shall have the meaning assigned to such term in the preamble.

 

“Contracts” shall mean all contracts and agreements between any Grantor and any
other person (in each case, whether written or oral, or third party or
intercompany) as the same may be amended, assigned, extended, restated,
supplemented, replaced or otherwise modified from time to time including (i) all
rights of any Grantor to receive moneys due and to become due to it thereunder
or in connection therewith, (ii) all rights of any Grantor to receive proceeds
of any insurance, indemnity, warranty or guaranty with respect thereto,
(iii) all rights of any Grantor to damages arising thereunder and (iv) all
rights of any Grantor to terminate and to perform and compel performance of,
such Contracts and to exercise all remedies thereunder.

 

“Copyright Licenses” shall mean any agreement, whether written or oral, naming
any Grantor as licensor or licensee (including those listed in Schedule 4.9(a)
(as such schedule may be amended or supplemented from time to time)), granting
any right in, to or under any Copyright, including the grant of rights to ,
publicly perform, display, copy, prepare derivative works or distribute under
any Copyright. This term shall exclude implied licenses and any rights obtained
or granted under a copyright pursuant to the doctrines of first sale or
estoppel.

 

“Copyrights” shall mean (i) all copyrights arising under the laws of the United
States, any other country, or union of countries, or any political subdivision
of any of the foregoing, whether registered or unregistered and whether
published or unpublished (including those listed in Schedule 4.9(a) (as such
schedule may be amended or supplemented from time to time)), all registrations
and recordings thereof, and all applications in connection therewith and rights
corresponding thereto throughout the world, including all registrations,
recordings and

 

3

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

applications in the United States Copyright Office, and all Mask Works (as
defined in 17 USC 901), (ii) the right to, and to obtain, all extensions and
renewals thereof, and the right to sue for past, present and future
infringements of any of the foregoing, (iii) all proceeds of the foregoing,
including license, royalties, income, payments, claims, damages, and proceeds of
suit and (iv) all other rights of any kind whatsoever accruing thereunder or
pertaining thereto.

 

“Credit Agreement” shall have the meaning assigned to such term in the preamble.

 

“dollars” or “$” shall mean lawful money of the United States of America.

 

“Excluded Assets” shall mean: (i) any lease, license, contract, property right
or agreement to which any Grantor is a party or any of its rights or interests
thereunder if and only for so long as the grant of a security interest hereunder
shall constitute or result in a breach, termination or default under any such
lease, license, contract, property right or agreement (other than to the extent
that any such term would be rendered ineffective pursuant to Sections 9-406,
9-407, 9-408 or 9-409 of the UCC of any relevant jurisdiction or any other
applicable law or principles of equity); provided, however, that such security
interest shall attach immediately to any portion of such lease, license,
contract, property rights or agreement that does not result in any of the
consequences specified above; (ii) all Security Entitlements, Securities
Accounts, Deposit Accounts and Financial Assets to which any Grantor has any
right, title or interest; and (iii) the Excluded Foreign Subsidiary Voting
Stock.

 

“Excluded Foreign Subsidiary Voting Stock” shall mean Voting Stock of any
Foreign Subsidiary in excess of 66% of the outstanding Voting Stock of such
Foreign Subsidiary.

 

“General Intangibles” shall mean all “general intangibles” as such term is
defined in Section 9-102(a)(42) of the New York UCC and, in any event, including
with respect to any Grantor, all rights of such Grantor to receive any tax
refunds, all Hedging Contracts and all contracts, agreements, instruments and
indentures and all licenses, permits, concessions, franchises and authorizations
issued by Governmental Authorities in any form, and portions thereof, to which
such Grantor is a party or under which such Grantor has any right, title or
interest or to which such Grantor or any property of such Grantor is subject, as
the same may from time to time be amended, supplemented, replaced or otherwise
modified, including (i) all rights of such Grantor to receive moneys due and to
become due to it thereunder or in connection therewith, (ii) all rights of such
Grantor to receive proceeds of any insurance, indemnity, warranty or guaranty
with respect thereto, (iii) all rights of such Grantor to damages arising
thereunder and (iv) all rights of such Grantor to terminate and to perform and
compel performance and to exercise all remedies thereunder.

 

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

 

“Guarantor Obligations” shall mean with respect to any Guarantor, all
obligations and liabilities of such Guarantor which may arise under or in
connection with this Agreement (including Section 2) or any other Loan Document
to which such Guarantor is a party, in each case whether on account of guarantee
obligations, reimbursement obligations, fees, indemnities,

 

4

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

reasonable out-of-pocket costs or expenses or otherwise (including reasonable
fees and disbursements of outside counsel to any Secured Party that are required
to be paid by such Guarantor pursuant to the terms of this Agreement or any
other Loan Document).

 

“Guarantors” shall mean the collective reference to each Grantor herein other
than the Borrower.

 

“Insurance” shall mean all insurance policies covering any or all of the
Collateral (regardless of whether the Collateral Agent is the loss payee
thereof).

 

“Intellectual Property” shall mean the collective reference to all intellectual
property rights whether arising under United States, multinational or foreign
laws or otherwise, including the Copyrights, the Copyright Licenses, the
Patents, the Patent Licenses, the Trademarks, the Trademark Licenses, the Trade
Secrets and the Trade Secret Licenses.

 

“Intercompany Note” shall mean any promissory note evidencing Indebtedness
permitted to be incurred pursuant to Section 8.1(f) of the Credit Agreement with
respect to any outstanding intercompany obligations and advances owed by or to a
Loan Party.

 

“Investment Property” shall mean the collective reference to (i) all “investment
property” as such term is defined in Section 9-102(a)(49) of the New York UCC
(other than any Excluded Foreign Subsidiary Voting Stock), including all
Certificated Securities and Uncertificated Securities, all Commodity Contracts
and all Commodity Accounts and (ii) whether or not otherwise constituting
“investment property,” all Pledged Notes, all Pledged Equity Interests and all
Pledged Commodity Contracts.

 

“Issuers” shall have the meaning assigned to such term in the preamble.

 

“Lenders” shall have the meaning assigned to such term in the preamble.

 

“Licensed Intellectual Property” shall have the meaning assigned to such term in
Section 4.9(a).

 

“Material Intellectual Property” shall have the meaning assigned to such term in
Section 4.9(b).

 

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

 

“Non-Assignable Contract” shall mean any Contract that either by its terms or by
any federal or state statutory prohibition or otherwise purports to restrict or
prevent the assignment thereof or granting of a security interest therein
(irrespective of whether such prohibition or restriction is enforceable under
Sections 9-407 through 409 of the New York UCC).

 

“Obligations” shall mean (i) in the case of the Borrower, the Borrower
Obligations, and (ii) in the case of each Guarantor, its Guarantor Obligations.

 

5

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

“Owned Intellectual Property” shall have the meaning assigned to such term in
Section 4.9(a).

 

“Patent License” shall mean all agreements, whether written or oral, providing
for the grant by or to any Grantor of any right to make, use, import, offer for
sale, or sell any invention covered in whole or in part by a Patent, including
any of the foregoing listed in Schedule 4.9(a) (as such schedule may be amended
or supplemented from time to time). This term shall exclude implied licenses and
any rights obtained or granted under a patent pursuant to the doctrines of
exhaustion or estoppel.

 

“Patents” shall mean (i) all United States patents, patents issued by any other
country, union of countries or any political subdivision of any of the
foregoing, and all reissues and extensions thereof, including any of the
foregoing listed in Schedule 4.9(a) (as such schedule may be amended or
supplemented from time to time), (ii) all patent applications pending in the
United States or any other country or union of countries or any political
subdivision of any of the foregoing and all divisions, continuations and
continuations-in-part thereof, including any of the foregoing listed in Schedule
4.9(a) (as such schedule may be amended or supplemented from time to time),
(iii) all rights to, and to obtain, any reissues or extensions of the foregoing
and (iv) all proceeds of the foregoing, including licenses, royalties, income,
payments, claims, damages and proceeds of suit.

 

“person” shall mean any natural person, corporation, trust, business trust,
joint venture, joint stock company, association company, limited liability
company, partnership, Governmental Authority or other entity.

 

“Pledged Alternative Equity Interests” shall mean all interests of any Grantor
in participation or other interests in any equity or profits of any business
entity and the certificates, if any, representing such interests and all
dividends, distributions, cash, warrants, rights, options, instruments,
securities and other property or proceeds from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all of such
interests and any other warrant, right or option to acquire any of the
foregoing; provided, however, that Pledged Alternative Equity Interests shall
not include any Pledged Stock, Pledged Partnership Interests, Pledged LLC
Interests or Pledged Trust Interests.

 

“Pledged Commodity Contracts” shall mean all commodity contracts listed on
Schedule 4.7(c) (as such schedule may be amended from time to time) and all
other commodity contracts to which any Grantor is party from time to time.

 

“Pledged Equity Interests” shall mean all Pledged Stock, Pledged LLC Interests,
Pledged Partnership Interests, Pledged Trust Interests and Pledged Alternative
Equity Interests.

 

“Pledged LLC Interests” shall mean all interests of any Grantor now owned or
hereafter acquired in any limited liability company, including all limited
liability company interests listed on Schedule 4.7(a) hereto under the heading
“Pledged LLC Interests” (as such schedule may be amended or supplemented from
time to time) and the certificates, if any, representing such limited liability
company interests and any interest of such Grantor on the books and records of
such limited liability company and all dividends, distributions, cash,

 

6

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

warrants, rights, options, instruments, securities and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such limited liability company
interests and any other warrant, right or option to acquire any of the
foregoing.

 

“Pledged Notes” shall mean all promissory notes now owned or hereafter acquired
by any Grantor, including those listed on Schedule 4.7(b) (as such schedule may
be amended or supplemented from time to time) and all Intercompany Notes at any
time issued to or held by any Grantor (other than (i) promissory notes in an
aggregate principal amount not to exceed $1,000,000 at any time outstanding
issued in connection with extensions of trade credit by any Grantor in the
ordinary course of business and (ii) promissory notes constituting Cash
Equivalents that are held by any Grantor).

 

“Pledged Partnership Interests” shall mean all interests of any Grantor now
owned or hereafter acquired in any general partnership, limited partnership,
limited liability partnership or other partnership, including all partnership
interests listed on Schedule 4.7(a) hereto under the heading “Pledged
Partnership Interests” (as such schedule may be amended or supplemented from
time to time) and the certificates, if any, representing such partnership
interests and any interest of such Grantor on the books and records of such
partnership and all dividends, distributions, cash, warrants, rights, options,
instruments, securities and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such partnership interests and any other warrant, right or option
to acquire any of the foregoing.

 

“Pledged Securities” shall mean the collective reference to the Pledged Notes
and the Pledged Equity Interests.

 

“Pledged Stock” shall mean all shares of capital stock (other than Excluded
Foreign Subsidiary Voting Stock) now owned or hereafter acquired by any Grantor,
including all shares of capital stock listed on Schedule 4.7(a) hereto under the
heading “Pledged Stock” (as such schedule may be amended or supplemented from
time to time), and the certificates, if any, representing such shares and any
interest of such Grantor in the entries on the books of the issuer of such
shares and all dividends, distributions, cash, warrants, rights, options,
instruments, securities and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such shares and any other warrant, right or option to acquire any
of the foregoing.

 

“Pledged Trust Interests” shall mean all interests of any Grantor now owned or
hereafter acquired in a Delaware business trust or other trust, including all
trust interests listed on Schedule 4.7(a) hereto under the heading “Pledged
Trust Interests” (as such schedule may be amended or supplemented from time to
time) and the certificates, if any, representing such trust interests and any
interest of such Grantor on the books and records of such trust or on the books
and records of any securities intermediary pertaining to such interest and all
dividends, distributions, cash, warrants, rights, options, instruments,
securities and other property or proceeds from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all of such
trust interests and any other warrant, right or option to acquire any of the
foregoing.

 

7

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

“Proceeds” shall mean all “proceeds” as such term is defined in
Section 9-102(a)(64) of the New York UCC and, in any event, shall include all
dividends or other income from the Investment Property, collections thereon or
distributions or payments with respect thereto.

 

“Qualified Counterparty” shall mean, with respect to any Specified Hedge
Agreement, any counterparty thereto that, at the time such Specified Hedge
Agreement was entered into, was a Lender, a Synthetic Investor, an Issuer, an
Agent or an Affiliate thereof.

 

“Receivable” shall mean all Accounts and any other right to payment for goods or
other property sold, leased, licensed or otherwise disposed of or for services
rendered, whether or not such right is evidenced by an Instrument or Chattel
Paper or classified as a Payment Intangible and whether or not it has been
earned by performance. References herein to Receivables shall include any
Supporting Obligation or collateral securing such Receivable.

 

“Secured Parties” shall mean, collectively, the Administrative Agent, the
Collateral Agent, the Syndication Agent, the Co-Documentation Agents, the
Lenders, the Synthetic Investors, the Issuers and, with respect to any Specified
Hedge Agreement, any Qualified Counterparty.

 

“Securities Act” shall mean the Securities Act of 1933, as amended.

 

“Specified Hedge Agreement” shall mean any Hedging Contract entered into by
(i) the Borrower or any of the Subsidiaries and (ii) a Qualified Counterparty.

 

“Subsidiary” shall have the meaning assigned to such term in the Credit
Agreement.

 

“Syndication Agent” shall have the meaning assigned to such term in the
preamble.

 

“Synthetic Investors” shall have the meaning assigned to such term in the
preamble.

 

“Trademark License” shall mean any agreement, whether written or oral, providing
for the grant by or to any Grantor of any right in, to or under any Trademark,
including any of the foregoing referred to in Schedule 4.9(a) (as such schedule
may be amended or supplemented from time to time). This term shall exclude
implied licenses and any rights obtained or granted under a trademark pursuant
to the doctrines of first sale or estoppel.

 

“Trademarks” shall mean (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos, designs and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country, union of countries, or any political subdivision of any of the
foregoing, or otherwise, and all common-law rights related thereto, including
any of the foregoing listed in Schedule 4.9(a) (as

 

8

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

such schedule may be amended or supplemented from time to time), (ii) the right
to, and to obtain, all renewals thereof, (iii) the goodwill of the business
symbolized by the foregoing and (iv) the right to sue for past, present and
future infringements or dilution of any of the foregoing or for any injury to
goodwill, and all proceeds of the foregoing, including royalties, income,
payments, claims, damages and proceeds of suit.

 

“Trade Secret License” shall mean any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right in, to or under any
Trade Secret, including any of the foregoing listed in Schedule 4.9(a) (as such
schedule may be amended or supplemented from time to time). This term shall
exclude implied licenses and any rights obtained or granted under a trade secret
pursuant to the doctrine of estoppel.

 

“Trade Secrets” shall mean (i) all trade secrets and all other confidential or
proprietary information and know how whether or not reduced to a writing or
other tangible form, (ii) all documents and things embodying, incorporating or
describing such Trade Secrets, and (iii) the right to sue for past, present and
future misappropriations of any Trade Secret and all proceeds of the foregoing,
including royalties, income, payments, claims, damages and proceeds of suit.

 

“UCC Letter of Credit” shall mean “Letter of Credit” (and in plural, “Letters of
Credit”) as defined in the New York UCC.

 

“UCC Letter of Credit Rights” shall mean “Letter of Credit Rights” as defined in
the New York UCC (and if defined in more than one Article of the New York UCC,
such terms shall have the meanings given in Article 9 thereof).

 

1.2. Other Definitional Provisions. (a) The words “hereof,” “herein,” “hereto”
and “hereunder” and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement, and Section and Schedule references are to the specific provisions of
this Agreement unless otherwise specified.

 

(b) The meanings given to terms defined herein shall be equally applicable to
both the singular and plural forms of such terms.

 

(c) Where the context requires, terms relating to the Collateral or any part
thereof, when used in relation to a Grantor, shall refer to the property or
assets such Grantor has granted as Collateral or the relevant part thereof.

 

(d) The expressions “payment in full,” “paid in full” and any other similar
terms or phrases when used herein with respect to the Borrower Obligations or
the Guarantor Obligations shall mean the unconditional, final and irrevocable
payment in full, in immediately available funds, of all of the Borrower
Obligations or the Guarantor Obligations, as the case may be, in each case,
unless otherwise specified, other than indemnification and other contingent
obligations not then due and payable.

 

(e) The words “include,” “includes” and “including,” and words of similar
import, shall not be limiting and shall be deemed to be followed by the phrase
“without limitation.”

 

9

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

(f) All references to the Lenders herein shall, where appropriate, include any
Lender, any Synthetic Investor, the Issuers, the Administrative Agent, the
Collateral Agent, the Syndication Agent or any Documentation Agent or, in the
case of any Specified Hedge Agreement, any Qualified Counterparty.

 

SECTION 2. GUARANTEE

 

2.1. Guarantee.

 

(a) Each of the Guarantors hereby, jointly and severally, unconditionally and
irrevocably, guarantees to the Administrative Agent, for the ratable benefit of
the Secured Parties and their respective successors, indorsees, transferees and
assigns, the prompt and complete payment and performance by the Borrower when
due (whether at the stated maturity, by acceleration or otherwise) of the
Borrower Obligations.

 

(b) If and to the extent required in order for the Obligations of any Guarantor
to be enforceable under applicable federal, state and other laws relating to the
insolvency of debtors, the maximum liability of such Guarantor hereunder shall
be limited to the greatest amount which can lawfully be guaranteed by such
Guarantor under such laws, after giving effect to any rights of contribution,
reimbursement and subrogation arising under Section 2.2. Each Guarantor
acknowledges and agrees that, to the extent not prohibited by applicable law,
(i) such Guarantor (as opposed to its creditors, representatives of creditors or
bankruptcy trustee, including such Guarantor in its capacity as debtor in
possession exercising any powers of a bankruptcy trustee) has no personal right
under such laws to reduce, or request any judicial relief that has the effect of
reducing, the amount of its liability under this Agreement, (ii) such Guarantor
(as opposed to its creditors, representatives of creditors or bankruptcy
trustee, including such Guarantor in its capacity as debtor in possession
exercising any powers of a bankruptcy trustee) has no personal right to enforce
the limitation set forth in this Section 2.1(b) or to reduce, or request
judicial relief reducing, the amount of its liability under this Agreement, and
(iii) the limitation set forth in this Section 2.1(b) may be enforced only to
the extent required under such laws in order for the obligations of such
Guarantor under this Agreement to be enforceable under such laws and only by or
for the benefit of a creditor, representative of creditors or bankruptcy trustee
of such Guarantor or other person entitled, under such laws, to enforce the
provisions thereof.

 

(c) Each Guarantor agrees that the Borrower Obligations may at any time and from
time to time be incurred or permitted in an amount exceeding the maximum
liability of such Guarantor under Section 2.1(b) without impairing the guarantee
contained in this Section 2 or affecting the rights and remedies of any Secured
Party hereunder.

 

(d) The guarantee contained in this Section 2 shall remain in full force and
effect until payment in full of the Obligations, notwithstanding that from time
to time during the term of the Credit Agreement the Borrower may be free from
any Borrower Obligations.

 

(e) No payment made by the Borrower, any of the Guarantors, any other guarantor
or any other person or received or collected by any Secured Party from the
Borrower, any of the Guarantors, any other guarantor or any other person by
virtue of any action or

 

10

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

proceeding or any set-off or appropriation or application at any time or from
time to time in reduction of or in payment of the Borrower Obligations shall be
deemed to modify, reduce, release or otherwise affect the liability of any
Guarantor hereunder which shall, notwithstanding any such payment (other than
any payment made by such Guarantor in respect of the Borrower Obligations or any
payment received or collected from such Guarantor in respect of the Borrower
Obligations), remain liable for the Borrower Obligations up to the maximum
liability of such Guarantor hereunder until the Borrower Obligations (other than
Obligations in respect of any Specified Hedge Agreement) are paid in full, no
Letter of Credit shall be outstanding (other than Letters of Credit that have
been cash collateralized in accordance with the terms of the Credit Agreement)
under the Credit Agreement and all commitments to extend credit under the Credit
Agreement shall have been terminated or have expired.

 

2.2. Rights of Reimbursement, Contribution and Subrogation. In case any payment
is made on account of the Obligations by any Grantor or is received or collected
on account of the Obligations from any Grantor or its property:

 

(a) If such payment is made by the Borrower or from its property, then, if and
to the extent such payment is made on account of Obligations arising from or
relating to a Loan or other extension of credit made to the Borrower or a Letter
of Credit issued for the account of the Borrower, the Borrower shall not be
entitled (i) to demand or enforce reimbursement or contribution in respect of
such payment from any other Grantor or (ii) to be subrogated to any claim,
interest, right or remedy of any Secured Party against any other person,
including any other Grantor or its property.

 

(b) If such payment is made by a Guarantor or from its property, such Guarantor
shall be entitled, subject to and upon payment in full of the Obligations,
(i) to demand and enforce reimbursement for the full amount of such payment from
the Borrower and (ii) to demand and enforce contribution in respect of such
payment from each other Guarantor that has not paid its fair share of such
payment, as necessary to ensure that (after giving effect to any enforcement of
reimbursement rights provided hereby) each Guarantor pays its fair share of the
unreimbursed portion of such payment. For this purpose, the fair share of each
Guarantor as to any unreimbursed payment shall be determined based on an
equitable apportionment of such unreimbursed payment among all Guarantors based
on the relative value of their assets and any other equitable considerations
deemed appropriate by a court of competent jurisdiction.

 

(c) If and whenever (after payment in full of the Obligations) any right of
reimbursement or contribution becomes enforceable by any Grantor against any
other Grantor under Sections 2.2(a) and 2.2(b), such Grantor shall be entitled,
subject to and upon payment in full of the Obligations, to be subrogated
(equally and ratably with all other Grantors entitled to reimbursement or
contribution from any other Grantor as set forth in this Section 2.2) to any
security interest that may then be held by the Collateral Agent upon any
Collateral granted to it in this Agreement. Such right of subrogation shall be
enforceable solely against the Grantors, and not against the Secured Parties,
and neither the Collateral Agent nor any other Secured Party shall have any duty
whatsoever to warrant, ensure or protect any such right of subrogation or to
obtain, perfect, maintain, hold, enforce or retain any Collateral for any
purpose related to any such right of subrogation. If subrogation is demanded by
any Grantor, then (after payment in full of the Obligations) the Collateral
Agent shall deliver to the Grantors making such demand, or to

 

11

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

a representative of such Grantors or of the Grantors generally, an instrument
reasonably satisfactory to the Collateral Agent transferring, on a quitclaim
basis without any recourse, representation, warranty or obligation whatsoever,
whatever security interest the Collateral Agent then may hold in whatever
Collateral may then exist that was not previously released or disposed of by the
Collateral Agent.

 

(d) All rights and claims arising under this Section 2.2 or based upon or
relating to any other right of reimbursement, indemnification, contribution or
subrogation that may at any time arise or exist in favor of any Grantor as to
any payment on account of the Obligations made by it or received or collected
from its property shall be fully subordinated in all respects to the prior
payment in full of all of the Obligations. Until payment in full of the
Obligations, no Grantor shall demand or receive any collateral security, payment
or distribution whatsoever (whether in cash, property or securities or
otherwise) on account of any such right or claim. If any such payment or
distribution is made or becomes available to any Grantor in any bankruptcy case
or receivership, insolvency or liquidation proceeding, such payment or
distribution shall be delivered by the person making such payment or
distribution directly to the Collateral Agent, for application to the payment of
the Obligations. If any such payment or distribution is received by any Grantor,
it shall be held by such Grantor in trust, as trustee of an express trust for
the benefit of the Secured Parties, and shall forthwith be transferred and
delivered by such Grantor to the Collateral Agent, in the exact form received
and, if necessary, duly endorsed.

 

(e) The obligations of the Grantors under the Loan Documents, including their
liability for the Obligations and the enforceability of the security interests
granted thereby, are not contingent upon the validity, legality, enforceability,
collectibility or sufficiency of any right of reimbursement, contribution or
subrogation arising under this Section 2.2. The invalidity, insufficiency,
unenforceability or uncollectibility of any such right shall not in any respect
diminish, affect or impair any such obligation or any other claim, interest,
right or remedy at any time held by any Secured Party against any Guarantor or
its property. The Secured Parties make no representations or warranties in
respect of any such right and shall have no duty to assure, protect, enforce or
ensure any such right or otherwise relating to any such right.

 

(f) Each Grantor reserves any and all other rights of reimbursement,
contribution or subrogation at any time available to it as against any other
Grantor, but (i) the exercise and enforcement of such rights shall be subject to
Section 2.2(d) and (ii) neither the Collateral Agent nor any other Secured Party
shall ever have any duty or liability whatsoever in respect of any such right,
except as provided in Section 2.2(c).

 

2.3. Amendments, etc. with respect to the Borrower Obligations. Each Guarantor
shall remain obligated hereunder notwithstanding that, without any reservation
of rights against any Guarantor and without notice to or further assent by any
Guarantor, any demand for payment of any of the Borrower Obligations made by any
Secured Party may be rescinded by such Secured Party and any of the Borrower
Obligations continued, and the Borrower Obligations, or the liability of any
other person upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, increased, extended, amended, modified,
accelerated, compromised, waived, surrendered or released by any Secured Party,
and the Credit Agreement and the other Loan Documents and any other documents
executed and delivered in connection

 

12

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

therewith may be amended, modified, supplemented or terminated, in whole or in
part, as the parties thereto may deem advisable from time to time, and any
collateral security, guarantee or right of offset at any time held by any
Secured Party for the payment of the Borrower Obligations may be sold,
exchanged, waived, surrendered or released. No Secured Party shall have any
obligation to protect, secure, perfect or insure any Lien at any time held by it
as security for the Borrower Obligations or for the guarantee contained in this
Section 2 or any property subject thereto.

 

2.4. Guarantee Absolute and Unconditional. Each Guarantor waives any and all
notice of the creation, renewal, extension or accrual of any of the Borrower
Obligations and notice of or proof of reliance by any Secured Party upon the
guarantee contained in this Section 2 or acceptance of the guarantee contained
in this Section 2; the Borrower Obligations, and any of them, shall conclusively
be deemed to have been created, contracted or incurred, or renewed, extended,
amended or waived, in reliance upon the guarantee contained in this Section 2;
and all dealings between the Borrower and any of the Guarantors, on the one
hand, and the Secured Parties, on the other hand, likewise shall be conclusively
presumed to have been had or consummated in reliance upon the guarantee
contained in this Section 2. Each Guarantor waives diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon the
Borrower or any of the Guarantors with respect to the Borrower Obligations. Each
Guarantor understands and agrees that the guarantee contained in this Section 2
shall be construed as a continuing, absolute and unconditional guarantee of
payment and performance without regard to (a) the validity or enforceability of
the Credit Agreement or any other Loan Document, any of the Borrower Obligations
or any other collateral security therefor or guarantee or right of offset with
respect thereto at any time or from time to time held by any Secured Party,
(b) any defense, set-off or counterclaim (other than a defense of payment or
performance hereunder) which may at any time be available to or be asserted by
the Borrower or any other person against any Secured Party, or (c) any other
circumstance whatsoever (with or without notice to or knowledge of the Borrower
or such Guarantor) which constitutes, or might be construed to constitute, an
equitable or legal discharge of the Borrower for the Borrower Obligations, or of
such Guarantor under the guarantee contained in this Section 2, in bankruptcy or
in any other instance. When making any demand hereunder or otherwise pursuing
its rights and remedies hereunder against any Guarantor, any Secured Party may,
but shall be under no obligation to, make a similar demand on or otherwise
pursue such rights and remedies as it may have against the Borrower, any other
Guarantor or any other person or against any collateral security or guarantee
for the Borrower Obligations or any right of offset with respect thereto, and
any failure by any Secured Party to make any such demand, to pursue such other
rights or remedies or to collect any payments from the Borrower, any other
Guarantor or any other person or to realize upon any such collateral security or
guarantee or to exercise any such right of offset, or any release of the
Borrower, any other Guarantor or any other person or any such collateral
security, guarantee or right of offset, shall not relieve any Guarantor of any
obligation or liability hereunder, and shall not impair or affect the rights and
remedies, whether express, implied or available as a matter of law, of any
Secured Party against any Guarantor. For the purposes hereof “demand” shall
include the commencement and continuance of any legal proceedings.

 

2.5. Reinstatement. The guarantee contained in this Section 2 shall continue to
be effective, or be reinstated, as the case may be, if at any time payment, or
any part thereof, of any of the Borrower Obligations is rescinded or must
otherwise be restored or returned by any

 

13

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

Secured Party upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Borrower or any Guarantor, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, the Borrower or any Guarantor or any substantial part of its
property, or otherwise, all as though such payments had not been made.

 

2.6. Payments. Each Guarantor hereby guarantees that payments hereunder will be
paid to the Collateral Agent without set-off or counterclaim in Dollars in
immediately available funds at the office of the Collateral Agent as specified
in the Credit Agreement.

 

SECTION 3. GRANT OF SECURITY INTEREST;

CONTINUING LIABILITY UNDER COLLATERAL

 

(a) Each Grantor hereby assigns and transfers to the Collateral Agent, and
hereby grants to the Collateral Agent, for the ratable benefit of the Secured
Parties, a security interest in all of the personal property of such Grantor,
including such Grantor’s right, title and interest in and to the following
property, in each case, wherever located and whether now owned or at any time
hereafter acquired by such Grantor or in which such Grantor now has or at any
time in the future may acquire any right, title or interest (collectively, the
“Collateral”), as collateral security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of such Grantor’s Obligations:

 

(i) all Accounts;

 

(ii) all As-Extracted Collateral;

 

(iii) all Chattel Paper;

 

(iv) all Collateral Accounts and all Collateral Account Funds;

 

(v) all Commercial Tort Claims from time to time specifically described on
Schedule 4.11;

 

(vi) all Contracts;

 

(vii) all Documents;

 

(viii) all Equipment;

 

(ix) all Fixtures;

 

(x) all General Intangibles;

 

(xi) all Goods;

 

(xii) all Instruments;

 

(xiii) all Insurance;

 

(xiv) all Intellectual Property;

 

14

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

(xv) all Inventory;

 

(xvi) all Investment Property;

 

(xvii) all UCC Letters of Credit and UCC Letter of Credit Rights;

 

(xviii) all books, records, ledger cards, files, correspondence, customer lists,
blueprints, technical specifications, manuals, computer software, computer
printouts, tapes, disks and other electronic storage media and related data
processing software and similar items that at any time pertain to or evidence or
contain information relating to any of the Collateral or are otherwise necessary
or helpful in the collection thereof or realization thereupon; and

 

(xix) to the extent not otherwise included, all other property, whether tangible
or intangible, of the Grantor and all Proceeds, goodwill, products, accessions,
rents and profits of any and all of the foregoing and all collateral security,
Supporting Obligations and guarantees given by any person with respect to any of
the foregoing;

 

provided that, notwithstanding any other provision set forth in this Section 3,
this Agreement shall not, at any time, constitute a grant of a security interest
in any property that is, at such time, an Excluded Asset, and the term
“Collateral” and each of the defined terms incorporated therein shall exclude
the Excluded Assets.

 

(b) Notwithstanding anything herein to the contrary, (i) each Grantor shall
remain liable for all obligations under and in respect of the Collateral and
nothing contained herein is intended or shall be a delegation of duties to the
Collateral Agent or any other Secured Party, (ii) each Grantor shall remain
liable under and each of the agreements included in the Collateral, including
any Receivables, any Contracts and any agreements relating to Pledged
Partnership Interests or Pledged LLC Interests, to perform all of the
obligations undertaken by it thereunder all in accordance with and pursuant to
the terms and provisions thereof and neither the Collateral Agent nor any other
Secured Party shall have any obligation or liability under any of such
agreements by reason of or arising out of this Agreement or any other document
related hereto nor shall the Collateral Agent nor any other Secured Party have
any obligation to make any inquiry as to the nature or sufficiency of any
payment received by it or have any obligation to take any action to collect or
enforce any rights under any agreement included in the Collateral, including any
agreements relating to any Receivables, any Contracts or any agreements relating
to Pledged Partnership Interests or Pledged LLC Interests and (iii) the exercise
by the Collateral Agent of any of its rights hereunder shall not release any
Grantor from any of its duties or obligations under the contracts and agreements
included in the Collateral, including any agreements relating to any
Receivables, any Contracts and any agreements relating to Pledged Partnership
Interests or Pledged LLC Interests.

 

SECTION 4. REPRESENTATIONS AND WARRANTIES

 

To induce the Arranger, the Administrative Agent, the Collateral Agent, the
Syndication Agent, the Co-Documentation Agents, the Lenders, the Synthetic
Investors and the Issuers to enter into the Credit Agreement and to induce
(i) the Lenders and the Synthetic Investors to make their respective extensions
of credit thereunder and (ii) the Issuers to issue

 

15

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

their respective Letters of Credit thereunder, each Grantor hereby represents
and warrants to the Secured Parties that:

 

4.1. Representations in Credit Agreement. In the case of each Guarantor, the
representations and warranties set forth in Article IV of the Credit Agreement
as they relate to such Guarantor or to the Loan Documents to which such
Guarantor is a party, each of which is hereby incorporated herein by reference,
are true and correct, in all material respects, except for representations and
warranties expressly stated to relate to a specific earlier date, in which case
such representations and warranties shall be true and correct in all material
respects as of such earlier date, and the Secured Parties shall be entitled to
rely on each of them as if they were fully set forth herein, provided that each
reference in each such representation and warranty to the Borrower’s knowledge
shall, for the purposes of this Section 4.l, be deemed to be a reference to such
Guarantor’s knowledge.

 

4.2. Title; No Other Liens. Such Grantor owns or licenses or otherwise has the
right to use each item of the Collateral free and clear of any and all Liens,
including Liens arising as a result of such Grantor becoming bound (as a result
of merger or otherwise) as grantor under a security agreement entered into by
another person, except for Liens expressly permitted by Section 8.2 (Liens,
Etc.) of the Credit Agreement. No effective financing statement, mortgage or
other public notice indicating the existence of a Lien with respect to all or
any part of the Collateral is on file or of record in any public office, except
such as have been filed in favor of the Collateral Agent, for the ratable
benefit of the Secured Parties, pursuant to this Agreement or as are expressly
permitted by the Credit Agreement.

 

4.3. Perfected First Priority Liens. The security interests granted pursuant to
this Agreement (a) upon completion of the filings and other actions specified on
Schedule 4.3 (all of which, in the case of all filings and other documents
referred to on said Schedule, have been delivered to the Collateral Agent in
duly completed and duly executed form, as applicable, and may be filed by the
Collateral Agent at any time) and payment of all filing fees, will constitute
valid fully perfected security interests in all of the Collateral in favor of
the Collateral Agent, for the ratable benefit of the Secured Parties, as
collateral security for such Grantor’s Obligations, enforceable in accordance
with the terms hereof, to the extent such security interest in such Collateral
can be perfected by (i) the filing of a financing statement under the Uniform
Commercial Code of any jurisdiction, (ii) the filing with the United States
Patent and Trademark Office or the United States Copyright Office of an
Intellectual Property Security Agreement, or (iii) the possession of such
Collateral, and (b) are prior to all other Liens on the Collateral, except for
Liens expressly permitted by Section 8.2 of the Credit Agreement. Without
limiting the foregoing, each Grantor has taken all actions necessary or
desirable, including those specified in Section 5.2 to (i) establish the
Collateral Agent’s “control” (within the meanings of Sections 8-106 and 9-106 of
the New York UCC) over any portion of the Investment Property constituting
Certificated Securities, Uncertificated Securities (each as defined in the New
York UCC), other than any such Investment Property issued by a Foreign
Subsidiary, (ii) establish the Collateral Agent’s “control” (within the meaning
of Section 9-107 of the New York UCC) over all UCC Letter of Credit Rights,
(iii) establish the Collateral Agent’s control (within the meaning of
Section 9-105 of the New York UCC) over all Electronic Chattel Paper and
(iv) establish the Collateral Agent’s “control” (within the meaning of
Section 16 of the Uniform Electronic Transaction Act as in effect in the
applicable jurisdiction “UETA”) over all “transferable records” (as defined in
UETA).

 

16

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

4.4. Name; Jurisdiction of Organization, etc. On the date hereof, such Grantor’s
exact legal name (as indicated on the public record of such Grantor’s
jurisdiction of formation or organization), jurisdiction of organization,
organizational identification number, if any, and the location of such Grantor’s
chief executive office or sole place of business are specified on Schedule 4.4.
Each Grantor is organized solely under the law of the jurisdiction so specified
and has not filed any certificates of domestication, transfer or continuance in
any other jurisdiction. Except as otherwise indicated on Schedule 4.4, the
jurisdiction of each such Grantor’s organization of formation is required to
maintain a public record showing the Grantor to have been organized or formed.
Except as specified on Schedule 4.4, as of the Closing Date no such Grantor has
changed its name, jurisdiction of organization, chief executive office or sole
place of business or its corporate structure in any way (e.g., by merger,
consolidation, change in corporate form or otherwise) within the past five years
and has not within the last five years become bound (whether as a result of
merger or otherwise) as a grantor under a security agreement entered into by
another person, which has not heretofore been terminated.

 

4.5. Inventory and Equipment. (a) On the date hereof, the material Inventory and
Equipment (other than mobile goods, Inventory in transit, and Inventory and
Equipment located outside the United States of America) that is included in the
Collateral are kept at the locations listed on Schedule 4.5.

 

(b) Any Inventory now or hereafter produced by any Grantor included in the
Collateral have been and will be produced in compliance in all material respects
with the requirements of all applicable laws and regulations, including the Fair
Labor Standards Act, as amended.

 

(c) No material portion of the Inventory or Equipment that is included in the
Collateral is in the possession of an issuer of a negotiable document (as
defined in Section 7-104 of the New York UCC) therefor or is otherwise in the
possession of any bailee or warehouseman.

 

4.6. Farm Products. None of the Collateral constitutes, or is the Proceeds of,
Farm Products.

 

4.7. Investment Property. (a) Schedule 4.7(a) hereto sets forth under the
headings “Pledged Stock,” “Pledged LLC Interests,” “Pledged Partnership
Interests” and “Pledged Trust Interests,” respectively, all of the Pledged
Stock, Pledged LLC Interests, Pledged Partnership Interests and Pledged Trust
Interests owned by any Grantor as of the Closing Date, and such Pledged Equity
Interests constitute the percentage of issued and outstanding shares of stock,
percentage of membership interests, percentage of partnership interests or
percentage of beneficial interest of the respective issuers thereof indicated on
such schedule. Schedule 4.7(b) sets forth under the heading “Pledged Notes” all
of the Pledged Notes owned by any Grantor as of the Closing Date, and all of
such Pledged Notes have been duly authorized, authenticated or issued, and
delivered and are the legal, valid and binding obligation of the issuers thereof
enforceable in accordance with their terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors’ rights
generally and subject to

 

17

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

general principals of equity, regardless of whether considered in a proceeding
in equity or at law, and constitute all of the issued and outstanding
inter-company indebtedness evidenced by an instrument or certificated security
of the respective issuers thereof owing to such Grantor.

 

(b) The shares of Pledged Equity Interests pledged by such Grantor hereunder
constitute all of the issued and outstanding shares of all classes of Equity
Interests owned by such Grantor in each issuer thereof (other than Excluded
Foreign Subsidiary Voting Stock).

 

(c) The Pledged Equity Interests have been duly and validly issued and, except
as set forth on Schedule 4.7(a) hereto, are fully paid and nonassessable.

 

(d) Such Grantor is the record and beneficial owner of, and has good and
marketable title to, the Investment Property pledged by it hereunder, free of
any and all Liens or options in favor of, or claims of, any other person, except
Liens expressly permitted by Section 8.2 of the Credit Agreement, and there are
no outstanding warrants, options or other rights to purchase, or shareholder,
voting trust or similar agreements outstanding with respect to, or property that
is convertible into, or that requires the issuance or sale of, any Pledged
Equity Interests.

 

(e) Each Subsidiary of the Borrower that is an issuer of Pledged Securities that
is not a Grantor hereunder has executed and delivered to the Collateral Agent an
Acknowledgment and Consent, in substantially the form of Exhibit A, to the
pledge of the Pledged Securities pursuant to this Agreement.

 

4.8. Receivables. (a) No amount payable to such Grantor under or in connection
with any Receivable in excess of $1,000,000 that is included in the Collateral
is evidenced by any Instrument or Tangible Chattel Paper which has not been
delivered to the Collateral Agent or constitutes Electronic Chattel Paper that
has not been subjected to the control (within the meaning of Section 9-105 of
the New York UCC) of the Collateral Agent.

 

(b) Each Receivable that is included in the Collateral (i) is and will be the
legal, valid and binding obligation of the Account Debtor in respect thereof,
representing an unsatisfied obligation of such Account Debtor, (ii) is and will
be enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors’ rights
generally and subject to general principals of equity, regardless of whether
considered in a proceeding in equity or at law, (iii) is not and will not be
subject to any setoffs, defenses, taxes, counterclaims (except with respect to
refunds, returns and allowances in the ordinary course of business) and (iv) is
and will be in compliance with all applicable laws and regulations, except where
the failure to comply with this Section 4.8(b) with respect to each Receivable
would not reasonably be expected to have a Material Adverse Effect.

 

4.9. Intellectual Property. (a) Schedule 4.9(a) lists all Copyrights, Patents,
and Trademarks which are registered with the U.S. Patent and Trademark Office or
the U.S. Copyright Office or are the subject of an application for registration
with any such Governmental Authority, in each case which is owned by such
Grantor in its own name on the date hereof (collectively, the “Owned
Intellectual Property”). Except as set forth in Schedule 4.9(a), such Grantor is
the exclusive owner of the entire and unencumbered right, title and interest in
and to

 

18

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

all material Owned Intellectual Property and is otherwise entitled to grant to
others the right to use (and, where applicable, itself use) all such material
Owned Intellectual Property. Such Grantor has a valid and enforceable right to
use all material Intellectual Property used by, or licensed to others by, such
Grantor which is not owned Intellectual Property either pursuant to one of the
written material Copyright Licenses, Patent Licenses, Trademark Licenses, and/or
Trade Secret Licenses listed on Schedule 4.9(a) and subject to the terms thereof
(collectively, the “Licensed Intellectual Property”) or otherwise.

 

(b) On the date hereof all Owned Intellectual Property and all Licensed
Intellectual Property, in each case, which is material to such Grantor’s
business (collectively, the “Material Intellectual Property”), is valid,
subsisting, unexpired and enforceable and has not been abandoned. The operation
of such Grantor’s business as currently conducted or as contemplated to be
conducted does not infringe, constitute a misappropriation of, dilute, or
otherwise violate the Intellectual Property rights of any other person where the
same would have a Material Adverse Effect.

 

(c) No claim has been asserted that the use of the Material Intellectual
Property does or may infringe upon or constitute a misappropriation of the
rights of any other person.

 

(d) To such Grantor’s knowledge, no decision or judgment has been rendered by
any Governmental Authority or arbitrator in the United States or outside the
United States which would materially limit or cancel the validity or
enforceability of, or such Grantor’s rights in, any Material Intellectual
Property. Such Grantor is not aware of any uses of any item of Material
Intellectual Property that could reasonably be expected to lead to such item
becoming invalid or unenforceable including unauthorized trademark uses by third
parties and uses which were not supported by the goodwill of the business
connected with Trademarks and Trademark Licenses.

 

(e) No action or proceeding is pending, or, to such Grantor’s knowledge,
threatened, on the date hereof (i) seeking to limit, cancel or invalidate any
Owned Intellectual Property, (ii) alleging that any services provided by,
processes used by, or products manufactured or sold by such Grantor infringe any
patent, trademark, copyright, or misappropriate any trade secret or violate any
other right of any other person, or (iii) alleging that any Material
Intellectual Property (x) owned by such Grantor or (y) licensed by such Grantor
(to such Grantor’s knowledge), is being licensed or sublicensed in violation of
any intellectual property or any other right of any other person, in each case,
which, if adversely determined, would reasonably be expected to have a Material
Adverse Effect. To such Grantor’s knowledge, no person is engaging in any
activity that infringes upon or misappropriates, or is otherwise an unauthorized
use of, any Material Intellectual Property owned by Grantor. The consummation of
the transactions contemplated by this Agreement will not result in the
termination of any of the Material Intellectual Property.

 

(f) With respect to each Copyright License, Trademark License, Trade Secret
License and Patent License which license concerns Material Intellectual Property
or the loss of which could otherwise have a Material Adverse Effect: (i) such
license is binding and enforceable against the other party thereto; (ii) such
license will not cease to be valid and binding and in full force and effect on
terms identical to those currently in effect as a result of the rights and
interests granted herein (including, but not limited to, the enforceability of
such rights and

 

19

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

interests with respect to each such license), nor will the grant of such rights
and interests (or the enforceability thereof) constitute a breach or default
under such license or otherwise give the licensor or licensee a right to
terminate such license; (iii) such Grantor has not received any notice of
termination or cancellation under such license; (iv) such Grantor has not
received any notice of a breach or default under such license, which breach or
default has not been cured; and (v) such Grantor is not in breach or default in
any material respect, and no event has occurred that, with notice and/or lapse
of time, would constitute such a breach or default or permit termination,
modification or acceleration under such license.

 

(g) Except as set forth on Schedule 4.9(g), such Grantor has made all filings
and recordations and paid all required fees and taxes to maintain each and every
item of registered Material Intellectual Property in full force and effect and
to protect and maintain its interest therein.

 

(h) To the knowledge of such Grantor, (i) none of the trade secrets that
constitute Material Intellectual Property of such Grantor have been used,
divulged, disclosed or appropriated to the detriment of such Grantor for the
benefit of any other person without permission of such Grantor; and (ii) no
employee, independent contractor or agent of such Grantor has misappropriated
any Trade Secrets of any other person in the course of the performance of his or
her duties as an employee, independent contractor or agent of such Grantor where
the same would reasonably be expected to have a Material Adverse Effect.

 

(i) Such Grantor has taken commercially reasonable steps to exercise quality
control over any licensee of such Grantor’s Trademarks.

 

4.10. UCC Letters of Credit and UCC Letter of Credit Rights. With respect to any
UCC Letters of Credit that are by their terms transferable, each Grantor will,
upon receipt of a written request from the Collateral Agent, use commercially
reasonable efforts to cause all issuers and nominated persons under UCC Letters
of Credit in which the Grantor is the beneficiary or assignee to consent to the
assignment of such UCC Letter of Credit to the Collateral Agent and has agreed
that, upon receipt of written notice received from the Collateral Agent that an
Event of Default has occurred and so long as such Event of Default is
continuing, it shall cause all payments thereunder to be made to the Collateral
Account. With respect to any UCC Letters of Credit that are not transferable,
each Grantor shall, upon receipt of a written request from the Collateral Agent,
use commercially reasonable efforts to obtain the consent of the issuer thereof
and any nominated person thereon to the assignment of the proceeds of such
released UCC Letter of Credit to the Collateral Agent in accordance with
Section 5-114(c) of the New York UCC.

 

4.11. Commercial Tort Claims. No Grantor has knowledge that it has any
Commercial Tort Claims as of the date hereof individually or in the aggregate in
excess of $1,000,000.

 

4.12. Contracts. No amount payable to such Grantor under or in connection with
any Contract which has a value in excess of $1,000,000 individually or
$5,000,000 in the aggregate is evidenced by any Instrument or Tangible Chattel
Paper which has not been delivered to the Collateral Agent or constitutes
Electronic Chattel Paper that is not under the

 

20

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

control (within the meaning of Section 9-105 of the New York UCC) of the
Collateral Agent. Notwithstanding any representation, warranty, covenant or
other provision contained herein to the contrary, the failure of any Grantor to
deliver to the Collateral Agent the original Certificated Securities,
Instruments and Tangible Chattel Paper described on (i) Schedule 4.12(a) and
(ii) Schedule 4.12(b) so long as the entities set forth on Schedule 4.12(b) are
dissolved within a six-months period commencing as of the date hereof, shall not
constitute a breach, Default or an Event of Default hereunder.

 

SECTION 5. COVENANTS

 

Each Grantor covenants and agrees with the Secured Parties that, as of the date
hereof and until the payment in full of all Obligations, the cancellation or
termination of all Commitments, the expiration or termination of all Specified
Hedge Agreements and the cancellation or expiration of all outstanding Letters
of Credit (or cash collateralization thereof):

 

5.1. Covenants in Credit Agreement. Each Grantor shall take, or shall refrain
from taking, as the case may be, each action that is within its control and is
necessary to be taken or not taken, as the case may be, so that no Default or
Event of Default is caused by the failure to take such action or to refrain from
taking such action by such Grantor or any of its Subsidiaries.

 

5.2. Delivery and Control of Instruments, Chattel Paper, Negotiable Documents
and Investment Property. (a) If any of the Collateral having a value in excess
of $1,000,000 individually or $5,000,000 in the aggregate is or shall become
evidenced or represented by any Instrument, Certificated Security, Negotiable
Document or Tangible Chattel Paper, such Instrument (other than checks received
in the ordinary course of business), Certificated Security, Negotiable Documents
or Tangible Chattel Paper shall be promptly delivered to the Collateral Agent,
duly endorsed in a manner reasonably satisfactory to the Collateral Agent, to be
held as Collateral pursuant to this Agreement, and all of such property owned by
any Grantor as of the Closing Date and represented in such form shall be
delivered on the Closing Date.

 

(b) If any of the Collateral having a value in excess of $1,000,000 individually
or $5,000,000 in the aggregate is or shall become “Electronic Chattel Paper”
such Grantor shall ensure that (i) a single authoritative copy shall exist which
is unique, identifiable, unalterable (except as provided in clauses (iii),
(iv) and (v) of this paragraph), (ii) such authoritative copy identifies the
Collateral Agent as the assignee and is communicated to and maintained by the
Collateral Agent or its designee, (iii) copies or revisions that add or change
the assignee of the authoritative copy can only be made with the participation
of the Collateral Agent, (iv) each copy of the authoritative copy and any copy
of a copy is readily identifiable as a copy and not the authoritative copy and
(v) any revision of the authoritative copy is readily identifiable as an
authorized or unauthorized revision.

 

(c) If any Collateral having a value in excess of $1,000,000 individually or
$5,000,000 in the aggregate is or shall become an Uncertificated Security, such
Grantor shall cause the issuer thereof, if such issuer is a Subsidiary of the
Borrower, either (i) to register the Collateral Agent as the registered owner of
such Uncertificated Security, upon original issue or registration of transfer or
(ii) to agree in writing with such Grantor and the Collateral Agent that

 

21

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

such issuer will comply with instructions with respect to such Uncertificated
Security originated by the Collateral Agent without further consent of such
Grantor, such agreement to be in substantially the form of Exhibit A, and such
actions shall be taken on or prior to the Closing Date with respect to any such
Uncertificated Securities owned as of the Closing Date by any Grantor.

 

(d) If any of the Collateral is or shall become evidenced or represented by a
Commodity Contract having a value in excess of $1,000,000 individually or
$5,000,000 in the aggregate, such Grantor shall, upon receipt of written request
from the Collateral Agent, cause the Commodity Intermediary with respect to such
Commodity Contract to agree in writing with such Grantor and the Collateral
Agent that such Commodity Intermediary will apply any value distributed on
account of such Commodity Contract as directed by the Collateral Agent without
further consent of such Grantor, such agreement to be in form and substance
reasonably satisfactory to the Collateral Agent.

 

(e) In addition to and not in lieu of the foregoing, if any issuer of any
Investment Property is a Subsidiary of the Borrower and is organized under the
law of, or has its chief executive office in, a jurisdiction outside of the
United States, each Grantor shall take such additional actions, including
causing such issuer to register the pledge on its books and records, as may be
reasonably requested by the Collateral Agent, under the laws of such
jurisdiction to insure the validity, perfection and priority of the security
interest of the Collateral Agent.

 

(f) In the case of any transferable UCC Letters of Credit in excess of
$1,000,000 individually or $5,000,000 in the aggregate, each Grantor shall use
commercially reasonable efforts to obtain the consent of any issuer thereof to
the transfer of such UCC Letters of Credit to the Collateral Agent. In the case
of any other UCC Letter of Credit Rights in excess of $1,000,000 individually or
$5,000,000 in the aggregate, each Grantor shall use commercially reasonable
efforts to obtain the consent of the issuer thereof and any nominated person
thereon to the assignment of the proceeds of the related UCC Letter of Credit in
accordance with Section 5-114(c) of the New York UCC.

 

5.3. Maintenance of Insurance. (a) Such Grantor will maintain insurance in
accordance with Section 7.5 of the Credit Agreement, and furnish to the
Collateral Agent, upon written request, of a copy of such insurance policies.

 

(b) Such Grantor will deliver to the Collateral Agent on behalf of the Secured
Parties, (i) on the Closing Date, a certificate dated as of a recent date
showing the amount and types of insurance coverage as of such date, (ii) upon
reasonable request of the Collateral Agent from time to time, reasonably
detailed information as to the insurance carried, (iii) promptly following
receipt of notice from any insurer, a copy of any notice of cancellation or
material change in coverage from that existing on the Closing Date and
(iv) forthwith, notice of any cancellation or nonrenewal of coverage by such
Grantor. To the extent applicable, the Collateral Agent shall be named as
additional insured on all such liability insurance policies of such Grantor and
the Collateral Agent shall be named as loss payee on all property and casualty
insurance policies of such Grantor.

 

22

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

5.4. Payment of Obligations. Such Grantor shall pay and discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all taxes, assessments and governmental charges or levies imposed upon the
Collateral or in respect of income or profits therefrom, as well as all claims
of any kind (including claims for labor, materials and supplies) against or with
respect to the Collateral, except that no such tax, assessment or charge need be
paid if (i) the amount or validity thereof is currently being contested in good
faith by appropriate proceedings, reserves in conformity with GAAP with respect
thereto have been provided on the books of such Grantor and such proceedings
could not reasonably be expected to result in the sale, forfeiture or loss of
any material portion of the Collateral or any interest therein, or (ii) the
failure to so pay and discharge would not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.

 

5.5. Maintenance of Perfected Security Interest; Further Documentation.
(a) Except as otherwise expressly permitted by the Credit Agreement, such
Grantor shall maintain each of the security interests created by this Agreement
as a perfected security interest having at least the priority described in
Section 4.3 and shall defend such security interest against any claims and
demands of any persons (other than the Secured Parties), subject to the
provisions of Section 8.15.

 

(b) Such Grantor shall furnish to the Secured Parties from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the assets and property of such Grantor as
the Collateral Agent may reasonably request, all in reasonable detail.

 

(c) At any time and from time to time, upon the written request of the
Collateral Agent, and at the sole expense of such Grantor, such Grantor shall
promptly and duly authorize, execute and deliver, and have recorded, such
further instruments and documents and take such further actions as the
Collateral Agent may reasonably request for the purpose of obtaining or
preserving the full benefits of this Agreement and of the rights and powers
herein granted, including, the filing of any financing or continuation
statements under the Uniform Commercial Code (or other similar laws) in effect
in any jurisdiction with respect to the security interests created hereby and in
the case of Investment Property and any other relevant Collateral, taking any
actions necessary to enable the Collateral Agent to obtain “control” (within the
meaning of the applicable Uniform Commercial Code) with respect thereto.

 

5.6. Changes in Locations, Name, Jurisdiction of Incorporation, etc. Such
Grantor shall not, except upon at least 10 days’ prior written notice (or such
shorter period consented to by the Collateral Agent in writing), in each case,
to the Collateral Agent and delivery to the Collateral Agent of duly authorized
and, where required, executed copies of all additional financing statements and
other documents reasonably requested by the Collateral Agent to maintain the
validity, perfection and priority of the security interests provided for herein:

 

(i) change its legal name, jurisdiction of organization or the location of its
chief executive office or sole place of business from that referred to in
Section 4.4; or

 

23

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

(ii) change its legal name, identity or structure to such an extent that any
financing statement filed by the Collateral Agent in connection with this
Agreement would become misleading.

 

5.7. Notices. Such Grantor shall advise the Collateral Agent promptly, in
reasonable detail, of:

 

(a) any Lien (other than any Lien expressly permitted by Section 8.2 of the
Credit Agreement) on any of the Collateral which would adversely affect the
ability of the Collateral Agent to exercise any of its remedies hereunder; and

 

(b) the occurrence of any other event of which such Grantor becomes aware that
would reasonably be expected to have a Material Adverse Effect on the aggregate
value of the Collateral or on the security interests created hereby.

 

5.8. Investment Property. (a) If such Grantor shall become entitled to receive
or shall receive any stock or other ownership certificate (including any
certificate representing a stock dividend or a distribution in connection with
any reclassification, increase or reduction of capital or any certificate issued
in connection with any reorganization), option or rights in respect of Equity
Interests in any issuer thereof, whether in addition to, in substitution of, as
a conversion of, or in exchange for, any shares of or other ownership interests
in the Pledged Securities, or otherwise in respect thereof, such Grantor shall
accept the same as the agent of the Secured Parties, hold the same in trust for
the Secured Parties and promptly deliver the same to the Collateral Agent in the
exact form received (other than Excluded Foreign Subsidiary Voting Stock if such
issuer is a Foreign Subsidiary), duly endorsed by such Grantor to the Collateral
Agent, if required, together with an undated stock power or similar instrument
of transfer covering such certificate duly executed in blank by such Grantor and
with, if the Collateral Agent so requests, signature guaranteed, to be held by
the Collateral Agent, subject to the terms hereof, as additional collateral
security for the Obligations. Any sums paid upon or in respect of the Pledged
Securities upon the liquidation or dissolution of any issuer thereof shall be
paid over to the Collateral Agent to be held by it hereunder as additional
collateral security for the Obligations if an Event of Default then exists, and
in case any distribution of capital shall be made on or in respect of the
Pledged Securities or any property shall be distributed upon or with respect to
the Pledged Securities pursuant to the recapitalization or reclassification of
the capital of any issuer thereof or pursuant to the reorganization thereof, the
property so distributed shall, if an Event of Default then exists, and unless
otherwise subject to a perfected security interest in favor of the Collateral
Agent, be delivered to the Collateral Agent to be held by it hereunder as
additional collateral security for the Obligations. If any sums of money or
property so paid or distributed in respect of the Pledged Securities shall be
received by such Grantor in violation of the immediately preceding sentence,
such Grantor shall, until such money or property is paid or delivered to the
Collateral Agent, hold such money or property in trust for the Secured Parties,
segregated from other funds of such Grantor, as additional collateral security
for the Obligations.

 

(b) Without the prior written consent of the Collateral Agent, such Grantor
shall not (i) vote to enable, or take any other action to permit, any Subsidiary
of the Borrower that is an issuer of Pledged Securities to issue any stock,
partnership interests, limited liability company interests or other equity
securities of any nature or to issue any other securities convertible into

 

24

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

or granting the right to purchase or exchange for any stock, partnership
interests, limited liability company interests or other equity securities of any
nature of any such issuer (except, in each case, pursuant to a transaction
expressly permitted by the Credit Agreement), (ii) sell, assign, transfer,
exchange, or otherwise dispose of, or grant any option with respect to, any of
the Investment Property or Proceeds thereof or any interest therein (except, in
each case, pursuant to a transaction expressly permitted by the Credit
Agreement), (iii) create, incur or permit to exist any Lien or option in favor
of, or any claim of any person with respect to, any of the Investment Property
or Proceeds thereof, or any interest therein, except for the security interests
created by this Agreement or any Lien expressly permitted thereon pursuant to
Section 8.2 of the Credit Agreement, (iv) enter into any agreement or
undertaking restricting the right or ability of such Grantor or the Collateral
Agent to sell, assign or transfer any of the Investment Property or Proceeds
thereof or any interest therein or (v) without the prior written consent of the
Collateral Agent, cause or permit any Subsidiary of the Borrower that is an
issuer of any Pledged Partnership Interests or Pledged LLC Interests which are
not securities (for purposes of the New York UCC) on the date hereof to elect or
otherwise take any action to cause such Pledged Partnership Interests or Pledged
LLC Interests to be treated as securities for purposes of the New York UCC;
provided, however, notwithstanding the foregoing, if any issuer of any Pledged
Partnership Interests or Pledged LLC Interests takes any such action in
violation of the provisions in this clause (v) or any non-Subsidiary of the
Borrower that is an issuer takes any of the foregoing actions, such Grantor
shall promptly notify the Collateral Agent in writing of any such election or
action and, in such event, shall take all steps necessary or advisable to
establish the Collateral Agent’s “control” thereof.

 

(c) In the case of each Grantor which is an issuer of Pledged Securities, such
issuer agrees that (i) it shall be bound by the terms of this Agreement relating
to the Pledged Securities issued by it and shall comply with such terms insofar
as such terms are applicable to it, (ii) it shall notify the Collateral Agent
promptly in writing of the occurrence of any of the events described in
Section 5.8(a) with respect to the Pledged Securities issued by it and (iii) the
terms of Sections 6.3(c) and 6.7 shall apply to it, mutatis mutandis, with
respect to all actions that may be required of it pursuant to Section 6.3(c) or
6.7 with respect to the Pledged Securities issued by it. In addition, each
Grantor which is either an issuer or an owner of any Pledged Security hereby
consents to the grant by each other Grantor of the security interest hereunder
in favor of the Collateral Agent and to the transfer of any Pledged Security to
the Collateral Agent or its nominee following an Event of Default and to the
substitution of the Collateral Agent or its nominee as a partner, member or
shareholder of the issuer of the related Pledged Security.

 

5.9. Receivables. Other than in the ordinary course of business, such Grantor
shall not (i) grant any extension of the time of payment of any Receivable,
(ii) compromise or settle any Receivable for less than the full amount thereof,
(iii) release, wholly or partially, any person liable for the payment of any
Receivable, (iv) allow any credit or discount whatsoever on any Receivable or
(v) amend, supplement or modify any Receivable in any manner that could
adversely affect the value thereof.

 

5.10. Intellectual Property. (a) Such Grantor (either itself or through
licensees) shall, in the exercise of its reasonable business judgment, taking
into account the Secured Parties’ interests under this Agreement, (i) continue
to use each owned Trademark material to its business, (ii) maintain commercially
reasonable quality of products and services offered under

 

25

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

such Trademarks and take all necessary steps to ensure that all licensed users
of such Trademarks comply with such Grantor’s quality control requirements and
maintain reasonable quality, (iv) not adopt or use any mark which is confusingly
similar or a colorable imitation of such Trademarks unless the Collateral Agent,
for the ratable benefit of the Secured Parties, shall obtain a perfected
security interest in such mark pursuant to this Agreement and the Intellectual
Property Security Agreement, and (v) not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby such
Trademark may become invalidated or impaired in any way.

 

(b) Such Grantor (either itself or through licensees), subject to the exercise
of its reasonable business judgment, taking into account the Secured Parties’
interests under this Agreement, shall not do any act, or omit to do any act,
whereby any Patent owned by such Grantor material to its business may become
forfeited, abandoned or dedicated to the public.

 

(c) Such Grantor (either itself or through licensees), subject to the exercise
of its reasonable business judgment, taking into account the Secured Parties’
interests under this Agreement, shall not (and shall not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby any
material portion of Copyrights owned by such Grantor and material to its
business may become invalidated or otherwise impaired. Such Grantor shall not
(either itself or through licensees) do any act whereby any material portion of
such Copyrights may fall into the public domain.

 

(d) Such Grantor shall notify the Collateral Agent promptly if it knows or
suspects that any application or registration relating to any Material
Intellectual Property owned by Grantor may become forfeited, abandoned or
dedicated to the public, or of any adverse determination (including the
institution of, or any such determination in, any proceeding in the United
States Patent and Trademark Office, the United States Copyright Office or any
court or tribunal in any country) regarding such Grantor’s ownership of, or the
validity of, any such Material Intellectual Property or such Grantor’s right to
register the same or to own and maintain the same.

 

(e) Before such Grantor, either by itself or through any agent, employee,
licensee or designee, shall file an application for the registration of any
Intellectual Property that is material to the business of such Grantor with the
United States Patent and Trademark Office, the United States Copyright Office or
any similar office or agency in any other country or any political subdivision
thereof, such Grantor shall give the Collateral Agent as much prior notice as is
reasonably practical and report such filing to the Collateral Agent (a) in the
case of Copyrights, within five Business Days after applying for a registration
and again within five Business Days after receiving a registration and (b) in
the case of Patents, Trademarks or other Intellectual Property, within five
Business Days after the last day of the fiscal quarter in which such filing
occurs. Upon request of the Collateral Agent, such Grantor shall execute and
deliver, and have recorded, any and all agreements, instruments, documents, and
papers as the Collateral Agent may request to evidence the Secured Parties’
security interest in any Copyright, Patent, Trademark or other Intellectual
Property of such Grantor.

 

(f) Such Grantor, subject to the exercise of its reasonable business judgment,
taking into account the Secured Parties’ interests under this Agreement, shall
take reasonable and

 

26

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

necessary steps, including in any proceeding before the United States Patent and
Trademark Office, the United States Copyright Office or any similar office or
agency in any other country or any political subdivision thereof, to maintain
and pursue each application (and to obtain the relevant registration) and to
maintain each registration of Intellectual Property material to its business,
including the payment of required fees and taxes, the filing of responses to
office actions issued by the United States Patent and Trademark Office and the
United States Copyright Office, the filing of applications for renewal or
extension, the filing of affidavits of use and affidavits of incontestability,
the filing of divisional, continuation, continuation-in-part, reissue and
renewal applications or extensions, the payment of maintenance fees, and the
participation in interference, reexamination, opposition, cancellation,
infringement and misappropriation proceedings.

 

(g) Such Grantor (either itself or through licensees), subject to the exercise
of its reasonable business judgment, taking into account the Secured Parties’
interests under this Agreement, shall not, without the prior written consent of
the Collateral Agent, discontinue use of or otherwise abandon any of its
registered Owned Intellectual Property, or abandon any application or any right
to file an application for any patent, trademark, or copyright, unless such
Grantor shall have previously determined that such use or the pursuit or
maintenance of such Intellectual Property is no longer desirable in the conduct
of such Grantor’s business and that the loss thereof could not reasonably be
expected to have a Material Adverse Effect.

 

(h) In the event that any Intellectual Property material to its business is
infringed, misappropriated or diluted by a third party, such Grantor shall
(i) take such actions as such Grantor shall reasonably deem appropriate under
the circumstances to protect such Intellectual Property and (ii) if such
Intellectual Property is of material economic value, promptly notify the
Collateral Agent after it learns thereof and sue for infringement,
misappropriation or dilution, to seek injunctive relief where appropriate and to
recover any and all damages for such infringement, misappropriation or dilution.

 

(i) Such Grantor agrees that, should it obtain an ownership interest in any item
of intellectual property which is not, as of the Closing Date, a part of the
Intellectual Property Collateral (the “After-Acquired Intellectual Property”),
(i) the provisions of Section 3 shall automatically apply thereto, (ii) any such
After-Acquired Intellectual Property, and in the case of trademarks, the
goodwill of the business connected therewith or symbolized thereby, shall
automatically become part of the Intellectual Property Collateral, (iii) it
shall give prompt (and, in any event within five Business Days after the last
day of the fiscal quarter in which such Grantor acquires such ownership
interest) written notice thereof to the Collateral Agent in accordance herewith,
and (iv) it shall provide the Collateral Agent promptly (and, in any event
within five Business Days after the last day of the fiscal quarter in which such
Grantor acquires such ownership interest) with an amended Schedule 4.9(a) and
take the actions specified in 5.9(m).

 

(j) Such Grantor agrees to execute an Intellectual Property Security Agreement
with respect to its Intellectual Property in substantially the form of Exhibit
B-1 in order to record the security interest granted herein to the Collateral
Agent for the ratable benefit of the Secured Parties with the United States
Patent and Trademark Office and the United States Copyright Office.

 

27

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

(k) Such Grantor agrees to execute an After-Acquired Intellectual Property
Security Agreement with respect to its After-Acquired Intellectual Property in
substantially the form of Exhibit B-2 in order to record the security interest
granted herein to the Collateral Agent for the ratable benefit of the Secured
Parties with the United States Patent and Trademark Office and the United States
Copyright Office.

 

(l) Such Grantor shall take commercially reasonable steps to protect the secrecy
of all trade secrets or confidential information material to its business,
including entering into confidentiality agreements with employees and labeling
and restricting access to secret information and documents.

 

5.11. Contracts. (a) Such Grantor shall perform and comply in all material
respects with all its obligations under the Contracts, except where the failure
to so perform and comply would not reasonably be expected to have a Material
Adverse Effect.

 

(b) Such Grantor shall not amend, modify, terminate, waive or fail to enforce
any provision of any Contract in any manner which would reasonably be expected
to have a Material Adverse Effect.

 

(c) Such Grantor shall exercise promptly and diligently each and every material
right which it may have under each Material Contract (other than any right of
termination), except where the failure to so exercise would not reasonably be
expected to have a Material Adverse Effect.

 

(d) Such Grantor shall not permit to become effective in any document creating,
governing or providing for any permit, lease, license or Material Contract, a
provision that would limit the creation, perfection or scope of, or exercise or
enforcement of remedies in connection with, a Lien on such permit, lease,
license or Material Contract in favor of the Collateral Agent for the ratable
benefit of the Secured Parties unless such Grantor believes, in its reasonable
judgment, that such prohibition is usual and customary in transactions of such
type.

 

5.12. Commercial Tort Claims. Such Grantor shall advise the Collateral Agent
promptly after such Grantor becomes aware of any Commercial Tort Claim held by
such Grantor individually or in the aggregate in excess of $1,000,000 and shall
promptly execute a supplement to this Agreement in form and substance reasonably
satisfactory to the Collateral Agent to grant a security interest in such
Commercial Tort Claim to the Collateral Agent for the ratable benefit of the
Secured Parties.

 

SECTION 6. REMEDIAL PROVISIONS

 

6.1. Certain Matters Relating to Receivables. (a) The Collateral Agent shall
have the right (but shall in no way be obligated), at its own expense if an
Event of Default does not then exist, to make test verifications of the
Receivables that are included in the Collateral in any manner and through any
medium that it reasonably considers advisable, and each Grantor shall furnish
all such assistance and information as the Collateral Agent may reasonably
require in connection with such test verifications.

 

28

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

(b) The Collateral Agent hereby authorizes each Grantor to collect such
Grantor’s Receivables, and each Grantor hereby agrees to use its commercially
reasonable efforts to continue to collect all amounts due or to become due to
such Grantor under the Receivables and any Supporting Obligation and diligently
exercise each material right it may have under any Receivable and any Supporting
Obligation, in each case, at its own expense; provided, however, that the
Collateral Agent may curtail or terminate said authority at any time after the
occurrence and during the continuance of an Event of Default. If required by the
Collateral Agent at any time after the occurrence and during the continuance of
an Event of Default, any payments of Receivables, when collected by any Grantor,
(i) shall be promptly (and, in any event, within two Business Days) deposited by
such Grantor in the exact form received, duly endorsed by such Grantor to the
Collateral Agent if required, in a Collateral Account maintained under the sole
dominion and control of the Collateral Agent, subject to withdrawal by the
Collateral Agent for the account of the Secured Parties only as provided in
Section 6.5, and (ii) until so turned over, shall be held by such Grantor in
trust for the Secured Parties, segregated from other funds of such Grantor. Each
such deposit of Proceeds of Receivables shall be accompanied by a report
identifying in reasonable detail the nature and source of the payments included
in the deposit.

 

(c) At the Collateral Agent’s request but subject to the confidentiality
provisions set forth in the Credit Agreement, during the continuance of an Event
of Default each Grantor shall make available to the Collateral Agent original
and other documents evidencing, and relating to, the agreements and transactions
which gave rise to the Receivables that are included in the Collateral,
including original orders, invoices and shipping receipts.

 

6.2. Communications with Obligors; Grantors Remain Liable.

 

(a) The Collateral Agent in its own name or in the name of others may at any
time after the occurrence and during the continuance of an Event of Default
communicate with obligors under the Receivables and parties to the Contracts to
verify with them to the Collateral Agent’s satisfaction the existence, amount
and terms of any Receivables or Contracts.

 

(b) The Collateral Agent may at any time after the occurrence and during the
continuance of an Event of Default notify, or require any Grantor to so notify,
the Account Debtor or counterparty on any Receivable or Contract of the security
interest of the Collateral Agent therein. In addition, after the occurrence and
during the continuance of an Event of Default, the Collateral Agent may upon
written notice to the applicable Grantor, notify, or require any Grantor to
notify, the Account Debtor or counterparty to make all payments under the
Receivables and/or Contracts directly to the Collateral Agent.

 

(c) Anything herein to the contrary notwithstanding, each Grantor shall remain
liable under each of the Receivables and Contracts to observe and perform all
the conditions and obligations to be observed and performed by it thereunder,
all in accordance with the terms of any agreement giving rise thereto. No
Secured Party shall have any obligation or liability under any Receivable (or
any agreement giving rise thereto) or Contract by reason of or arising out of
this Agreement or the receipt by any Secured Party of any payment relating
thereto, nor shall any Secured Party be obligated in any manner to perform any
of the obligations of any Grantor under or pursuant to any Receivable (or any
agreement giving rise thereto) or Contract, to make any

 

29

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

payment, to make any inquiry as to the nature or the sufficiency of any payment
received by it or as to the sufficiency of any performance by any party
thereunder, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.

 

6.3. Pledged Securities. (a) Unless an Event of Default shall have occurred and
be continuing and the Collateral Agent shall have given notice to the relevant
Grantor of the Collateral Agent’s intent to exercise its corresponding rights
pursuant to Section 6.3(b), each Grantor shall be permitted to receive all cash
dividends paid in respect of the Pledged Equity Interests and all payments made
in respect of the Pledged Notes, to the extent not prohibited by the Credit
Agreement, and to exercise all voting and corporate rights with respect to the
Pledged Securities; provided, however, that no vote shall be cast or corporate
or other ownership right exercised or other action taken which would materially
impair the Collateral or which would be inconsistent with or result in any
violation of any provision of the Credit Agreement, this Agreement or any other
Loan Document.

 

(b) If an Event of Default shall occur and be continuing and the Collateral
Agent shall have given notice to the relevant Grantor of the Collateral Agent’s
intent to exercise its rights pursuant to this Section 6.3(b): (i) all rights of
each Grantor to exercise or refrain from exercising the voting and other
consensual rights which it would otherwise be entitled to exercise pursuant
hereto shall cease and all such rights shall thereupon become vested in the
Collateral Agent who shall thereupon have the sole right, but shall be under no
obligation, to exercise or refrain from exercising such voting and other
consensual rights; (ii) the Collateral Agent shall have the right, without
notice to any Grantor (where permitted by applicable law), to transfer all or
any portion of the Investment Property to its name or the name of its nominee or
agent; and (iii) the Collateral Agent shall have the right, without notice to
any Grantor, to exchange any certificates or instruments representing any
Investment Property for certificates or instruments of smaller or larger
denominations. In order to permit the Collateral Agent to exercise the voting
and other consensual rights which it may be entitled to exercise pursuant hereto
and to receive all dividends and other distributions which it may be entitled to
receive hereunder each Grantor shall promptly execute and deliver (or cause to
be executed and delivered) to the Collateral Agent all proxies, dividend payment
orders and other instruments as the Collateral Agent may from time to time
reasonably request and each Grantor acknowledges that the Collateral Agent may
utilize the power of attorney set forth herein.

 

(c) Each Grantor hereby authorizes and instructs each issuer of any Pledged
Securities pledged by such Grantor hereunder to (i) comply with any instruction
received by it from the Collateral Agent in writing that (x) states that an
Event of Default has occurred and is continuing and (y) is otherwise in
accordance with the terms of this Agreement, without any other or further
instructions from such Grantor, and each Grantor agrees that each such issuer
shall be fully protected in so complying, and (ii) upon any such instruction
following the occurrence and during the continuance of an Event of Default, pay
any dividends or other payments with respect to the Investment Property,
including Pledged Securities, directly to the Collateral Agent.

 

6.4. Proceeds to be Turned Over To Collateral Agent. In addition to the rights
of the Secured Parties specified in Section 6.1 with respect to payments of
Receivables, if an

 

30

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

Event of Default shall occur and be continuing, all Proceeds received by any
Grantor consisting of cash, cash equivalents, checks and other near-cash items
shall, if requested in writing by the Collateral Agent, be held by such Grantor
in trust for the Secured Parties, segregated from other funds of such Grantor,
and shall, forthwith upon receipt by such Grantor, be turned over to the
Collateral Agent in the exact form received by such Grantor (duly endorsed by
such Grantor to the Collateral Agent, if required). All Proceeds received by the
Collateral Agent hereunder shall be held by the Collateral Agent in a Collateral
Account maintained under its sole dominion and control. All Proceeds while held
by the Collateral Agent in a Collateral Account (or by such Grantor in trust for
the Secured Parties) shall continue to be held as collateral security for all
the Obligations and shall not constitute payment thereof until applied as
provided in Section 6.5.

 

6.5. Application of Proceeds. At such intervals as may be agreed upon by the
Borrower and the Collateral Agent, or, if an Event of Default shall have
occurred and be continuing, at any time at the Collateral Agent’s election, the
Collateral Agent may apply all or any part of the net Proceeds (after deducting
fees and reasonable out-of-pocket expenses as provided in Section 6.6)
constituting Collateral realized through the exercise by the Collateral Agent of
its remedies hereunder, whether or not held in any Collateral Account, and any
proceeds of the guarantee set forth in Section 2, in payment of the Obligations
in the following order:

 

First, to the Collateral Agent, to pay incurred and unpaid fees and expenses of
the Secured Parties under the Loan Documents;

 

Second, to the Collateral Agent, for application by it towards payment of
amounts then due and owing and remaining unpaid in respect of the Obligations,
pro rata among the Secured Parties according to the amounts of the Obligations
then due and owing and remaining unpaid to the Secured Parties;

 

Third, to the Collateral Agent, for application by it towards prepayment of the
Obligations, pro rata among the Lenders, Synthetic Investors and Issuers,
according to the amounts of the Obligations then held by the respective Lenders,
Synthetic Investors and Issuers; and

 

Fourth, any balance of such Proceeds remaining after the Obligations shall have
been paid in full, no Letters of Credit issued under the Credit Agreement shall
be outstanding (unless cash collateralized in accordance with the terms of the
Credit Agreement) and the Commitments under the Credit Agreement shall have
terminated or expired shall be paid over to the applicable Grantor or to
whomsoever may be lawfully entitled to receive the same.

 

6.6. Code and Other Remedies. (a) If an Event of Default shall occur and be
continuing, the Collateral Agent, on behalf of the Secured Parties, may
exercise, in addition to all other rights and remedies granted to it in this
Agreement and in any other instrument or agreement securing, evidencing or
relating to the Obligations, all rights and remedies of a secured party under
the New York UCC (whether or not the New York UCC applies to the affected
Collateral) or its rights under any other applicable law or in equity. Without
limiting the generality of the foregoing, the Collateral Agent, without demand
of performance or other

 

31

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

demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon any Grantor or any other
person (all and each of which demands, defenses, advertisements and notices are
hereby waived), may in such circumstances collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may sell, lease,
license, assign, give option or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker’s board or office of any Secured Party or elsewhere upon such
terms and conditions as it may deem advisable and at such prices as it may deem
best, for cash or on credit or for future delivery without assumption of any
credit risk. Each Secured Party shall have the right upon any such public sale
or sales, and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of the Collateral so sold, free of any
right or equity of redemption in any Grantor, which right or equity is hereby
waived and released. Each purchaser at any such sale shall hold the property
sold absolutely free from any claim or right on the part of any Grantor, and
each Grantor hereby waives (to the extent permitted by applicable law) all
rights of redemption, stay and/or appraisal which it now has or may at any time
in the future have under any rule of law or statute now existing or hereafter
enacted. Each Grantor agrees that, to the extent notice of sale shall be
required by law, at least ten days notice to such Grantor of the time and place
of any public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Collateral Agent shall not be obligated
to make any sale of Collateral regardless of notice of sale having been given.
The Collateral Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefore, and such sale may, without
further notice, be made at the time and place to which it was so adjourned. The
Collateral Agent may sell the Collateral without giving any warranties as to the
Collateral. The Collateral Agent may specifically disclaim or modify any
warranties of title or the like. This procedure will not be considered to
adversely effect the commercial reasonableness of any sale of the Collateral.
Each Grantor agrees that it would not be commercially unreasonable for the
Collateral Agent to dispose of the Collateral or any portion thereof by using
Internet sites that provide for the auction of assets of the types included in
the Collateral or that have the reasonable capability of doing so, or that match
buyers and sellers of assets. To the extent permitted by applicable law, each
Grantor hereby waives any claims against the Collateral Agent arising by reason
of the fact that the price at which any Collateral may have been sold at such a
private sale was less than the price which might have been obtained at a public
sale, even if the Collateral Agent accepts the first offer received and does not
offer such Collateral to more than one offeree. Each Grantor further agrees, at
the Collateral Agent’s request, to assemble the Collateral and make it available
to the Collateral Agent at places which the Collateral Agent shall reasonably
select, whether at such Grantor’s premises or elsewhere. To the extent permitted
by applicable law, and so long as an Event of Default is continuing, the
Collateral Agent shall have the right to enter onto the property where any
Collateral is located and take possession thereof with or without judicial
process.

 

(b) The Collateral Agent shall apply the net proceeds of any action taken by it
pursuant to this Section 6.6, after deducting all reasonable costs and expenses
of every kind incurred in connection therewith or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral or
the rights of the Secured Parties hereunder, including reasonable attorneys’
fees and disbursements, to the payment in whole or in part of the Obligations
and only after such application and after the payment by the Collateral Agent of
any

 

32

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

other amounts required by any provision of law, including Section 9-615(a) of
the New York UCC, need the Collateral Agent account for the surplus, if any, to
any Grantor. If the Collateral Agent sells any of the Collateral upon credit,
the Grantor will be credited only with payments actually made by the purchaser
and received by the Collateral Agent and applied to indebtedness of the
purchaser. In the event the purchaser fails to pay for the Collateral, the
Collateral Agent may resell the Collateral and the Grantor shall be credited
with proceeds of the sale. To the extent permitted by applicable law, each
Grantor waives all claims, damages and demands it may acquire against any
Secured Party arising out of the exercise by any Secured Party of any rights
hereunder.

 

(c) In the event of any disposition of any of the Intellectual Property, the
goodwill of the business connected with and symbolized by any Trademarks subject
to such Disposition shall be included, and the applicable Grantor shall, to the
extent commercially reasonable and feasible under the circumstances, supply the
Collateral Agent or its designee with such Grantor’s know-how and expertise, and
with documents and things embodying the same, relating to the manufacture,
distribution, advertising and sale of products or the provision of services
relating to any Intellectual Property subject to such disposition, and such
Grantor’s customer lists and other records and documents relating to such
Intellectual Property and to the manufacture, distribution, advertising and sale
of such products and services.

 

6.7. Registration Rights. (a) If the Collateral Agent shall determine to
exercise its right to sell any or all of the Pledged Equity Interests pursuant
to Section 6.6, and if in the opinion of the Collateral Agent it is necessary or
advisable to have the Pledged Equity Interests, or that portion thereof to be
sold, registered under the provisions of the Securities Act, the relevant
Grantor shall use commercially reasonable efforts to cause the issuer thereof to
(i) execute and deliver, and cause the directors and officers of such issuer to
execute and deliver, all such instruments and documents, and do or cause to be
done all such other acts as may be, in the opinion of the Collateral Agent,
necessary or advisable to register the Pledged Equity Interests, or that portion
thereof to be sold, under the provisions of the Securities Act, (ii) cause the
registration statement relating thereto to become effective and to remain
effective for a period of one year from the date of the first public offering of
the Pledged Equity Interests, or that portion thereof to be sold, and (iii) make
all amendments thereto and/or to the related prospectus which, in the opinion of
the Collateral Agent, are reasonably necessary or advisable, all in conformity
with the requirements of the Securities Act and the rules and regulations of the
SEC applicable thereto. Each Grantor agrees to use commercially reasonable
efforts to cause such issuer to comply with the provisions of the securities or
“Blue Sky” laws of any and all jurisdictions which the Collateral Agent shall
designate and to make available to its security holders, as soon as practicable,
an earnings statement (which need not be audited) which will satisfy the
provisions of Section 11(a) of the Securities Act.

 

(b) Each Grantor recognizes that the Collateral Agent may be unable to effect a
public sale of any or all the Pledged Equity Interests, by reason of certain
prohibitions contained in the Securities Act and applicable state securities
laws or otherwise, and may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers which will be obliged to agree,
among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. Each
Grantor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if

 

33

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

such sale were a public sale and, notwithstanding such circumstances, agrees
that any such private sale shall be deemed to have been made in a commercially
reasonable manner. The Collateral Agent shall be under no obligation to delay a
sale of any of the Pledged Equity Interests for the period of time necessary to
permit the issuer thereof to register such securities for public sale under the
Securities Act, or under applicable state securities laws, even if such issuer
would agree to do so.

 

(c) Each Grantor agrees to use commercially reasonable efforts to do or cause to
be done all such other acts as may be necessary to make such sale or sales of
all or any portion of the Pledged Equity Interests pursuant to this Section 6.7
valid and binding and in compliance with any and all other applicable
Requirements of Law. Each Grantor further agrees that a breach of any of the
covenants contained in this Section 6.7 will cause irreparable injury to the
Secured Parties, that the Secured Parties have no adequate remedy at law in
respect of such breach and, as a consequence, that each and every covenant
contained in this Section 6.7 shall be specifically enforceable against such
Grantor, and such Grantor hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except for a
defense that no Event of Default has occurred and is continuing under the Credit
Agreement or a defense of payment.

 

6.8. Deficiency. Each Grantor shall remain liable for any deficiency if the
proceeds of any sale or other disposition of the Collateral are insufficient to
pay its Obligations and the reasonable fees and disbursements of any outside
attorneys employed by any Secured Party to collect such deficiency.

 

SECTION 7. THE COLLATERAL AGENT

 

7.1. Collateral Agent’s Appointment as Attorney-in-Fact, etc. (a) Each Grantor
hereby irrevocably constitutes and appoints the Collateral Agent, with full
power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of such Grantor and in
the name of such Grantor or in its own name, for the purpose of carrying out the
terms of this Agreement, to take any and all appropriate action and to execute
any and all documents and instruments which may be necessary or desirable to
accomplish the purposes of this Agreement, and, without limiting the generality
of the foregoing, each Grantor hereby gives the Collateral Agent the power and
right, on behalf of such Grantor, without notice to or assent by such Grantor,
to do any or all of the following:

 

(i) in the name of such Grantor or its own name, or otherwise, take possession
of and endorse and collect any checks, drafts, notes, acceptances or other
instruments for the payment of moneys due under any Receivable or Contract or
with respect to any other Collateral and file any claim or take any other action
or proceeding in any court of law or equity or otherwise deemed appropriate by
the Collateral Agent for the purpose of collecting any and all such moneys due
under any Receivable or Contract or with respect to any other Collateral
whenever payable;

 

(ii) in the case of any Intellectual Property, execute and deliver, and have
recorded, any and all agreements, instruments, documents and papers as the
Collateral Agent may request to evidence the Secured Parties’ security interest
in such Intellectual Property and the goodwill and general intangibles of such
Grantor relating thereto or represented thereby;

 

34

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

(iii) pay or discharge taxes and Liens levied or placed on or threatened against
the Collateral, effect any repairs or any insurance called for by the terms of
this Agreement and pay all or any part of the premiums therefor and the costs
thereof;

 

(iv) execute, in connection with any sale provided for in Section 6.7 or 6.8,
any endorsements, assignments or other instruments of conveyance or transfer
with respect to the Collateral; and

 

(v) (1) direct any party liable for any payment under any of the Collateral to
make payment of any and all moneys due or to become due thereunder directly to
the Collateral Agent or as the Collateral Agent shall direct; (2) ask or demand
for, collect, and receive payment of and receipt for, any and all moneys, claims
and other amounts due or to become due at any time in respect of or arising out
of any Collateral; (3) sign and endorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications, notices and other documents in connection with any
of the Collateral; (4) commence and prosecute any suits, actions or proceedings
at law or in equity in any court of competent jurisdiction to collect the
Collateral or any portion thereof and to enforce any other right in respect of
any Collateral; (5) defend any suit, action or proceeding brought against such
Grantor with respect to any Collateral; (6) settle, compromise or adjust any
such suit, action or proceeding and, in connection therewith, give such
discharges or releases as the Collateral Agent may deem appropriate; (7) assign
any Copyright, Patent or Trademark (along with the goodwill of the business to
which any such Copyright, Patent or Trademark pertains), throughout the world
for such term or terms, on such conditions, and in such manner, as the
Collateral Agent shall in its sole discretion determine; and (8) generally,
sell, transfer, pledge and make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though the Collateral
Agent were the absolute owner thereof for all purposes, and do, at the
Collateral Agent’s option and such Grantor’s expense, at any time, or from time
to time, all acts and things which the Collateral Agent deems necessary to
protect, preserve or realize upon the Collateral and the Secured Parties’
security interests therein and to effect the intent of this Agreement, all as
fully and effectively as such Grantor might do.

 

Anything in this Section 7.1(a) to the contrary notwithstanding, the Collateral
Agent agrees that, except as provided in Section 7.1(b), it will not exercise
any rights under the power of attorney provided for in this Section 7.1(a)
unless an Event of Default shall have occurred and be continuing.

 

(b) If any Grantor fails to perform or comply with any of its agreements
contained herein, the Collateral Agent, at its option, but without any
obligation so to do, may perform or comply, or otherwise cause performance or
compliance, with such agreement; provided, however, that unless an Event of
Default has occurred and is continuing or time is of the essence, the Collateral
Agent shall not exercise this power without first making demand on the Grantor
and the Grantor failing to promptly comply therewith.

 

35

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

(c) The expenses of the Collateral Agent incurred in connection with actions
undertaken as provided in this Section 7.1, together with interest thereon at a
rate per annum equal to the rate per annum at which interest would then be
payable on past due Revolving Loans that are Base Rate Loans under the Credit
Agreement, from the date of payment by the Collateral Agent to the date
reimbursed by the relevant Grantor, shall be payable by such Grantor to the
Collateral Agent on demand.

 

(d) Each Grantor hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof. All powers, authorizations and agencies
contained in this Agreement are coupled with an interest and are irrevocable
until this Agreement is terminated and the security interests created hereby are
released.

 

7.2. Duty of Collateral Agent. The Collateral Agent’s sole duty with respect to
the custody, safekeeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the New York UCC or otherwise, shall be to
deal with it in the same manner as the Collateral Agent deals with similar
property for its own account. Neither the Collateral Agent, nor any other
Secured Party nor any of their respective officers, directors, partners,
employees, agents, attorneys and other advisors, attorneys-in-fact or affiliates
shall be liable for failure to demand, collect or realize upon any of the
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Collateral upon the request of any Grantor or any
other person or to take any other action whatsoever with regard to the
Collateral or any part thereof. The powers conferred on the Secured Parties
hereunder are solely to protect the Secured Parties’ interests in the Collateral
and shall not impose any duty upon any Secured Party to exercise any such
powers. The Secured Parties shall be accountable only for amounts that they
actually receive as a result of the exercise of such powers, and neither they
nor any of their officers, directors, partners, employees, agents, attorneys and
other advisors, attorneys-in-fact or affiliates shall be responsible to any
Grantor for any act or failure to act hereunder, except to the extent that any
such act or failure to act is found by a final and nonappealable decision of a
court of competent jurisdiction to have resulted from their own gross negligence
or willful misconduct in breach of a duty owed to such Grantor.

 

7.3. Execution of Financing Statements. Each Grantor acknowledges that pursuant
to Section 9-509(b) of the New York UCC and any other applicable law, each
Grantor authorizes the Collateral Agent to file or record financing or
continuation statements, and amendments thereto, and other filing or recording
documents or instruments with respect to the Collateral, without the signature
of such Grantor, in such form and in such offices as the Collateral Agent
reasonably determines appropriate to perfect or maintain the perfection of the
security interests of the Collateral Agent under this Agreement. Each Grantor
agrees that such financing statements may describe the collateral in the same
manner as described in the Collateral Documents or as “all assets” or “all
personal property,” whether now owned or hereafter existing or acquired or such
other description as the Collateral Agent, in its sole judgment, determines is
necessary or advisable, provided that any such description of the Collateral
that uses phrases such as “all assets” or “all personal property” also includes
a reference to the fact that the Collateral excludes the Excluded Assets. A
photographic or other reproduction of this Agreement shall, where permitted by
applicable law, be sufficient as a financing statement or other filing or
recording document or instrument for filing or recording in any jurisdiction.

 

36

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

7.4. Authority of Collateral Agent. Each Grantor acknowledges that the rights
and responsibilities of the Collateral Agent under this Agreement with respect
to any action taken by the Collateral Agent or the exercise or non-exercise by
the Collateral Agent of any option, voting right, request, judgment or other
right or remedy provided for herein or resulting or arising out of this
Agreement shall, as between the Collateral Agent and the other Secured Parties,
be governed by the Credit Agreement and by such other agreements with respect
thereto as may exist from time to time among them, but, as between the
Collateral Agent and the Grantors, the Collateral Agent shall be conclusively
presumed to be acting as agent for the Secured Parties with full and valid
authority so to act or refrain from acting, and no Grantor shall be under any
obligation, or entitlement, to make any inquiry respecting such authority.

 

7.5. Appointment of Co-Collateral Agents. At any time or from time to time, in
order to comply with any applicable requirement of law, the Collateral Agent may
appoint another bank or trust company or one of more other persons, either to
act as co-agent or agents on behalf of the Secured Parties with such power and
authority as may be necessary for the effectual operation of the provisions
hereof and which may be specified in the instrument of appointment (which may,
in the discretion of the Collateral Agent, include provisions for
indemnification and similar protections of such co-agent or separate agent).

 

SECTION 8. MISCELLANEOUS

 

8.1. Amendments in Writing. None of the terms or provisions of this Agreement
may be waived, amended, supplemented or otherwise modified except by a written
instrument executed by each affected Grantor and the Collateral Agent or the
Administrative Agent, as applicable, subject to any consents required under
Section 11.1 of the Credit Agreement; provided that any provision of this
Agreement imposing obligations on any Grantor may be waived by the Collateral
Agent or Administrative Agent, as applicable, in a written instrument executed
by such Agent.

 

8.2. Notices. All notices, requests and demands to or upon the Collateral Agent,
Administrative Agent or any Grantor hereunder shall be effected in the manner
provided for in Section 11.8 of the Credit Agreement; provided that any such
notice, request or demand to or upon any Guarantor shall be addressed to such
Guarantor at its notice address set forth on Schedule 8.2.

 

8.3. No Waiver by Course of Conduct; Cumulative Remedies. No Secured Party shall
by any act (except by a written instrument pursuant to Section 8.1), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default. No failure
to exercise, nor any delay in exercising, on the part of any Secured Party, any
right, power or privilege hereunder shall operate as a waiver thereof. No single
or partial exercise of any right, power or privilege hereunder shall preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. A waiver by any Secured Party of any right or remedy hereunder on
any one occasion shall not be construed as a bar to any right or remedy which
such Secured Party would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or concurrently
and are not exclusive of any other rights or remedies provided by law.

 

37

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

8.4. Enforcement Expenses; Indemnification. (a) Each Grantor agrees to pay or
reimburse each Secured Party for its reasonable out-of-pocket costs and expenses
incurred in collecting against such Grantor under the guarantee contained in
Section 2 or otherwise enforcing or preserving any rights under this Agreement
and the other Loan Documents to which such Grantor is a party, including the
reasonable fees and disbursements of outside counsel to each Secured Party and
outside counsel to the Collateral and Administrative Agents.

 

(b) Each Grantor agrees to pay, and to hold the Secured Parties harmless from,
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits and reasonable out-of-pocket costs, expenses or disbursements
of any kind or nature whatsoever with respect to, or resulting from any delay in
paying, any and all stamp, excise, sales or other taxes which may be payable or
determined to be payable with respect to any of the Collateral or in connection
with any of the transactions contemplated by this Agreement.

 

(c) Each Grantor agrees to pay, and to hold the Secured Parties harmless from,
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits and reasonable out-of-pocket costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement to the extent the
Borrower would be required to do so pursuant to Section 11.4 of the Credit
Agreement.

 

(d) The agreements in this Section shall survive repayment of the Obligations
and all other amounts payable under the Credit Agreement and the other Loan
Documents.

 

8.5. Successors and Assigns. This Agreement shall be binding upon the successors
and assigns of each Grantor and shall inure to the benefit of the Secured
Parties and their permitted successors and assigns; provided that, except as
otherwise permitted by the Credit Agreement, no Grantor may assign, transfer or
delegate any of its rights or obligations under this Agreement without the prior
written consent of the Collateral Agent or the Administrative Agent, as
applicable, and any attempted assignment without such consent shall be null and
void.

 

8.6. Set-Off. Each Grantor hereby irrevocably authorizes each Secured Party at
any time and from time to time, while an Event of Default shall have occurred
and be continuing, without notice to such Grantor or any other Grantor, any such
notice being expressly waived by each Grantor, to set-off and appropriate and
apply any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by such Secured Party to or for
the credit or the account of such Grantor, or any part thereof in such amounts
as such Secured Party may elect, against and on account of the obligations and
liabilities of such Grantor to such Secured Party hereunder and claims of every
nature and description of such Secured Party against such Grantor, in any
currency, whether arising hereunder, under the Credit Agreement or under any
other Loan Document, as such Secured Party may elect, whether or not any Secured
Party has made any demand for payment and although such obligations, liabilities
and claims may be contingent or unmatured. Each Secured Party shall notify such
Grantor promptly of any such set-off and the application made by such Secured
Party of the proceeds thereof, provided that the failure to give such notice
shall not affect the validity of such set-off and application.

 

38

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

The rights of each Secured Party under this Section are in addition to other
rights and remedies (including other rights of set-off) which such Secured Party
may have. Notwithstanding the foregoing or any contrary provision contained
herein, in any other Loan Document or in any other agreement between any
Grantor, on the one hand, and any Secured Party or any Affiliate of any Secured
Party, on the other hand, neither any Secured Party nor any Affiliate of any
Secured Party shall have, and each Secured Party hereby waives and relinquishes,
any right to set off any deposits (general or special, time or demand,
provisional or final) held by such Secured Party or Affiliate to or for the
credit or the account of any Grantor against any or all of the Obligations if
such deposits are, and are identified by the Borrower as, the proceeds of a
capital contribution made by MI or an Affiliate of MI to the Borrower or a
Subsidiary of the Borrower in connection with the Contingent MI Payment.

 

8.7. Counterparts. This Agreement may be executed by one or more of the parties
to this Agreement on any number of separate counterparts (including by
facsimile), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.

 

8.8. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

8.9. Section Headings. The Section headings used in this Agreement are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.

 

8.10. Integration. This Agreement and the other Loan Documents represent the
agreement of the Grantors, the Collateral Agent, the Administrative Agent and
the other Secured Parties with respect to the subject matter hereof and thereof,
and there are no promises, undertakings, representations or warranties by any
Secured Party relative to subject matter hereof and thereof not expressly set
forth or referred to herein or in the other Loan Documents.

 

8.11. APPLICABLE LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES THEREOF THAT WOULD REQUIRE APPLICATION OF LAWS OF ANOTHER STATE.

 

8.12. Submission to Jurisdiction; Waivers. Each Grantor hereby irrevocably and
unconditionally:

 

(a) submits for itself and its property in any legal action or proceeding
relating to this Agreement and the other Loan Documents to which it is a party,
or for recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the Courts of the State of New York, the
courts of the United States of America for the Southern District of New York,
and appellate courts from any thereof;

 

39

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

(b) consents that any such action or proceeding may be brought in such courts
and waives any objection that it may now or hereafter have to the venue of any
such action or proceeding in any such court or that such action or proceeding
was brought in an inconvenient court and agrees not to plead or claim the same;

 

(c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such Grantor at its
address referred to in Section 8.2 or at such other address of which the
applicable Agent shall have been notified pursuant thereto;

 

(d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction; and

 

(e) waives, to the maximum extent not prohibited by law, any right it may have
to claim or recover in any legal action or proceeding referred to in this
Section any special, exemplary, punitive or consequential damages.

 

8.13. Acknowledgments. Each Grantor hereby acknowledges that:

 

(a) it has been advised by counsel in the negotiation, execution and delivery of
this Agreement and the other Loan Documents to which it is a party;

 

(b) no Secured Party has any fiduciary relationship with or duty to any Grantor
arising out of or in connection with this Agreement or any of the other Loan
Documents, and the relationship between the Grantors, on the one hand, and the
Secured Parties, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and

 

(c) no joint venture is created hereby or by the other Loan Documents or
otherwise exists by virtue of the transactions contemplated hereby among the
Secured Parties or among the Grantors and the Secured Parties.

 

8.14. Additional Grantors. Each Subsidiary of the Borrower that is required to
become a party to this Agreement pursuant to Section 7.11 of the Credit
Agreement shall become a Grantor and a Guarantor for all purposes of this
Agreement upon execution and delivery by such Subsidiary of an Assumption
Agreement in the form of Annex 1 hereto.

 

8.15. Releases. (a) At such time as the Loans and the other Obligations (other
than Obligations in respect of any Specified Hedge Agreement) shall have been
paid in full, the Commitments under the Credit Agreement have been terminated or
expired and each Letter of Credit issued under the Credit Agreement shall be
cash collateralized or no longer outstanding, the Collateral shall be released
from the Liens created hereby, and this Agreement and all obligations (other
than those expressly stated to survive such termination) of the Administrative
Agent, Collateral Agent and each Grantor hereunder shall terminate, all without
delivery of any instrument or performance of any act by any party, and all
rights to the Collateral shall revert to the Grantors. At the request and sole
expense of any Grantor following any such termination, the Collateral Agent
shall deliver to such Grantor any Collateral held by the Collateral Agent
hereunder, and execute and deliver to such Grantor such documents as such
Grantor shall reasonably request to evidence such termination.

 

40

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

(b) If any of the Collateral shall be sold or otherwise disposed of by any
Grantor in a transaction permitted by the Credit Agreement, then the Collateral
Agent, at the request and sole expense of such Grantor, shall execute and
deliver to such Grantor all releases or other documents reasonably necessary for
the release of the Liens created hereby on such Collateral. At the request and
sole expense of the Borrower, a Guarantor shall be released from its obligations
hereunder in the event that all the Equity Interests in such Guarantor shall be
sold or otherwise disposed of in a transaction permitted by the Credit
Agreement; provided that the Borrower shall have delivered to the Collateral
Agent, at least three Business Days (or such lesser period permitted in writing
by the Collateral Agent) prior to the date of the proposed release, a written
request for such release identifying the relevant Guarantor and the terms of the
relevant sale or other disposition in reasonable detail, including the price
thereof and any expenses incurred in connection therewith, together with a
certification by the Borrower stating that such transaction is in compliance
with the Credit Agreement and the other Loan Documents.

 

(c) Each Grantor acknowledges that it is not authorized to file any financing
statement or amendment or termination statement with respect to any financing
statement originally filed in connection herewith without the prior written
consent of the Collateral Agent, subject to such Grantor’s rights under Sections
9-509(d)(2) and 9-518 of the New York UCC.

 

8.16. WAIVER OF JURY TRIAL. EACH GRANTOR, THE ADMINISTRATIVE AGENT AND
COLLATERAL AGENT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

[Remainder of page intentionally left blank]

 

41

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

IN WITNESS WHEREOF, each of the undersigned has caused this Pledge and Security
Agreement to be duly executed and delivered as of the date first above written.

 

THE BABCOCK AND WILCOX COMPANY By:  

/s/ James R. Easter

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

Name:   James R. Easter Title:   Treasurer AMERICON EQUIPMENT SERVICES, INC.
AMERICON, INC. APPLIED SYNERGISTICS, INC. B&W SERVICE COMPANY BABCOCK & WILCOX
CHINA HOLDINGS, INC.

BABCOCK & WILCOX CONSTRUCTION CO., INC.

BABCOCK & WILCOX DENMARK HOLDINGS, INC.

BABCOCK & WILCOX EBENSBURG POWER, INC. BABCOCK & WILCOX EQUITY INVESTMENTS, INC.

BABCOCK & WILCOX INTERNATIONAL SALES AND SERVICE CORPORATION

BABCOCK & WILCOX INTERNATIONAL, INC.

DIAMOND OPERATING CO., INC.

DIAMOND POWER AUSTRALIA HOLDINGS, INC.

DIAMOND POWER CHINA HOLDINGS, INC.

DIAMOND POWER EQUITY INVESTMENTS, INC.

DIAMOND POWER INTERNATIONAL, INC.

PALM BEACH RESOURCE RECOVERY CORPORATION

POWER SYSTEMS OPERATIONS, INC.

REVLOC RECLAMATION SERVICE, INC.

By:  

/s/ James R. Easter

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

Name:   James R. Easter Title:   Treasurer of each of the above-listed
Guarantors

 

42

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

NATIONAL ECOLOGY COMPANY NORTH COUNTY RECYCLING, INC.       By:  

/s/ Robert E. Stumpf

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

Name   : Robert E. Stumpf Title:   Treasurer of each of the above-listed
Guarantors CREDIT SUISSE, CAYMAN ISLANDS BRANCH, as Administrative Agent and
Collateral Agent By:  

/s/ Robert Hetu

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

Name:   Robert Hetu Title:   Managing Director By:  

/s/ Cassandra Droogan

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

Name   : Cassandra Droogan Title:   Vice President            

 

43