Exhibit 10.3

 

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SECURITY AGREEMENT

 

among

 

BCO HOLDING COMPANY,

 

BWAY CORPORATION,

 

CERTAIN SUBSIDIARIES OF BWAY CORPORATION

 

and

 

DEUTSCHE BANK TRUST COMPANY AMERICAS,

as COLLATERAL AGENT

 

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Dated as of July 7, 2004

 

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TABLE OF CONTENTS

 

         Page

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ARTICLE I SECURITY INTERESTS

   2

1.1

 

Grant of Security Interests

   2

1.2

 

Certain Exceptions

   3

1.3

 

Power of Attorney

   4

ARTICLE II GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS

   5

2.1

 

Necessary Filings

   5

2.2

 

No Liens

   5

2.3

 

Other Financing Statements

   5

2.4

 

Chief Executive Office, Record Locations

   5

2.5

 

Location of Inventory and Equipment

   6

2.6

 

Legal Names; Type of Organization (and Whether a Registered Organization and/or
a Transmitting Utility); Jurisdiction of Organization; Location; Organizational
Identification Numbers; Changes Thereto; etc.

   6

2.7

 

Trade Names; Etc.

   6

2.8

 

Certain Significant Transactions

   7

2.9

 

Non-UCC Property

   7

2.10

 

As-Extracted Collateral; Timber-to-be-Cut

   7

2.11

 

Collateral in the Possession of a Bailee

   7

2.12

 

Recourse

   7

ARTICLE III SPECIAL PROVISIONS CONCERNING ACCOUNTS; CONTRACT RIGHTS;
INSTRUMENTS; CHATTEL PAPER AND CERTAIN OTHER COLLATERAL

   8

3.1

 

Additional Representations and Warranties

   8

3.2

 

Maintenance of Records

   8

3.3

 

Direction to Account Debtors; Contracting Parties; etc.

   8

3.4

 

Modification of Terms; etc.

   9

3.5

 

Collection

   9

3.6

 

Instruments

   9

3.7

 

Assignors Remain Liable Under Accounts

   10

3.8

 

Assignors Remain Liable Under Contracts

   10

3.9

 

Deposit Accounts; Etc.

   10

3.10

 

Letter-of-Credit Rights

   11

3.11

 

Commercial Tort Claims

   11

3.12

 

Chattel Paper

   12

3.13

 

Further Actions

   12

 

(i)

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ARTICLE IV SPECIAL PROVISIONS CONCERNING TRADEMARKS AND DOMAIN NAMES

   12

4.1

 

Additional Representations and Warranties

   12

4.2

 

Licenses and Assignments

   13

4.3

 

Infringements

   13

4.4

 

Preservation of Marks and Domain Names

   13

4.5

 

Maintenance of Registration

   13

4.6

 

Future Registered Marks and Domain Names

   14

4.7

 

Remedies

   14

ARTICLE V SPECIAL PROVISIONS CONCERNING PATENTS, COPYRIGHTS AND TRADE SECRETS

   14

5.1

 

Additional Representations and Warranties

   14

5.2

 

Licenses and Assignments

   15

5.3

 

Infringements

   15

5.4

 

Maintenance of Patents or Copyrights

   15

5.5

 

Prosecution of Patent or Copyright Applications

   15

5.6

 

Other Patents and Copyrights

   15

5.7

 

Remedies

   16

ARTICLE VI PROVISIONS CONCERNING ALL COLLATERAL

   16

6.1

 

Protection of Collateral Agent’s Security

   16

6.2

 

Warehouse Receipts Non-Negotiable

   16

6.3

 

Additional Information

   16

6.4

 

Further Actions

   17

6.5

 

Financing Statements

   17

ARTICLE VII REMEDIES UPON OCCURRENCE OF AN EVENT OF DEFAULT

   17

7.1

 

Remedies; Obtaining the Collateral Upon Default

   17

7.2

 

Remedies; Disposition of the Collateral

   19

7.3

 

Waiver of Claims

   19

7.4

 

Application of Proceeds

   20

7.5

 

Remedies Cumulative

   22

7.6

 

Discontinuance of Proceedings

   22

ARTICLE VIII INDEMNITY

   23

8.1

 

Indemnity

   23

8.2

 

Indemnity Obligations Secured by Collateral; Survival

   24

ARTICLE IX DEFINITIONS

   24

ARTICLE X MISCELLANEOUS

   32

10.1

 

Notices

   32

10.2

 

Waiver; Amendment

   32

10.3

 

Obligations Absolute

   33

 

(ii)

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10.4

 

Successors and Assigns

   33

10.5

 

Headings Descriptive

   33

10.6

 

GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL

   33

10.7

 

Assignor’s Duties

   34

10.8

 

Termination; Release

   34

10.9

 

Counterparts

   36

10.10

 

Severability

   36

10.11

 

The Collateral Agent and the other Secured Creditors

   36

10.12

 

Additional Assignors

   36

 

ANNEX A

  Schedule of Chief Executive Offices Address(es) of Chief Executive Office

ANNEX B

  Schedule of Inventory and Equipment Locations

ANNEX C

  Schedule of Legal Names, Type of Organization (and Whether a Registered
Organization and/or a Transmitting Utility), Jurisdiction of Organization,
Location and Organizational Identification Numbers

ANNEX D

  Schedule of Trade and Fictitious Names

ANNEX E

  Description of Certain Significant Transactions Occurring Within One Year
Prior to the Date of the Security Agreement

ANNEX F

  Schedule of Deposit Accounts

ANNEX G

  Form of Control Agreement Regarding Deposit Accounts

ANNEX H

  Schedule of Commercial Tort Claims

ANNEX I

  Schedule of Marks and Applications; Internet Domain Name Registrations

ANNEX J

  Schedule of Patents

ANNEX K

  Schedule of Copyrights

ANNEX L

  Grant of Security Interest in United States Trademarks

ANNEX M

  Grant of Security Interest in United States Patents

ANNEX N

  Grant of Security Interest in United States Copyrights

 

[Remainder of this page intentionally left blank]

 

(iii)

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SECURITY AGREEMENT

 

SECURITY AGREEMENT, dated as of July 7, 2004, made by each of the undersigned
assignors (each, an “Assignor” and, together with any other entity that becomes
an assignor hereunder pursuant to Section 10.12 hereof, the “Assignors”) in
favor of Deutsche Bank Trust Company Americas, as Collateral Agent (together
with any successor Collateral Agent, the “Collateral Agent”), for the benefit of
the Secured Creditors (as defined below). Certain capitalized terms as used
herein are defined in Article IX hereof. Except as otherwise defined herein, all
capitalized terms used herein and defined in the Credit Agreement (as defined
below) shall be used herein as therein defined.

 

W I T N E S S E T H:

 

WHEREAS, BCO Holding Company, a Delaware Corporation (“Holdings”), BWAY
Corporation, a Delaware Corporation (the ”Borrower”), the lenders party thereto
from time to time (the “Lenders”), Deutsche Bank Securities Inc. and J.P. Morgan
Securities Inc., as Joint Lead Arrangers, and Deutsche Bank Trust Company
Americas, as administrative agent (together with any successor administrative
agent, the “Administrative Agent”), have entered into a Credit Agreement, dated
as of July 7, 2004 (as amended, modified or supplemented from time to time, the
“Credit Agreement”), providing for the making of Loans to, and the issuance of,
and participation in, Letters of Credit for the account of the Borrower, all as
contemplated therein (the Lenders, each Issuing Lender, the Administrative
Agent, the Collateral Agent and each other Agent are herein called the “Lender
Creditors”);

 

WHEREAS, the Borrower and/or one or more of its Subsidiaries may at any time and
from time to time enter into one or more Interest Rate Protection Agreements
with one or more Lenders or any affiliate thereof (each such Lender or
affiliate, even if the respective Lender subsequently ceases to be a Lender
under the Credit Agreement for any reason, together with such Lender’s or
affiliate’s successors and assigns, if any, collectively, the “Other Creditors”
and, together with the Lender Creditors, the “Secured Creditors”);

 

WHEREAS, pursuant to the Credit Agreement, Holdings has guaranteed to the
Secured Creditors the payment when due of all Guaranteed Obligations as
described therein;

 

WHEREAS, pursuant to the Subsidiaries Guaranty, each Subsidiary Guarantor has
jointly and severally guaranteed to the Secured Creditors the payment when due
of all Guaranteed Obligations as described therein;

 

WHEREAS, it is a condition precedent to the making of Loans to the Borrower and
the issuance of, and participation in, Letters of Credit for the account of the
Borrower under the Credit Agreement and to the Other Creditors entering into
Interest Rate Protection Agreements that each Assignor shall have executed and
delivered to the Collateral Agent this Agreement; and

 

WHEREAS, each Assignor will obtain benefits from the incurrence of Loans by the
Borrower and the issuance of, and participation in, Letters of Credit for the
account of the

 

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Borrower under the Credit Agreement and the entering into by the Borrower and/or
one or more of its Subsidiaries of Interest Rate Protection Agreements and,
accordingly, desires to execute this Agreement in order to satisfy the condition
described in the preceding paragraph and to induce the Lenders to make Loans to
the Borrower and issue, and/or participate in, Letters of Credit for the account
of the Borrower and the Other Creditors to enter into Interest Rate Protection
Agreements with the Borrower and/or one or more of its Subsidiaries;

 

NOW, THEREFORE, in consideration of the benefits accruing to each Assignor, the
receipt and sufficiency of which are hereby acknowledged, each Assignor hereby
makes the following representations and warranties to the Collateral Agent for
the benefit of the Secured Creditors and hereby covenants and agrees with the
Collateral Agent for the benefit of the Secured Creditors as follows:

 

ARTICLE I

 

SECURITY INTERESTS

 

1.1 Grant of Security Interests. (a) As security for the prompt and complete
payment and performance when due of all of its Obligations, each Assignor does
hereby assign and transfer unto the Collateral Agent, and does hereby pledge and
grant to the Collateral Agent, for the benefit of the Secured Creditors, a
continuing security interest in all of the right, title and interest of such
Assignor in, to and under all of the following personal property and fixtures
(and all rights therein) of such Assignor, or in which or to which such Assignor
has any rights, in each case whether now existing or hereafter from time to time
acquired:

 

(i) each and every Account;

 

(ii) all cash;

 

(iii) the Cash Collateral Account and all monies, securities, Instruments and
other investments deposited or required to be deposited in the Cash Collateral
Account;

 

(iv) all Chattel Paper (including, without limitation, all Tangible Chattel
Paper and all Electronic Chattel Paper);

 

(v) all Commercial Tort Claims;

 

(vi) all computer programs of such Assignor and all intellectual property rights
therein and all other proprietary information of such Assignor, including but
not limited to Domain Names and Trade Secret Rights;

 

(vii) Contracts, together with all Contract Rights arising thereunder;

 

(viii) all Copyrights;

 

(ix) all Equipment;

 

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(x) all Deposit Accounts and all other demand, deposit, time, savings, cash
management, passbook and similar accounts maintained by such Assignor with any
Person and all monies, securities, Instruments and other investments deposited
or required to be deposited in any of the foregoing;

 

(xi) all Documents;

 

(xii) all General Intangibles;

 

(xiii) all Goods;

 

(xiv) all Instruments;

 

(xv) all Inventory;

 

(xvi) all Investment Property;

 

(xvii) all Letter-of-Credit Rights (whether or not the respective letter of
credit is evidenced by a writing);

 

(xviii) all Marks, together with the registrations and right to all renewals
thereof, and the goodwill of the business of such Assignor symbolized by the
Marks;

 

(xix) all Patents;

 

(xx) all Permits;

 

(xxi) all Software and all Software licensing rights, all writings, plans,
specifications and schematics, all engineering drawings, customer lists,
goodwill and licenses, and all recorded data of any kind or nature, regardless
of the medium of recording;

 

(xxii) all Supporting Obligations; and

 

(xxiii) all Proceeds and products of any and all of the foregoing (all of the
above, the “Collateral”).

 

(b) The security interest of the Collateral Agent under this Agreement extends
to all Collateral which any Assignor may acquire, or with respect to which any
Assignor may obtain rights, at any time during the term of this Agreement.

 

1.2 Certain Exceptions. No security interest is or will be granted pursuant
hereto in any right, title or interest of any Assignor under or in:

 

(a) any Instruments, Contracts, Chattel Paper, General Intangibles, licenses or
other contracts or agreements with or issued by Persons other than Holdings or a
Subsidiary of Holdings or an Affiliate thereof (collectively, “Excluded
Agreements”) that would otherwise be included in the Collateral (and such
Excluded Agreements shall not be deemed to constitute a part of the Collateral)
for so long as, and to the extent that, the granting of such a security interest

 

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pursuant hereto would result in a breach, default or termination of such
Excluded Agreements (in each case, except to the extent the granting of security
interests therein can be made with the respective breach, default or termination
being ineffective under the UCC or other applicable law); or

 

(b) any of the following:

 

(i) any asset that would otherwise be included in the Collateral (and such asset
shall not be deemed to constitute a part of the Collateral) if such asset is
subject to a Lien permitted by Section 9.01(vi) of the Credit Agreement;

 

(ii) any Equipment, machinery or other fixed asset that would otherwise be
included in the Collateral (and such Equipment, machinery or other fixed asset
shall not be deemed to constitute a part of the Collateral) if such Equipment,
machinery or other fixed asset is subject to a Lien permitted by Section
9.01(vii) of the Credit Agreement;

 

(iii) any property that would otherwise be included in the Collateral (and such
property shall not be deemed to constitute a part of the Collateral) if such
property has been sold or otherwise transferred in connection with a
sale-leaseback transaction permitted under Section 9.02(xiii) of the Credit
Agreement, or is subject to any Liens permitted under Section 9.01(xviii) of the
Credit Agreement, or constitutes the Proceeds or products of any property that
has been so sold or otherwise transferred so long as such Proceeds or products
remain subject to the Liens referenced above in this clause (d); and

 

(iv) any property or asset that would otherwise be included in the Collateral
(and such property or asset shall not be deemed to constitute a part of the
Collateral) if such property or assets is subject to a Lien permitted by Section
9.01(xiv);

 

in each case pursuant to preceding clauses (b)(i) through (iv), for so long as,
and to the extent that, the granting or existence of such a security interest
pursuant hereto would result in a breach, default or termination of any
agreement relating to the respective Lien or obligations secured thereby (in
each case except to the extent the granting of security interests therein can be
made with the respective breach, default or termination being ineffective under
the UCC or other applicable law).

 

1.3 Power of Attorney. Each Assignor hereby constitutes and appoints the
Collateral Agent its true and lawful attorney, irrevocably, with full power
after the occurrence of and during the continuance of an Event of Default (in
the name of such Assignor or otherwise) to act, require, demand, receive,
compound and give acquittance for any and all moneys and claims for moneys due
or to become due to such Assignor under or arising out of the Collateral, to
endorse any checks or other instruments or orders in connection therewith and to
file any claims or take any action or institute any proceedings which the
Collateral Agent may deem to be reasonably necessary or advisable to protect the
interests of the Secured Creditors, which appointment as attorney is coupled
with an interest.

 

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ARTICLE II

 

GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS

 

Each Assignor represents, warrants and covenants, which representations,
warranties and covenants shall survive execution and delivery of this Agreement,
as follows:

 

2.1 Necessary Filings. The security interest granted to the Collateral Agent
pursuant to this Agreement in and to the Collateral for the benefit of the
Collateral Agent and the Secured Creditors creates a valid security interest and
Lien upon such Assignor’s right, title and interest in and to the Collateral.
Except with regard to (i) Liens (if any) on Specified Assets and (ii) any rights
reserved in favor of the United States government as required by law (if any),
such security interest will be duly perfected (A) upon the filing of the UCC
financing statements delivered to the Collateral Agent for filing in the
appropriate jurisdictions set forth on Annex C, (B) in Deposit Accounts and the
Cash Collateral Account upon the obtaining and maintenance of “control” (as
described in the UCC as in effect on the date hereof in the State of New York)
by the Collateral Agent and (C) upon the recordation of certain assignments of
Patents, Marks and Copyrights in the United States Patent and Trademark Office
or the United States Copyright Office, as the case may be.

 

Upon the actions taken under this Section 2.1, such security interest will be
prior to all other Liens of all other Persons (other than Permitted Liens which
have priority under the UCC or other applicable law), and enforceable as such as
against all other Persons other than Ordinary Course Transferees.

 

2.2 No Liens. Such Assignor is, and as to all Collateral acquired by it from
time to time after the date hereof such Assignor will be, the owner of all
Collateral free from any Lien, security interest, encumbrance or other right,
title or interest of any Person (other than Permitted Liens), and such Assignor
shall defend the Collateral against all claims and demands of all Persons at any
time claiming the same or any interest therein adverse to the Collateral Agent.

 

2.3 Other Financing Statements. As of the date hereof, there is no financing
statement (or similar statement or instrument of registration under the law of
any jurisdiction) covering or purporting to cover any interest of any kind in
the Collateral (other than financing statements filed in respect of Permitted
Liens), and so long as the Termination Date has not occurred, such Assignor will
not execute or authorize to be filed in any public office any financing
statement (or similar statement or instrument of registration under the law of
any jurisdiction) or statements relating to the Collateral, except financing
statements filed or to be filed in respect of and covering the security
interests granted hereby by such Assignor or in connection with Permitted Liens.

 

2.4 Chief Executive Office, Record Locations. The chief executive office of such
Assignor is, on the date of this Agreement, located at the address indicated on
Annex A hereto for such Assignor. During the period of the four calendar months
preceding the date of this Agreement, the chief executive office of such
Assignor has not been located at any address other

 

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than that indicated on Annex A in accordance with the immediately preceding
sentence, in each case unless each such other address is also indicated on Annex
A hereto for such Assignor.

 

2.5 Location of Inventory and Equipment. All Inventory and Equipment held on the
date hereof, or held at any time during the four calendar months prior to the
date hereof, by each Assignor is located at one of the locations shown on Annex
B hereto for such Assignor.

 

2.6 Legal Names; Type of Organization (and Whether a Registered Organization
and/or a Transmitting Utility); Jurisdiction of Organization; Location;
Organizational Identification Numbers; Changes Thereto; etc. The exact legal
name of each Assignor, the type of organization of such Assignor, whether or not
such Assignor is a Registered Organization, the jurisdiction of organization of
such Assignor, such Assignor’s Location, the organizational identification
number (if any) of such Assignor, and whether or not such Assignor is a
Transmitting Utility, is listed on Annex C hereto for such Assignor. Such
Assignor shall not change its legal name, its type of organization, its status
as a Registered Organization (in the case of a Registered Organization), its
status as a Transmitting Utility or as a Person which is not a Transmitting
Utility, as the case may be, its jurisdiction of organization, its Location, or
its organizational identification number (if any) from that used on Annex C
hereto, except that any such changes shall be permitted (so long as not in
violation of the applicable requirements of the Secured Debt Agreements and so
long as same do not involve (x) a Registered Organization ceasing to constitute
same or (y) such Assignor changing its jurisdiction of organization or Location
from the United States or a State thereof to a jurisdiction of organization or
Location, as the case may be, outside the United States or a State thereof) if
(i) it shall have given to the Collateral Agent not less than 10 Business Days’
prior written notice of each change to the information listed on Annex C (as
adjusted for any subsequent changes thereto previously made in accordance with
this sentence), together with a supplement to Annex C which shall correct all
information contained therein for such Assignor, and (ii) in connection with the
respective such change or changes, it shall have taken all action reasonably
requested by the Collateral Agent to maintain the security interests of the
Collateral Agent in the Collateral intended to be granted hereby at all times
fully perfected to the extent described in Section 2.1 and in full force and
effect. In addition, to the extent that such Assignor does not have an
organizational identification number on the date hereof and later obtains one,
such Assignor shall promptly thereafter notify the Collateral Agent of such
organizational identification number and shall take all actions reasonably
satisfactory to the Collateral Agent to the extent necessary to maintain the
security interest of the Collateral Agent in the Collateral intended to be
granted hereby fully perfected to the extent described in Section 2.1 and in
full force and effect.

 

2.7 Trade Names; Etc. Such Assignor has or operates in any jurisdiction under,
or in the preceding five years has had or has operated in any jurisdiction
under, no trade names, fictitious names or other names except its legal name as
specified in Annex C and such other trade or fictitious names as are listed on
Annex D hereto for such Assignor. Such Assignor shall not assume or operate in
any jurisdiction under any new trade, fictitious or other name until (i) it
shall have given to the Collateral Agent not less than 5 days’ written notice of
its intention so to do, clearly describing such new name and the jurisdictions
in which such new name will be used and providing such other information in
connection therewith as the Collateral Agent may reasonably request and (ii)
with respect to such new name, it shall have taken all action reasonably
requested by the Collateral Agent to maintain the security interest of the
Collateral

 

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Agent in the Collateral intended to be granted hereby at all times fully
perfected and in full force and effect.

 

2.8 Certain Significant Transactions. During the one year period preceding the
date of this Agreement, no Person shall have merged or consolidated with or into
any Assignor, and no Person shall have liquidated into, or transferred all or
substantially all of its assets to, any Assignor, in each case except as
described in Annex E hereto. With respect to any transactions so described in
Annex E hereto, the respective Assignor shall have furnished such information
with respect to the Person (and the assets of the Person and locations thereof)
which merged with or into or consolidated with such Assignor, or was liquidated
into or transferred all or substantially all of its assets to such Assignor, and
shall have furnished to the Collateral Agent such UCC lien searches as may have
been requested with respect to such Person and its assets, to establish that no
security interest (excluding Permitted Liens) continues perfected on the date
hereof with respect to any Person described above (or the assets transferred to
the respective Assignor by such Person), including without limitation pursuant
to Section 9-316(a)(3) of the UCC.

 

2.9 As-Extracted Collateral; Timber-to-be-Cut. On the date hereof, such Assignor
does not own, or expect to acquire, any property which constitutes, or would
constitute, As-Extracted Collateral or Timber-to-be-Cut. If at any time after
the date of this Agreement such Assignor owns, acquires or obtains rights to any
As-Extracted Collateral or Timber-to-be-Cut, such Assignor shall furnish the
Collateral Agent with prompt written notice thereof (which notice shall describe
in reasonable detail the As-Extracted Collateral and/or Timber-to-be-Cut and the
locations thereof) and shall take all actions as may be deemed reasonably
necessary or desirable by the Collateral Agent to perfect the security interest
of the Collateral Agent therein.

 

2.10 Collateral in the Possession of a Bailee. If any Inventory or other Goods,
the aggregate fair market value of which is equal to or greater than $250,000,
are at any time in the possession of a bailee, such Assignor shall promptly
notify the Collateral Agent thereof and, if requested by the Collateral Agent,
shall use its reasonable best efforts to promptly obtain an acknowledgment from
such bailee, in form and substance reasonably satisfactory to the Collateral
Agent, that the bailee holds such Collateral for the benefit of the Collateral
Agent and shall act upon the instructions of the Collateral Agent, without the
further consent of such Assignor. The Collateral Agent agrees with such Assignor
that the Collateral Agent shall not give any such instructions unless an Event
of Default has occurred and is continuing or would occur after taking into
account any action by the respective Assignor with respect to any such bailee.

 

2.11 Recourse. This Agreement is made with full recourse to each Assignor and
pursuant to and upon all the warranties, representations, covenants and
agreements on the part of such Assignor contained herein, in the Secured Debt
Agreements and otherwise in writing in connection herewith or therewith.

 

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ARTICLE III

 

SPECIAL PROVISIONS CONCERNING ACCOUNTS; CONTRACT RIGHTS;

INSTRUMENTS; CHATTEL PAPER AND CERTAIN OTHER COLLATERAL

 

3.1 Additional Representations and Warranties. As of the time when each of its
Accounts arises, each Assignor shall be deemed to have represented and warranted
that each such Account, and all records, papers and documents relating thereto
(if any) are genuine and what they purport to be, and that all papers and
documents (if any) relating thereto (i) will, to the knowledge of such Assignor,
represent the genuine, legal, valid and binding obligation of the account debtor
evidencing indebtedness unpaid and owed by the respective account debtor arising
out of the performance of labor or services or the sale or lease and delivery of
the merchandise listed therein, or both, (ii) will be the only original writings
evidencing and embodying such obligation of the account debtor named therein
(other than copies created for general accounting purposes), (iii) will, to the
knowledge of such Assignor, evidence true and valid obligations, enforceable in
accordance with their respective terms, and (iv) will be in compliance and will
conform in all material respects with all applicable federal, state and local
laws and applicable laws of any relevant foreign jurisdiction.

 

3.2 Maintenance of Records. Each Assignor will keep and maintain at its own cost
and expense accurate records of its Accounts and Contracts, including, but not
limited to, originals of all documentation (including each Contract) with
respect thereto, records of all payments received, all credits granted thereon,
all merchandise returned and all other dealings therewith, and such Assignor
will make the same available on such Assignor’s premises to the Collateral Agent
for inspection, at such Assignor’s own cost and expense, at any and all
reasonable times upon prior notice to such Assignor and otherwise in accordance
with the Credit Agreement. Upon the occurrence and during the continuance of an
Event of Default and at the request of the Collateral Agent, such Assignor
shall, at its own cost and expense, deliver all tangible evidence of its
Accounts and Contract Rights (including, without limitation, all documents
evidencing the Accounts and all Contracts) and such books and records to the
Collateral Agent or to its representatives (copies of which evidence and books
and records may be retained by such Assignor). Upon the occurrence and during
the continuance of an Event of Default and if the Collateral Agent so directs,
such Assignor shall legend, in form and manner satisfactory to the Collateral
Agent, the Accounts and the Contracts, as well as books, records and documents
(if any) of such Assignor evidencing or pertaining to such Accounts and
Contracts with an appropriate reference to the fact that such Accounts and
Contracts have been assigned to the Collateral Agent and that the Collateral
Agent has a security interest therein.

 

3.3 Direction to Account Debtors; Contracting Parties; etc. Upon the occurrence
and during the continuance of an Event of Default following written notice to
such Assignor, if the Collateral Agent so directs any Assignor, such Assignor
agrees (x) to cause all payments on account of the Accounts and Contracts to be
made directly to the Cash Collateral Account, (y) that the Collateral Agent may,
at its option, directly notify the obligors with respect to any Accounts and/or
under any Contracts to make payments with respect thereto as provided in the
preceding clause (x), and (z) that the Collateral Agent may enforce collection
of any such Accounts and Contracts and may adjust, settle or compromise the
amount of payment thereof, in the same manner and to the same extent as such
Assignor. Without notice to or assent by any

 

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Assignor, the Collateral Agent may, upon the occurrence and during the
continuance of an Event of Default, apply any or all amounts then in, or
thereafter deposited in, the Cash Collateral Account toward the payment of the
Obligations in the manner provided in Section 7.4 of this Agreement. The
reasonable costs and expenses of collection (including reasonable attorneys’
fees), whether incurred by an Assignor or the Collateral Agent, shall be borne
by the relevant Assignor. The Collateral Agent shall deliver a copy of each
notice referred to in the preceding clause (y) to the relevant Assignor,
provided that (x) the failure by the Collateral Agent to so notify such Assignor
shall not affect the effectiveness of such notice or the other rights of the
Collateral Agent created by this Section 3.3 and (y) no such notice shall be
required if an Event of Default of the type described in Section 10.05 of the
Credit Agreement has occurred and is continuing.

 

3.4 Modification of Terms; etc. Except in accordance with such Assignor’s
ordinary course of business and consistent with reasonable business judgment or
as permitted by Section 3.5 or the Credit Documents, no Assignor shall rescind
or cancel any indebtedness evidenced by any Account or under any Contract, or
modify any material term thereof or make any material adjustment with respect
thereto, or extend or renew the same, or compromise or settle any material
dispute, claim, suit or legal proceeding relating thereto, or sell any Account
or Contract, or interest therein, without the prior written consent of the
Collateral Agent unless such rescissions, cancellations, modifications,
adjustments, extensions, renewals, compromises, settlements, releases, or sales
would not reasonably be expected to materially adversely affect the value of the
Accounts or Contracts constituting Collateral taken as a whole. No Assignor will
do anything to impair the rights of the Collateral Agent in the Accounts or
Contracts.

 

3.5 Collection. Each Assignor shall endeavor in accordance with reasonable
business practices to cause to be collected from the account debtor named in
each of its Accounts or obligor under any Contract, as and when due (including,
without limitation, amounts which are delinquent, such amounts to be collected
in accordance with generally accepted lawful collection procedures) any and all
amounts owing under or on account of such Account or Contract, and apply
forthwith upon receipt thereof all such amounts as are so collected to the
outstanding balance of such Account or under such Contract. Except as otherwise
directed by the Collateral Agent after the occurrence and during the
continuation of an Event of Default, any Assignor may allow in the ordinary
course of business as adjustments to amounts owing under its Accounts and
Contracts (i) an extension or renewal of the time or times of payment, or
settlement for less than the total unpaid balance, which such Assignor finds
appropriate in accordance with reasonable business judgment and (ii) a refund or
credit due as a result of returned or damaged merchandise or improperly
performed services or for other reasons which such Assignor finds appropriate in
accordance with reasonable business judgment. The reasonable costs and expenses
(including, without limitation, reasonable attorneys’ fees) of collection,
whether incurred by an Assignor or the Collateral Agent, shall be borne by the
relevant Assignor.

 

3.6 Instruments. If any Assignor owns or acquires any Instrument constituting
Collateral (other than checks and other payment instruments received and
collected in the ordinary course of business), such Assignor will within 10
Business Days notify the Collateral Agent thereof, and upon request by the
Collateral Agent will promptly deliver such Instrument to the Collateral Agent
appropriately endorsed to the order of the Collateral Agent, provided that,

 

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so long as no Event of Default shall have occurred and be continuing, such
Assignor may retain for collection in the ordinary course of business any
Instrument received by such Assignor in the ordinary course of business, and the
Collateral Agent shall, promptly upon request of such Assignor, make appropriate
arrangements for making any Instruments in its possession and pledged by such
Assignor available to such Assignor for purposes of presentation, collection or
renewal. If such Assignor retains possession of any Instruments pursuant to the
terms hereof, such Instrument shall be marked with the following legend: “This
writing and the obligations evidenced or secured hereby are subject to the
security interests of Deutsche Bank Trust Company Americas, as collateral agent,
for the benefit of itself and certain Lenders.”.

 

3.7 Assignors Remain Liable Under Accounts. Anything herein to the contrary
notwithstanding, the Assignors shall remain liable under each of the Accounts to
observe and perform all of the conditions and obligations to be observed and
performed by it thereunder, all in accordance with the terms of any agreement
giving rise to such Accounts. Neither the Collateral Agent nor any other Secured
Creditor shall have any obligation or liability under any Account (or any
agreement giving rise thereto) by reason of or arising out of this Agreement or
the receipt by the Collateral Agent or any other Secured Creditor of any payment
relating to such Account pursuant hereto, nor shall the Collateral Agent or any
other Secured Creditor be obligated in any manner to perform any of the
obligations of any Assignor under or pursuant to any Account (or any agreement
giving rise thereto), to make any payment, to make any inquiry as to the nature
or the sufficiency of any payment received by them or as to the sufficiency of
any performance by any party under any Account (or any agreement giving rise
thereto), to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to them or to which they may be entitled at any time or times.

 

3.8 Assignors Remain Liable Under Contracts. Anything herein to the contrary
notwithstanding, the Assignors shall remain liable under each of the Contracts
to observe and perform all of the conditions and obligations to be observed and
performed by them thereunder, all in accordance with and pursuant to the terms
and provisions of each Contract. Neither the Collateral Agent nor any other
Secured Creditor shall have any obligation or liability under any Contract by
reason of or arising out of this Agreement or the receipt by the Collateral
Agent or any other Secured Creditor of any payment relating to such Contract
pursuant hereto, nor shall the Collateral Agent or any other Secured Creditor be
obligated in any manner to perform any of the obligations of any Assignor under
or pursuant to any Contract, to make any payment, to make any inquiry as to the
nature or the sufficiency of any performance by any party under any Contract, to
present or file any claim, to take any action to enforce any performance or to
collect the payment of any amounts which may have been assigned to them or to
which they may be entitled at any time or times.

 

3.9 Deposit Accounts; Etc. (a) No Assignor maintains, or at any time after the
date of this Agreement shall establish or maintain, any demand, time, savings,
passbook or similar account, except for such accounts maintained with a bank (as
defined in Section 9-102 of the UCC) whose jurisdiction (determined in
accordance with Section 9-304 of the UCC) is within a State of the United
States. Annex F hereto accurately sets forth, as of the date of this Agreement,
for each Assignor, each Deposit Account maintained by such Assignor (including a
description thereof and the respective account number), the name of the
respective bank with

 

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which such Deposit Account is maintained, and the jurisdiction of the respective
bank with respect to such Deposit Account. For each Deposit Account (other than
the Cash Collateral Account or any other Deposit Account maintained with the
Collateral Agent), the respective Assignor shall cause the bank with which the
Deposit Account is maintained to execute and deliver to the Collateral Agent,
within 60 days after the date of this Agreement or, if later, at the time of the
establishment of the respective Deposit Account, a “control agreement” in the
form of Annex G hereto (appropriately completed), with such changes thereto as
may be acceptable to the Collateral Agent. If any bank with which a Deposit
Account is maintained refuses to, or does not, enter into such a “control
agreement”, then the respective Assignor shall promptly (and in any event within
60 days after the date of this Agreement or, if later, 60 days after the
establishment of such account) close the respective Deposit Account and transfer
all balances therein to the Cash Collateral Account or another Deposit Account
meeting the requirements of this Section 3.9. If any bank with which a Deposit
Account is maintained refuses to subordinate all its claims with respect to such
Deposit Account to the Collateral Agent’s security interest therein on terms
reasonably satisfactory to the Collateral Agent, then the Collateral Agent, at
its option, may (x) require that such Deposit Account be terminated in
accordance with the immediately preceding sentence or (y) agree to a “control
agreement” without such subordination, provided that in such event the
Collateral Agent may at any time, at its option, subsequently require that such
Deposit Account be terminated (within 30 days after notice from the Collateral
Agent) in accordance with the requirements of the immediately preceding
sentence.

 

(b) After the date of this Agreement, no Assignor shall establish any new
demand, time, savings, passbook or similar account, except for Deposit Accounts
established and maintained with banks and meeting the requirements of preceding
clause (a). At the time any such Deposit Account is established, the appropriate
“control agreement” shall be entered into in accordance with the requirements of
preceding clause (a) and the respective Assignor shall furnish to the Collateral
Agent a supplement to Annex F hereto containing the relevant information with
respect to the respective Deposit Account and the bank with which same is
established.

 

3.10 Letter-of-Credit Rights. If any Assignor is at any time a beneficiary under
a letter of credit with a stated amount of $1,000,000 or more, such Assignor
shall promptly notify the Collateral Agent thereof and, at the request of the
Collateral Agent, such Assignor shall, pursuant to an agreement in form and
substance reasonably satisfactory to the Collateral Agent, use its reasonable
best efforts to (i) arrange for the issuer and any confirmer of such letter of
credit to consent to an assignment to the Collateral Agent of the proceeds of
any drawing under such letter of credit or (ii) arrange for the Collateral Agent
to become the transferee beneficiary of such letter of credit, with the
Collateral Agent agreeing, in each case, that the proceeds of any drawing under
the letter of credit are to be applied as provided in this Agreement after the
occurrence and during the continuance of an Event of Default (it being
understood that unless an Event of Default has occurred and is continuing such
proceeds shall be released to such Assignor).

 

3.11 Commercial Tort Claims. All Commercial Tort Claims of each Assignor in
existence on the date of this Agreement are described in Annex H hereto. If any
Assignor shall at any time after the date of this Agreement acquire a Commercial
Tort Claim in an amount (taking the greater of the aggregate claimed damages
thereunder or the reasonably estimated

 

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value thereof) of $1,000,000 or more, such Assignor shall promptly notify the
Collateral Agent thereof in a writing signed by such Assignor and describing the
details thereof and shall grant to the Collateral Agent in such writing a
security interest therein and in the proceeds thereof, all upon the terms of
this Agreement, with such writing to be in form and substance reasonably
satisfactory to the Collateral Agent.

 

3.12 Chattel Paper. Upon the reasonable request of the Collateral Agent made at
any time or from time to time, each Assignor shall promptly furnish to the
Collateral Agent a list of all Electronic Chattel Paper held or owned by such
Assignor. Furthermore, if requested by the Collateral Agent, each Assignor shall
promptly take all actions which are reasonably practicable so that the
Collateral Agent has “control” of all Electronic Chattel Paper in accordance
with the requirements of Section 9-105 of the UCC. Each Assignor will promptly
(and in any event within 10 days) following any reasonable request by the
Collateral Agent, deliver all of its Tangible Chattel Paper to the Collateral
Agent, provided that, so long as no Event of Default shall have occurred and be
continuing, such Assignor may retain for collection in the ordinary course of
business any Chattel Paper received by such Assignor in the ordinary course of
business, and the Collateral Agent shall, promptly upon request of such
Assignor, make appropriate arrangements for making any Chattel Paper in its
possession and pledged by such Assignor available to such Assignor for purposes
of presentation, collection or renewal. If such Assignor retains possession of
any Chattel Paper pursuant to the terms hereof, such Chattel Paper shall be
marked with the following legend: “This writing and the obligations evidenced or
secured hereby are subject to the security interests of Deutsche Bank Trust
Company Americas, as collateral agent, for the benefit of itself and certain
Lenders.”.

 

3.13 Further Actions. Each Assignor will, at its own expense, make, execute,
endorse, acknowledge, file and/or deliver to the Collateral Agent from time to
time such vouchers, invoices, schedules, confirmatory assignments, conveyances,
financing statements, transfer endorsements, certificates, reports and other
assurances or instruments and take such further steps, including any and all
actions as may be necessary or required under the Federal Assignment of Claims
Act, relating to its Accounts, Contracts, Instruments and other property or
rights covered by the security interest hereby granted, as the Collateral Agent
may reasonably require.

 

ARTICLE IV

 

SPECIAL PROVISIONS CONCERNING TRADEMARKS AND DOMAIN NAMES

 

4.1 Additional Representations and Warranties. Each Assignor represents and
warrants that it is the true and lawful owner of or otherwise has the right to
use the registered Marks and Domain Names listed in Annex I hereto for such
Assignor and that said listed Marks and Domain Names include all United States
marks and applications for United States marks registered in the United States
Patent and Trademark Office and all Domain Names that such Assignor owns or uses
in connection with its business as of the date hereof. Each Assignor represents
and warrants that it owns, is licensed to use or otherwise has the right to use,
all Marks and Domain Names that it uses, except for such failure to own or have
the right to use as have not had, and would not be reasonably expected to have,
a Material Adverse Effect. Each Assignor further warrants that it has no
knowledge of any third party claim received by it that

 

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any aspect of such Assignor’s present or contemplated business operations
infringes or will infringe any trademark, service mark or trade name of any
other Person other than as has not, and would not, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Each
Assignor represents and warrants that it is the true and lawful owner of or
otherwise has the right to use all U.S. trademark registrations and applications
and Domain Name registrations listed in Annex I hereto and that said
registrations are valid, subsisting, have not been canceled and that such
Assignor is not aware of any third-party claim that any of said registrations is
invalid or unenforceable, and is not aware that there is any reason that any of
said registrations is invalid or unenforceable, and is not aware that there is
any reason that any of said applications will not mature into registrations.
Each Assignor hereby grants to the Collateral Agent an absolute power of
attorney to sign, upon the occurrence and during the continuance of an Event of
Default, any document which may be required by the United States Patent and
Trademark Office or similar registrar in order to effect an absolute assignment
of all right, title and interest in each Mark and/or Domain Name, and record the
same.

 

4.2 Licenses and Assignments. Except as otherwise permitted by the Secured Debt
Agreements, each Assignor hereby agrees not to divest itself of any right under
any Mark or Domain Name absent prior written approval of the Collateral Agent.

 

4.3 Infringements. Each Assignor agrees, promptly upon learning thereof, to
notify the Collateral Agent in writing of the name and address of, and to
furnish such pertinent information that may be available with respect to, any
party who such Assignor believes is, or may be, infringing or diluting or
otherwise violating any of such Assignor’s rights in and to any Mark or Domain
Name in any manner that would reasonably be expected to have a Material Adverse
Effect, or with respect to any party claiming that such Assignor’s use of any
Mark or Domain Name material to such Assignor’s business violates in any
material respect any property right of that party. Each Assignor further agrees
to prosecute diligently in accordance with reasonable business practices any
Person infringing any Mark or Domain Name in any manner that would reasonably be
expected to have a Material Adverse Effect.

 

4.4 Preservation of Marks and Domain Names. Each Assignor agrees to use its
Marks and Domain Names which are material to such Assignor’s business in
interstate commerce during the time in which this Agreement is in effect and to
take all such other actions as are reasonably necessary to preserve such Marks
as trademarks or service marks under the laws of the United States (other than
any such Marks which are no longer used or useful in its business or
operations).

 

4.5 Maintenance of Registration. Each Assignor shall, at its own expense,
diligently process all documents reasonably required to maintain all Mark and/or
Domain Name registrations, including but not limited to affidavits of use and
applications for renewals of registration in the United States Patent and
Trademark Office for all of its material registered Marks, and shall pay all
fees and disbursements in connection therewith and shall not abandon any such
filing of affidavit of use or any such application of renewal prior to the
exhaustion of all administrative and judicial remedies without prior written
consent of the Collateral Agent, not to be unreasonably withheld (other than
with respect to registrations and applications deemed by such Assignor in its
reasonable business judgment to be no longer prudent to pursue).

 

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4.6 Future Registered Marks and Domain Names. If any Mark registration is issued
hereafter to any Assignor as a result of any application now or hereafter
pending before the United States Patent and Trademark Office or any Domain Name
is registered by Assignor, within 60 days of receipt of such certificate or
similar indicia of ownership, such Assignor shall deliver to the Collateral
Agent a copy of such registration certificate or similar indicia of ownership,
and a grant of a security interest in such Mark and/or Domain Name, to the
Collateral Agent and at the expense of such Assignor, confirming the grant of a
security interest in such Mark and/or Domain Name to the Collateral Agent
hereunder, the form of such security to be substantially in the form of Annex L
hereto or in such other form as may be reasonably satisfactory to the Collateral
Agent.

 

4.7 Remedies. If an Event of Default shall occur and be continuing, the
Collateral Agent may, by written notice to the relevant Assignor, take any or
all of the following actions: (i) declare the entire right, title and interest
of such Assignor in and to each of the Marks and Domain Names, together with all
trademark rights and rights of protection to the same, vested in the Collateral
Agent for the benefit of the Secured Creditors, in which event such rights,
title and interest shall immediately vest, in the Collateral Agent for the
benefit of the Secured Creditors, and the Collateral Agent shall be entitled to
exercise the power of attorney referred to in Section 4.1 hereof to execute,
cause to be acknowledged and notarized and record said absolute assignment with
the applicable agency or registrar; (ii) take and use or sell the Marks or
Domain Names and the goodwill of such Assignor’s business symbolized by the
Marks or Domain Names and the right to carry on the business and use the assets
of such Assignor in connection with which the Marks or Domain Names have been
used; and (iii) direct such Assignor to refrain, in which event such Assignor
shall refrain, from using the Marks or Domain Names in any manner whatsoever,
directly or indirectly, and such Assignor shall execute such further documents
that the Collateral Agent may reasonably request to further confirm this and to
transfer ownership of the Marks or Domain Names and registrations and any
pending trademark applications in the United States Patent and Trademark Office
or applicable Domain Name registrar to the Collateral Agent.

 

ARTICLE V

 

SPECIAL PROVISIONS CONCERNING PATENTS, COPYRIGHTS AND TRADE SECRETS

 

5.1 Additional Representations and Warranties. Each Assignor represents and
warrants that it is the true and lawful owner of all rights in (i) all Trade
Secret Rights, (ii) the Patents listed in Annex J hereto for such Assignor and
that said Patents include all the United States patents and applications for
United States patents that such Assignor owns as of the date hereof and (iii)
the Copyrights listed in Annex K hereto for such Assignor and that said
Copyrights include all the United States copyrights registered with the United
States Copyright Office and applications to United States copyrights that such
Assignor owns as of the date hereof. Each Assignor further warrants that it has
no knowledge of any third party claim that any aspect of such Assignor’s present
or contemplated business operations infringes or will infringe any patent of any
other Person or such Assignor has misappropriated any trade secret or
proprietary information which, either individually or in the aggregate, has, or
would reasonably be expected to have, a Material Adverse Effect. Each Assignor
hereby grants to the Collateral Agent an absolute power of attorney to sign,
upon the occurrence and during the continuance of

 

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any Event of Default, any document which may be required by the United States
Patent and Trademark Office or the United States Copyright Office in order to
effect an absolute assignment of all right, title and interest in each Patent or
Copyright, and to record the same.

 

5.2 Licenses and Assignments. Except as otherwise permitted by the Secured Debt
Agreements, each Assignor hereby agrees not to divest itself of any right under
any Patent or Copyright absent prior written approval of the Collateral Agent.

 

5.3 Infringements. Each Assignor agrees, promptly upon learning thereof, to
furnish the Collateral Agent in writing with all pertinent information available
to such Assignor with respect to any infringement, contributing infringement or
active inducement to infringe or other violation of such Assignor’s rights in
any Patent or Copyright or to any claim that the practice of any Patent or use
of any Copyright violates any property right of a third party, or with respect
to any misappropriation of any Trade Secret Right or any claim that practice of
any Trade Secret Right violates any property right of a third party, in each
case, in any manner which, either individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect. Each Assignor further
agrees, absent direction of the Collateral Agent to the contrary, to diligently
prosecute, in accordance with its reasonable business judgment, any Person
infringing any Patent or Copyright or any Person misappropriating any Trade
Secret Right, in each case to the extent that such infringement or
misappropriation, either individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect.

 

5.4 Maintenance of Patents or Copyrights. At its own expense, each Assignor
shall make timely payment of all post-issuance fees required to maintain in
force its rights under each Patent or Copyright, absent prior written consent of
the Collateral Agent (other than any such Patents or Copyrights which are no
longer used or are deemed by such Assignor in its reasonable business judgment
to no longer be useful in its business or operations).

 

5.5 Prosecution of Patent or Copyright Applications. At its own expense, each
Assignor shall diligently prosecute all material applications for (i) United
States Patents listed in Annex J hereto and (ii) Copyrights listed on Annex K
hereto, in each case for such Assignor and shall not abandon any such
application prior to exhaustion of all administrative and judicial remedies
(other than applications that are deemed by such Assignor in its reasonable
business judgment to no longer be necessary in the conduct of the Assignor’s
business), absent written consent of the Collateral Agent not to be unreasonably
withheld.

 

5.6 Other Patents and Copyrights. Within 30 days of the acquisition or issuance
of a United States Patent, registration of a Copyright, or acquisition of a
registered Copyright, or of filing of an application for a United States Patent
or Copyright, the relevant Assignor shall deliver to the Collateral Agent a copy
of said Copyright or Patent, or certificate or registration of, or application
therefor, as the case may be, with a grant of a security interest as to such
Patent or Copyright, as the case may be, to the Collateral Agent and at the
expense of such Assignor, confirming the grant of a security interest, the form
of such grant of a security interest to be substantially in the form of Annex M
or N hereto, as appropriate, or in such other form as may be reasonably
satisfactory to the Collateral Agent.

 

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5.7 Remedies. If an Event of Default shall occur and be continuing, the
Collateral Agent may, by written notice to the relevant Assignor, take any or
all of the following actions: (i) declare the entire right, title, and interest
of such Assignor in each of the Patents and Copyrights vested in the Collateral
Agent for the benefit of the Secured Creditors, in which event such right,
title, and interest shall immediately vest in the Collateral Agent for the
benefit of the Secured Creditors, in which case the Collateral Agent shall be
entitled to exercise the power of attorney referred to in Section 5.1 hereof to
execute, cause to be acknowledged and notarized and to record said absolute
assignment with the applicable agency; (ii) take and practice or sell the
Patents and Copyrights; and (iii) direct such Assignor to refrain, in which
event such Assignor shall refrain, from practicing the Patents and using the
Copyrights directly or indirectly, and such Assignor shall execute such further
documents as the Collateral Agent may reasonably request further to confirm this
and to transfer ownership of the Patents and Copyrights to the Collateral Agent
for the benefit of the Secured Creditors.

 

ARTICLE VI

 

PROVISIONS CONCERNING ALL COLLATERAL

 

6.1 Protection of Collateral Agent’s Security. Except as otherwise permitted by
the Secured Debt Agreements, each Assignor will do nothing to impair the rights
of the Collateral Agent in the Collateral. Each Assignor or an affiliate on
behalf of such Assignor will at all times maintain insurance, at such Assignor’s
own expense to the extent and in the manner provided in the Secured Debt
Agreements. If any Event of Default shall have occurred and be continuing, the
Collateral Agent shall, at the time any proceeds of such insurance are
distributed to the Secured Creditors, apply such proceeds in accordance with
Section 7.4 hereof. Each Assignor assumes all liability and responsibility in
connection with the Collateral acquired by it and the liability of such Assignor
to pay the Obligations shall in no way be affected or diminished by reason of
the fact that such Collateral may be lost, destroyed, stolen, damaged or for any
reason whatsoever unavailable to such Assignor.

 

6.2 Warehouse Receipts Non-Negotiable. To the extent practicable, each Assignor
agrees that if any warehouse receipt or receipt in the nature of a warehouse
receipt is issued with respect to any of its Inventory, such Assignor shall
request that such warehouse receipt or receipt in the nature thereof shall not
be “negotiable” (as such term is used in Section 7-104 of the Uniform Commercial
Code as in effect in any relevant jurisdiction or under other relevant law).

 

6.3 Additional Information. Each Assignor will, at its own expense, from time to
time upon the reasonable request of the Collateral Agent, promptly (and in any
event within 10 Business Days after its receipt of the respective request)
furnish to the Collateral Agent such information with respect to the Collateral
(including the identity of the Collateral or such components thereof as may have
been reasonably requested by the Collateral Agent, the value and location of
such Collateral, etc.) as may be requested by the Collateral Agent. Without
limiting the forgoing, each Assignor agrees that it shall promptly (and in any
event within 10 Business Days after its receipt of the respective request)
furnish to the Collateral Agent such updated Annexes hereto as may from time to
time be reasonably requested by the Collateral Agent.

 

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6.4 Further Actions. Each Assignor will, at its own expense and upon the
reasonable request of the Collateral Agent, make, execute, endorse, acknowledge,
file and/or deliver to the Collateral Agent from time to time such lists,
descriptions and designations of its Collateral, warehouse receipts, receipts in
the nature of warehouse receipts, bills of lading, documents of title, vouchers,
invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, certificates, reports and other assurances or
instruments and take such further steps relating to the Collateral and other
property or rights covered by the security interest hereby granted, which the
Collateral Agent deems reasonably appropriate or advisable to perfect, preserve
or protect its security interest in the Collateral at least to the extent
described in Section 2.1.

 

6.5 Financing Statements. Each Assignor agrees to execute and deliver to the
Collateral Agent such financing statements, in form reasonably acceptable to the
Collateral Agent, as the Collateral Agent may from time to time reasonably
request or as are reasonably necessary or desirable in the opinion of the
Collateral Agent to establish and maintain a valid, enforceable, perfected
security interest in the Collateral as provided herein and the other rights and
security contemplated hereby at least to the extent described in Section 2.1.
Each Assignor will pay any applicable filing fees, recordation taxes and related
expenses relating to its Collateral. Each Assignor hereby authorizes the
Collateral Agent to file any such financing statements without the signature of
such Assignor where permitted by law (and such authorization includes describing
the Collateral as “all assets” of such Assignor).

 

ARTICLE VII

 

REMEDIES UPON OCCURRENCE OF AN EVENT OF DEFAULT

 

7.1 Remedies; Obtaining the Collateral Upon Default. Each Assignor agrees that,
if any Event of Default shall have occurred and be continuing, then and in every
such case, the Collateral Agent, in addition to any rights now or hereafter
existing under applicable law and under the other provisions of this Agreement,
shall have all rights as a secured creditor under any UCC, and such additional
rights and remedies to which a secured creditor is entitled under the laws in
effect in all relevant jurisdictions and may:

 

(i) personally, or by agents or attorneys, immediately take possession of the
Collateral or any part thereof, from such Assignor or any other Person who then
has possession of any part thereof with or without notice or process of law, and
for that purpose may enter upon such Assignor’s premises where any of the
Collateral is located and remove the same and use in connection with such
removal any and all services, supplies, aids and other facilities of such
Assignor;

 

(ii) instruct the obligor or obligors on any agreement, instrument or other
obligation (including, without limitation, the Accounts and the Contracts)
constituting the Collateral to make any payment required by the terms of such
agreement, instrument or other obligation directly to the Collateral Agent and
may exercise any and all remedies of such Assignor in respect of such
Collateral;

 

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(iii) instruct all banks which have entered into a control agreement with the
Collateral Agent to transfer all monies, securities and instruments held by such
depositary bank to the Cash Collateral Account; it being understood and agreed
that unless an Event of Default has occurred and is continuing, the Collateral
Agent shall not deliver to such banks a Notice of Exclusive Control under, and
as defined in the respective “control agreement” relating thereto;

 

(iv) sell, assign or otherwise liquidate any or all of the Collateral or any
part thereof in accordance with Section 7.2 hereof, or direct such Assignor to
sell, assign or otherwise liquidate any or all of the Collateral or any part
thereof, and, in each case, take possession of the proceeds of any such sale or
liquidation;

 

(v) take possession of the Collateral or any part thereof, by directing such
Assignor in writing to deliver the same to the Collateral Agent at any
reasonable place or places designated by the Collateral Agent, in which event
such Assignor shall at its own expense:

 

(x) forthwith cause the same to be moved to the place or places so designated by
the Collateral Agent and there delivered to the Collateral Agent;

 

(y) store and keep any Collateral so delivered to the Collateral Agent at such
place or places pending further action by the Collateral Agent as provided in
Section 7.2 hereof; and

 

(z) while the Collateral shall be so stored and kept, provide such security and
maintenance services as shall be reasonably necessary to protect the same and to
preserve and maintain it in good condition;

 

(vi) license or sublicense, whether on an exclusive or nonexclusive basis, any
Marks, Domain Names, Patents or Copyrights included in the Collateral for such
term and on such conditions and in such manner as the Collateral Agent shall in
its sole judgment determine;

 

(vii) apply any monies constituting Collateral or proceeds thereof in accordance
with the provisions of Section 7.4; and

 

(viii) take any other action as specified in clauses (1) through (5), inclusive,
of Section 9-607 of the UCC;

 

it being understood that each Assignor’s obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Collateral Agent shall be entitled to a
decree requiring specific performance by such Assignor of said obligation. By
accepting the benefits of this Agreement and each other Security Document, the
Secured Creditors expressly acknowledge and agree that this Agreement and each
other Security Document may be enforced only by the action of the Collateral
Agent acting upon the instructions of the Required Secured Creditors and that no
other Secured Creditor shall have any right individually to seek to enforce or
to enforce this Agreement or to realize upon the

 

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security to be granted hereby, it being understood and agreed that such rights
and remedies may be exercised by the Collateral Agent or the holders of at least
a majority of the outstanding Other Obligations, as the case may be, for the
benefit of the Secured Creditors upon the terms of this Agreement and the other
Security Documents.

 

7.2 Remedies; Disposition of the Collateral. To the extent permitted by
applicable law, if any Event of Default shall have occurred and be continuing,
then any Collateral repossessed by the Collateral Agent under or pursuant to
Section 7.1 hereof and any other Collateral whether or not so repossessed by the
Collateral Agent, may be sold, assigned, leased or otherwise disposed of under
one or more contracts or as an entirety, and without the necessity of gathering
at the place of sale the property to be sold, and in general in such manner, at
such time or times, at such place or places and on such terms as the Collateral
Agent may, in compliance with any mandatory requirements of applicable law,
determine to be commercially reasonable. Any of the Collateral may be sold,
leased or otherwise disposed of, in the condition in which the same existed when
taken by the Collateral Agent or after any overhaul or repair at the expense of
the relevant Assignor which the Collateral Agent shall determine to be
commercially reasonable. Any such sale, lease or other disposition may be
effected by means of a public disposition or private disposition, effected in
accordance with the applicable requirements (in each case if and to the extent
applicable) of Sections 9-610 through 9-613 of the UCC and/or such other
mandatory requirements of applicable law as may apply to the respective
disposition. The Collateral Agent may, without notice or publication, adjourn
any public or private disposition or cause the same to be adjourned from time to
time by announcement at the time and place fixed for the disposition, and such
disposition may be made at any time or place to which the disposition may be so
adjourned. To the extent permitted by any such requirement of law, the
Collateral Agent may bid for and become the purchaser (and may pay all or any
portion of the purchase price by crediting Obligations against the purchase
price) of the Collateral or any item thereof, offered for disposition in
accordance with this Section 7.2 without accountability to the relevant
Assignor. If, under applicable law, the Collateral Agent shall be permitted to
make disposition of the Collateral within a period of time which does not permit
the giving of notice to the relevant Assignor as hereinabove specified, the
Collateral Agent need give such Assignor only such notice of disposition as
shall be required by such applicable law. Each Assignor agrees to do or cause to
be done all such other acts and things as may be reasonably necessary to make
such disposition or dispositions of all or any portion of the Collateral valid
and binding and in compliance with any and all applicable laws, regulations,
orders, writs, injunctions, decrees or awards of any and all courts, arbitrators
or governmental instrumentalities, domestic or foreign, having jurisdiction over
any such sale or sales, all at such Assignor’s expense.

 

7.3 Waiver of Claims. Except as otherwise provided in this Agreement, EACH
ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE AND
JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT’S TAKING POSSESSION OR
THE COLLATERAL AGENT’S DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING, WITHOUT
LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT REMEDY OR
REMEDIES, and each Assignor hereby further waives, to the extent permitted by
law:

 

(a) all damages occasioned by such taking of possession or any such disposition
except any damages which are the direct result of the Collateral Agent’s gross
negligence or

 

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willful misconduct (as determined by a court of competent jurisdiction in a
final and non-appealable decision);

 

(b) all other requirements as to the time, place and terms of sale or other
requirements with respect to the enforcement of the Collateral Agent’s rights
hereunder; and

 

(c) all rights of redemption, appraisement, valuation, stay, extension or
moratorium now or hereafter in force under any applicable law in order to
prevent or delay the enforcement of this Agreement or the absolute sale of the
Collateral or any portion thereof, and each Assignor, for itself and all who may
claim under it, insofar as it or they now or hereafter lawfully may, hereby
waives the benefit of all such laws.

 

Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the relevant Assignor therein and
thereto, and shall be a perpetual bar both at law and in equity against such
Assignor and against any and all Persons claiming or attempting to claim the
Collateral so sold, optioned or realized upon, or any part thereof, from,
through and under such Assignor.

 

7.4 Application of Proceeds. (a) All moneys collected by the Collateral Agent
(or, to the extent the Pledge Agreement or any other Security Document requires
proceeds of collateral under such other Security Document to be applied in
accordance with the provisions of this Agreement, the Pledgee or collateral
agent under such other Security Document) upon any sale or other disposition of
the Collateral, together with all other moneys received by the Collateral Agent
hereunder, shall be applied as follows:

 

(i) first, to the payment of all amounts owing the Collateral Agent of the type
described in clauses (iii), (iv) and (v) of the definition of “Obligations”;

 

(ii) second, to the extent proceeds remain after the application pursuant to the
preceding clause (i), to the payment of all amounts owing to any Agent of the
type described in clauses (v) and (vi) of the definition of “Obligations”;

 

(iii) third, to the extent proceeds remain after the application pursuant to the
preceding clauses (i) and (ii), an amount equal to the outstanding Primary
Obligations shall be paid to the Secured Creditors as provided in Section 7.4(e)
hereof, with each Secured Creditor receiving an amount equal to its outstanding
Primary Obligations or, if the proceeds are insufficient to pay in full all such
Primary Obligations, its Pro Rata Share of the amount remaining to be
distributed;

 

(iv) fourth, to the extent proceeds remain after the application pursuant to the
preceding clauses (i) through (iii), inclusive, an amount equal to the
outstanding Secondary Obligations shall be paid to the Secured Creditors as
provided in Section 7.4(e) hereof, with each Secured Creditor receiving an
amount equal to its outstanding Secondary Obligations or, if the proceeds are
insufficient to pay in full all such Secondary Obligations, its Pro Rata Share
of the amount remaining to be distributed; and

 

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(v) fifth, to the extent proceeds remain after the application pursuant to the
preceding clauses (i) through (iv), inclusive, and following the termination of
this Agreement pursuant to Section 10.8(a) hereof, to the relevant Assignor or
to whomever may be lawfully entitled to receive such surplus.

 

(b) For purposes of this Agreement, (x) “Pro Rata Share” shall mean, when
calculating a Secured Creditor’s portion of any distribution or amount, that
amount (expressed as a percentage) equal to a fraction the numerator of which is
the then unpaid amount of such Secured Creditor’s Primary Obligations or
Secondary Obligations, as the case may be, and the denominator of which is the
then outstanding amount of all Primary Obligations or Secondary Obligations, as
the case may be, (y) “Primary Obligations” shall mean (i) in the case of the
Credit Document Obligations, all unpaid principal of, premium, if any, fees and
interest on, all Loans, all Unpaid Drawings, the Stated Amount of all
outstanding Letters of Credit and all Fees and (ii) in the case of the Other
Obligations, all amounts due under each Interest Rate Protection Agreement with
an Other Creditor (other than indemnities, fees (including, without limitation,
attorneys’ fees) and similar obligations and liabilities) and (z) “Secondary
Obligations” shall mean all Obligations other than Primary Obligations.

 

(c) When payments to Secured Creditors are based upon their respective Pro Rata
Shares, the amounts received by such Secured Creditors hereunder shall be
applied (for purposes of making determinations under this Section 7.4 only) (i)
first, to their Primary Obligations and (ii) second, to their Secondary
Obligations. If any payment to any Secured Creditor of its Pro Rata Share of any
distribution would result in overpayment to such Secured Creditor, such excess
amount shall instead be distributed in respect of the unpaid Primary Obligations
or Secondary Obligations, as the case may be, of the other Secured Creditors,
with each Secured Creditor whose Primary Obligations or Secondary Obligations,
as the case may be, have not been paid in full to receive an amount equal to
such excess amount multiplied by a fraction the numerator of which is the unpaid
Primary Obligations or Secondary Obligations, as the case may be, of such
Secured Creditor and the denominator of which is the unpaid Primary Obligations
or Secondary Obligations, as the case may be, of all Secured Creditors entitled
to such distribution.

 

(d) Each of the Secured Creditors, by their acceptance of the benefits hereof
and of the other Security Documents, agrees and acknowledges that if the Lender
Creditors receive a distribution on account of undrawn amounts with respect to
Letters of Credit issued under the Credit Agreement (which shall only occur
after all outstanding Revolving Loans under the Credit Agreement and Unpaid
Drawings have been paid in full), such amounts shall be paid to the
Administrative Agent under the Credit Agreement and held by it, for the equal
and ratable benefit of the Lender Creditors, as cash security for the repayment
of Obligations owing to the Lender Creditors as such. If any amounts are held as
cash security pursuant to the immediately preceding sentence, then upon the
termination of all outstanding Letters of Credit under the Credit Agreement, and
after the application of all such cash security to the repayment of all
Obligations owing to the Lender Creditors after giving effect to the termination
of all such Letters of Credit, if there remains any excess cash, such excess
cash shall be returned by the Administrative Agent to the Collateral Agent for
distribution in accordance with Section 7.4(a) hereof.

 

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(e) All payments required to be made hereunder shall be made (x) if to the
Lender Creditors, to the Administrative Agent for the account of the Lender
Creditors and (y) if to the Other Creditors, to the trustee, paying agent or
other similar representative (each, a “Representative”) for the Other Creditors
or, in the absence of such a Representative, directly to the Other Creditors.

 

(f) For purposes of applying payments received in accordance with this Section
7.4, the Collateral Agent shall be entitled to rely upon (i) the Administrative
Agent and (ii) the Representative or, in the absence of such a Representative,
upon the Other Creditors for a determination (which the Administrative Agent,
each Representative and the Other Creditors agree (or shall agree) to provide
upon request of the Collateral Agent) of the outstanding Primary Obligations and
Secondary Obligations owed to the Lender Creditors or the Other Creditors, as
the case may be. Unless it has received written notice from a Lender Creditor or
an Other Creditor to the contrary, the Administrative Agent and each
Representative, in furnishing information pursuant to the preceding sentence,
and the Collateral Agent, in acting hereunder, shall be entitled to assume that
no Secondary Obligations are outstanding. Unless it has written notice from an
Other Creditor to the contrary, the Collateral Agent, in acting hereunder, shall
be entitled to assume that no Interest Rate Protection Agreements are in
existence.

 

(g) It is understood that the Assignors shall remain jointly and severally
liable to the extent of any deficiency between the amount of the proceeds of the
Collateral and the aggregate amount of the Obligations.

 

7.5 Remedies Cumulative. Each and every right, power and remedy hereby
specifically given to the Collateral Agent shall be in addition to every other
right, power and remedy specifically given to the Collateral Agent under this
Agreement, the other Secured Debt Agreements or now or hereafter existing at
law, in equity or by statute and each and every right, power and remedy whether
specifically herein given or otherwise existing may be exercised from time to
time or simultaneously and as often and in such order as may be deemed expedient
by the Collateral Agent. All such rights, powers and remedies shall be
cumulative and the exercise or the beginning of the exercise of one shall not be
deemed a waiver of the right to exercise any other or others. No delay or
omission of the Collateral Agent in the exercise of any such right, power or
remedy and no renewal or extension of any of the Obligations shall impair any
such right, power or remedy or shall be construed to be a waiver of any Default
or Event of Default or an acquiescence thereof. No notice to or demand on any
Assignor in any case shall entitle it to any other or further notice or demand
in similar or other circumstances or constitute a waiver of any of the rights of
the Collateral Agent to any other or further action in any circumstances without
notice or demand. In the event that the Collateral Agent shall bring any suit to
enforce any of its rights hereunder and shall be entitled to judgment, then in
such suit the Collateral Agent may recover reasonable expenses, including
reasonable attorneys’ fees, and the amounts thereof shall be included in such
judgment.

 

7.6 Discontinuance of Proceedings. In case the Collateral Agent shall have
instituted any proceeding to enforce any right, power or remedy under this
Agreement by foreclosure, sale, entry or otherwise, and such proceeding shall
have been discontinued or abandoned for any reason or shall have been determined
adversely to the Collateral Agent, then and in every such case the relevant
Assignor, the Collateral Agent and each holder of any of the Obligations shall

 

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be restored to their former positions and rights hereunder with respect to the
Collateral subject to the security interest created under this Agreement, and
all rights, remedies and powers of the Collateral Agent shall continue as if no
such proceeding had been instituted.

 

ARTICLE VIII

 

INDEMNITY

 

8.1 Indemnity. (a) Each Assignor jointly and severally agrees to indemnify,
reimburse and hold the Collateral Agent, each other Secured Creditor and their
respective successors, assigns, employees, affiliates and agents (hereinafter in
this Section 8.1 referred to individually as “Indemnitee,” and collectively as
“Indemnitees”) harmless from any and all liabilities, obligations, damages,
injuries, penalties, claims, demands, actions, suits, judgments and any and all
costs, expenses or disbursements (including reasonable attorneys’ fees and
expenses) (for the purposes of this Section 8.1 the foregoing are collectively
called “Indemnified Liabilities”) of whatsoever kind and nature imposed on,
asserted against or incurred by any of the Indemnitees in any way relating to or
arising out of this Agreement, any other Secured Debt Agreement or any other
document executed in connection herewith or therewith or in any other way
connected with the administration of the transactions contemplated hereby or
thereby or the enforcement of any of the terms of, or the preservation of any
rights under any thereof, or in any way relating to or arising out of the
manufacture, ownership, ordering, purchase, delivery, control, acceptance,
lease, financing, possession, operation, condition, sale, return or other
disposition, or use of the Collateral (including, without limitation, latent or
other defects, whether or not discoverable), the violation of the laws of any
country, state or other governmental body or unit, any tort (including, without
limitation, claims arising or imposed under the doctrine of strict liability, or
for or on account of injury to or the death of any Person (including any
Indemnitee), or property damage), or contract claim; provided that no Indemnitee
shall be indemnified pursuant to this Section 8.1(a) for Indemnified Liabilities
to the extent caused by the gross negligence or willful misconduct of respective
Indemnitee, any Affiliate of such Indemnitee, or any of their respective
directors, officers, employees, representatives, agents, Affiliates, trustees or
investment advisors (as determined by a court of competent jurisdiction in a
final and non-appealable decision). Each Assignor agrees that upon written
notice by any Indemnitee of the assertion of such Indemnified Liabilities, the
relevant Assignor shall assume full responsibility for the defense thereof. Each
Indemnitee agrees to use its best efforts to promptly notify the relevant
Assignor of any such assertion of which such Indemnitee has knowledge.

 

(b) Without limiting the application of Section 8.1(a) hereof, each Assignor
agrees, jointly and severally, to pay or reimburse the Collateral Agent for any
and all reasonable fees, costs and expenses of whatever kind or nature incurred
in connection with the creation, preservation or protection of the Collateral
Agent’s Liens on, and security interest in, the Collateral, including, without
limitation, all fees and taxes in connection with the recording or filing of
instruments and documents in public offices, payment or discharge of any taxes
or Liens upon or in respect of the Collateral, premiums for insurance with
respect to the Collateral and all other fees, costs and expenses in connection
with protecting, maintaining or preserving the Collateral and the Collateral
Agent’s interest therein, whether through judicial proceedings or

 

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otherwise, or in defending or prosecuting any actions, suits or proceedings
arising out of or relating to the Collateral.

 

(c) Without limiting the application of Section 8.1(a) or (b) hereof, each
Assignor agrees, jointly and severally, to pay, indemnify and hold each
Indemnitee harmless from and against any loss, costs, damages and expenses which
such Indemnitee may suffer, expend or incur in consequence of or growing out of
any misrepresentation by any Assignor in this Agreement, any other Secured Debt
Agreement or in any writing contemplated by or made or delivered pursuant to or
in connection with this Agreement or any other Secured Debt Agreement.

 

(d) If and to the extent that the obligations of any Assignor under this Section
8.1 are unenforceable for any reason, such Assignor hereby agrees to make the
maximum contribution to the payment and satisfaction of such obligations which
is permissible under applicable law.

 

8.2 Indemnity Obligations Secured by Collateral; Survival. Any amounts paid by
any Indemnitee as to which such Indemnitee has the right to reimbursement shall
constitute Obligations secured by the Collateral. The indemnity obligations of
each Assignor contained in this Article VIII shall continue in full force and
effect notwithstanding the full payment of all of the other Obligations and
notwithstanding the full payment of all the Notes issued, and Loans made, under
the Credit Agreement, the termination of all Letters of Credit issued under the
Credit Agreement, the termination of all Interest Rate Protection Agreements
entered into with the Other Creditors and the payment of all other Obligations
and notwithstanding the discharge thereof and the occurrence of the Termination
Date.

 

ARTICLE IX

 

DEFINITIONS

 

The following terms shall have the meanings herein specified. Such definitions
shall be equally applicable to the singular and plural forms of the terms
defined.

 

“Account” shall mean any “account” as such term is defined in the Uniform
Commercial Code as in effect on the date hereof in the State of New York, and in
any event shall include but shall not be limited to, all rights to payment of
any monetary obligation, whether or not earned by performance, (i) for property
that has been or is to be sold, leased, licensed, assigned or otherwise disposed
of, (ii) for services rendered or to be rendered, (iii) for a policy of
insurance issued or to be issued, (iv) for a secondary obligation incurred or to
be incurred, (v) for energy provided or to be provided, (vi) for the use or hire
of a vessel under a charter or other contract, (vii) arising out of the use of a
credit or charge card or information contained on or for use with the card, or
(viii) as winnings in a lottery or other game of chance operated or sponsored by
a State, governmental unit of a State, or person licensed or authorized to
operate the game by a State or governmental unit of a State. Without limiting
the foregoing, the term “account” shall include all Health-Care-Insurance
Receivables.

 

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“Administrative Agent” shall have the meaning provided in the recitals of this
Agreement.

 

“Agreement” shall mean this Security Agreement as the same may be amended,
modified, restated and/or supplemented from time to time in accordance with its
terms.

 

“As-Extracted Collateral” shall mean “as-extracted collateral” as such term is
defined in the Uniform Commercial Code as in effect on the date hereof in the
State of New York.

 

“Assignor” shall have the meaning provided in the first paragraph of this
Agreement.

 

“Borrower” shall have the meaning provided in the recitals of this Agreement.

 

“Cash Collateral Account” shall mean a non-interest bearing cash collateral
account maintained with, and in the sole dominion and control of, the Collateral
Agent for the benefit of the Secured Creditors.

 

“Chattel Paper” shall mean “chattel paper” as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York. Without limiting the foregoing, the term “Chattel Paper” shall in any
event include all Tangible Chattel Paper and all Electronic Chattel Paper.

 

“Class” shall have the meaning provided in Section 10.2 of this Agreement.

 

“Collateral” shall have the meaning provided in Section 1.1(a) of this
Agreement.

 

“Collateral Agent” shall have the meaning provided in the first paragraph of
this Agreement.

 

“Commercial Tort Claims” shall mean “commercial tort claims” as such term is
defined in the Uniform Commercial Code as in effect on the date hereof in the
State of New York.

 

“Contract Rights” shall mean all rights of any Assignor under each Contract,
including, without limitation, (i) any and all rights to receive and demand
payments under any or all Contracts, (ii) any and all rights to receive and
compel performance under any or all Contracts and (iii) any and all other
rights, interests and claims now existing or in the future arising in connection
with any or all Contracts.

 

“Contracts” shall mean all contracts between any Assignor and one or more
additional parties (including, without limitation, any Interest Rate Protection
Agreements, Other Hedging Agreements, licensing agreements and any partnership
agreements, joint venture agreements and limited liability company agreements).

 

“Copyrights” shall mean any United States or foreign copyright now or hereafter
owned by any Assignor, including any registrations of any copyrights, in the
United States

 

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Copyright Office or any foreign equivalent office, as well as any application
for a copyright registration now or hereafter made with the United States
Copyright Office or any foreign equivalent office by any Assignor.

 

“Credit Agreement” shall have the meaning provided in the recitals of this
Agreement.

 

“Credit Document Obligations” shall have the meaning provided in the definition
of “Obligations” in this Article IX.

 

“Deposit Accounts” shall mean all “deposit accounts” as such term is defined in
the Uniform Commercial Code as in effect on the date hereof in the State of New
York.

 

“Documents” shall mean “documents” as such term is defined in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.

 

“Domain Names” shall mean all Internet domain names and associated URL addresses
in or to which any Assignor now or hereafter has any right, title or interest.

 

“Electronic Chattel Paper” shall mean “electronic chattel paper” as such term is
defined in the Uniform Commercial Code as in effect on the date hereof in the
State of New York.

 

“Equipment” shall mean any “equipment” as such term is defined in the Uniform
Commercial Code as in effect on the date hereof in the State of New York, and in
any event, shall include, but shall not be limited to, all machinery, equipment,
furnishings, fixtures and vehicles now or hereafter owned by any Assignor and
any and all additions, substitutions and replacements of any of the foregoing
and all accessions thereto, wherever located, together with all attachments,
components, parts, equipment and accessories installed thereon or affixed
thereto.

 

“Event of Default” shall mean any Event of Default under, and as defined in, the
Credit Agreement and shall in any event include, without limitation, any payment
default on any of the Obligations after the expiration of any applicable grace
period.

 

“General Intangibles” shall mean “general intangibles” as such term is defined
in the Uniform Commercial Code as in effect on the date hereof in the State of
New York.

 

“Goods” shall mean “goods” as such term is defined in the Uniform Commercial
Code as in effect on the date hereof in the State of New York.

 

“Health-Care-Insurance Receivable” shall mean any “health-care-insurance
receivable” as such term is defined in the Uniform Commercial Code as in effect
on the date hereof in the State of New York.

 

“Holdings” shall have the meaning provided in the recitals hereto.

 

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“Indemnitee” shall have the meaning provided in Section 8.1(a) of this
Agreement.

 

“Instrument” shall mean “instruments” as such term is defined in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.

 

“Inventory” shall mean merchandise, inventory and goods, and all additions,
substitutions and replacements thereof and all accessions thereto, wherever
located, together with all goods, supplies, incidentals, packaging materials,
labels, materials and any other items used or usable in manufacturing,
processing, packaging or shipping same, in all stages of production from raw
materials through work in process to finished goods, and all products and
proceeds of whatever sort and wherever located any portion thereof which may be
returned, rejected, reclaimed or repossessed by the Collateral Agent from any
Assignor’s customers, and shall specifically include all “inventory” as such
term is defined in the Uniform Commercial Code as in effect on the date hereof
in the State of New York.

 

“Investment Property” shall mean “investment property” as such term is defined
in the Uniform Commercial Code as in effect on the date hereof in the State of
New York.

 

“Lender Creditors” shall have the meaning provided in the recitals of this
Agreement.

 

“Lenders” shall have the meaning provided in the recitals of this Agreement.

 

“Letter-of-Credit Rights” shall mean “letter-of-credit rights” as such term is
defined in the Uniform Commercial Code as in effect on the date hereof in the
State of New York.

 

“Location” of any Assignor, shall mean such Assignor’s “location” as determined
pursuant to Section 9-307 of the UCC.

 

“Marks” shall mean all right, title and interest in and to any trademarks,
service marks and trade names now held or hereafter acquired by any Assignor,
including any registration or application for registration of any trademarks and
service marks now held or hereafter acquired by any Assignor (except for “intent
to use” applications for trademark or service mark registrations filed pursuant
to Section 1(b) of the Lanham Act, 15 U.S.C. § 1051, unless and until an
Amendment to Allege Use or a Statement of Use under Sections 1(c) and 1(d) of
said Act has been filed), which are registered or filed in the United States
Patent and Trademark Office or the equivalent thereof in any state of the United
States or any equivalent foreign office or agency, as well as any unregistered
trademarks and service marks used by an Assignor and any trade dress including
logos, designs, fictitious business names and other business identifiers used by
any Assignor.

 

“Material Adverse Effect” shall mean a material adverse effect on the business,
property, assets, liabilities (actual or contingent), operations or condition
(financial or otherwise) of the Borrower and its Subsidiaries taken as a whole.

 

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“Obligations” shall mean and include, as to any Assignor, all of the following:

 

(i) the full and prompt payment when due (whether at stated maturity, by
acceleration or otherwise) of all obligations, liabilities and indebtedness
(including, without limitation, unpaid principal, if any, premium, interest
(including, without limitation, all interest that accrues after the commencement
of any case, proceeding or other action relating to the bankruptcy, insolvency,
reorganization or similar proceeding of any Assignor at the rate provided for in
the respective documentation, whether or not a claim for post-petition interest
is allowed in any such proceeding), reimbursement obligations under Letters of
Credit, fees, costs and indemnities) of such Assignor to the Lender Creditors,
whether now existing or hereafter incurred under, arising out of, or in
connection with, the Credit Agreement and the other Credit Documents to which
such Assignor is a party (including, without limitation, in the event such
Assignor is a Guarantor, all such obligations, liabilities and indebtedness of
such Assignor under its Guaranty) and the due performance and compliance by such
Assignor with all of the terms, conditions and agreements contained in the
Credit Agreement and in such other Credit Documents (all such obligations,
liabilities and indebtedness under this clause (i), except to the extent
consisting of obligations or indebtedness with respect to Interest Rate
Protection Agreements, being herein collectively called the “Credit Document
Obligations”);

 

(ii) the full and prompt payment when due (whether at stated maturity, by
acceleration or otherwise) of all obligations, liabilities and indebtedness
(including, without limitation, all interest that accrues after the commencement
of any case, proceeding or other action relating to the bankruptcy, insolvency,
reorganization or similar proceeding of any Assignor at the rate provided for in
the respective documentation, whether or not a claim for post-petition interest
is allowed in any such proceeding) owing by such Assignor to the Other
Creditors, now existing or hereafter incurred under, arising out of or in
connection with any Interest Rate Protection Agreement, whether such Interest
Rate Protection Agreement is now in existence or hereinafter arising (including,
without limitation, in the case of a Assignor that is a Guarantor, all
obligations, liabilities and indebtedness of such Assignor under its Guaranty in
respect of the Interest Rate Protection Agreements), and the due performance and
compliance by such Assignor with all of the terms, conditions and agreements
contained in each such Interest Rate Protection Agreement (all such obligations,
liabilities and indebtedness under this clause (ii) being herein collectively
called the “Other Obligations”);

 

(iii) any and all sums advanced by the Collateral Agent in order to preserve the
Collateral or preserve its security interest in the Collateral;

 

(iv) in the event of any proceeding for the collection or enforcement of any
indebtedness, obligations, or liabilities of such Assignor referred to in
clauses (i) and (ii) above, after an Event of Default shall have occurred and be
continuing, the reasonable expenses of retaking, holding, preparing for sale or
lease, selling or otherwise disposing of or realizing on the Collateral, or of
any exercise by the Collateral Agent of its rights hereunder, together with
reasonable attorneys’ fees and court costs;

 

(v) all amounts paid by any Indemnitee as to which such Indemnitee has the right
to reimbursement under Section 8.1 of this Agreement; and

 

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(vi) all amounts owing to any Agent pursuant to any of the Credit Documents in
its capacity as such;

 

it being acknowledged and agreed that the “Obligations” shall include extensions
of credit of the types described above, whether outstanding on the date of this
Agreement or extended from time to time after the date of this Agreement.

 

“Ordinary Course Transferees” shall mean: (i) with respect to Goods only, buyers
in the ordinary course of business and lessees in the ordinary course of
business to the extent provided in Section 9-320(a) and 9-321 of the Uniform
Commercial Code as in effect from time to time in the relevant jurisdiction,
(ii) with respect to General Intangibles only, licensees in the ordinary course
of business to the extent provided in Section 9-321 of the Uniform Commercial
Code as in effect from time to time in the relevant jurisdiction and (iii) any
other Person who is entitled to take free of the Lien pursuant to the Uniform
Commercial Code as in effect from time to time in the relevant jurisdiction.

 

“Other Creditors” shall have the meaning provided in the recitals of this
Agreement.

 

“Other Obligations” shall have the meaning provided in the definition of
“Obligations” in this Article IX.

 

“Patents” shall mean any patent in or to which any Assignor now or hereafter has
any right, title or interest therein, and any divisions, continuations
(including, but not limited to, continuations-in-parts) and improvements
thereof, as well as any application for a patent now or hereafter made by any
Assignor.

 

“Permits” shall mean, to the extent permitted to be assigned by the terms
thereof or by applicable law, all licenses, permits, rights, orders, variances,
franchises or authorizations of or from any governmental authority or agency.

 

“Primary Obligations” shall have the meaning provided in Section 7.4(b) of this
Agreement.

 

“Pro Rata Share” shall have the meaning provided in Section 7.4(b) of this
Agreement.

 

“Proceeds” shall mean all “proceeds” as such term is defined in the Uniform
Commercial Code as in effect in the State of New York on the date hereof and, in
any event, shall also include, but not be limited to, (i) any and all proceeds
of any insurance, indemnity, warranty or guaranty payable to the Collateral
Agent or any Assignor from time to time with respect to any of the Collateral,
(ii) any and all payments (in any form whatsoever) made or due and payable to
any Assignor from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any
governmental authority (or any person acting under color of governmental
authority) and (iii) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral.

 

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“Registered Organization” shall have the meaning provided in the Uniform
Commercial Code as in effect in the State of New York.

 

“Representative” shall have the meaning provided in Section 7.4(e) of this
Agreement.

 

“Required Secured Creditors” shall mean (i) at any time when any Credit Document
Obligations are outstanding or any Commitments under the Credit Agreement exist,
the Required Lenders (or, to the extent provided in Section 13.12 of the Credit
Agreement, each of the Lenders) and (ii) at any time after all of the Credit
Document Obligations have been paid in full and all Commitments under the Credit
Agreement have been terminated and no further Commitments may be provided
thereunder, the holders of a majority of the Other Obligations.

 

“Requisite Creditors” shall have the meaning provided in Section 10.2 of this
Agreement.

 

“Secondary Obligations” shall have the meaning provided in Section 7.4(b) of
this Agreement.

 

“Secured Creditors” shall have the meaning provided in the recitals of this
Agreement.

 

“Secured Debt Agreements” shall mean and include this Agreement, the other
Credit Documents and the Interest Rate Protection Agreements entered into with
an Other Creditor.

 

“Software” shall mean “software” as such term is defined in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.

 

“Specified Assets” shall mean the following property and assets of such Grantor:

 

(i) Equipment constituting Fixtures or Vehicles;

 

(ii) Accounts or receivables arising therefrom to the extent that the Uniform
Commercial Code as in effect from time to time in the relevant jurisdiction is
not applicable to the creation or perfection of Liens thereon;

 

(iii) uncertificated securities;

 

(iv) Collateral for which the perfection of Liens thereon requires filings in or
other actions under the laws of jurisdictions outside the United States of
America, any State, territory or dependency thereof or the District of Columbia;

 

(v) Goods constituting Vehicles or included in Collateral received by any Person
for “sale or return” within the meaning of Section 2-326 of the Uniform
Commercial Code of the applicable jurisdiction, to the extent of claims of
creditors of such Person;

 

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(vi) Patents, Marks and Copyrights to the extent that Liens thereon cannot be
perfected by the filing of UCC financing statements under the UCC or by a filing
in the United States Patent and Trademark Office or the United States Copyright
Office; and

 

(v) Proceeds which have not been transferred to or deposited in the Cash
Collateral Account (if any) or a Deposit Account meeting the requirements of
Section 3.9 hereof.

 

“Supporting Obligations” shall mean any “supporting obligation” as such term is
defined in the Uniform Commercial Code as in effect on the date hereof in the
State of New York, now or hereafter owned by any Assignor, or in which any
Assignor has any rights, and, in any event, shall include, but shall not be
limited to all of such Assignor’s rights in any Letter-of-Credit Right or
secondary obligation that supports the payment or performance of, and all
security for, any Account, Chattel Paper, Document, General Intangible,
Instrument or Investment Property.

 

“Tangible Chattel Paper” shall mean “tangible chattel paper” as such term is
defined in the Uniform Commercial Code as in effect on the date hereof in the
State of New York.

 

“Termination Date” shall have the meaning provided in Section 10.8(a) of this
Agreement.

 

“Timber-to-be-Cut” shall mean “timber-to-be-cut” as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.

 

“Trade Secret Rights” shall mean the rights of an Assignor in any Trade Secret
it holds.

 

“Trade Secrets” shall mean any secretly held existing engineering or other data,
information, production procedures and other know-how relating to the design
manufacture, assembly, installation, use, operation, marketing, sale and/or
servicing of any products or business of an Assignor worldwide whether written
or not.

 

“Transmitting Utility” shall have the meaning given such term in Section
9-102(a)(80) of the UCC.

 

“UCC” shall mean the Uniform Commercial Code as in effect from time to time in
the relevant jurisdiction.

 

“Vehicles” shall mean all cars, trucks, construction and earth moving equipment
covered by a certificate of title law of any state (and where perfection of
security interests therein cannot be effected by filings under the UCC).

 

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ARTICLE X

 

MISCELLANEOUS

 

10.1 Notices. Except as otherwise specified herein, all notices, requests,
demands or other communications to or upon the respective parties hereto shall
be sent or delivered by mail, telegraph, telex, telecopy, cable or courier
service and all such notices and communications shall, when mailed, telegraphed,
telexed, telecopied, or cabled or sent by courier, be effective when deposited
in the mails, delivered to the telegraph company, cable company or overnight
courier, as the case may be, or sent by telex or telecopier, except that notices
and communications to the Collateral Agent or any Assignor shall not be
effective until received by the Collateral Agent or such Assignor, as the case
may be. All notices and other communications shall be in writing and addressed
as follows:

 

(a) if to any Assignor, c/o:

 

BWAY Corporation

8607 Roberts Drive

Suite 250

Atlanta, Georgia 30350

Attention: Jeff O’Connell

Telephone No.: 770-645-4800

Telecopier No.: 770-645-4810

 

(b) if to the Collateral Agent, at:

 

Deutsche Bank Trust Company Americas

60 Wall Street

New York, New York 10005

Attention: Albert Fischetti

Telephone No.: (212) 250-0452

Telecopier No.: (212) 797-5904

 

(c) if to any Lender Creditor (other than the Collateral Agent), at such address
as such Lender Creditor shall have specified in the Credit Agreement;

 

(d) if to any Other Creditor, at such address as such Other Creditor shall have
specified in writing to each Assignor and the Collateral Agent;

 

or at such other address or addressed to such other individual as shall have
been furnished in writing by any Person described above to the party required to
give notice hereunder.

 

10.2 Waiver; Amendment. Except as provided in Sections 10.8 and 10.12, none of
the terms and conditions of this Agreement may be changed, waived, modified or
varied in any manner whatsoever unless in writing duly signed by each Assignor
directly affected thereby (it being understood that the addition or release of
any Assignor hereunder shall not constitute a change, waiver, discharge or
termination affecting any Assignor other than the Assignor so added or released)
and the Collateral Agent (with the written consent of the Required Secured

 

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Creditors); provided, however, that any change, waiver, modification or variance
affecting the rights and benefits of a single Class of Secured Creditors (and
not all Secured Creditors in a like or similar manner) also shall require the
written consent of the Requisite Creditors of such affected Class. For the
purpose of this Agreement, the term “Class” shall mean each class of Secured
Creditors, i.e., whether (x) the Lender Creditors as holders of the Credit
Document Obligations or (y) the Other Creditors as the holders of the Other
Obligations. For the purpose of this Agreement, the term “Requisite Creditors”
of any Class shall mean each of (x) with respect to the Credit Document
Obligations, the Required Lenders (or, to the extent provided in Section 13.12
of the Credit Agreement, each of the Lenders), and (y) with respect to the Other
Obligations, the holders of at least a majority of all Other Obligations
outstanding from time to time.

 

10.3 Obligations Absolute. The obligations of each Assignor hereunder shall
remain in full force and effect without regard to, and shall not be impaired by,
(a) any bankruptcy, insolvency, reorganization, arrangement, readjustment,
composition, liquidation or the like of such Assignor; (b) any exercise or
non-exercise, or any waiver of, any right, remedy, power or privilege under or
in respect of this Agreement or any other Secured Debt Agreement; or (c) any
amendment to or modification of any Secured Debt Agreement or any security for
any of the Obligations; whether or not such Assignor shall have notice or
knowledge of any of the foregoing.

 

10.4 Successors and Assigns. This Agreement shall create a continuing security
interest in the Collateral and shall (i) remain in full force and effect,
subject to release and/or termination as set forth in Section 10.8, (ii) be
binding upon each Assignor, its successors and assigns; provided, however, that
no Assignor shall assign any of its rights or obligations hereunder without the
prior written consent of the Collateral Agent (with the prior written consent of
the Required Secured Creditors), and (iii) inure, together with the rights and
remedies of the Collateral Agent hereunder, to the benefit of the Collateral
Agent, the other Secured Creditors and their respective successors, transferees
and assigns. All agreements, statements, representations and warranties made by
each Assignor herein or in any certificate or other instrument delivered by such
Assignor or on its behalf under this Agreement shall be considered to have been
relied upon by the Secured Creditors and shall survive the execution and
delivery of this Agreement and the other Secured Debt Agreements regardless of
any investigation made by the Secured Creditors or on their behalf.

 

10.5 Headings Descriptive. The headings of the several sections of this
Agreement are inserted for convenience only and shall not in any way affect the
meaning or construction of any provision of this Agreement.

 

10.6 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL. (a)
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW
YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE
UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND
DELIVERY OF

 

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THIS AGREEMENT, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY ACCEPTS FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS. EACH SUCH PARTY HEREBY FURTHER IRREVOCABLY
WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK JURISDICTION OVER IT, AND AGREES NOT
TO PLEAD OR CLAIM IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN ANY OF THE AFORESAID COURTS
THAT ANY SUCH COURT LACKS JURISDICTION OVER IT. EACH SUCH PARTY FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PARTY, AS THE CASE MAY
BE, AT ITS ADDRESS FOR NOTICES AS PROVIDED IN SECTION 10.1 ABOVE, SUCH SERVICE
TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. EACH SUCH PARTY HEREBY
IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER
IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING
COMMENCED HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT THAT SUCH SERVICE OF
PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF ANY SUCH PARTY TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY OTHER PARTY IN
ANY OTHER JURISDICTION.

 

(b) EACH SUCH PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY
FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT
THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM.

 

(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.

 

10.7 Assignor’s Duties. It is expressly agreed, anything herein contained to the
contrary notwithstanding, that each Assignor shall remain liable to perform all
of the obligations, if any, assumed by it with respect to the Collateral and the
Collateral Agent shall not have any obligations or liabilities with respect to
any Collateral by reason of or arising out of this Agreement, nor shall the
Collateral Agent be required or obligated in any manner to perform or fulfill
any of the obligations of any Assignor under or with respect to any Collateral.

 

10.8 Termination; Release. (a) After the Termination Date, this Agreement shall
terminate, all without delivery of any instrument or performance of any act by
any party, and all

 

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rights to the Collateral shall revert to the Assignors (provided that all
indemnities set forth herein including, without limitation in Section 8.1
hereof, shall survive such termination) and the Collateral Agent, at the request
and expense of the respective Assignor, will promptly execute and deliver to
such Assignor a proper instrument or instruments (including Uniform Commercial
Code termination statements on form UCC-3) acknowledging the satisfaction and
termination of this Agreement, and will duly assign, transfer and deliver to
such Assignor (without recourse and without any representation or warranty) such
of the Collateral as may be in the possession of the Collateral Agent and as has
not theretofore been sold or otherwise applied or released pursuant to this
Agreement. As used in this Agreement, “Termination Date” shall mean the date
upon which the Total Commitment under the Credit Agreement has been terminated
and all Interest Rate Protection Agreements entered into with any Other Creditor
have been terminated, no Note under the Credit Agreement is outstanding and all
Loans thereunder have been repaid in full, all Letters of Credit issued under
the Credit Agreement have been terminated and all Obligations then due and
payable have been paid in full.

 

(b) In the event that any part of the Collateral is sold or otherwise disposed
of (to a Person other than a Credit Party) (x) at any time prior to the time at
which all Credit Document Obligations have been paid in full and all Commitments
and Letters of Credit under the Credit Agreement have been terminated, in
connection with a sale or disposition permitted by Section 9.02 of the Credit
Agreement or is otherwise released at the direction of the Required Lenders (or
all the Lenders if required by Section 13.12 of the Credit Agreement) or (y) at
any time thereafter, to the extent permitted by the other Secured Debt
Agreements, and in the case of clauses (x) and (y), the proceeds of such sale or
disposition (or from such release) are applied in accordance with the terms of
the Credit Agreement or such other Secured Debt Agreement, as the case may be,
to the extent required to be so applied, the Collateral Agent, at the request
and expense of such Assignor, will duly release from the security interest
created hereby (and will execute and deliver such documentation, including
termination or partial release statements and the like in connection therewith)
and assign, transfer and deliver to such Assignor (without recourse and without
any representation or warranty) such of the Collateral as is then being (or has
been) so sold or otherwise disposed of, or released, and as may be in the
possession of the Collateral Agent and has not theretofore been released
pursuant to this Agreement. Furthermore, upon the release of any Subsidiary
Guarantor from the Subsidiaries Guaranty in accordance with the provisions
thereof, such Assignor (and the Collateral at such time assigned by the
respective Assignor pursuant hereto) shall be released from this Agreement.

 

(c) At any time that an Assignor desires that the Collateral Agent take any
action to acknowledge or give effect to any release of Collateral pursuant to
the foregoing Section 10.8 (b), such Assignor shall deliver to the Collateral
Agent a certificate signed by a principal executive officer of such Assignor
stating that the release of the respective Collateral is permitted pursuant to
such Section 10.8 (b). At any time that the Borrower or the respective Assignor
desires that a Subsidiary of the Borrower which has been released from the
Subsidiaries Guaranty be released hereunder as provided in the last sentence of
Section 10.8(b), it shall deliver to the Collateral Agent a certificate signed
by a principal executive officer of the Borrower and the respective Assignor
stating that the release of the respective Assignor (and its Collateral) is
permitted pursuant to such Section 10.8(b). If reasonably requested by the
Collateral Agent (although the Collateral Agent shall have no obligation to make
such request),

 

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the relevant Assignor shall furnish appropriate legal opinions (from counsel,
reasonably acceptable to the Collateral Agent) to the effect set forth in this
Section 10.8(c).

 

(d) The Collateral Agent shall have no liability whatsoever to any other Secured
Creditor as the result of any release of Collateral by it in accordance with (or
which the Collateral Agent in the absence of gross negligence and willful
misconduct believes to be in accordance with) this Section 10.8.

 

10.9 Counterparts. This Agreement may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which when
so executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. A set of counterparts executed by all
the parties hereto shall be lodged with the Borrower and the Collateral Agent.

 

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

 

10.11 The Collateral Agent and the other Secured Creditors. The Collateral Agent
will hold in accordance with this Agreement all items of the Collateral at any
time received under this Agreement. It is expressly understood and agreed that
the obligations of the Collateral Agent as holder of the Collateral and
interests therein and with respect to the disposition thereof, and otherwise
under this Agreement, are only those expressly set forth in this Agreement and
in Section 12 of the Credit Agreement. The Collateral Agent shall act hereunder
on the terms and conditions set forth herein and in Section 12 of the Credit
Agreement.

 

10.12 Additional Assignors. It is understood and agreed that any Subsidiary
Guarantor that desires to become an Assignor hereunder, or is required to
execute a counterpart of this Agreement after the date hereof pursuant to the
requirements of the Credit Agreement or any other Credit Document, shall become
an Assignor hereunder by executing a counterpart hereof and delivering same to
the Collateral Agent, or by executing a joinder agreement in form and substance
reasonably satisfactory to the Collateral Agent, (y) delivering supplements to
Annexes A through F, inclusive, and H through K, inclusive, hereto as are
necessary to cause such Annexes to be complete and accurate with respect to such
additional Assignor on such date and (z) taking all actions as specified in this
Agreement as would have been taken by such Assignor had it been an original
party to this Agreement, in each case with all documents required above to be
delivered to the Collateral Agent and with all documents and actions required
above to be taken to the reasonable satisfaction of the Collateral Agent.

 

[Remainder of this page intentionally left blank; signature page follows]

 

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

 

BCO HOLDING COMPANY, as an Assignor

By:  

/s/ James J. Connors

   

Name:

 

James J. Connors, II

   

Title:

 

Vice President and Secretary

BWAY CORPORATION, as an Assignor

By:  

/s/ J. M. O’Connell

   

Name:

 

Jeff O’Connell

   

Title:

 

Vice President/Secretary

ARMSTRONG CONTAINERS, INC.

By:  

/s/ J. M. O’Connell

   

Name:

 

Jeff O’Connell

   

Title:

 

Vice President/Secretary

SC PLASTICS, LLC

By:  

/s/ J. M. O’Connell

   

Name:

 

Jeff O’Connell

   

Title:

 

Vice President/Secretary

NORTH AMERICA PACKAGING CORPORATION By:  

/s/ J. M. O’Connell

   

Name:

 

Jeff O’Connell

   

Title:

 

Vice President/Secretary

NORTH AMERICA PACKAGING OF PUERTO RICO, INC. By:  

/s/ J. M. O’Connell

   

Name:

 

Jeff O’Connell

   

Title:

 

Vice President/Secretary

 

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

Accepted and Agreed to:

 

DEUTSCHE BANK TRUST COMPANY AMERICAS, as Collateral Agent

By:  

/s/ Albert Fischetti

   

Name:

 

Albert Fischetti

   

Title:

 

Director