Exhibit 10.7

 

EXECUTION COPY

 

PLEDGE AND SECURITY AND INTERCREDITOR AGREEMENT

 

THIS PLEDGE AND SECURITY AND INTERCREDITOR AGREEMENT (as it may be amended or
modified from time to time, this “Agreement”) is entered into as of October 6,
2005 by and among Newton Acquisition, Inc., a Delaware corporation (“Holdings”),
Newton Acquisition Merger Sub., Inc., a Delaware corporation (“Merger Sub” and,
prior to the Merger, the “Borrower”), The Neiman Marcus Group, Inc., a Delaware
corporation (“Neiman Marcus”, and after the Merger, the “Borrower”), the
Subsidiary Parties (as defined below) from time to time party hereto and Credit
Suisse, in its capacity as administrative agent and collateral agent for the
Secured Parties (as defined below) (in such capacity, the “Agent”).

 

PRELIMINARY STATEMENT

 

Reference is hereby made to (a) the Credit Agreement dated as of the date hereof
providing for a term loan facility in an aggregate principal amount
of $1,975,000,000 (as amended, restated, supplemented or otherwise modified from
time to time, the “Term Loan Credit Agreement”), among Holdings, Merger Sub, the
Subsidiaries of Neiman Marcus from time to time party thereto and Credit Suisse,
as administrative agent, and (b) the Indenture dated as of May 27, 1998 (as
amended, restated, supplemented or otherwise modified from time to time, the
“Existing Notes Indenture”), between Neiman Marcus and The Bank of New York, as
trustee (in such capacity, the “Existing Notes Trustee”), pursuant to which the
Borrower’s 7.125% Debentures due 2028 in an initial aggregate principal amount
of $125,000,000 (the “2028 Debentures”) and the Borrower’s 6.65% Senior Notes
due 2008 in an initial aggregate principal amount of $125,000,000 (the “2008
Notes”) were issued.

 

Pursuant to the Term Loan Credit Agreement, the Grantors are entering into this
Agreement in order to induce the Term Loan Lenders to enter into and extend
credit to the Borrower under the Term Loan Credit Agreement and to secure the
Term Loan Obligations.

 

Pursuant to the Existing Notes Indenture, the Borrower may not secure the Term
Loan Obligations with any Existing Notes Designated Collateral unless the
Borrower shall have made effective provision to secure the 2028 Debentures and
the 2008 Notes equally and ratably with the Term Loan Obligations for as long as
such obligations are secured by any Existing Notes Designated Collateral.

 

ACCORDINGLY, the parties hereto agree as follows:

 

ARTICLE I
DEFINITIONS

 

SECTION 1.1.                                   TERMS DEFINED IN TERM LOAN CREDIT
AGREEMENT.  ALL CAPITALIZED TERMS USED HEREIN AND NOT OTHERWISE DEFINED SHALL
HAVE THE MEANINGS ASSIGNED TO SUCH TERMS IN THE TERM LOAN CREDIT AGREEMENT.

 

SECTION 1.2.                                   TERMS DEFINED IN UCC.  TERMS
DEFINED IN THE UCC THAT ARE NOT OTHERWISE DEFINED IN THIS AGREEMENT ARE USED
HEREIN AS DEFINED IN THE UCC.

 

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SECTION 1.3.                                   DEFINITIONS OF CERTAIN TERMS USED
HEREIN.  AS USED IN THIS AGREEMENT, IN ADDITION TO THE TERMS DEFINED IN THE
PREAMBLE AND PRELIMINARY STATEMENT ABOVE, THE FOLLOWING TERMS SHALL HAVE THE
FOLLOWING MEANINGS:

 

“Account” shall have the meaning set forth in Article 9 of the UCC.

 

“Aggregate Term Loan Credit Exposure” means, at any time, the aggregate
principal amount of loans outstanding under the Term Loan Credit Agreement at
such time.

 

“Article” means a numbered article of this Agreement, unless another document is
specifically referenced.

 

“Bankruptcy Proceeding” means, with respect to any Person, a general assignment
by such Person for the benefit of its creditors, or the institution by or
against such Person of any proceeding seeking relief as debtor, or seeking to
adjudicate such Person as bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment or composition of such Person or its debts, under any
law relating to bankruptcy, insolvency, reorganization or relief of debtors, or
seeking appointment of a receiver, trustee, custodian or other similar official
for such Person or for any substantial part of its property.

 

“Chattel Paper” shall have the meaning set forth in Article 9 of the UCC.

 

“Collateral” shall have the meaning set forth in Article II.

 

“Commercial Tort Claim” shall have the meaning set forth in Article 9 of the
UCC.

 

“Consignment Inventory” means any Inventory held by a Grantor on a consignment
basis, which Inventory is not owned by a Grantor (and would not be reflected on
a consolidated balance sheet of Borrower and its Subsidiaries prepared in
accordance with GAAP).

 

“Consignment Proceeds” means any proceeds from the sale of any Consignment
Inventory, solely to the extent that such proceeds are identifiable proceeds
from the sale of Consignment Inventory and that the Borrower identifies such
proceeds as such through a method of tracing reasonably satisfactory to the
Agent.

 

 “Control” shall have the meaning set forth in Article 8 or, if applicable, in
Section 9-104, 9-105, 9-106 or 9-107 of Article 9 of the UCC.

 

“Copyrights” means, with respect to any Person, all of such Person’s right,
title, and interest in and to the following:  (a) all copyrights, rights and
interests in copyrights, works protectable by copyright, copyright
registrations, and copyright applications; (b) all renewals of any of the
foregoing; (c) all income, royalties, damages, and payments now or hereafter due
and/or payable under any of the foregoing, including, without limitation,
damages or payments for past or future infringements for any of the foregoing;
(d) the right to sue for past, present, and future infringements of any of the
foregoing; and (e) all rights corresponding to any of the foregoing throughout
the world.

 

“Credit Agreement Event of Default” means any “Event of Default”, as defined in
the Term Loan Credit Agreement.

 

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“Deposit Account” shall have the meaning set forth in Article 9 of the UCC.

 

“Document” shall have the meaning set forth in Article 9 of the UCC.

 

“Equipment” shall have the meaning set forth in Article 9 of the UCC.

 

“Event of Default” means a Credit Agreement Event of Default or an Existing
Notes Event of Default.

 

“Excluded Assets” means

 

(a)                                  the Specified Credit Card Receivables, any
Specified Credit Card Payments and any Specified In-Store Credit Card Payments;

 

(b)                                 the HSBC Credit Card Receivables Accounts;

 

(c)                                  more than 65% of the issued and outstanding
voting Equity Interests of any Foreign Subsidiary;

 

(d)                                 any Domestic Subsidiary that is taxed as a
partnership for federal income tax purposes that holds Equity Interests of a
Foreign Subsidiary whose Equity Interests are pledged pursuant to this Security
Agreement;

 

(e)                                  any Margin Stock;

 

(f)                                    Equity Interests in Kate Spade LLC,
Gurwitch Products, L.L.C. and Willow Bend Beverage Corporation;

 

(g)                                 any intercompany Indebtedness of (i) the
Borrower or any Subsidiary that is a Loan Party owing to a Subsidiary that is a
Loan Party, (ii) a Subsidiary that is a Loan Party owing to the Borrower or
(iii) any Subsidiary that is not a Loan Party owing to the Borrower or owing to
a Subsidiary that is a Loan Party (in the case of (iii), other than such
Indebtedness that is Indebtedness for borrowed money and has a principal amount
of $5,000,000 or more);

 

(h)                                 subject to Section 11.16(d), any Equity
Interests to the extent that a pledge of such Equity Interests would give rise
to additional subsidiary reporting requirements under Rule 3-10 or Rule 3-16 of
Regulation S-X promulgated under the Exchange Act of 1934;

 

(i)                                     any Consignment Inventory and any
Consignment Proceeds;

 

(j)                                     any Leased-Department Inventory and any
Leased-Department Proceeds;

 

(k)                                  any leases, licenses, rights or other
agreements contained within the Collateral to which any Grantor is a party or
any of its rights or interests are subject thereto to the extent and solely to
the extent that the proximate result of the grant of such security interest
shall be to (1) constitute or result in the abandonment, invalidation or
unenforceability of any right, title or interest in such Grantor therein, or
(2) create a situation under which such Grantor shall be deemed to have breached
or terminated pursuant to the terms of, or defaulted under, any such Collateral;
and in each case under

 

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clauses (1) and (2) above such abandonment, invalidation, unenforceability,
breach, termination or default would not be rendered ineffective pursuant to
Sections 9-406, 9-407, 9-408 or 9-409 of the Uniform Commercial Code (or any
successor provision or provisions) of any relevant jurisdiction or any other
applicable law or principles or equity; provided, however, that the Excluded
Assets shall not include, and such security interest shall attach immediately at
such time as the condition causing such abandonment, invalidation,
unenforceability, breach, termination or default shall be remedied and to the
extent severable, shall attach immediately to, any portion of such lease,
license, right or agreement that does not result in any of the consequences
specified in (1) or (2) above; and

 

(l)                                     assets that are acquired by any Grantor
with the proceeds of Indebtedness incurred pursuant to Section 6.01(b)(vi) of
the Term Loan Credit Agreement and that are subject to a purchase money Lien in
favor of the lenders under such Indebtedness; provided, however, that the
aggregate purchase price paid for the acquisition of such assets shall not
exceed $75,000,000 in the aggregate.

 

 “Exhibit” refers to a specific exhibit to this Agreement, unless another
document is specifically referenced.

 

 “Existing Notes Designated Collateral” means (a) any “Principal Property” (as
such term is defined in the Existing Notes Indenture) of the Borrower or any
Restricted Subsidiary (as defined in the Existing Notes Indenture) and (b) any
Equity Interests or indebtedness of any Subsidiary of the Borrower.  For the
avoidance of doubt, Existing Notes Designated Collateral does not include
(i) any Equity Interests of the Borrower or (ii) any Excluded Assets.

 

“Existing Notes Event of Default” means any “Event of Default”, as defined in
the Existing Notes Indenture.

 

“Existing Notes Indenture” has the meaning set forth in the Preliminary
Statement.

 

“Existing Notes Obligations” means the 2008 Notes Obligations and the 2028
Debenture Obligations.

 

“Existing Notes Trustee” means The Bank of New York, in its capacity as trustee
under the Existing Notes Indenture.

 

“Existing Notes Secured Parties” means the 2008 Notes Secured Parties and the
2028 Debentures Secured Parties.

 

“Fixture” shall have the meaning set forth in Article 9 of the UCC.

 

“General Intangible” shall have the meaning set forth in Article 9 of the UCC.

 

“Goods” shall have the meaning set forth in Article 9 of the UCC.

 

“Grantors” means Holdings, the Borrower and the Subsidiary Parties.

 

“HSBC Credit Card Receivables Accounts” means the deposit accounts # 001846205
held at HSBC Bank USA, N.A. and # 08806372312 held at JPMorgan Chase Bank,
containing proceeds of Specified Credit Card Receivables, which account is owned
by the Borrower but

 

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controlled by HSBC and the ownership of which is anticipated to be transferred
to HSBC in the first or second calendar quarter of 2006.

 

 “Instrument” shall have the meaning set forth in Article 9 of the UCC.

 

“Intercreditor Agreement” means the Lien Subordination and Intercreditor
Agreement dated as of the date hereof, among Holdings, the Borrower, the
Subsidiaries from time to time party thereto, the Revolving Facility Agent and
the Agent, as amended, modified or supplemented from time to time.

 

“Inventory” shall have the meaning set forth in Article 9 of the UCC.

 

“Investment Property” shall have the meaning set forth in Article 9 of the UCC.

 

“Leased-Department Inventory” means any Inventory relating to a leased
department within one of the Grantors’ retail stores, which Inventory is not
owned by a Grantor (and would not be reflected on a consolidated balance sheet
of Borrower and its Subsidiaries prepared in accordance with GAAP).

 

“Leased-Department Proceeds” means any proceeds from the sale of any
Leased-Department Inventory, solely to the extent that such proceeds are
identifiable proceeds from the sale of Leased-Department Inventory and that the
Borrower identifies such proceeds as such through a method of tracing reasonably
satisfactory to the Agent.

 

“Letter-of-Credit Right” shall have the meaning set forth in Article 9 of the
UCC.

 

“Licenses” means, with respect to any Grantor, all of such Grantor’s right,
title, and interest in and to (a) any and all licensing agreements or similar
arrangements in and to its owned (1) Patents, (2) Copyrights, or (3) Trademarks,
(b) all income, royalties, damages, claims, and payments now or hereafter due or
payable under and with respect thereto, including, without limitation, damages
and payments for past and future breaches thereof, and (c) all rights to sue for
past, present, and future breaches thereof.

 

“Obligations” means the Term Loan Obligations and the Existing Notes
Obligations.

 

“Patents” means, with respect to any Person, all of such Person’s right, title,
and interest in and to:  (a) any and all patents and patent applications;
(b) all inventions and improvements described and claimed therein; (c) all
reissues, divisions, continuations, renewals, extensions, and
continuations-in-part thereof; (d) all income, royalties, damages, claims, and
payments now or hereafter due or payable under and with respect thereto,
including, without limitation, damages and payments for past and future
infringements thereof; (e) all rights to sue for past, present, and future
infringements thereof; and (f) all rights corresponding to any of the foregoing
throughout the world.

 

“Perfection Certificate”  means a certificate substantially in the form of
Exhibit I completed and supplemented with the schedules and attachments
contemplated thereby, and duly executed by a Responsible Officer of the
Borrower.

 

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“Permitted Liens” means the “Permitted Liens” as defined in the Term Loan Credit
Agreement.

 

“Pledged Collateral” means all Instruments, Securities and other Investment
Property owned by any Grantor, other than any Instruments, Securities or
Investment Property that is an Excluded Asset (for so long and to the extent
such exclusion is applicable), whether or not physically delivered to the Agent
pursuant to this Agreement.

 

“Receivables” means the Accounts, Chattel Paper, Documents, Investment Property,
Instruments and any other rights or claims to receive money (other than the
Specified Credit Card Receivables) that are General Intangibles or that are
otherwise included as Collateral.

 

“Required Secured Parties” means (a) prior to an acceleration of the Term Loan
Obligations under the Term Loan Credit Agreement, the “Required Lenders” as
defined in the Term Loan Credit Agreement (with any loans under the Term Loan
Credit Agreement and unused commitments thereunder held by the Borrower or any
of its Affiliates being excluded for such purpose), (b) after an acceleration of
the Term Loan Obligations under the Term Loan Credit Agreement but prior to the
date upon which the Term Loan Credit Agreement has terminated by its terms and
all of the obligations thereunder have been paid in full, Term Loan Lenders
holding in the aggregate loans under the Term Loan Credit Agreement representing
more than 50% of the Aggregate Term Loan Credit Exposure (with any such loans
held by the Borrower or any of its Affiliates being excluded for this purpose),
and (c) after the Term Loan Credit Agreement has terminated by its terms and all
of the Term Loan Obligations thereunder have been paid in full (whether or not
the Term Loan Obligations under the Term Loan Credit Agreement were ever
accelerated), Term Loan Lenders holding in the aggregate at least a majority of
the aggregate net Secured Hedging Obligations then due and unpaid from the
Grantors to the Term Loan Lenders under Hedge Agreements, as determined by the
Term Loan Agent in its reasonable discretion.

 

“Revolving Facility Agent” means Deutsche Bank Trust Company Americas, in its
capacity as administrative agent and collateral agent under the Revolving
Facility Credit Agreement.

 

“Revolving Facility Credit Agreement” means the Credit Agreement dated the date
hereof among Holdings, the Borrower, the Subsidiary Parties and the Revolving
Facility Agent, as amended, restated supplemented or otherwise modified from
time to time.

 

“Revolving Facility First Lien Collateral Transition Date” has the meaning set
forth in the Intercreditor Agreement.

 

“Section” means a numbered section of this Agreement, unless another document is
specifically referenced.

 

“Secured Parties” means the Term Loan Secured Parties and the Existing Notes
Secured Parties.

 

“Security” shall have the meaning set forth in Article 8 of the UCC.

 

“Specified Credit Card Receivables” means the Accounts, Documents and other
rights or claims to receive money which are General Intangibles and that have
been or from time to time are

 

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sold or otherwise transferred to (i) HSBC pursuant to the HSBC Arrangements or
(ii) any third party pursuant to any Permitted Replacement Credit Card Program.

 

“Specified Credit Card Payments” means any payments by the holder of a private
label credit card subject to the HSBC Arrangements or any Permitted Replacement
Credit Card Program to the issuer of such credit card that are (i) in the case
of the HSBC Arrangements, made to a HSBC Credit Card Receivables Accounts or
(ii) in the case of any Permitted Replacement Credit Card Program, made to any
account of a Grantor prior to the transition of ownership of such account to the
applicable third party in connection with the establishment of the applicable
Permitted Replacement Credit Card Program.

 

“Specified In-Store Credit Card Payments” means any payments made in-person by
customers in respect of private label credit cards subject to the HSBC
Arrangements or any Permitted Replacement Credit Card Program in one of the
Grantors’ retail stores, solely to the extent that such payments are
identifiable payments from the holders of such private label credit cards and
that the Borrower identifies such payments as such through a method of tracing
reasonably satisfactory to the Agent.

 

 “Stock Rights” means all dividends, instruments or other distributions and any
other right or property which any Grantor shall receive or shall become entitled
to receive for any reason whatsoever with respect to, in substitution for or in
exchange for any Equity Interest constituting Collateral, any right to receive
an Equity Interest constituting Collateral and any right to receive earnings, in
which such Grantor now has or hereafter acquires any right, issued by an issuer
of such Equity Interest.

 

“Subsidiary Parties” means (a) the Subsidiaries identified on Exhibit J hereto,
(b) NM Nevada Trust, a Massachusetts business trust, and (c) each other Domestic
Subsidiary that becomes a party to this Agreement as a Subsidiary Party after
the date hereof, in accordance with Section 11.14 herein and Section 5.11 of the
Term Loan Credit Agreement.

 

“Supporting Obligation” shall have the meaning set forth in Article 9 of the
UCC.

 

“Term Loan Credit Agreement” has the meaning set forth in the Preliminary
Statement.

 

“Term Loan/Notes Documents” has the meaning set forth in the Intercreditor
Agreement.

 

“Term Loan Lenders” means the “Lenders” under and as defined in the Term Loan
Credit Agreement.

 

“Term Loan Obligations” means (a) the due and punctual payment by the Borrower
of (i) the principal of and interest (including interest accruing during the
pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) when
and as due, whether at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise, on the loans under the Term Loan Credit Agreement
and (ii) all other monetary obligations of the Borrower or any other Grantor to
any of the Term Loan Secured Parties under the Term Loan Credit Agreement and
each of the Term Loan Security Documents, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or

 

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otherwise (including monetary obligations incurred during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding), (b) the due and punctual
performance of all other obligations of the Borrower or any other Grantor to any
of the Term Loan Secured Parties under or pursuant to the Term Loan Credit
Agreement and each of the Term Loan Security Documents and (c) the due and
punctual payment and performance of all the obligations of the Borrower and each
other Grantor to any of the Term Loan Secured Parties under this Agreement and
each of the Term Loan Security Documents.

 

“Term Loan Secured Parties” means (a) the Term Loan Lenders, (b) the Agent,
(c) each counterparty to any Hedge Agreement with a Loan Party the obligations
under which constitute Secured Hedge Obligations, (d) each beneficiary of any
indemnification obligation undertaken by the Borrower or any other Grantor under
any Term Loan/Notes Document and (e) the successors and assigns of each of the
foregoing.

 

“Term Loan Security Documents” shall have the meaning set forth in the
Intercreditor Agreement.

 

“Trademarks” means, with respect to any Person, all of such Person’s right,
title, and interest in and to the following:  (a) all trademarks (including
service marks), trade names, trade dress, and trade styles and the registrations
and applications for registration thereof and the goodwill of the business
symbolized by the foregoing; (b) all licenses of the foregoing, whether as
licensee or licensor; (c) all renewals of the foregoing; (d) all income,
royalties, damages, and payments now or hereafter due or payable with respect
thereto, including, without limitation, damages, claims, and payments for past
and future infringements thereof; (e) all rights to sue for past, present, and
future infringements of the foregoing, including the right to settle suits
involving claims and demands for royalties owing; and (f) all rights
corresponding to any of the foregoing throughout the world.

 

“2008 Notes Obligations” means (a) the due and punctual payment by the Borrower
of (i) the principal of and interest (including interest accruing during the
pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) when
and as due, whether at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise, on the 2008 Notes (ii) and all other monetary
obligations of the Borrower or any other Grantor to any of the 2008 Notes
Secured Parties under the Existing Notes Indenture and each of the Term Loan
Security Documents related thereto, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), (b) the due and punctual performance
of all other obligations of the Borrower or any other Grantor to any of the 2008
Notes Secured Parties under or pursuant to the Existing Notes Indenture and each
of the Term Loan Security Documents related thereto and (c) the due and punctual
payment and performance of all the obligations of each other Grantor to any of
the 2008 Notes Secured Parties under this Agreement and each of the Term Loan
Security Documents related thereto.

 

“2008 Notes Secured Parties” means (a) the holders of the 2008 Notes, (b) each
beneficiary of any indemnification obligation undertaken by the Borrower or any
other Grantor under any Existing Notes Indenture and (c) the successors and
assigns of each of the foregoing.

 

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“2028 Debentures Obligations” means (a) the due and punctual payment by the
Borrower of (i) the principal of and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) when
and as due, whether at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise, on the 2028 Debentures and (ii) all other monetary
obligations of the Borrower or any other Grantor to any of the 2028 Debentures
Secured Parties under the Existing Notes Indenture and each of the Term Loan
Security Documents related thereto, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), (b) the due and punctual performance
of all other obligations of the Borrower or any other Grantor to any of the 2028
Debentures Secured Parties under or pursuant to the Existing Notes Indenture and
each of the Term Loan Security Documents related thereto and (c) the due and
punctual payment and performance of all the obligations of each other Grantor to
any of the 2028 Debentures Secured Parties under this Agreement and each of the
Term Loan Security Documents related thereto.

 

“2028 Debentures Secured Parties” means (a) the holders of the 2028 Debentures,
(b) each beneficiary of any indemnification obligation undertaken by the
Borrower or any other Grantor under any Existing Notes Indenture and (c) the
successors and assigns of each of the foregoing.

 

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

 

The foregoing definitions shall be equally applicable to both the singular and
plural forms of the defined terms.

 

ARTICLE II
GRANT OF SECURITY INTEREST

 

Each Grantor hereby pledges, assigns and grants to the Agent, on behalf of and
for the ratable benefit of the Secured Parties, a security interest in all of
its right, title and interest in, to and under all personal property and other
assets, whether now owned by or owing to, or hereafter acquired by or arising in
favor of such Grantor (including under any trade name or derivations thereof),
and regardless of where located (all of which are collectively referred to as
the “Collateral”), including:

 

(I)                                     ALL ACCOUNTS;

 

(II)                                  ALL CHATTEL PAPER;

 

(III)                               ALL COPYRIGHTS, PATENTS AND TRADEMARKS;

 

(IV)                              ALL DOCUMENTS;

 

(V)                                 ALL EQUIPMENT;

 

(VI)                              ALL FIXTURES;

 

(VII)                           ALL GENERAL INTANGIBLES;

 

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(VIII)                        ALL GOODS;

 

(IX)                                ALL INSTRUMENTS;

 

(X)                                   ALL INVENTORY;

 

(XI)                                ALL INVESTMENT PROPERTY;

 

(XII)                             ALL CASH OR CASH EQUIVALENTS;

 

(XIII)                          ALL LETTERS OF CREDIT, LETTER-OF-CREDIT RIGHTS
AND SUPPORTING OBLIGATIONS;

 

(XIV)                         ALL DEPOSIT ACCOUNTS WITH ANY BANK OR OTHER
FINANCIAL INSTITUTION;

 

(XV)                            ALL COMMERCIAL TORT CLAIMS AS SPECIFIED FROM
TIME TO TIME IN EXHIBIT E; AND

 

(XVI)                         ALL ACCESSIONS TO, SUBSTITUTIONS FOR AND
REPLACEMENTS, PROCEEDS (INCLUDING STOCK RIGHTS), INSURANCE PROCEEDS AND PRODUCTS
OF THE FOREGOING, TOGETHER WITH ALL BOOKS AND RECORDS, CUSTOMER LISTS, CREDIT
FILES, COMPUTER FILES, PROGRAMS, PRINTOUTS AND OTHER COMPUTER MATERIALS AND
RECORDS RELATED THERETO AND ANY GENERAL INTANGIBLES AT ANY TIME EVIDENCING OR
RELATING TO ANY OF THE FOREGOING;

 

to secure the prompt and complete payment and performance of the Obligations.

 

Notwithstanding the foregoing or anything herein to the contrary, in no event
shall the “Collateral” include or the security interest attach to any Excluded
Asset.

 

ARTICLE III
REPRESENTATIONS AND WARRANTIES

 

The Grantors, jointly and severally, represent and warrant to the Agent, for the
benefit of the Secured Parties, that:

 

SECTION 3.1.                                   TITLE, PERFECTION AND PRIORITY. 
EACH GRANTOR HAS GOOD AND VALID RIGHTS IN, OR THE POWER TO TRANSFER THE
COLLATERAL AND TITLE TO, THE COLLATERAL WITH RESPECT TO WHICH IT HAS PURPORTED
TO GRANT A SECURITY INTEREST HEREUNDER, FREE AND CLEAR OF ALL LIENS EXCEPT
PERMITTED LIENS, AND HAS FULL POWER AND AUTHORITY TO GRANT TO THE AGENT THE
SECURITY INTEREST IN SUCH COLLATERAL PURSUANT HERETO.  WHEN FINANCING STATEMENTS
HAVE BEEN FILED IN THE APPROPRIATE OFFICES AGAINST SUCH GRANTOR IN THE LOCATIONS
LISTED ON EXHIBIT G, THE AGENT WILL HAVE A FULLY PERFECTED FIRST PRIORITY
SECURITY INTEREST IN THAT COLLATERAL IN WHICH A SECURITY INTEREST MAY BE
PERFECTED BY FILING UNDER THE UNIFORM COMMERCIAL CODE IN EFFECT IN THE
APPLICABLE JURISDICTION, SUBJECT ONLY TO PERMITTED LIENS AND TO THE TERMS OF THE
INTERCREDITOR AGREEMENT.

 

SECTION 3.2.                                   TYPE AND JURISDICTION OF
ORGANIZATION, ORGANIZATIONAL AND IDENTIFICATION NUMBERS.  THE TYPE OF ENTITY OF
EACH GRANTOR, ITS JURISDICTION OF ORGANIZATION, THE ORGANIZATIONAL NUMBER ISSUED
TO IT BY ITS JURISDICTION OF ORGANIZATION AND ITS FEDERAL EMPLOYER
IDENTIFICATION NUMBER ARE SET FORTH ON EXHIBIT A.

 

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SECTION 3.3.                                   PRINCIPAL LOCATION.  EACH
GRANTOR’S MAILING ADDRESS AND THE LOCATION OF ITS PLACE OF BUSINESS (IF IT HAS
ONLY ONE) OR ITS CHIEF EXECUTIVE OFFICE (IF IT HAS MORE THAN ONE PLACE OF
BUSINESS), IS DISCLOSED ON EXHIBIT A.

 

SECTION 3.4.                                   COLLATERAL LOCATIONS.  EACH
LOCATION WHERE COLLATERAL IS LOCATED AS OF THE DATE HEREOF (EXCEPT FOR INVENTORY
IN TRANSIT) IS LISTED ON EXHIBIT A.  ALL OF SAID LOCATIONS ARE OWNED BY A
GRANTOR EXCEPT FOR LOCATIONS (I) THAT ARE LEASED BY A GRANTOR AS LESSEE AND
DESIGNATED IN PART III(B) OF EXHIBIT A AND (II) AT WHICH INVENTORY IS HELD IN A
PUBLIC WAREHOUSE OR IS OTHERWISE HELD BY A BAILEE OR ON CONSIGNMENT AS
DESIGNATED IN PART III(C) OF EXHIBIT A.

 

SECTION 3.5.                                   BAILEES, WAREHOUSEMEN, ETC. 
EXHIBIT B HERETO SETS FORTH A LIST, AS OF THE DATE HEREOF, OF EACH BAILEE,
WAREHOUSEMAN AND OTHER THIRD PARTY IN POSSESSION OR CONTROL OF ANY INVENTORY OF
ANY GRANTOR (EXCEPT FOR INVENTORY IN TRANSIT) AND SPECIFIES AS TO EACH BAILEE,
WAREHOUSEMAN OR OTHER THIRD PARTY WHETHER THE VALUE OF THE INVENTORY, AT COST,
POSSESSED OR CONTROLLED BY SUCH BAILEE, WAREHOUSEMAN OR OTHER THIRD PARTY
EXCEEDS $2,500,000.

 

SECTION 3.6.                                   EXACT NAMES.  THE NAME IN WHICH
EACH GRANTOR HAS EXECUTED THIS AGREEMENT IS THE EXACT NAME AS IT APPEARS IN SUCH
GRANTOR’S ORGANIZATIONAL DOCUMENTS, AS AMENDED, AS FILED WITH SUCH GRANTOR’S
JURISDICTION OF ORGANIZATION.  NO GRANTOR HAS, DURING THE PAST FIVE YEARS, BEEN
KNOWN BY OR USED ANY OTHER CORPORATE OR FICTITIOUS NAME, OR BEEN A PARTY TO ANY
MERGER OR CONSOLIDATION (OTHER THAN, IN THE CASE OF THE BORROWER, THE MERGER)
EXCEPT AS DISCLOSED IN THE PERFECTION CERTIFICATE.

 

SECTION 3.7.                                   LETTER-OF-CREDIT RIGHTS AND
CHATTEL PAPER.  EXHIBIT C LISTS ALL LETTER-OF-CREDIT RIGHTS AND CHATTEL PAPER OF
EACH GRANTOR.  ALL ACTIONS NECESSARY OR DESIRABLE TO PROTECT AND PERFECT THE
AGENT’S LIEN UNDER THE LAWS OF THE UNITED STATES, ON EACH ITEM LISTED ON
EXHIBIT C (INCLUDING THE DELIVERY OF ALL ORIGINALS AS REQUIRED HEREUNDER) HAS
BEEN DULY TAKEN BY EACH GRANTOR. THE AGENT WILL HAVE A FULLY PERFECTED FIRST
PRIORITY SECURITY INTEREST IN THE COLLATERAL LISTED ON EXHIBIT C, SUBJECT ONLY
TO PERMITTED LIENS AND TO THE TERMS OF THE INTERCREDITOR AGREEMENT.

 

SECTION 3.8.                                   ACCOUNTS AND CHATTEL PAPER.  THE
NAMES OF THE OBLIGORS, AMOUNTS OWING, DUE DATES AND OTHER INFORMATION WITH
RESPECT TO EACH GRANTOR’S ACCOUNTS AND CHATTEL PAPER THAT ARE COLLATERAL ARE AND
WILL BE CORRECTLY STATED, AT THE TIME FURNISHED, IN ALL RECORDS OF SUCH GRANTOR
RELATING THERETO AND IN ALL INVOICES FURNISHED TO THE AGENT BY SUCH GRANTOR FROM
TIME TO TIME.

 

SECTION 3.9.                                   INTELLECTUAL PROPERTY.  NO
GRANTOR HAS ANY INTEREST IN, OR TITLE TO, ANY PATENT, TRADEMARK OR COPYRIGHT
EXCEPT AS SET FORTH ON EXHIBIT D.  THIS AGREEMENT IS EFFECTIVE TO CREATE A VALID
AND CONTINUING LIEN UNDER THE UCC AND THE LAWS OF THE UNITED STATES AND, UPON
FILING OF APPROPRIATE FINANCING STATEMENTS IN THE OFFICES LISTED ON EXHIBIT G
AND THIS AGREEMENT WITH THE UNITED STATES COPYRIGHT OFFICE AND THE UNITED STATES
PATENT AND TRADEMARK OFFICE, FULLY PERFECTED FIRST PRIORITY SECURITY INTERESTS
UNDER THE UCC AND THE LAWS OF THE UNITED STATES (SUBJECT TO THE TERMS OF THE
INTERCREDITOR AGREEMENT) IN FAVOR OF THE AGENT FOR THE RATABLE BENEFIT OF THE
SECURED PARTIES ON THE PATENTS, TRADEMARKS AND COPYRIGHTS OF THE GRANTORS, SUCH
PERFECTED SECURITY INTERESTS ARE ENFORCEABLE AS SUCH AS AGAINST ANY AND ALL
CREDITORS OF AND PURCHASERS FROM THE GRANTORS; AND ALL ACTION NECESSARY OR
DESIRABLE UNDER THE UCC AND THE LAWS OF THE UNITED STATES TO PROTECT AND PERFECT
THE AGENT’S LIEN ON THE PATENTS, TRADEMARKS OR COPYRIGHTS OF THE GRANTORS SHALL
HAVE BEEN DULY TAKEN.

 

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SECTION 3.10.                             NO FINANCING STATEMENTS, SECURITY
AGREEMENTS.  NO FINANCING STATEMENT OR SECURITY AGREEMENT DESCRIBING ALL OR ANY
PORTION OF THE COLLATERAL THAT HAS NOT LAPSED OR BEEN TERMINATED NAMING A
GRANTOR AS DEBTOR HAS BEEN FILED OR IS OF RECORD IN ANY JURISDICTION EXCEPT
(A) FOR FINANCING STATEMENTS OR SECURITY AGREEMENTS NAMING THE AGENT ON BEHALF
OF THE SECURED PARTIES AS THE SECURED PARTY AND (B) PERMITTED LIENS.

 

SECTION 3.11.                             PLEDGED COLLATERAL.

 

(A)                                  EXHIBIT F SETS FORTH A COMPLETE AND
ACCURATE LIST OF ALL OF THE PLEDGED COLLATERAL AND THE PERCENTAGE OF THE TOTAL
ISSUED AND OUTSTANDING EQUITY INTERESTS OF THE ISSUER REPRESENTED THEREBY
(EXCEPT ANY EQUITY INTERESTS IN RESPECT OF WHICH A GRANTOR OWNS LESS THAN 10% OF
THE EQUITY INTERESTS OF THE ISSUER OF SUCH EQUITY INTERESTS).  EACH GRANTOR IS
THE DIRECT, SOLE BENEFICIAL OWNER AND SOLE HOLDER OF RECORD OF THE PLEDGED
COLLATERAL LISTED ON EXHIBIT F AS BEING OWNED BY IT, FREE AND CLEAR OF ANY
LIENS, EXCEPT FOR THE SECURITY INTEREST GRANTED TO THE AGENT FOR THE RATABLE
BENEFIT OF THE SECURED PARTIES HEREUNDER AND PERMITTED LIENS.  EACH GRANTOR
FURTHER REPRESENTS AND WARRANTS THAT (I) ALL PLEDGED COLLATERAL CONSTITUTING AN
EQUITY INTEREST HAS BEEN (TO THE EXTENT SUCH CONCEPTS ARE RELEVANT WITH RESPECT
TO SUCH PLEDGED COLLATERAL) DULY AUTHORIZED AND VALIDLY ISSUED BY THE ISSUER
THEREOF AND ARE FULLY PAID AND NON-ASSESSABLE, (II) WITH RESPECT TO ANY
CERTIFICATES DELIVERED TO THE AGENT REPRESENTING AN EQUITY INTEREST, EITHER SUCH
CERTIFICATES ARE SECURITIES AS DEFINED IN ARTICLE 8 OF THE UCC AS A RESULT OF
ACTIONS BY THE ISSUER OR OTHERWISE, OR, IF SUCH CERTIFICATES ARE NOT SECURITIES,
SUCH GRANTOR HAS SO INFORMED THE AGENT SO THAT THE AGENT MAY TAKE STEPS TO
PERFECT ITS SECURITY INTEREST THEREIN AS A GENERAL INTANGIBLE, (III) IT SHALL
HAVE USED COMMERCIALLY REASONABLE EFFORTS TO ENSURE THAT ALL PLEDGED COLLATERAL
HELD BY A SECURITIES INTERMEDIARY IS COVERED BY A CONTROL AGREEMENT AMONG THE
APPLICABLE GRANTOR, THE SECURITIES INTERMEDIARY AND THE AGENT PURSUANT TO WHICH
THE AGENT HAS CONTROL AND (IV) ALL PLEDGED COLLATERAL THAT REPRESENTS
INDEBTEDNESS OWED TO ANY GRANTOR HAS BEEN DULY AUTHORIZED, AUTHENTICATED OR
ISSUED AND DELIVERED BY THE ISSUER OF SUCH INDEBTEDNESS, IS THE LEGAL, VALID AND
BINDING OBLIGATION OF SUCH ISSUER AND SUCH ISSUER IS NOT IN DEFAULT THEREUNDER.

 

(B)                                 (I) NONE OF THE PLEDGED COLLATERAL HAS BEEN
ISSUED OR TRANSFERRED IN VIOLATION OF THE SECURITIES REGISTRATION, SECURITIES
DISCLOSURE OR SIMILAR LAWS OF ANY JURISDICTION TO WHICH SUCH ISSUANCE OR
TRANSFER MAY BE SUBJECT, (II) NONE OF THE PLEDGED COLLATERAL IS OR WILL BE
SUBJECT TO ANY OPTION, RIGHT OF FIRST REFUSAL, SHAREHOLDERS AGREEMENT, CHARTER
OR BY-LAW PROVISIONS OR CONTRACTUAL RESTRICTION OF ANY NATURE THAT MIGHT
PROHIBIT, IMPAIR, DELAY OR OTHERWISE AFFECT THE PLEDGE OF SUCH PLEDGED
COLLATERAL HEREUNDER, THE SALE OR DISPOSITION THEREOF PURSUANT HERETO OR THE
EXERCISE BY THE AGENT OF RIGHTS AND REMEDIES HEREUNDER, AND (III) NO CONSENT,
APPROVAL, AUTHORIZATION, OR OTHER ACTION BY, AND NO GIVING OF NOTICE, FILING
WITH, ANY GOVERNMENTAL AUTHORITY OR ANY OTHER PERSON IS REQUIRED FOR THE PLEDGE
BY THE GRANTORS OF THE PLEDGED COLLATERAL PURSUANT TO THIS AGREEMENT OR FOR THE
EXECUTION, DELIVERY AND PERFORMANCE OF THIS AGREEMENT BY THE GRANTORS, OR FOR
THE EXERCISE BY THE AGENT OF THE VOTING OR OTHER RIGHTS PROVIDED FOR IN THIS
AGREEMENT OR FOR THE REMEDIES IN RESPECT OF THE PLEDGED COLLATERAL PURSUANT TO
THIS AGREEMENT, EXCEPT AS MAY BE REQUIRED IN CONNECTION WITH SUCH DISPOSITION BY
LAWS AFFECTING THE OFFERING AND SALE OF SECURITIES GENERALLY.

 

(C)                                  EXCEPT AS SET FORTH ON EXHIBIT F, NONE OF
THE PLEDGED COLLATERAL WHICH REPRESENTS INDEBTEDNESS OWED TO A GRANTOR IS
SUBORDINATED IN RIGHT OF PAYMENT TO OTHER INDEBTEDNESS OR SUBJECT TO THE TERMS
OF AN INDENTURE.

 

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SECTION 3.12.                             COMMERCIAL TORT CLAIMS.  AS OF THE
DATE HEREOF, NO GRANTOR HOLDS ANY COMMERCIAL TORT CLAIMS HAVING A VALUE IN
EXCESS OF $1,000,000 FOR WHICH SUCH GRANTOR HAS FILED A COMPLAINT IN A COURT OF
COMPETENT JURISDICTION, EXCEPT AS INDICATED ON EXHIBIT E HERETO.

 

SECTION 3.13.                             PERFECTION CERTIFICATE.  THE
PERFECTION CERTIFICATE HAS BEEN DULY PREPARED, COMPLETED AND EXECUTED AND THE
INFORMATION SET FORTH THEREIN IS CORRECT AND COMPLETE IN ALL MATERIAL RESPECTS
AS OF THE DATE HEREOF.

 

ARTICLE IV
COVENANTS

 

From the date hereof, and thereafter until this Agreement is terminated, each
Grantor agrees that:

 

SECTION 4.1.                                   GENERAL.

 

(A)                                  COLLATERAL RECORDS.  EACH GRANTOR WILL
MAINTAIN COMPLETE AND ACCURATE BOOKS AND RECORDS AS IS CONSISTENT WITH ITS
PRACTICES AS OF THE DATE HEREOF IN ALL MATERIAL RESPECTS WITH RESPECT TO THE
COLLATERAL, AND FURNISH TO THE AGENT SUCH REPORTS RELATING TO THE COLLATERAL AS
THE AGENT SHALL FROM TIME TO TIME REASONABLY REQUEST.

 

(B)                                 AUTHORIZATION TO FILE FINANCING STATEMENTS;
RATIFICATION.  EACH GRANTOR HEREBY AUTHORIZES THE AGENT TO FILE, AND IF
REQUESTED WILL DELIVER TO THE AGENT, ALL FINANCING STATEMENTS AND OTHER
DOCUMENTS AND TAKE SUCH OTHER ACTIONS AS MAY FROM TIME TO TIME BE REQUESTED BY
THE AGENT IN ORDER TO MAINTAIN A FIRST PRIORITY (SUBJECT TO THE TERMS OF THE
INTERCREDITOR AGREEMENT) PERFECTED SECURITY INTEREST IN AND, IF APPLICABLE,
CONTROL OF, THE COLLATERAL.  ANY FINANCING STATEMENT FILED BY THE AGENT MAY BE
FILED IN ANY FILING OFFICE IN ANY APPLICABLE UNIFORM COMMERCIAL CODE
JURISDICTION AND MAY (I) INDICATE THE COLLATERAL (1) AS ALL ASSETS OF THE
APPLICABLE GRANTOR OR WORDS OF SIMILAR EFFECT, REGARDLESS OF WHETHER ANY
PARTICULAR ASSET COMPRISED IN THE COLLATERAL FALLS WITHIN THE SCOPE OF ARTICLE 9
OF THE UNIFORM COMMERCIAL CODE OF SUCH JURISDICTION, OR (2) BY ANY OTHER
DESCRIPTION WHICH REASONABLY APPROXIMATES THE DESCRIPTION CONTAINED IN THIS
AGREEMENT, AND (II) CONTAIN ANY OTHER INFORMATION REQUIRED BY PART 5 OF
ARTICLE 9 OF THE UCC FOR THE SUFFICIENCY OR FILING OFFICE ACCEPTANCE OF ANY
FINANCING STATEMENT OR AMENDMENT, INCLUDING (A) WHETHER THE GRANTOR IS AN
ORGANIZATION, THE TYPE OF ORGANIZATION AND ANY ORGANIZATION IDENTIFICATION
NUMBER ISSUED TO THE GRANTOR AND (B) IN THE CASE OF A FINANCING STATEMENT FILED
AS A FIXTURE FILING, A SUFFICIENT DESCRIPTION OF REAL PROPERTY TO WHICH THE
COLLATERAL RELATES.  EACH GRANTOR ALSO AGREES TO FURNISH ANY SUCH INFORMATION TO
THE AGENT PROMPTLY UPON REQUEST.  EACH GRANTOR ALSO RATIFIES ITS AUTHORIZATION
FOR THE AGENT TO HAVE FILED IN ANY UNIFORM COMMERCIAL CODE JURISDICTION ANY
INITIAL FINANCING STATEMENTS OR AMENDMENTS THERETO IF FILED PRIOR TO THE DATE
HEREOF.

 

(C)                                  FURTHER ASSURANCES.  EACH GRANTOR WILL, IF
REASONABLY REQUESTED BY THE AGENT, BUT NOT MORE FREQUENTLY THAN ONCE PER
QUARTER, FURNISH TO THE AGENT STATEMENTS AND SCHEDULES FURTHER IDENTIFYING AND
DESCRIBING THE COLLATERAL AND SUCH OTHER REPORTS AND INFORMATION IN CONNECTION
WITH THE COLLATERAL AS THE AGENT MAY REASONABLY REQUEST, ALL IN SUCH DETAIL AS
THE AGENT MAY REASONABLY SPECIFY.  EACH GRANTOR ALSO AGREES TO TAKE ANY AND ALL
ACTIONS NECESSARY TO DEFEND TITLE TO THE COLLATERAL AGAINST ALL PERSONS AND TO
DEFEND THE SECURITY INTEREST OF THE AGENT IN THE COLLATERAL AND THE PRIORITY
THEREOF AGAINST ANY LIEN OTHER THAN PERMITTED LIENS.

 

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(D)                                 DISPOSITION OF COLLATERAL.  NO GRANTOR WILL
SELL, LEASE, TRANSFER OR OTHERWISE DISPOSE OF THE COLLATERAL EXCEPT FOR SALES,
LEASES, TRANSFERS AND OTHER DISPOSITIONS SPECIFICALLY PERMITTED PURSUANT TO THE
TERMS OF THE TERM LOAN CREDIT AGREEMENT.

 

(E)                                  LIENS.  NO GRANTOR WILL CREATE, INCUR, OR
SUFFER TO EXIST ANY LIEN ON THE COLLATERAL EXCEPT (I) THE SECURITY INTEREST
CREATED BY THIS AGREEMENT AND (II) PERMITTED LIENS.

 

(F)                                    OTHER FINANCING STATEMENTS.  NO GRANTOR
WILL AUTHORIZE THE FILING OF ANY FINANCING STATEMENT NAMING IT AS DEBTOR
COVERING ALL OR ANY PORTION OF THE COLLATERAL, EXCEPT TO COVER SECURITY
INTERESTS THAT ARE PERMITTED LIENS. EACH GRANTOR ACKNOWLEDGES THAT IT IS NOT
AUTHORIZED TO FILE ANY FINANCING STATEMENT OR AMENDMENT OR TERMINATION STATEMENT
WITH RESPECT TO ANY FINANCING STATEMENT WITHOUT THE PRIOR WRITTEN CONSENT OF THE
AGENT, SUBJECT TO SUCH GRANTOR’S RIGHTS UNDER SECTION 9-509(D)(2) OF THE UCC. 
WITHOUT LIMITING THE FOREGOING, EACH GRANTOR SHALL USE ITS COMMERCIALLY
REASONABLE EFFORTS TO ENSURE THAT ANY FINANCING STATEMENT FILED BY ANY PERSON
WITH RESPECT TO CONSIGNMENT INVENTORY SHALL CLEARLY INDICATE THAT SUCH FINANCING
STATEMENT RELATES TO A CONSIGNMENT TRANSACTION WITH RESPECT TO SUCH CONSIGNMENT
INVENTORY BETWEEN THE APPLICABLE GRANTOR AND SUCH PERSON.

 

(G)                                 CHANGE OF NAME, ETC.  EACH GRANTOR AGREES TO
FURNISH TO THE AGENT PROMPT WRITTEN NOTICE OF ANY CHANGE IN:  (I) SUCH GRANTOR’S
NAME; (II) THE LOCATION OF SUCH GRANTOR’S CHIEF EXECUTIVE OFFICE OR ITS
PRINCIPAL PLACE OF BUSINESS; (III) SUCH GRANTOR’S ORGANIZATIONAL LEGAL ENTITY
DESIGNATION OR JURISDICTION OF INCORPORATION OR FORMATION; (IV) SUCH GRANTOR’S
FEDERAL TAXPAYER IDENTIFICATION NUMBER OR ORGANIZATIONAL IDENTIFICATION NUMBER
ASSIGNED TO IT BY ITS JURISDICTION OF INCORPORATION OR FORMATION; OR (V) THE
ACQUISITION BY SUCH GRANTOR OF ANY MATERIAL PROPERTY FOR WHICH ADDITIONAL
FILINGS OR RECORDINGS ARE NECESSARY TO PERFECT AND MAINTAIN THE AGENT’S SECURITY
INTEREST THEREIN (TO THE EXTENT PERFECTION OF THE SECURITY INTEREST IN SUCH
PROPERTY IS REQUIRED BY THE TERMS HEREOF).  EACH GRANTOR AGREES NOT TO EFFECT OR
PERMIT ANY CHANGE REFERRED TO IN THE PRECEDING SENTENCE UNLESS ALL FILINGS HAVE
BEEN MADE UNDER THE UNIFORM COMMERCIAL CODE OR OTHER APPLICABLE LAW THAT ARE
REQUIRED IN ORDER FOR THE AGENT TO CONTINUE AT ALL TIMES FOLLOWING SUCH CHANGE
TO HAVE A VALID, LEGAL AND PERFECTED, FIRST PRIORITY SECURITY INTEREST (SUBJECT
TO THE TERMS OF THE INTERCREDITOR AGREEMENT AND TO PERMITTED LIENS THAT HAVE
PRIORITY BY OPERATION OF APPLICABLE LAW) IN THE COLLATERAL FOR ITS BENEFIT AND
THE BENEFIT OF THE OTHER SECURED PARTIES.

 

(H)                                 COMPLIANCE WITH TERMS.  EACH GRANTOR WILL
PERFORM AND COMPLY IN ALL MATERIAL RESPECTS WITH ALL OBLIGATIONS IN RESPECT OF
THE COLLATERAL AND ALL MATERIAL AGREEMENTS RELATING TO THE COLLATERAL TO WHICH
IT IS A PARTY OR BY WHICH IT IS BOUND.

 

SECTION 4.2.                                   RECEIVABLES.

 

(A)                                  CERTAIN AGREEMENTS ON RECEIVABLES.  NO
GRANTOR WILL MAKE OR AGREE TO MAKE ANY DISCOUNT, CREDIT, REBATE OR OTHER
REDUCTION IN THE ORIGINAL AMOUNT OWING ON A RECEIVABLE OR ACCEPT IN SATISFACTION
OF A RECEIVABLE LESS THAN THE ORIGINAL AMOUNT THEREOF, EXCEPT THAT, PRIOR TO THE
OCCURRENCE OF AN EVENT OF DEFAULT, ANY GRANTOR MAY REDUCE THE AMOUNT OF
ACCOUNTS, WHETHER FROM THE SALE OF INVENTORY OR OTHERWISE, IN ACCORDANCE WITH
ITS PRESENT POLICIES AND IN THE ORDINARY COURSE OF BUSINESS.

 

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(B)                                 COLLECTION OF RECEIVABLES.  EXCEPT AS
OTHERWISE PROVIDED IN THIS AGREEMENT, EACH GRANTOR WILL COLLECT AND ENFORCE, IN
ACCORDANCE WITH ITS PRESENT POLICIES AND IN THE ORDINARY COURSE OF BUSINESS, ALL
AMOUNTS DUE OR HEREAFTER DUE TO SUCH GRANTOR UNDER THE RECEIVABLES.

 

(C)                                  ELECTRONIC CHATTEL PAPER.  IF ANY GRANTOR
AT ANY TIME HOLDS OR ACQUIRES AN INTEREST IN ANY ELECTRONIC CHATTEL PAPER OR ANY
“TRANSFERABLE RECORD”, AS THAT TERM IS DEFINED IN SECTION 201 OF THE FEDERAL
ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL COMMERCE ACT, OR IN SECTION 16 OF
THE UNIFORM ELECTRONIC TRANSACTIONS ACT AS IN EFFECT IN ANY RELEVANT
JURISDICTION, SUCH GRANTOR SHALL PROMPTLY NOTIFY THE AGENT THEREOF AND, AT THE
REQUEST OF THE AGENT, SHALL TAKE SUCH ACTION AS THE AGENT MAY REASONABLY REQUEST
TO VEST IN THE AGENT CONTROL UNDER UCC SECTION 9-105 OF SUCH ELECTRONIC CHATTEL
PAPER OR CONTROL (TO THE EXTENT THE MEANING OF “CONTROL” HAS NOT BEEN CLEARLY
ESTABLISHED UNDER SUCH PROVISIONS, “CONTROL” IN THIS PARAGRAPH (C) TO HAVE SUCH
MEANING AS THE AGENT SHALL IN GOOD FAITH SPECIFY IN WRITING AFTER CONSULTATION
WITH THE BORROWER) UNDER SECTION 201 OF THE FEDERAL ELECTRONIC SIGNATURES IN
GLOBAL AND NATIONAL COMMERCE ACT OR, AS THE CASE MAY BE, SECTION 16 OF THE
UNIFORM ELECTRONIC TRANSACTIONS ACT, AS SO IN EFFECT IN SUCH JURISDICTION, OF
SUCH TRANSFERABLE RECORD.  THE AGENT AGREES WITH SUCH GRANTOR THAT THE AGENT
WILL ARRANGE, PURSUANT TO PROCEDURES REASONABLY SATISFACTORY TO THE AGENT AND SO
LONG AS SUCH PROCEDURES WILL NOT RESULT IN THE AGENT’S LOSS OF CONTROL OR
CONTROL, AS APPLICABLE, FOR THE GRANTOR TO MAKE ALTERATIONS TO THE ELECTRONIC
CHATTEL PAPER OR TRANSFERABLE RECORD PERMITTED UNDER UCC SECTION 9-105 OR, AS
THE CASE MAY BE, SECTION 201 OF THE FEDERAL ELECTRONIC SIGNATURES IN GLOBAL AND
NATIONAL COMMERCE ACT OR SECTION 16 OF THE UNIFORM ELECTRONIC TRANSACTIONS ACT
FOR A PARTY IN CONTROL TO ALLOW WITHOUT LOSS OF CONTROL OR CONTROL, AS
APPLICABLE, UNLESS AN EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING OR WOULD
OCCUR AFTER TAKING INTO ACCOUNT ANY ACTION BY SUCH GRANTOR WITH RESPECT TO SUCH
ELECTRONIC CHATTEL PAPER OR TRANSFERABLE RECORD.

 

SECTION 4.3.                                   DELIVERY OF INSTRUMENTS,
SECURITIES, CHATTEL PAPER AND DOCUMENTS. EACH GRANTOR WILL (A) DELIVER TO THE
AGENT IMMEDIATELY UPON EXECUTION OF THIS AGREEMENT THE ORIGINALS OF ALL CHATTEL
PAPER, SECURITIES AND INSTRUMENTS CONSTITUTING COLLATERAL (IF ANY THEN EXIST),
(B) HOLD IN TRUST FOR THE AGENT UPON RECEIPT AND PROMPTLY THEREAFTER DELIVER TO
THE AGENT ANY CHATTEL PAPER, SECURITIES AND INSTRUMENTS CONSTITUTING COLLATERAL
RECEIVED AFTER THE DATE HEREOF, (C) UPON THE AGENT’S REQUEST, DELIVER TO THE
AGENT, AND THEREAFTER HOLD IN TRUST FOR THE AGENT UPON RECEIPT AND PROMPTLY
DELIVER TO THE AGENT ANY DOCUMENT EVIDENCING OR CONSTITUTING COLLATERAL AND
(D) UPON THE AGENT’S REQUEST, DELIVER TO THE AGENT A DULY EXECUTED AMENDMENT TO
THIS AGREEMENT, IN THE FORM OF EXHIBIT H HERETO (EACH, AN “AMENDMENT”), PURSUANT
TO WHICH SUCH GRANTOR WILL PLEDGE ANY ADDITIONAL COLLATERAL.  EACH GRANTOR
HEREBY AUTHORIZES THE AGENT TO ATTACH EACH AMENDMENT TO THIS AGREEMENT AND
AGREES THAT ALL ADDITIONAL COLLATERAL SET FORTH IN SUCH AMENDMENTS SHALL BE
CONSIDERED TO BE PART OF THE COLLATERAL.

 

SECTION 4.4.                                   UNCERTIFICATED PLEDGED
COLLATERAL.  THE GRANTORS WILL PERMIT THE AGENT FROM TIME TO TIME TO CAUSE THE
APPROPRIATE ISSUERS (AND, IF HELD WITH A SECURITIES INTERMEDIARY, SUCH
SECURITIES INTERMEDIARY) OF UNCERTIFICATED SECURITIES OR OTHER TYPES OF PLEDGED
COLLATERAL WITH RESPECT TO WHICH A GRANTOR OWNS 50% OR MORE OF THE EQUITY
INTERESTS OF THE ISSUER OF SUCH PLEDGED COLLATERAL NOT REPRESENTED BY
CERTIFICATES TO MARK THEIR BOOKS AND RECORDS WITH THE NUMBERS AND FACE AMOUNTS
OF ALL SUCH UNCERTIFICATED SECURITIES OR OTHER TYPES OF PLEDGED COLLATERAL NOT
REPRESENTED BY CERTIFICATES AND ALL ROLLOVERS AND REPLACEMENTS THEREFOR TO
REFLECT THE LIEN OF THE AGENT GRANTED PURSUANT TO THIS AGREEMENT.  THE GRANTORS
WILL TAKE ANY ACTIONS REASONABLY NECESSARY TO CAUSE (A) THE ISSUERS OF
UNCERTIFICATED SECURITIES WHICH ARE PLEDGED COLLATERAL WITH RESPECT TO WHICH A
GRANTOR OWNS 50% OR MORE OF THE EQUITY INTERESTS OF THE ISSUER OF SUCH PLEDGED
COLLATERAL, AND (B) ANY SECURITIES INTERMEDIARY WHICH IS THE HOLDER OF ANY
PLEDGED COLLATERAL, TO CAUSE THE AGENT TO HAVE AND RETAIN

 

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CONTROL OVER SUCH PLEDGED COLLATERAL.  WITHOUT LIMITING THE FOREGOING, EACH
APPLICABLE GRANTOR WILL USE ITS COMMERCIALLY REASONABLE EFFORTS TO CAUSE, WITH
RESPECT TO PLEDGED COLLATERAL HELD WITH A SECURITIES INTERMEDIARY IN AN ACCOUNT
WITH AN AGGREGATE ASSET VALUE OF $5,000,000 OR MORE, SUCH SECURITIES
INTERMEDIARY TO ENTER INTO A CONTROL AGREEMENT WITH THE AGENT, IN FORM AND
SUBSTANCE SATISFACTORY TO THE AGENT, GIVING THE AGENT CONTROL.

 

SECTION 4.5.                                   PLEDGED COLLATERAL.

 

(A)                                  REGISTRATION IN NOMINEE NAME;
DENOMINATIONS.  THE AGENT, ON BEHALF OF THE SECURED PARTIES, SHALL HOLD
CERTIFICATED PLEDGED COLLATERAL IN THE NAME OF THE APPLICABLE GRANTOR, ENDORSED
OR ASSIGNED IN BLANK OR IN FAVOR OF THE AGENT, BUT FOLLOWING THE OCCURRENCE AND
DURING THE CONTINUANCE OF AN EVENT OF DEFAULT SHALL HAVE THE RIGHT (IN ITS SOLE
AND ABSOLUTE DISCRETION) TO HOLD THE PLEDGED COLLATERAL IN ITS OWN NAME AS
PLEDGEE, OR IN THE NAME OF ITS NOMINEE (AS PLEDGEE OR AS SUB-AGENT).  EACH
GRANTOR WILL PROMPTLY GIVE TO THE AGENT COPIES OF ANY NOTICES OR OTHER
COMMUNICATIONS RECEIVED BY IT WITH RESPECT TO PLEDGED COLLATERAL REGISTERED IN
THE NAME OF SUCH GRANTOR.  FOLLOWING THE OCCURRENCE AND DURING THE CONTINUANCE
OF AN EVENT OF DEFAULT, THE AGENT SHALL AT ALL TIMES HAVE THE RIGHT TO EXCHANGE
THE CERTIFICATES REPRESENTING PLEDGED COLLATERAL FOR CERTIFICATES OF SMALLER OR
LARGER DENOMINATIONS FOR ANY PURPOSE CONSISTENT WITH THIS AGREEMENT.

 

(B)                                 ANY INDEBTEDNESS OF ANY SUBSIDIARY THAT IS
NOT A LOAN PARTY OWING TO THE BORROWER OR ANY SUBSIDIARY THAT IS A LOAN PARTY IN
EXCESS OF $5,000,000 SHALL BE OR BECOME EVIDENCED BY A PROMISSORY NOTE OR OTHER
INSTRUMENT, AND SUCH NOTE OR INSTRUMENT SHALL BE PROMPTLY PLEDGED AND DELIVERED
TO THE AGENT, DULY ENDORSED IN A MANNER SATISFACTORY TO THE AGENT.

 

(C)                                  EXERCISE OF RIGHTS IN PLEDGED COLLATERAL.

 

(I)                                     WITHOUT IN ANY WAY LIMITING THE
FOREGOING AND SUBJECT TO CLAUSE (II) BELOW, EACH GRANTOR SHALL HAVE THE RIGHT TO
EXERCISE ALL VOTING RIGHTS OR OTHER RIGHTS RELATING TO THE PLEDGED COLLATERAL
FOR ALL PURPOSES NOT INCONSISTENT WITH THIS AGREEMENT AND THE OTHER TERM
LOAN/NOTE DOCUMENTS; PROVIDED HOWEVER, THAT NO VOTE OR OTHER RIGHT SHALL BE
EXERCISED OR ACTION TAKEN WHICH WOULD REASONABLY BE EXPECTED TO HAVE THE EFFECT
OF MATERIALLY AND ADVERSELY IMPAIRING THE RIGHTS OF THE AGENT IN RESPECT OF THE
PLEDGED COLLATERAL.

 

(II)                                  EACH GRANTOR WILL PERMIT THE AGENT OR ITS
NOMINEE AT ANY TIME AFTER THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT
OF DEFAULT, WITHOUT NOTICE, TO EXERCISE ALL VOTING RIGHTS OR OTHER RIGHTS
RELATING TO PLEDGED COLLATERAL, INCLUDING, WITHOUT LIMITATION, EXCHANGE,
SUBSCRIPTION OR ANY OTHER RIGHTS, PRIVILEGES, OR OPTIONS PERTAINING TO ANY
EQUITY INTEREST OR INVESTMENT PROPERTY CONSTITUTING PLEDGED COLLATERAL AS IF IT
WERE THE ABSOLUTE OWNER THEREOF.

 

(III)                               EACH GRANTOR SHALL BE ENTITLED TO RECEIVE
AND RETAIN ANY AND ALL DIVIDENDS, INTEREST, PRINCIPAL AND OTHER DISTRIBUTIONS
PAID ON OR DISTRIBUTED IN RESPECT OF THE PLEDGED COLLATERAL TO THE EXTENT AND
ONLY TO THE EXTENT THAT SUCH DIVIDENDS, INTEREST, PRINCIPAL AND OTHER
DISTRIBUTIONS ARE PERMITTED BY, AND OTHERWISE PAID OR DISTRIBUTED IN ACCORDANCE
WITH, THE TERMS AND CONDITIONS OF THE TERM LOAN/NOTE DOCUMENTS AND APPLICABLE
LAW; PROVIDED, HOWEVER, THAT ANY NON-CASH DIVIDENDS, INTEREST, PRINCIPAL OR
OTHER DISTRIBUTIONS THAT WOULD CONSTITUTE PLEDGED COLLATERAL, WHETHER RESULTING
FROM A SUBDIVISION, COMBINATION OR RECLASSIFICATION OF THE

 

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OUTSTANDING EQUITY INTERESTS OF THE ISSUER OF ANY PLEDGED COLLATERAL OR RECEIVED
IN EXCHANGE FOR PLEDGED COLLATERAL OR ANY PART THEREOF, OR IN REDEMPTION
THEREOF, OR AS A RESULT OF ANY MERGER, CONSOLIDATION, ACQUISITION OR OTHER
EXCHANGE OF ASSETS TO WHICH SUCH ISSUER MAY BE A PARTY OR OTHERWISE, SHALL BE
AND BECOME PART OF THE PLEDGED COLLATERAL, AND, IF RECEIVED BY ANY GRANTOR,
SHALL NOT BE COMMINGLED BY SUCH GRANTOR WITH ANY OF ITS OTHER FUNDS OR PROPERTY
BUT SHALL BE HELD SEPARATE AND APART THEREFROM, SHALL BE HELD IN TRUST FOR THE
RATABLE BENEFIT OF THE SECURED PARTIES AND SHALL BE FORTHWITH DELIVERED TO THE
AGENT IN THE SAME FORM AS SO RECEIVED (WITH ANY NECESSARY ENDORSEMENT OR
INSTRUMENT OF ASSIGNMENT).  THE PROVISO TO THE FIRST SENTENCE OF THIS
CLAUSE (III) SHALL NOT APPLY TO DIVIDENDS BETWEEN OR AMONG THE GRANTORS ONLY OF
PROPERTY SUBJECT TO A PERFECTED SECURITY INTEREST UNDER THIS AGREEMENT; PROVIDED
THAT THE BORROWER NOTIFIES THE AGENT IN WRITING, SPECIFICALLY REFERRING TO THIS
SECTION 4.5 AT THE TIME OF SUCH DIVIDEND AND TAKES ANY ACTIONS THE AGENT
REASONABLY SPECIFIES TO ENSURE THE CONTINUANCE OF ITS PERFECTED SECURITY
INTEREST IN SUCH PROPERTY UNDER THIS AGREEMENT.

 

SECTION 4.6.                                   INTELLECTUAL PROPERTY.

 

(A)                                  UPON THE OCCURRENCE AND DURING THE
CONTINUANCE OF AN EVENT OF DEFAULT, EACH GRANTOR WILL USE ITS BEST EFFORTS TO
OBTAIN ALL CONSENTS AND APPROVALS NECESSARY OR APPROPRIATE FOR THE ASSIGNMENT TO
OR FOR THE BENEFIT OF THE AGENT OF ANY LICENSE HELD BY SUCH GRANTOR AND TO
ENFORCE THE SECURITY INTERESTS GRANTED HEREUNDER.

 

(B)                                 EACH GRANTOR SHALL NOTIFY THE AGENT PROMPTLY
IF IT KNOWS OR REASONABLY EXPECTS THAT ANY APPLICATION OR REGISTRATION RELATING
TO ANY PATENT, TRADEMARK OR COPYRIGHT (NOW OR HEREAFTER EXISTING) MATERIAL TO
THE CONDUCT OF SUCH GRANTOR’S BUSINESS MAY BECOME ABANDONED OR DEDICATED, OR OF
ANY MATERIAL ADVERSE DETERMINATION OR DEVELOPMENT (INCLUDING THE INSTITUTION OF,
OR ANY SUCH DETERMINATION OR DEVELOPMENT IN, ANY PROCEEDING IN THE UNITED STATES
PATENT AND TRADEMARK OFFICE, THE UNITED STATES COPYRIGHT OFFICE OR ANY COURT)
REGARDING SUCH GRANTOR’S OWNERSHIP OF ANY SUCH PATENT, TRADEMARK OR COPYRIGHT,
ITS RIGHT TO REGISTER THE SAME, OR TO KEEP AND MAINTAIN THE SAME.

 

(C)                                  IN NO EVENT SHALL ANY GRANTOR, EITHER
DIRECTLY OR THROUGH ANY AGENT, EMPLOYEE, LICENSEE OR DESIGNEE, FILE AN
APPLICATION FOR THE REGISTRATION OF ANY MATERIAL PATENT, TRADEMARK OR COPYRIGHT
WITH THE UNITED STATES PATENT AND TRADEMARK OFFICE, THE UNITED STATES COPYRIGHT
OFFICE OR ANY SIMILAR OFFICE OR AGENCY WITHOUT GIVING THE AGENT PROMPT WRITTEN
NOTICE THEREOF, AND, UPON REQUEST OF THE AGENT, SUCH GRANTOR SHALL EXECUTE AND
DELIVER ANY AND ALL SECURITY AGREEMENTS OR OTHER INSTRUMENTS AS THE AGENT MAY
REASONABLY REQUEST TO EVIDENCE THE AGENT’S SECURITY INTEREST IN SUCH PATENT,
TRADEMARK OR COPYRIGHT, AND THE GENERAL INTANGIBLES OF SUCH GRANTOR RELATING
THERETO OR REPRESENTED THEREBY.

 

(D)                                 EACH GRANTOR SHALL TAKE ALL ACTIONS
NECESSARY OR REASONABLY REQUESTED BY THE AGENT TO MAINTAIN AND PURSUE EACH
MATERIAL APPLICATION, TO OBTAIN THE RELEVANT REGISTRATION AND TO MAINTAIN THE
REGISTRATION OF EACH OF THE PATENTS, TRADEMARKS AND COPYRIGHTS (NOW OR HEREAFTER
EXISTING) MATERIAL TO THE CONDUCT OF SUCH GRANTOR’S BUSINESS, EXCEPT IN CASES
WHERE, IN THE ORDINARY COURSE OF BUSINESS CONSISTENT WITH PAST PRACTICE, SUCH
GRANTOR REASONABLY DECIDES TO ABANDON, ALLOW TO LAPSE OR EXPIRE ANY PATENT,
TRADEMARK OR COPYRIGHT, INCLUDING THE FILING OF APPLICATIONS FOR RENEWAL,
AFFIDAVITS OF USE, AFFIDAVITS OF NONCONTESTABILITY AND, IF CONSISTENT WITH GOOD
BUSINESS JUDGMENT AND PAST PRACTICE, TO INITIATE OPPOSITION AND INTERFERENCE AND
CANCELLATION PROCEEDINGS AGAINST THIRD PARTIES.

 

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(E)                                  CONSISTENT WITH EACH GRANTOR’S PAST
PRACTICE, EACH GRANTOR SHALL, UNLESS IT SHALL REASONABLY DETERMINE THAT A
PATENT, TRADEMARK OR COPYRIGHT IS NOT MATERIAL TO THE CONDUCT OF ITS BUSINESS,
PROMPTLY NOTIFY THE AGENT AND SHALL, IF CONSISTENT WITH GOOD BUSINESS JUDGMENT,
PROMPTLY SUE FOR INFRINGEMENT, MISAPPROPRIATION OR DILUTION OF SUCH PATENT,
TRADEMARK OR COPYRIGHT AND TO RECOVER ANY AND ALL DAMAGES FOR SUCH INFRINGEMENT,
MISAPPROPRIATION OR DILUTION, AND SHALL TAKE SUCH OTHER ACTIONS AS ARE
APPROPRIATE UNDER THE CIRCUMSTANCES TO PROTECT SUCH PATENT, TRADEMARK OR
COPYRIGHT.

 

SECTION 4.7.                                   COMMERCIAL TORT CLAIMS.  EACH
GRANTOR SHALL PROMPTLY NOTIFY THE AGENT OF ANY COMMERCIAL TORT CLAIM HAVING A
VALUE IN EXCESS OF $1,000,000 ACQUIRED BY IT FOR WHICH SUCH GRANTOR HAS FILED A
COMPLAINT IN A COURT OF COMPETENT JURISDICTION AND, UNLESS THE AGENT OTHERWISE
CONSENTS, SUCH GRANTOR SHALL UPDATE EXHIBIT E TO THIS AGREEMENT, THEREBY
GRANTING TO THE AGENT A FIRST PRIORITY SECURITY INTEREST IN SUCH COMMERCIAL TORT
CLAIM (SUBJECT TO THE INTERCREDITOR AGREEMENT).

 

SECTION 4.8.                                   LETTER-OF-CREDIT RIGHTS.  IF ANY
GRANTOR IS OR BECOMES THE BENEFICIARY OF A LETTER OF CREDIT HAVING A FACE AMOUNT
IN EXCESS OF $1,000,000, SUCH GRANTOR SHALL PROMPTLY NOTIFY THE AGENT THEREOF
AND CAUSE THE ISSUER AND/OR CONFIRMATION BANK TO CONSENT TO THE ASSIGNMENT OF
ANY LETTER-OF-CREDIT RIGHTS TO THE AGENT.

 

SECTION 4.9.                                   NO INTERFERENCE.  EACH GRANTOR
AGREES THAT IT WILL NOT INTERFERE WITH ANY RIGHT, POWER AND REMEDY OF THE AGENT
PROVIDED FOR IN THIS AGREEMENT OR NOW OR HEREAFTER EXISTING AT LAW OR IN EQUITY
OR BY STATUTE OR OTHERWISE, OR THE EXERCISE OR BEGINNING OF THE EXERCISE BY THE
AGENT OF ANY ONE OR MORE OF SUCH RIGHTS, POWERS OR REMEDIES.

 

SECTION 4.10.                             INSURANCE.  (A)                    IN
THE EVENT ANY COLLATERAL IS LOCATED IN ANY AREA THAT HAS BEEN DESIGNATED BY THE
FEDERAL EMERGENCY MANAGEMENT AGENCY AS A “SPECIAL FLOOD HAZARD AREA”, THE
APPLICABLE GRANTOR SHALL PURCHASE AND MAINTAIN FLOOD INSURANCE ON SUCH
COLLATERAL (INCLUDING ANY PERSONAL PROPERTY WHICH IS LOCATED ON ANY REAL
PROPERTY LEASED BY SUCH LOAN PARTY WITHIN A “SPECIAL FLOOD HAZARD AREA”).  THE
AMOUNT OF ALL INSURANCE REQUIRED BY THIS SECTION SHALL AT A MINIMUM COMPLY WITH
APPLICABLE LAW, INCLUDING THE FLOOD DISASTER PROTECTION ACT OF 1973, AS AMENDED.
 ALL PREMIUMS ON SUCH INSURANCE SHALL BE PAID WHEN DUE BY SUCH GRANTOR, AND
COPIES OF THE POLICIES DELIVERED TO THE AGENT.  IF ANY GRANTOR FAILS TO OBTAIN
ANY INSURANCE AS REQUIRED BY THIS SECTION, THE AGENT AT THE DIRECTION OF THE
REQUIRED LENDERS MAY OBTAIN SUCH INSURANCE AT THE BORROWER’S EXPENSE.  BY
PURCHASING SUCH INSURANCE, THE AGENT SHALL NOT BE DEEMED TO HAVE WAIVED ANY
DEFAULT ARISING FROM THE GRANTORS’ FAILURE TO MAINTAIN SUCH INSURANCE OR PAY ANY
PREMIUMS THEREFOR.

 

(B)                                 ALL INSURANCE POLICIES REQUIRED UNDER
SECTION 5.10 OF THE TERM LOAN CREDIT AGREEMENT SHALL NAME THE AGENT (FOR THE
BENEFIT OF THE SECURED PARTIES) AS AN ADDITIONAL INSURED OR AS LOSS PAYEE, AS
APPLICABLE, AND SHALL CONTAIN LOSS PAYABLE CLAUSES OR MORTGAGEE CLAUSES, THROUGH
ENDORSEMENTS IN FORM AND SUBSTANCE SATISFACTORY TO THE AGENT, WHICH PROVIDE
THAT: (I) SUBJECT TO THE INTERCREDITOR AGREEMENT, ALL PROCEEDS THEREUNDER WITH
RESPECT TO ANY COLLATERAL SHALL BE PAYABLE TO THE AGENT; (II) NO SUCH INSURANCE
SHALL BE AFFECTED BY ANY ACT OR NEGLECT OF THE INSURED OR OWNER OF THE PROPERTY
DESCRIBED IN SUCH POLICY; AND (III) SUCH POLICY AND LOSS PAYABLE OR MORTGAGEE
CLAUSES MAY BE CANCELED, AMENDED, OR TERMINATED ONLY UPON AT LEAST THIRTY (30)
DAYS PRIOR WRITTEN NOTICE GIVEN TO THE AGENT.

 

SECTION 4.11.                             CERTAIN ACCOUNTS.  EACH GRANTOR SHALL
USE COMMERCIALLY REASONABLE EFFORTS TO TRANSFER OWNERSHIP OF (I) THE HSBC CREDIT
CARD RECEIVABLES ACCOUNTS BY THE END OF THE SECOND

 

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CALENDAR QUARTER OF 2006 AND (II) ANY ACCOUNT ESTABLISHED IN CONNECTION WITH THE
ESTABLISHMENT OF THE APPLICABLE PERMITTED REPLACEMENT CREDIT CARD PROGRAM PRIOR
TO THE ESTABLISHMENT THEREOF OR AS PROMPTLY THEREAFTER AS IS REASONABLY
PRACTICABLE.

 

ARTICLE V
REMEDIES

 

SECTION 5.1.                                   REMEDIES.

 

(A)                                  UPON THE OCCURRENCE AND DURING THE
CONTINUANCE OF AN EVENT OF DEFAULT, THE AGENT MAY EXERCISE ANY OR ALL OF THE
FOLLOWING RIGHTS AND REMEDIES:

 

(I)                                     THOSE RIGHTS AND REMEDIES PROVIDED IN
THIS AGREEMENT, THE TERM LOAN CREDIT AGREEMENT, THE EXISTING NOTES INDENTURE OR
ANY OTHER TERM LOAN/NOTE DOCUMENT; PROVIDED THAT THIS SECTION 5.1(A) SHALL NOT
BE UNDERSTOOD TO LIMIT ANY RIGHTS AVAILABLE TO THE AGENT, THE TERM LOAN LENDERS
OR THE EXISTING NOTEHOLDERS PRIOR TO AN EVENT OF DEFAULT;

 

(II)                                  THOSE RIGHTS AND REMEDIES AVAILABLE TO A
SECURED PARTY UNDER THE UCC (WHETHER OR NOT THE UCC APPLIES TO THE AFFECTED
COLLATERAL) OR UNDER ANY OTHER APPLICABLE LAW (INCLUDING, WITHOUT LIMITATION,
ANY LAW GOVERNING THE EXERCISE OF A BANK’S RIGHT OF SETOFF OR BANKERS’ LIEN)
WHEN A DEBTOR IS IN DEFAULT UNDER A SECURITY AGREEMENT;

 

(III)                               GIVE NOTICE OF SOLE CONTROL OR ANY OTHER
INSTRUCTION UNDER ANY SECURITIES ACCOUNT CONTROL AGREEMENT AND TAKE ANY ACTION
PROVIDED THEREIN WITH RESPECT TO THE APPLICABLE COLLATERAL;

 

(IV)                              WITHOUT NOTICE (EXCEPT AS SPECIFICALLY
PROVIDED IN SECTION 11.2 OR ELSEWHERE HEREIN), DEMAND OR ADVERTISEMENT OF ANY
KIND TO ANY GRANTOR OR ANY OTHER PERSON, ENTER THE PREMISES OF ANY GRANTOR WHERE
ANY COLLATERAL IS LOCATED (THROUGH SELF-HELP AND WITHOUT JUDICIAL PROCESS) TO
COLLECT, RECEIVE, ASSEMBLE, PROCESS, APPROPRIATE, SELL, LEASE, ASSIGN, GRANT AN
OPTION OR OPTIONS TO PURCHASE OR OTHERWISE DISPOSE OF, DELIVER, OR REALIZE UPON,
THE COLLATERAL OR ANY PART THEREOF IN ONE OR MORE PARCELS AT PUBLIC OR PRIVATE
SALE OR SALES (WHICH SALES MAY BE ADJOURNED OR CONTINUED FROM TIME TO TIME WITH
OR WITHOUT NOTICE AND MAY TAKE PLACE AT SUCH GRANTOR’S PREMISES OR ELSEWHERE),
FOR CASH, ON CREDIT OR FOR FUTURE DELIVERY WITHOUT ASSUMPTION OF ANY CREDIT
RISK, AND UPON SUCH OTHER TERMS AS THE AGENT MAY DEEM COMMERCIALLY REASONABLE;
AND

 

(V)                                 CONCURRENTLY WITH WRITTEN NOTICE TO THE
GRANTORS, TRANSFER AND REGISTER IN ITS NAME OR IN THE NAME OF ITS NOMINEE THE
WHOLE OR ANY PART OF THE PLEDGED COLLATERAL, TO EXCHANGE CERTIFICATES OR
INSTRUMENTS REPRESENTING OR EVIDENCING PLEDGED COLLATERAL FOR CERTIFICATES OR
INSTRUMENTS OF SMALLER OR LARGER DENOMINATIONS, TO EXERCISE THE VOTING AND ALL
OTHER RIGHTS AS A HOLDER WITH RESPECT THERETO, TO COLLECT AND RECEIVE ALL CASH
DIVIDENDS, INTEREST, PRINCIPAL AND OTHER DISTRIBUTIONS MADE THEREON AND TO
OTHERWISE ACT WITH RESPECT TO THE PLEDGED COLLATERAL AS THOUGH THE AGENT WAS THE
OUTRIGHT OWNER THEREOF.

 

(B)                                 EACH GRANTOR ACKNOWLEDGES AND AGREES THAT
THE COMPLIANCE BY THE AGENT, ON BEHALF OF THE SECURED PARTIES, WITH ANY
APPLICABLE STATE OR FEDERAL LAW REQUIREMENTS IN CONNECTION WITH

 

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A DISPOSITION OF THE COLLATERAL AND COMPLIANCE WILL NOT BE CONSIDERED TO
ADVERSELY AFFECT THE COMMERCIAL REASONABLENESS OF ANY SALE OF THE COLLATERAL.

 

(C)                                  THE AGENT SHALL HAVE THE RIGHT UPON ANY
PUBLIC SALE OR SALES AND, TO THE EXTENT PERMITTED BY LAW, UPON ANY PRIVATE SALE
OR SALES, TO PURCHASE FOR THE BENEFIT OF THE AGENT AND THE SECURED PARTIES, THE
WHOLE OR ANY PART OF THE COLLATERAL SO SOLD, FREE OF ANY RIGHT OF EQUITY
REDEMPTION, WHICH EQUITY REDEMPTION EACH GRANTOR HEREBY EXPRESSLY RELEASES.

 

(D)                                 UNTIL THE AGENT IS ABLE TO EFFECT A SALE,
LEASE, TRANSFER OR OTHER DISPOSITION OF COLLATERAL, THE AGENT SHALL HAVE THE
RIGHT TO HOLD OR USE COLLATERAL, OR ANY PART THEREOF, TO THE EXTENT THAT IT
DEEMS APPROPRIATE FOR THE PURPOSE OF PRESERVING COLLATERAL OR THE VALUE OF THE
COLLATERAL, OR FOR ANY OTHER PURPOSE DEEMED APPROPRIATE BY THE AGENT.  THE AGENT
MAY, IF IT SO ELECTS, SEEK THE APPOINTMENT OF A RECEIVER OR KEEPER TO TAKE
POSSESSION OF COLLATERAL AND TO ENFORCE ANY OF THE AGENT’S REMEDIES (FOR THE
BENEFIT OF THE AGENT AND SECURED PARTIES), WITH RESPECT TO SUCH APPOINTMENT
WITHOUT PRIOR NOTICE OR HEARING AS TO SUCH APPOINTMENT.

 

(E)                                  NOTWITHSTANDING THE FOREGOING, NEITHER THE
AGENT NOR THE SECURED PARTIES SHALL BE REQUIRED TO (I) MAKE ANY DEMAND UPON, OR
PURSUE OR EXHAUST ANY OF THEIR RIGHTS OR REMEDIES AGAINST, THE GRANTORS, ANY
OTHER OBLIGOR, GUARANTOR, PLEDGOR OR ANY OTHER PERSON WITH RESPECT TO THE
PAYMENT OF THE OBLIGATIONS OR TO PURSUE OR EXHAUST ANY OF THEIR RIGHTS OR
REMEDIES WITH RESPECT TO ANY COLLATERAL THEREFOR OR ANY DIRECT OR INDIRECT
GUARANTEE THEREOF, (II) MARSHAL THE COLLATERAL OR ANY GUARANTEE OF THE
OBLIGATIONS OR TO RESORT TO THE COLLATERAL OR ANY SUCH GUARANTEE IN ANY
PARTICULAR ORDER, OR (III) EFFECT A PUBLIC SALE OF ANY COLLATERAL.

 

(F)                                    EACH GRANTOR RECOGNIZES THAT THE AGENT
MAY BE UNABLE TO EFFECT A PUBLIC SALE OF ANY OR ALL THE PLEDGED COLLATERAL AND
MAY BE COMPELLED TO RESORT TO ONE OR MORE PRIVATE SALES THEREOF.  EACH GRANTOR
ALSO ACKNOWLEDGES THAT ANY PRIVATE SALE MAY RESULT IN PRICES AND OTHER TERMS
LESS FAVORABLE TO THE SELLER THAN IF SUCH SALE WERE A PUBLIC SALE AND,
NOTWITHSTANDING SUCH CIRCUMSTANCES, AGREES THAT ANY SUCH PRIVATE SALE SHALL NOT
BE DEEMED TO HAVE BEEN MADE IN A COMMERCIALLY UNREASONABLE MANNER SOLELY BY
VIRTUE OF SUCH SALE BEING PRIVATE.  THE AGENT SHALL BE UNDER NO OBLIGATION TO
DELAY A SALE OF ANY OF THE PLEDGED COLLATERAL FOR THE PERIOD OF TIME NECESSARY
TO PERMIT ANY GRANTOR OR THE ISSUER OF THE PLEDGED COLLATERAL TO REGISTER SUCH
SECURITIES FOR PUBLIC SALE UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
UNDER APPLICABLE STATE SECURITIES LAWS, EVEN IF ANY GRANTOR AND THE ISSUER WOULD
AGREE TO DO SO (IT BEING ACKNOWLEDGED AND AGREED THAT NO GRANTOR SHALL HAVE ANY
OBLIGATION HEREUNDER TO DO SO).

 

(G)                                 NOTWITHSTANDING THE FOREGOING, ANY RIGHTS
AND REMEDIES PROVIDED IN THIS SECTION 5.1 SHALL BE SUBJECT TO THE INTERCREDITOR
AGREEMENT.

 

SECTION 5.2.                                   GRANTOR’S OBLIGATIONS UPON
DEFAULT.  UPON THE REQUEST OF THE AGENT AFTER THE OCCURRENCE AND DURING THE
CONTINUANCE OF AN EVENT OF DEFAULT, EACH GRANTOR WILL:

 

(A)                                  ASSEMBLE AND MAKE AVAILABLE TO THE AGENT
THE COLLATERAL AND ALL BOOKS AND RECORDS RELATING THERETO AT ANY PLACE OR PLACES
REASONABLY SPECIFIED BY THE AGENT, WHETHER AT SUCH GRANTOR’S PREMISES OR
ELSEWHERE;

 

(B)                                 PERMIT THE AGENT, BY THE AGENT’S
REPRESENTATIVES AND AGENTS, TO ENTER, OCCUPY AND USE ANY PREMISES WHERE ALL OR
ANY PART OF THE COLLATERAL, OR THE BOOKS AND RECORDS RELATING THERETO,

 

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OR BOTH, ARE LOCATED, TO TAKE POSSESSION OF ALL OR ANY PART OF THE COLLATERAL OR
THE BOOKS AND RECORDS RELATING THERETO, OR BOTH, TO REMOVE ALL OR ANY PART OF
THE COLLATERAL OR THE BOOKS AND RECORDS RELATING THERETO, OR BOTH, AND TO
CONDUCT SALES OF THE COLLATERAL, WITHOUT ANY OBLIGATION TO PAY ANY GRANTOR FOR
SUCH USE AND OCCUPANCY;

 

SECTION 5.3.                                   GRANT OF INTELLECTUAL PROPERTY
LICENSE.  FOR THE PURPOSE OF ENABLING THE AGENT TO EXERCISE THE RIGHTS AND
REMEDIES UNDER THIS ARTICLE V AT SUCH TIME AS THE AGENT SHALL BE LAWFULLY
ENTITLED TO EXERCISE SUCH RIGHTS AND REMEDIES, EACH GRANTOR HEREBY (A) GRANTS TO
THE AGENT, FOR THE BENEFIT OF THE AGENT AND THE SECURED PARTIES, AN IRREVOCABLE,
NONEXCLUSIVE LICENSE (EXERCISABLE WITHOUT PAYMENT OF ROYALTY OR OTHER
COMPENSATION TO SUCH GRANTOR) TO USE, LICENSE OR SUBLICENSE ANY INTELLECTUAL
PROPERTY RIGHTS NOW OWNED OR HEREAFTER ACQUIRED BY SUCH GRANTOR, WHEREVER THE
SAME MAY BE LOCATED, AND INCLUDING IN SUCH LICENSE ACCESS TO ALL MEDIA IN WHICH
ANY OF THE LICENSED ITEMS MAY BE RECORDED OR STORED AND TO ALL COMPUTER SOFTWARE
AND PROGRAMS USED FOR THE COMPILATION OR PRINTOUT THEREOF AND (B) IRREVOCABLY
AGREES THAT, AT ANY TIME AND FROM TIME TO TIME FOLLOWING THE OCCURRENCE AND
DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, THE AGENT MAY SELL ANY GRANTOR’S
INVENTORY DIRECTLY TO ANY PERSON, INCLUDING WITHOUT LIMITATION PERSONS WHO HAVE
PREVIOUSLY PURCHASED ANY GRANTOR’S INVENTORY FROM SUCH GRANTOR AND IN CONNECTION
WITH ANY SUCH SALE OR OTHER ENFORCEMENT OF THE AGENT’S RIGHTS UNDER THIS
AGREEMENT, MAY (SUBJECT TO ANY RESTRICTIONS CONTAINED IN APPLICABLE THIRD PARTY
LICENSES ENTERED INTO BY A GRANTOR) SELL INVENTORY WHICH BEARS ANY TRADEMARK
OWNED BY OR LICENSED TO ANY GRANTOR AND ANY INVENTORY THAT IS COVERED BY ANY
COPYRIGHT OWNED BY OR LICENSED TO SUCH GRANTOR AND THE AGENT MAY FINISH ANY WORK
IN PROCESS AND AFFIX ANY RELEVANT TRADEMARK OWNED BY OR LICENSED TO ANY GRANTOR
AND SELL SUCH INVENTORY AS PROVIDED HEREIN.  THE USE OF THE LICENSE GRANTED
PURSUANT TO CLAUSE (A) OF THE PRECEDING SENTENCE BY THE AGENT MAY BE EXERCISED,
AT THE OPTION OF THE AGENT, ONLY UPON THE OCCURRENCE AND DURING THE CONTINUANCE
OF AN EVENT OF DEFAULT; PROVIDED, HOWEVER, THAT ANY LICENSE, SUBLICENSE OR OTHER
TRANSACTION ENTERED INTO BY THE AGENT IN ACCORDANCE HEREWITH SHALL BE BINDING
UPON EACH GRANTOR NOTWITHSTANDING ANY SUBSEQUENT CURE OF AN EVENT OF DEFAULT.

 

SECTION 5.4.                                   APPLICATION OF PROCEEDS.  SUBJECT
TO THE INTERCREDITOR AGREEMENT, THE AGENT SHALL APPLY THE PROCEEDS OF ANY
COLLECTION, SALE, FORECLOSURE OR OTHER REALIZATION UPON ANY COLLATERAL, AS WELL
AS ANY COLLATERAL CONSISTING OF CASH, AS FOLLOWS:

 

FIRST, to the payment of all reasonable costs and expenses incurred by the Agent
(in its capacity as such hereunder or under any other Term Loan Security
Document) in connection with such collection, sale, foreclosure or realization
or otherwise in connection with this Agreement, any other Term Loan Security
Document or any of the Obligations, including all court costs and the reasonable
fees and expenses of its agents and legal counsel, the repayment of all advances
made by the Agent hereunder or under any other Term Loan Security Document on
behalf of any Grantor and any other reasonable costs or expenses incurred by the
Agent in connection with the exercise of any remedy hereunder or under any other
Term Loan Security Document, if reimbursable pursuant to a Term Loan Security
Document;

 

SECOND, to the payment in full of the Term Loan Obligations and the Existing
Notes Obligations, ratably in accordance with the respective amounts thereof on
the date of any such distribution; and

 

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

 

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

 

ARTICLE VI
CONCERNING THE EXISTING NOTES TRUSTEE AND HOLDERS OF 2028 DEBENTURES AND 2008
NOTES

 

SECTION 6.1.                                   AGENT’S CONSENT TO SERVE.  THE
AGENT HAS CONSENTED TO SERVE AS AGENT HEREUNDER ON THE EXPRESS UNDERSTANDING,
AND THE EXISTING NOTES TRUSTEE AND EACH HOLDER OF 2028 DEBENTURES AND 2008
NOTES, BY ACCEPTING THE BENEFITS OF THIS AGREEMENT, SHALL BE DEEMED TO HAVE
AGREED, THAT THE AGENT SHALL HAVE NO DUTY AND SHALL OWE NO OBLIGATION OR
RESPONSIBILITY (FIDUCIARY OR OTHERWISE) TO THE EXISTING NOTES TRUSTEE OR SUCH
HOLDERS, OTHER THAN THE DUTY TO PERFORM ITS EXPRESS OBLIGATIONS UNDER THIS
AGREEMENT IN ACCORDANCE WITH ITS TERMS.  WITHOUT LIMITING THE FOREGOING, EACH OF
THE EXISTING NOTES TRUSTEE AND EACH HOLDER OF 2028 DEBENTURES AND 2008 NOTES, BY
ACCEPTING THE BENEFITS OF THIS AGREEMENT, SHALL BE DEEMED TO HAVE WAIVED ANY
RIGHT IT MIGHT HAVE, UNDER APPLICABLE LAW OR OTHERWISE, TO COMPEL THE SALE OR
OTHER DISPOSITION OF ANY COLLATERAL, AND ANY OBLIGATION THE AGENT MIGHT HAVE,
UNDER APPLICABLE LAW OR OTHERWISE, TO OBTAIN ANY MINIMUM PRICE FOR ANY
COLLATERAL UPON THE SALE THEREOF, IT BEING EXPRESSLY UNDERSTOOD, AND THE
AVAILABILITY OF THE BENEFITS OF THIS AGREEMENT TO THE EXISTING NOTES TRUSTEE AND
EACH HOLDER OF 2028 DEBENTURES AND 2008 NOTES BEING CONDITIONED UPON THE
UNDERSTANDING, THAT THE SOLE RIGHT OF THE HOLDERS OF THE 2028 DEBENTURES AND THE
2008 NOTES SHALL BE TO RECEIVE THEIR RATABLE SHARE OF ANY PROCEEDS OF COLLATERAL
IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS AGREEMENT, THE
INTERCREDITOR AGREEMENT AND THE OTHER TERM LOAN SECURITY DOCUMENTS.

 

SECTION 6.2.                                   DETERMINATION OF AMOUNTS OF
OBLIGATIONS AND EXISTENCE OF EXISTING NOTES EVENTS OF DEFAULT; ACCELERATION. 
WHENEVER THE AGENT IS REQUIRED TO DETERMINE THE EXISTENCE OR AMOUNT OF ANY OF
THE EXISTING NOTES OBLIGATIONS OR THE EXISTENCE OF ANY EXISTING NOTES EVENT OF
DEFAULT FOR ANY PURPOSES OF THIS AGREEMENT, IT SHALL REQUEST WRITTEN
CERTIFICATION OF SUCH EXISTENCE OR AMOUNT FROM THE EXISTING NOTES TRUSTEE AND
SHALL BE ENTITLED TO MAKE SUCH DETERMINATION ON THE BASIS OF SUCH CERTIFICATION;
PROVIDED, HOWEVER, THAT IF, NOTWITHSTANDING THE REQUEST OF THE AGENT, THE
EXISTING NOTES TRUSTEE SHALL FAIL OR REFUSE REASONABLY PROMPTLY TO CERTIFY AS TO
THE EXISTENCE OR AMOUNT OF ANY EXISTING NOTES OBLIGATION OR THE EXISTENCE OF ANY
EXISTING NOTES EVENT OF DEFAULT, THE AGENT SHALL BE ENTITLED TO DETERMINE SUCH
EXISTENCE OR AMOUNT BY SUCH COMMERCIALLY REASONABLE METHOD AS THE AGENT MAY, IN
THE EXERCISE OF ITS GOOD FAITH JUDGMENT, DETERMINE, INCLUDING BY RELIANCE UPON A
CERTIFICATE OF THE BORROWER.  THE AGENT MAY RELY CONCLUSIVELY, AND SHALL BE
FULLY PROTECTED IN SO RELYING, ON ANY DETERMINATION MADE BY IT IN ACCORDANCE
WITH THE PROVISIONS OF THE PRECEDING SENTENCE (OR AS OTHERWISE DIRECTED BY A
COURT OF COMPETENT JURISDICTION) AND SHALL HAVE NO LIABILITY TO THE BORROWER,
ANY OTHER GRANTOR, ANY SECURED PARTY OR ANY OTHER PERSON AS A RESULT OF SUCH
DETERMINATION OR ANY ACTION TAKEN PURSUANT THERETO EXCEPT TO THE EXTENT SUCH
LIABILITY IS DETERMINED BY A COURT OF COMPETENT JURISDICTION

 

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BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS NEGLIGENCE
OR WILFUL MISCONDUCT OF THE AGENT.  THE EXISTING NOTES TRUSTEE SHALL PROMPTLY
NOTIFY THE AGENT OF ANY EXISTING NOTES EVENT OF DEFAULT OF WHICH IT SHALL HAVE
BEEN NOTIFIED BY ANY EXISTING NOTES SECURED PARTY OR OF WHICH IT SHALL HAVE
OTHERWISE BECOME AWARE OR ANY ACCELERATION OF ANY OF THE EXISTING NOTES
OBLIGATIONS; PROVIDED THAT FAILURE TO GIVE ANY SUCH NOTICE SHALL NOT AFFECT ANY
RIGHTS OR REMEDIES OF THE AGENT OR ANY SECURED PARTY ARISING IN CONNECTION WITH
ANY SUCH ACCELERATION.

 

ARTICLE VII

CERTAIN INTERCREDITOR AGREEMENTS

 

SECTION 7.1.                                   PRIORITY OF SECURITY INTERESTS. 
THE AGENT AND EACH OF THE SECURED PARTIES HEREBY AGREES THAT THE LIENS AND
SECURITY INTERESTS GRANTED TO THE AGENT HEREUNDER SHALL BE TREATED, AS AMONG THE
SECURED PARTIES, AS BEING FOR THE EQUAL AND PROPORTIONATE BENEFIT OF ALL THE
SECURED PARTIES, WITHOUT PREFERENCE, PRIORITY, PREJUDICE OR DISTINCTION AS TO
LIEN OR SECURITY INTEREST OF ANY SECURED PARTY OVER ANY OTHER SECURED PARTY
(EXCEPT AS EXPRESSLY PROVIDED IN SECTION 5.4), AND SHALL AT ALL TIMES BE SHARED
BY THE SECURED PARTIES AS PROVIDED HEREIN.

 

SECTION 7.2.                                   NOTICES TO EXISTING NOTES
TRUSTEE.  THE AGENT SHALL PROMPTLY NOTIFY THE EXISTING NOTES TRUSTEE IN THE
EVENT OF A CREDIT AGREEMENT EVENT OF DEFAULT OR THE ACCELERATION OF ANY TERM
LOAN OBLIGATIONS.

 

SECTION 7.3.                                   ACTIONS UNDER THIS AGREEMENT.  BY
ACCEPTANCE OF THE BENEFITS OF THIS AGREEMENT, EACH OF THE SECURED PARTIES SHALL
BE DEEMED IRREVOCABLY TO CONFIRM THAT THE AGENT SHALL HAVE THE AUTHORITY TO ACT
AS THE EXCLUSIVE AGENT OF SUCH SECURED PARTY FOR ENFORCEMENT OF ANY PROVISIONS
OF THIS AGREEMENT AGAINST ANY GRANTOR AND OF ANY OTHER TERM LOAN SECURITY
DOCUMENT AGAINST ANY “GRANTOR” OR “PLEDGOR” THEREUNDER OR THE EXERCISE OF
REMEDIES HEREUNDER OR UNDER ANY OTHER TERM LOAN SECURITY DOCUMENT AND TO AGREE
THAT SUCH SECURED PARTY SHALL NOT TAKE ANY ACTION TO ENFORCE ANY PROVISIONS OF
THIS AGREEMENT AGAINST ANY GRANTOR OR OF ANY OF THE OTHER TERM LOAN SECURITY
DOCUMENTS AGAINST ANY “GRANTOR” OR “PLEDGOR” THEREUNDER OR TO EXERCISE ANY
REMEDY HEREUNDER OR UNDER ANY OTHER TERM LOAN SECURITY DOCUMENT.  THE AGENT
SHALL NOT BE OBLIGATED TO TAKE ANY ACTION UNDER THIS AGREEMENT EXCEPT FOR THE
PERFORMANCE OF SUCH DUTIES AS ARE SPECIFICALLY SET FORTH HEREIN.

 

SECTION 7.4.                                   TURNOVER OF COLLATERAL; SHARING
OF SETOFFS.  (A) IF ANY SECURED PARTY ACQUIRES CUSTODY, CONTROL OR POSSESSION OF
ANY COLLATERAL OR PROCEEDS THEREFROM, OTHER THAN PURSUANT TO THE TERMS OF THIS
AGREEMENT, SUCH SECURED PARTY SHALL PROMPTLY CAUSE SUCH COLLATERAL OR PROCEEDS
TO BE DELIVERED TO OR PUT IN THE CUSTODY, POSSESSION OR CONTROL OF THE AGENT FOR
DISPOSITION OR DISTRIBUTION IN ACCORDANCE WITH THE PROVISIONS HEREOF.  UNTIL
SUCH TIME AS THE PROVISIONS OF THE IMMEDIATELY PRECEDING SENTENCE HAVE BEEN
COMPLIED WITH, SUCH SECURED PARTY SHALL BE DEEMED TO HOLD SUCH COLLATERAL AND
PROCEEDS IN TRUST FOR THE PARTIES ENTITLED THERETO HEREUNDER.  NOTWITHSTANDING
THE FOREGOING, NO SECURED PARTY SHALL BE REQUIRED TO DELIVER TO OR PUT IN THE
CUSTODY, POSSESSION OR CONTROL OF THE AGENT OR TO HOLD IN TRUST AS SPECIFIED IN
THE PRECEDING SENTENCE ANY AMOUNT OF ANY OBLIGATION PAID OR PREPAID BY THE
BORROWER TO IT (AND NOT OBTAINED BY IT THROUGH ANY SALE OF OR OTHER REALIZATION
UPON COLLATERAL) IN ACCORDANCE WITH THE TERMS OF THE TERM LOAN CREDIT AGREEMENT
OR THE EXISTING NOTES INDENTURE, AS APPLICABLE.

 

(b) Each Secured Party agrees that if it shall through the exercise of a right
of banker’s lien, setoff or counterclaim against the Borrower or any other
Grantor, including, without limitation,

 

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any right of the Term Loan Lenders pursuant to Section 9.08 of the Term Loan
Credit Agreement, or pursuant to a secured claim under Section 506 of Title 11
of the United States Code or other security or interest arising from, or in lieu
of, such secured claim, received by such Secured Party under any applicable
bankruptcy, insolvency or other similar law, obtain payment (voluntary or
involuntary) in respect of any Obligations owing to it, it shall promptly
purchase from each other Secured Party participations in (or, if and to the
extent specified by such Secured Party, direct interests in) the Obligations
held by such other Secured Party in such amounts, and make such other
adjustments from time to time as shall be equitable, to the end that all the
Secured Parties shall share the benefit of such payment (net of any expenses
which may be incurred by such benefitted Secured Party in obtaining or
preserving such excess payment) pro rata in accordance with the respective
principal amounts of the Obligations owing to such Secured Parties.  To such
end, all the Secured Parties shall make appropriate adjustments among themselves
(by the release of participations sold or otherwise) if such payment is
rescinded or must otherwise be restored.  The Borrower and each other Grantor
agrees that any Secured Party so purchasing a participation (or direct interest)
in the Obligations owing to other Secured Parties may exercise all rights of
setoff and similar rights with respect to such participation as fully as if such
Secured Party were a direct holder of Obligations in the amount of such
participation.

 

ARTICLE VIII
RELATIONSHIP AMONG SECURED PARTIES

 

SECTION 8.1.                                   RESTRICTIONS ON ACTIONS.  EACH
SECURED PARTY AGREES THAT, SO LONG AS ANY TERM LOAN OBLIGATIONS ARE OUTSTANDING,
THE PROVISIONS OF THIS AGREEMENT SHALL PROVIDE THE EXCLUSIVE METHOD BY WHICH ANY
SECURED PARTY MAY EXERCISE RIGHTS AND REMEDIES HEREUNDER AND UNDER THE OTHER
TERM LOAN SECURITY DOCUMENTS IN RESPECT OF THE COLLATERAL.  THEREFORE, EACH
SECURED PARTY SHALL, FOR THE MUTUAL BENEFIT OF ALL SECURED PARTIES, EXCEPT AS
OTHERWISE PERMITTED UNDER THIS AGREEMENT:

 

(A)                                  REFRAIN FROM TAKING OR FILING ANY ACTION,
JUDICIAL OR OTHERWISE, TO ENFORCE ANY RIGHTS OR PURSUE ANY REMEDY HEREUNDER AND
UNDER ANY OTHER TERM LOAN SECURITY DOCUMENT, EXCEPT FOR DELIVERING NOTICES
HEREUNDER;

 

(B)                                 REFRAIN FROM (I) SELLING ANY OBLIGATIONS TO
ANY GRANTOR OR ANY AFFILIATE OF ANY GRANTOR AND (II) ACCEPTING ANY OTHER
SECURITY FOR THE OBLIGATIONS FROM ANY GRANTOR OR ITS AFFILIATES, EXCEPT FOR ANY
SECURITY GRANTED TO THE AGENT FOR THE BENEFIT OF ALL SECURED PARTIES; AND

 

(C)                                  REFRAIN FROM EXERCISING ANY RIGHTS OR
REMEDIES HEREUNDER OR UNDER ANY OTHER TERM LOAN SECURITY DOCUMENT THAT HAVE OR
MAY HAVE ARISEN OR WHICH MAY ARISE AS A RESULT OF AN EVENT OF DEFAULT;

 

provided, however, that nothing contained in this Section shall prevent any
Secured Party from (i) imposing a default rate of interest in accordance with
the Term Loan Credit Agreement or the Existing Notes Indenture, as applicable,
(ii) accelerating the maturity of any Obligations, (iii) raising any defenses in
any action in which it has been made a party defendant or has been joined as a
third party, except that the Agent may direct and control any defense directly
relating to the Collateral or any one or more of the Term Loan Security
Documents, which shall be governed by the provisions of this Agreement or
(iv) subject to Section 7.4(b), exercising any right of setoff, recoupment or
similar right.

 

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SECTION 8.2.                                   COOPERATION; ACCOUNTINGS.  EACH
OF THE SECURED PARTIES WILL, UPON THE REASONABLE REQUEST OF THE AGENT OR
EXISTING NOTES TRUSTEE, FROM TIME TO TIME EXECUTE AND DELIVER OR CAUSE TO BE
EXECUTED AND DELIVERED SUCH FURTHER INSTRUMENTS, AND DO AND CAUSE TO BE DONE
SUCH FURTHER ACTS, AS MAY BE NECESSARY OR PROPER TO CARRY OUT MORE EFFECTIVELY
THE PROVISIONS OF THIS AGREEMENT.  THE SECURED PARTIES AGREE TO PROVIDE TO EACH
OTHER UPON REASONABLE REQUEST A STATEMENT OF ALL PAYMENTS RECEIVED IN RESPECT OF
OBLIGATIONS.

 

SECTION 8.3.                                   SECURED PARTIES; OTHER
COLLATERAL.  THE SECURED PARTIES AGREE THAT ALL OF THE PROVISIONS OF THIS
AGREEMENT SHALL APPLY TO ANY AND ALL PROPERTIES, ASSETS AND RIGHTS OF THE
GRANTORS AND THEIR AFFILIATES IN WHICH THE AGENT AT ANY TIME ACQUIRES A SECURITY
INTEREST OR LIEN PURSUANT HERETO OR TO ANY OTHER TERM LOAN SECURITY DOCUMENT,
INCLUDING, WITHOUT LIMITATION, REAL PROPERTY OR RIGHTS IN, ON OR OVER REAL
PROPERTY, NOTWITHSTANDING ANY PROVISION TO THE CONTRARY IN ANY MORTGAGE,
LEASEHOLD MORTGAGE OR OTHER DOCUMENT PURPORTING TO GRANT OR PERFECT ANY LIEN IN
FAVOR OF THE SECURED PARTIES OR ANY OF THEM OR THE AGENT FOR THE BENEFIT OF THE
SECURED PARTIES OR ANY OF THEM.

 

ARTICLE IX

CONCERNING THE AGENT

 

SECTION 9.1.                                   APPOINTMENT OF AGENT.  EACH OF
THE SECURED PARTIES APPOINTS CREDIT SUISSE TO ACT, AND CREDIT SUISSE AGREES TO
ACT, AS AGENT FOR THE SECURED PARTIES PURSUANT TO THE TERMS OF THIS AGREEMENT
AND THE OTHER TERM LOAN SECURITY DOCUMENTS AND TO EXECUTE AND ENTER INTO THIS
AGREEMENT, THE INTERCREDITOR AGREEMENT AND THE OTHER TERM LOAN SECURITY
DOCUMENTS AND ALL OTHER INSTRUMENTS RELATING TO THIS AGREEMENT AND THE OTHER
TERM LOAN SECURITY DOCUMENTS AND (A) TO TAKE ACTIONS ON ITS BEHALF THAT ARE
EXPRESSLY PERMITTED UNDER THE PROVISIONS OF THIS AGREEMENT AND THE OTHER TERM
LOAN SECURITY DOCUMENTS AND ALL OTHER INSTRUMENTS OR AGREEMENTS RELATING HERETO
OR THERETO AND (B) TO EXERCISE SUCH POWERS AND PERFORM SUCH DUTIES AS ARE, IN
EACH CASE, EXPRESSLY DELEGATED TO THE AGENT BY THE TERMS HEREOF AND THEREOF.  BY
ACCEPTANCE OF THE BENEFITS OF THIS AGREEMENT, EACH SECURED PARTY THAT IS NOT A
PARTY TO THIS AGREEMENT SHALL BE DEEMED TO HAVE CONSENTED TO THE APPOINTMENT AND
AUTHORIZATION SET FORTH IN THE IMMEDIATELY PRECEDING SENTENCE. THE AGENT HAS
CONSENTED TO SERVE AS AGENT HEREUNDER ON THE EXPRESS UNDERSTANDING, AND THE
SECURED PARTIES, BY ACCEPTING THE BENEFITS OF THIS AGREEMENT, SHALL BE DEEMED TO
HAVE AGREED, THAT THE AGENT SHALL HAVE NO DUTY AND SHALL OWE NO OBLIGATION OR
RESPONSIBILITY (FIDUCIARY OR OTHERWISE), REGARDLESS OF WHETHER AN EVENT OF
DEFAULT HAS OCCURRED AND IS CONTINUING, TO THE SECURED PARTIES, OTHER THAN THE
DUTY TO PERFORM ITS EXPRESS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER TERM
LOAN SECURITY DOCUMENTS IN ACCORDANCE WITH THEIR RESPECTIVE TERMS, SUBJECT IN
ALL EVENTS TO THE PROVISIONS OF THIS AGREEMENT LIMITING THE RESPONSIBILITY OR
LIABILITY OF THE AGENT HEREUNDER.

 

SECTION 9.2.                                   LIMITATIONS ON RESPONSIBILITY OF
AGENT.  THE AGENT SHALL NOT BE REQUIRED TO ASCERTAIN OR INQUIRE AS TO (I) ANY
STATEMENT, WARRANTY OR REPRESENTATION MADE HEREIN OR IN CONNECTION HEREWITH OR
IN OR IN CONNECTION WITH ANY OTHER TERM LOAN/NOTE DOCUMENT, (II) THE CONTENTS OF
ANY CERTIFICATE, REPORT OR OTHER DOCUMENT DELIVERED HEREUNDER OR IN CONNECTION
HEREWITH, (III) THE PERFORMANCE OR OBSERVANCE OF ANY OF THE COVENANTS,
AGREEMENTS OR OTHER TERMS OR CONDITIONS SET FORTH HEREIN OR IN ANY OTHER TERM
LOAN/NOTE DOCUMENT, (IV) THE VALIDITY, ENFORCEABILITY, EFFECTIVENESS OR
GENUINENESS OF ANY TERM LOAN/NOTE DOCUMENT OR ANY OTHER AGREEMENT, INSTRUMENT OR
DOCUMENT, OR

 

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(V) THE SATISFACTION OF ANY CONDITION SET FORTH IN ANY TERM LOAN/NOTE DOCUMENT,
OTHER THAN TO CONFIRM RECEIPT OF ITEMS EXPRESSLY REQUIRED TO BE DELIVERED TO THE
AGENT.  NEITHER THE AGENT NOR ANY OFFICER, AGENT OR REPRESENTATIVE THEREOF SHALL
BE PERSONALLY LIABLE FOR ANY ACTION TAKEN OR OMITTED TO BE TAKEN BY ANY SUCH
PERSON IN CONNECTION WITH THIS AGREEMENT EXCEPT FOR ITS OWN GROSS NEGLIGENCE OR
WILFUL MISCONDUCT OR, IN THE CASE OF THE AGENT, IN THE CASE OF THE LOSS OF ANY
MONEYS IN THE POSSESSION OF THE AGENT, FOR THE FAILURE OF THE AGENT TO ACCORD
SUCH MONEYS THE SAME CARE AS A PRUDENT PERSON IN THE SAME OR SIMILAR
CIRCUMSTANCES WOULD ACCORD ITS OWN ASSETS.  THE AGENT MAY EXECUTE ANY OF THE
POWERS GRANTED TO IT UNDER THIS AGREEMENT AND PERFORM ANY DUTY HEREUNDER EITHER
DIRECTLY OR BY OR THROUGH SUB-AGENTS OR ATTORNEYS-IN-FACT, AND SHALL NOT BE
RESPONSIBLE FOR THE NEGLIGENCE (INCLUDING GROSS NEGLIGENCE) OR MISCONDUCT
(INCLUDING WILFUL MISCONDUCT) OF ANY SUB-AGENTS OR ATTORNEYS-IN-FACT SELECTED BY
IT WITH THE CARE THAT A PRUDENT PERSON IN SIMILAR CIRCUMSTANCES WOULD HAVE
EMPLOYED IN SUCH SELECTION.  THE AGENT AND ANY SUCH SUB-AGENT MAY PERFORM ANY
AND ALL ITS DUTIES AND EXERCISE ITS RIGHTS AND POWERS THROUGH THEIR RESPECTIVE
AFFILIATES.  THE EXCULPATORY PROVISIONS SET FORTH IN THIS ARTICLE IX AND IN THE
OTHER TERM LOAN/NOTE DOCUMENTS SHALL APPLY TO ANY SUCH SUB-AGENT AND TO THE
AFFILIATES OF THE AGENT AND ANY SUCH SUB-AGENT.

 

SECTION 9.3.                                   RELIANCE BY AGENT; INDEMNITY
AGAINST LIABILITIES, ETC.

 

(A)                                  WHENEVER IN THE PERFORMANCE OF ITS DUTIES
UNDER THIS AGREEMENT THE AGENT SHALL DEEM IT NECESSARY OR DESIRABLE THAT A
MATTER BE PROVED OR ESTABLISHED WITH RESPECT TO THE GRANTORS OR ANY OTHER PERSON
IN CONNECTION WITH THE TAKING, SUFFERING OR OMITTING OF ANY ACTION HEREUNDER BY
THE AGENT, SUCH MATTER MAY BE CONCLUSIVELY DEEMED TO BE PROVED OR ESTABLISHED BY
A CERTIFICATE EXECUTED BY AN OFFICER OF SUCH PERSON, AND THE AGENT SHALL HAVE NO
LIABILITY WITH RESPECT TO ANY ACTION TAKEN, SUFFERED OR OMITTED IN RELIANCE
THEREON.

 

(B)                                 THE AGENT SHALL BE FULLY PROTECTED IN
RELYING UPON ANY RESOLUTION, STATEMENT, CERTIFICATE, INSTRUMENT, OPINION,
REPORT, NOTICE (INCLUDING ANY NOTICE OF AN EVENT OF DEFAULT OR OF THE CURE OR
WAIVER THEREOF), REQUEST, CONSENT, ORDER OR OTHER PAPER OR DOCUMENT OR ORAL
CONVERSATION (INCLUDING, TELEPHONE CONVERSATIONS) WHICH IT IN GOOD FAITH
BELIEVES TO BE GENUINE AND CORRECT AND TO HAVE BEEN SIGNED, PRESENTED OR MADE BY
THE PROPER PARTY.  THE AGENT MAY CONCLUSIVELY RELY, AS TO THE TRUTH OF THE
STATEMENTS AND THE CORRECTNESS OF THE OPINIONS EXPRESSED THEREIN, UPON ANY
NOTICE, CERTIFICATE OR OPINION FURNISHED TO THE AGENT IN CONNECTION WITH THIS
AGREEMENT.

 

(C)                                  THE AGENT SHALL NOT BE DEEMED TO HAVE
ACTUAL, CONSTRUCTIVE, DIRECT OR INDIRECT NOTICE OR KNOWLEDGE OF THE OCCURRENCE
OF ANY EVENT OF DEFAULT UNLESS AND UNTIL THE AGENT SHALL HAVE RECEIVED WRITTEN
NOTICE THEREOF FROM ANY SECURED PARTY OR THE BORROWER OR ANY OTHER GRANTOR.  THE
AGENT SHALL HAVE NO OBLIGATION WHATSOEVER EITHER PRIOR TO OR AFTER RECEIVING
SUCH A NOTICE TO INQUIRE WHETHER AN EVENT OF DEFAULT HAS, IN FACT, OCCURRED AND
SHALL BE ENTITLED TO RELY CONCLUSIVELY, AND SHALL BE FULLY PROTECTED IN SO
RELYING, ON ANY NOTICE SO FURNISHED TO IT.

 

SECTION 9.4.                                   EXERCISE OF REMEDIES.  THE
REMEDIES OF THE AGENT HEREUNDER AND UNDER THE OTHER TERM LOAN SECURITY DOCUMENTS
SHALL INCLUDE, BUT NOT BE LIMITED TO, THE DISPOSITION OF THE COLLATERAL BY
FORECLOSURE OR OTHER SALE AND THE EXERCISING OF ALL REMEDIES OF A SECURED LENDER
UNDER THE UCC, BANKRUPTCY LAWS OR SIMILAR LAWS OF ANY APPLICABLE JURISDICTION.

 

SECTION 9.5.                                   COOPERATION.  TO THE EXTENT THE
EXERCISE OF THE RIGHTS, POWERS AND REMEDIES OF THE AGENT IN ACCORDANCE WITH THIS
AGREEMENT REQUIRES THAT ANY ACTION BE TAKEN BY ANY SECURED PARTY,

 

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SUCH SECURED PARTY SHALL TAKE SUCH ACTION AND COOPERATE WITH THE AGENT TO ENSURE
THAT THE RIGHTS, POWERS AND REMEDIES OF ALL SECURED PARTIES ARE EXERCISED IN
FULL.

 

SECTION 9.6.                                   AUTHORIZED INVESTMENTS.  ANY AND
ALL FUNDS HELD BY THE AGENT IN ITS CAPACITY AS AGENT, WHETHER PURSUANT TO ANY
PROVISION HEREOF OR OF ANY OTHER TERM LOAN SECURITY DOCUMENT OR OTHERWISE, SHALL
TO THE EXTENT REASONABLY PRACTICABLE BE INVESTED BY THE AGENT WITHIN A
REASONABLE TIME IN CASH EQUIVALENTS.  ANY INTEREST EARNED ON SUCH FUNDS SHALL BE
DISBURSED IN ACCORDANCE WITH SECTION 5.4.  THE AGENT MAY HOLD ANY SUCH FUNDS IN
A COMMON INTEREST BEARING ACCOUNT.  TO THE EXTENT THAT THE INTEREST RATE PAYABLE
WITH RESPECT TO ANY SUCH ACCOUNT VARIES OVER TIME, THE AGENT MAY USE AN AVERAGE
INTEREST RATE IN MAKING THE INTEREST ALLOCATIONS AMONG THE RESPECTIVE SECURED
PARTIES.  THE AGENT SHALL HAVE NO DUTY TO SELECT INVESTMENTS WHICH PROVIDE A
MAXIMUM RETURN.  IN THE ABSENCE OF GROSS NEGLIGENCE OR WILFUL MISCONDUCT, THE
AGENT SHALL NOT BE RESPONSIBLE FOR ANY INVESTMENT LOSSES IN RESPECT OF ANY FUNDS
INVESTED IN ACCORDANCE WITH THIS SECTION.

 

SECTION 9.7.                                   BANKRUPTCY PROCEEDINGS.  THE
FOLLOWING PROVISIONS SHALL APPLY DURING ANY BANKRUPTCY PROCEEDING OF ANY
GRANTOR:

 

(A)                                  THE AGENT SHALL REPRESENT ALL SECURED
PARTIES IN CONNECTION WITH ALL MATTERS DIRECTLY RELATING TO THE COLLATERAL,
INCLUDING, WITHOUT LIMITATION, ANY USE, SALE OR LEASE OF COLLATERAL, USE OF CASH
COLLATERAL, REQUEST FOR RELIEF FROM THE AUTOMATIC STAY AND REQUEST FOR ADEQUATE
PROTECTION; PROVIDED THAT THE AGENT SHALL NOT TREAT THE TERM LOAN LENDERS OR THE
EXISTING NOTEHOLDERS DIFFERENTLY FORM EACH OTHER WITH RESPECT TO RIGHTS IN THE
COLLATERAL (EXCEPT DIFFERENCES IN RESPECT OF RIGHTS TO RECEIVE THE PROCEEDS
THEREOF ARISING FROM DIFFERENCES IN THEIR INTERESTS AS THEY MAY APPEAR BASED ON
THE RELATIVE AMOUNT OF OBLIGATIONS OF EACH SUCH CLASS OF SECURED PARTIES).

 

(B)                                 EACH SECURED PARTY SHALL BE FREE TO ACT
INDEPENDENTLY ON ANY ISSUE NOT AFFECTING THE COLLATERAL.  EACH SECURED PARTY
SHALL GIVE PRIOR NOTICE TO THE AGENT OF ANY SUCH ACTION THAT COULD MATERIALLY
AFFECT THE RIGHTS OR INTERESTS OF THE AGENT OR THE OTHER SECURED PARTIES TO THE
EXTENT THAT SUCH NOTICE IS REASONABLY PRACTICABLE.  IF SUCH PRIOR NOTICE IS NOT
GIVEN, SUCH SECURED PARTY SHALL GIVE PROMPT NOTICE FOLLOWING ANY ACTION TAKEN
HEREUNDER.

 

(C)                                  ANY PROCEEDS OF THE COLLATERAL RECEIVED BY
ANY SECURED PARTY AS A RESULT OF, OR DURING, ANY BANKRUPTCY PROCEEDING WILL BE
DELIVERED PROMPTLY TO THE AGENT FOR DISTRIBUTION IN ACCORDANCE WITH SECTION 5.4.

 

ARTICLE X
ACCOUNT VERIFICATION; ATTORNEY IN FACT; PROXY

 

SECTION 10.1.                             ACCOUNT VERIFICATION.  THE AGENT MAY
AT ANY TIME AND FROM TIME TO TIME FOLLOWING THE OCCURRENCE AND DURING THE
CONTINUANCE OF AN EVENT OF DEFAULT, IN THE AGENT’S OWN NAME, IN THE NAME OF A
NOMINEE OF THE AGENT, OR IN THE NAME OF ANY GRANTOR COMMUNICATE (BY MAIL,
TELEPHONE, FACSIMILE OR OTHERWISE) WITH THE ACCOUNT DEBTORS OF SUCH GRANTOR,
PARTIES TO CONTRACTS WITH SUCH GRANTOR AND OBLIGORS IN RESPECT OF INSTRUMENTS OF
SUCH GRANTOR TO VERIFY WITH SUCH PERSONS, TO THE AGENT’S SATISFACTION, THE
EXISTENCE, AMOUNT, TERMS OF, AND ANY OTHER MATTER RELATING TO, ACCOUNTS,
INSTRUMENTS, CHATTEL PAPER, PAYMENT INTANGIBLES AND/OR OTHER RECEIVABLES THAT
ARE COLLATERAL.

 

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SECTION 10.2.                             AUTHORIZATION FOR SECURED PARTY TO
TAKE CERTAIN ACTION.

 

(A)                                  EACH GRANTOR IRREVOCABLY AUTHORIZES THE
AGENT AND APPOINTS THE AGENT AS ITS ATTORNEY IN FACT (I) AT ANY TIME AND FROM
TIME TO TIME IN THE SOLE DISCRETION OF THE AGENT (1) TO EXECUTE ON BEHALF OF
SUCH GRANTOR AS DEBTOR AND TO FILE FINANCING STATEMENTS NECESSARY OR DESIRABLE
IN THE AGENT’S REASONABLE DISCRETION TO PERFECT AND TO MAINTAIN THE PERFECTION
AND PRIORITY OF THE AGENT’S SECURITY INTEREST IN THE COLLATERAL, (2) TO FILE A
CARBON, PHOTOGRAPHIC OR OTHER REPRODUCTION OF THIS AGREEMENT OR ANY FINANCING
STATEMENT WITH RESPECT TO THE COLLATERAL AS A FINANCING STATEMENT AND TO FILE
ANY OTHER FINANCING STATEMENT OR AMENDMENT OF A FINANCING STATEMENT (WHICH WOULD
NOT ADD NEW COLLATERAL OR ADD A DEBTOR) IN SUCH OFFICES AS THE AGENT IN ITS
REASONABLE DISCRETION DEEMS NECESSARY OR DESIRABLE TO PERFECT AND TO MAINTAIN
THE PERFECTION AND PRIORITY OF THE AGENT’S SECURITY INTEREST IN THE COLLATERAL,
(3) TO CONTACT AND ENTER INTO ONE OR MORE AGREEMENTS WITH THE ISSUERS OF
UNCERTIFICATED SECURITIES WHICH ARE PLEDGED COLLATERAL OR WITH SECURITIES
INTERMEDIARIES HOLDING PLEDGED COLLATERAL AS MAY BE NECESSARY OR ADVISABLE TO
GIVE THE AGENT CONTROL OVER SUCH PLEDGED COLLATERAL, AND (4) TO DISCHARGE PAST
DUE TAXES, ASSESSMENTS, CHARGES, FEES OR LIENS ON THE COLLATERAL (EXCEPT FOR
PERMITTED LIENS); (II) AT ANY TIME FOLLOWING THE OCCURRENCE AND DURING THE
CONTINUANCE OF AN EVENT OF DEFAULT, (1) TO ENDORSE AND COLLECT ANY CASH PROCEEDS
OF THE COLLATERAL AND TO APPLY THE PROCEEDS OF ANY COLLATERAL RECEIVED BY THE
AGENT TO THE OBLIGATIONS AS PROVIDED HEREIN OR IN ANY OTHER TERM LOAN/NOTE
DOCUMENT, SUBJECT TO THE TERMS OF THE INTERCREDITOR AGREEMENT, (2) TO DEMAND
PAYMENT OR ENFORCE PAYMENT OF THE RECEIVABLES IN THE NAME OF THE AGENT OR ANY
GRANTOR AND TO ENDORSE ANY AND ALL CHECKS, DRAFTS, AND OTHER INSTRUMENTS FOR THE
PAYMENT OF MONEY RELATING TO THE RECEIVABLES, (3) TO SIGN ANY GRANTOR’S NAME ON
ANY INVOICE OR BILL OF LADING RELATING TO THE RECEIVABLES, DRAFTS AGAINST ANY
ACCOUNT DEBTOR OF SUCH GRANTOR, ASSIGNMENTS AND VERIFICATIONS OF RECEIVABLES,
(4) TO EXERCISE ALL OF ANY GRANTOR’S RIGHTS AND REMEDIES WITH RESPECT TO THE
COLLECTION OF THE RECEIVABLES AND ANY OTHER COLLATERAL, (5) TO SETTLE, ADJUST,
COMPROMISE, EXTEND OR RENEW THE RECEIVABLES (INCLUDING, WITHOUT LIMITATION,
MAKING, SETTLING AND ADJUSTING CLAIMS IN RESPECT OF COLLATERAL UNDER POLICIES OF
INSURANCE AND MAKING ALL DETERMINATIONS AND DECISIONS WITH RESPECT THERETO,
SUBJECT TO THE TERMS OF THE INTERCREDITOR AGREEMENT), (6) TO SETTLE, ADJUST OR
COMPROMISE ANY LEGAL PROCEEDINGS BROUGHT TO COLLECT RECEIVABLES, (7) TO PREPARE,
FILE AND SIGN ANY GRANTOR’S NAME ON A PROOF OF CLAIM IN BANKRUPTCY OR SIMILAR
DOCUMENT AGAINST ANY ACCOUNT DEBTOR OF SUCH GRANTOR, (8) TO PREPARE, FILE AND
SIGN ANY GRANTOR’S NAME ON ANY NOTICE OF LIEN, ASSIGNMENT OR SATISFACTION OF
LIEN OR SIMILAR DOCUMENT IN CONNECTION WITH THE RECEIVABLES, (9) TO CHANGE THE
ADDRESS FOR DELIVERY OF MAIL ADDRESSED TO ANY GRANTOR TO SUCH ADDRESS AS THE
AGENT MAY DESIGNATE AND TO RECEIVE, OPEN AND DISPOSE OF ALL MAIL ADDRESSED TO
SUCH GRANTOR; AND (III) TO DO ALL OTHER ACTS AND THINGS NECESSARY TO CARRY OUT
THE TERMS OF THIS AGREEMENT; AND EACH GRANTOR AGREES TO REIMBURSE THE AGENT ON
DEMAND FOR ANY REASONABLE PAYMENT MADE OR ANY REASONABLE DOCUMENTED EXPENSE
INCURRED BY THE AGENT IN CONNECTION WITH ANY OF THE FOREGOING; PROVIDED THAT
THIS AUTHORIZATION SHALL NOT RELIEVE ANY GRANTOR OF ANY OF ITS OBLIGATIONS UNDER
THIS AGREEMENT, THE TERM LOAN CREDIT AGREEMENT OR THE EXISTING NOTES INDENTURE.

 

(B)                                 ALL ACTS OF SAID ATTORNEY OR DESIGNEE ARE
HEREBY RATIFIED AND APPROVED BY THE GRANTORS. THE POWERS CONFERRED ON THE AGENT,
FOR THE BENEFIT OF THE AGENT AND SECURED PARTIES, UNDER THIS SECTION 10.2 ARE
SOLELY TO PROTECT THE AGENT’S INTERESTS IN THE COLLATERAL AND SHALL NOT IMPOSE
ANY DUTY UPON THE AGENT OR ANY SECURED PARTY TO EXERCISE ANY SUCH POWERS.

 

SECTION 10.3.                             PROXY. EACH GRANTOR HEREBY IRREVOCABLY
CONSTITUTES AND APPOINTS THE AGENT AS ITS PROXY AND ATTORNEY-IN-FACT (AS SET
FORTH IN SECTION 10.2 ABOVE) WITH RESPECT TO THE PLEDGED COLLATERAL, INCLUDING
THE RIGHT TO VOTE SUCH PLEDGED COLLATERAL, WITH FULL POWER OF SUBSTITUTION TO DO
SO. IN ADDITION TO THE RIGHT TO VOTE ANY SUCH PLEDGED COLLATERAL,

 

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THE APPOINTMENT OF THE AGENT AS PROXY AND ATTORNEY-IN-FACT SHALL INCLUDE THE
RIGHT TO EXERCISE ALL OTHER RIGHTS, POWERS, PRIVILEGES AND REMEDIES TO WHICH A
HOLDER OF SUCH PLEDGED COLLATERAL WOULD BE ENTITLED (INCLUDING GIVING OR
WITHHOLDING WRITTEN CONSENTS OF SHAREHOLDERS, CALLING SPECIAL MEETINGS OF
SHAREHOLDERS AND VOTING AT SUCH MEETINGS). SUCH PROXY SHALL BE EFFECTIVE,
AUTOMATICALLY AND WITHOUT THE NECESSITY OF ANY ACTION (INCLUDING ANY TRANSFER OF
ANY SUCH PLEDGED COLLATERAL ON THE RECORD BOOKS OF THE ISSUER THEREOF) BY ANY
PERSON (INCLUDING THE ISSUER OF SUCH PLEDGED COLLATERAL OR ANY OFFICER OR AGENT
THEREOF), UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT.

 

SECTION 10.4.                             NATURE OF APPOINTMENT; LIMITATION OF
DUTY.  THE APPOINTMENT OF THE AGENT AS PROXY AND ATTORNEY-IN-FACT IN THIS
ARTICLE X IS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE UNTIL THE DATE ON
WHICH THIS AGREEMENT IS TERMINATED IN ACCORDANCE WITH SECTION 11.16.
NOTWITHSTANDING ANYTHING CONTAINED HEREIN, NEITHER THE AGENT, NOR ANY SECURED
PARTY, NOR ANY OF THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS OR REPRESENTATIVES SHALL HAVE ANY DUTY TO EXERCISE ANY RIGHT OR POWER
GRANTED HEREUNDER OR OTHERWISE OR TO PRESERVE THE SAME AND SHALL NOT BE LIABLE
FOR ANY FAILURE TO DO SO OR FOR ANY DELAY IN DOING SO, EXCEPT TO THE EXTENT SUCH
DAMAGES ARE ATTRIBUTABLE TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS
FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION; PROVIDED THAT, IN NO
EVENT SHALL THEY BE LIABLE FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR
CONSEQUENTIAL DAMAGES.

 

ARTICLE XI
GENERAL PROVISIONS

 

SECTION 11.1.                             NOTICE.  ALL NOTICES AND OTHER
COMMUNICATIONS PROVIDED FOR HEREIN SHALL BE IN WRITING AND SHALL BE DELIVERED BY
HAND OR OVERNIGHT COURIER SERVICE, MAILED BY CERTIFIED OR REGISTERED MAIL OR
SENT BY TELECOPY, AS FOLLOWS:

 

(A)                                  IF TO THE AGENT, TO IT AT CREDIT SUISSE,
ELEVEN MADISON AVENUE, NEW YORK, NEW YORK 10010, ATTENTION OF AGENCY GROUP
(TELECOPY NO. (212) 325-8304);

 

(B)                                 IF TO THE EXISTING NOTES TRUSTEE, TO IT AT
THE BANK OF NEW YORK, PLAZA OF THE AMERICAS, CORPORATE TRUST DIVISION, 600 NORTH
PEARL STREET, SUITE 420, DALLAS, TEXAS 75201, ATTENTION OF PATRICK GIORDANO
(TELECOPY NO. (214) 880-8234); AND

 

(C)                                  IF TO GRANTORS, AT THE NEIMAN MARCUS
GROUP, INC., ONE MARCUS SQUARE, 1618 MAIN STREET, DALLAS, TEXAS 75201, ATTENTION
OF GENERAL COUNSEL (TELECOPY NO. (214) 743-7611).

 

Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto (and for this
purpose a notice to the Borrower shall be deemed to be a notice to each
Grantor).  All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been

 

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given on the date of receipt if delivered by hand or overnight courier service
or sent by telecopy or on the date five (5) Business Days after dispatch by
certified or registered mail if mailed, in each case delivered, sent or mailed
(properly addressed) to such party as provided in this Section 11.1 or in
accordance with the latest unrevoked direction from such party given in
accordance with this Section 11.1.  As agreed to among the parties from time to
time, notices and other communications may also be delivered by e-mail to the
e-mail address of a representative of the applicable person provided from time
to time by such Person.

 

SECTION 11.2.                             WAIVERS.  EACH GRANTOR HEREBY WAIVES
NOTICE OF THE TIME AND PLACE OF ANY PUBLIC SALE OR THE TIME AFTER WHICH ANY
PRIVATE SALE OR OTHER DISPOSITION OF ALL OR ANY PART OF THE COLLATERAL MAY BE
MADE.  TO THE EXTENT SUCH NOTICE MAY NOT BE WAIVED UNDER APPLICABLE LAW, ANY
NOTICE MADE SHALL BE DEEMED REASONABLE IF SENT TO THE GRANTORS, ADDRESSED AS SET
FORTH IN SECTION 11.1, AT LEAST TEN (10) DAYS PRIOR TO (I) THE DATE OF ANY SUCH
PUBLIC SALE OR (II) THE TIME AFTER WHICH ANY SUCH PRIVATE SALE OR OTHER
DISPOSITION MAY BE MADE.  TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW,
EACH GRANTOR WAIVES ALL CLAIMS, DAMAGES, AND DEMANDS AGAINST THE AGENT OR ANY
SECURED PARTY ARISING OUT OF THE REPOSSESSION, RETENTION OR SALE OF THE
COLLATERAL, EXCEPT SUCH AS ARISE SOLELY OUT OF THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF THE AGENT OR SUCH SECURED PARTY AS FINALLY DETERMINED BY A COURT
OF COMPETENT JURISDICTION. TO THE EXTENT IT MAY LAWFULLY DO SO, EACH GRANTOR
ABSOLUTELY AND IRREVOCABLY WAIVES AND RELINQUISHES THE BENEFIT AND ADVANTAGE OF,
AND COVENANTS NOT TO ASSERT AGAINST THE AGENT OR ANY SECURED PARTY, ANY
VALUATION, STAY, APPRAISAL, EXTENSION, MORATORIUM, REDEMPTION OR SIMILAR LAWS
AND ANY AND ALL RIGHTS OR DEFENSES IT MAY HAVE AS A SURETY NOW OR HEREAFTER
EXISTING WHICH, BUT FOR THIS PROVISION, MIGHT BE APPLICABLE TO THE SALE OF ANY
COLLATERAL MADE UNDER THE JUDGMENT, ORDER OR DECREE OF ANY COURT, OR PRIVATELY
UNDER THE POWER OF SALE CONFERRED BY THIS AGREEMENT, OR OTHERWISE.  EXCEPT AS
OTHERWISE SPECIFICALLY PROVIDED HEREIN, EACH GRANTOR HEREBY WAIVES PRESENTMENT,
DEMAND, PROTEST OR ANY NOTICE (TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE
LAW) OF ANY KIND IN CONNECTION WITH THIS AGREEMENT OR ANY COLLATERAL.

 

SECTION 11.3.                             LIMITATION ON AGENT’S AND SECURED
PARTY’S DUTY WITH RESPECT TO THE COLLATERAL. THE AGENT SHALL HAVE NO OBLIGATION
TO CLEAN-UP OR OTHERWISE PREPARE THE COLLATERAL FOR SALE. THE AGENT AND EACH
SECURED PARTY SHALL USE REASONABLE CARE WITH RESPECT TO THE COLLATERAL IN ITS
POSSESSION OR UNDER ITS CONTROL.  NEITHER THE AGENT NOR ANY SECURED PARTY SHALL
HAVE ANY OTHER DUTY AS TO ANY COLLATERAL IN ITS POSSESSION OR CONTROL OR IN THE
POSSESSION OR CONTROL OF ANY AGENT OR NOMINEE OF THE AGENT OR SUCH SECURED
PARTY, OR ANY INCOME THEREON OR AS TO THE PRESERVATION OF RIGHTS AGAINST PRIOR
PARTIES OR ANY OTHER RIGHTS PERTAINING THERETO. TO THE EXTENT THAT APPLICABLE
LAW IMPOSES DUTIES ON THE AGENT TO EXERCISE REMEDIES IN A COMMERCIALLY
REASONABLE MANNER, EACH GRANTOR ACKNOWLEDGES AND AGREES THAT IT WOULD BE
COMMERCIALLY REASONABLE FOR THE AGENT (I) TO FAIL TO INCUR EXPENSES DEEMED
SIGNIFICANT BY THE AGENT TO PREPARE COLLATERAL FOR DISPOSITION OR OTHERWISE TO
TRANSFORM RAW MATERIAL OR WORK IN PROCESS INTO FINISHED GOODS OR OTHER FINISHED
PRODUCTS FOR DISPOSITION, (II) TO FAIL TO OBTAIN THIRD PARTY CONSENTS FOR ACCESS
TO COLLATERAL TO BE DISPOSED OF, OR TO OBTAIN OR, IF NOT REQUIRED BY OTHER LAW,
TO FAIL TO OBTAIN GOVERNMENTAL OR THIRD PARTY CONSENTS FOR THE COLLECTION OR
DISPOSITION OF COLLATERAL TO BE COLLECTED OR DISPOSED OF, (III) TO FAIL TO
EXERCISE COLLECTION REMEDIES AGAINST ACCOUNT DEBTORS OR OTHER PERSONS OBLIGATED
ON COLLATERAL OR TO REMOVE LIENS ON OR ANY ADVERSE CLAIMS AGAINST COLLATERAL,
(IV) TO EXERCISE COLLECTION REMEDIES AGAINST ACCOUNT DEBTORS AND OTHER PERSONS
OBLIGATED ON COLLATERAL DIRECTLY OR THROUGH THE USE OF COLLECTION AGENCIES AND
OTHER COLLECTION SPECIALISTS, (V) TO ADVERTISE DISPOSITIONS OF COLLATERAL
THROUGH PUBLICATIONS OR MEDIA OF GENERAL CIRCULATION, WHETHER OR NOT THE
COLLATERAL IS OF A SPECIALIZED NATURE, (VI) TO CONTACT OTHER PERSONS, WHETHER OR
NOT IN THE SAME BUSINESS AS THE GRANTOR, FOR EXPRESSIONS OF INTEREST IN
ACQUIRING ALL OR ANY PORTION OF SUCH COLLATERAL, (VII) TO HIRE

 

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ONE OR MORE PROFESSIONAL AUCTIONEERS TO ASSIST IN THE DISPOSITION OF COLLATERAL,
WHETHER OR NOT THE COLLATERAL IS OF A SPECIALIZED NATURE, (VIII) TO DISPOSE OF
COLLATERAL BY UTILIZING INTERNET SITES THAT PROVIDE FOR THE AUCTION OF ASSETS OF
THE TYPES INCLUDED IN THE COLLATERAL OR THAT HAVE THE REASONABLE CAPACITY OF
DOING SO, OR THAT MATCH BUYERS AND SELLERS OF ASSETS, (IX) TO DISPOSE OF ASSETS
IN WHOLESALE RATHER THAN RETAIL MARKETS, (X) TO DISCLAIM DISPOSITION WARRANTIES,
SUCH AS TITLE, POSSESSION OR QUIET ENJOYMENT, (XI) TO PURCHASE INSURANCE OR
CREDIT ENHANCEMENTS TO INSURE THE AGENT AGAINST RISKS OF LOSS, COLLECTION OR
DISPOSITION OF COLLATERAL OR TO PROVIDE TO THE AGENT A GUARANTEED RETURN FROM
THE COLLECTION OR DISPOSITION OF COLLATERAL, OR (XII) TO THE EXTENT DEEMED
APPROPRIATE BY THE AGENT, TO OBTAIN THE SERVICES OF OTHER BROKERS, INVESTMENT
BANKERS, CONSULTANTS AND OTHER PROFESSIONALS TO ASSIST THE AGENT IN THE
COLLECTION OR DISPOSITION OF ANY OF THE COLLATERAL.  EACH GRANTOR ACKNOWLEDGES
THAT THE PURPOSE OF THIS SECTION 11.3 IS TO PROVIDE NON-EXHAUSTIVE INDICATIONS
OF WHAT ACTIONS OR OMISSIONS BY THE AGENT WOULD BE COMMERCIALLY REASONABLE IN
THE AGENT’S EXERCISE OF REMEDIES AGAINST THE COLLATERAL AND THAT OTHER ACTIONS
OR OMISSIONS BY THE AGENT SHALL NOT BE DEEMED COMMERCIALLY UNREASONABLE SOLELY
ON ACCOUNT OF NOT BEING INDICATED IN THIS SECTION 11.3.  WITHOUT LIMITATION UPON
THE FOREGOING, NOTHING CONTAINED IN THIS SECTION 11.3 SHALL BE CONSTRUED TO
GRANT ANY RIGHTS TO ANY GRANTOR OR TO IMPOSE ANY DUTIES ON THE AGENT THAT WOULD
NOT HAVE BEEN GRANTED OR IMPOSED BY THIS AGREEMENT OR BY APPLICABLE LAW IN THE
ABSENCE OF THIS SECTION 11.3.

 

SECTION 11.4.                             COMPROMISES AND COLLECTION OF
COLLATERAL.  EACH GRANTOR AND THE AGENT RECOGNIZE THAT SETOFFS, COUNTERCLAIMS,
DEFENSES AND OTHER CLAIMS MAY BE ASSERTED BY OBLIGORS WITH RESPECT TO CERTAIN OF
THE RECEIVABLES, THAT CERTAIN OF THE RECEIVABLES MAY BE OR BECOME UNCOLLECTIBLE
IN WHOLE OR IN PART AND THAT THE EXPENSE AND PROBABILITY OF SUCCESS IN
LITIGATING A DISPUTED RECEIVABLE MAY EXCEED THE AMOUNT THAT REASONABLY MAY BE
EXPECTED TO BE RECOVERED WITH RESPECT TO A RECEIVABLE.  IN VIEW OF THE
FOREGOING, EACH GRANTOR AGREES THAT THE AGENT MAY AT ANY TIME AND FROM TIME TO
TIME, IF AN EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING, COMPROMISE WITH THE
OBLIGOR ON ANY RECEIVABLE, ACCEPT IN FULL PAYMENT OF ANY RECEIVABLE SUCH AMOUNT
AS THE AGENT IN ITS SOLE DISCRETION SHALL DETERMINE OR ABANDON ANY RECEIVABLE,
AND ANY SUCH ACTION BY THE AGENT SHALL BE COMMERCIALLY REASONABLE SO LONG AS THE
AGENT ACTS IN GOOD FAITH BASED ON INFORMATION KNOWN TO IT AT THE TIME IT TAKES
ANY SUCH ACTION.

 

SECTION 11.5.                             SECURED PARTY PERFORMANCE OF DEBTOR
OBLIGATIONS.  WITHOUT HAVING ANY OBLIGATION TO DO SO, THE AGENT MAY PERFORM OR
PAY ANY OBLIGATION WHICH ANY GRANTOR HAS AGREED TO PERFORM OR PAY UNDER THIS
AGREEMENT AND THE GRANTOR SHALL REIMBURSE THE AGENT FOR ANY AMOUNTS PAID BY THE
AGENT PURSUANT TO THIS SECTION 11.5.  EACH GRANTOR’S OBLIGATION TO REIMBURSE THE
AGENT PURSUANT TO THE PRECEDING SENTENCE SHALL BE AN OBLIGATION PAYABLE ON
DEMAND.

 

SECTION 11.6.                             SPECIFIC PERFORMANCE OF CERTAIN
COVENANTS.  THE GRANTOR ACKNOWLEDGES AND AGREES THAT A BREACH OF ANY OF THE
COVENANTS CONTAINED IN SECTIONS 4.1(D), 4.1(E), 4.3, 4.4, 4.5, 4.6, 4.7, 4.8,
4.10, OR 5.2, WILL CAUSE IRREPARABLE INJURY TO THE AGENT AND THE SECURED
PARTIES, THAT THE AGENT AND THE SECURED PARTIES HAVE NO ADEQUATE REMEDY AT LAW
IN RESPECT OF SUCH BREACHES AND THEREFORE AGREES, WITHOUT LIMITING THE RIGHT OF
THE AGENT OR THE SECURED PARTIES TO SEEK AND OBTAIN SPECIFIC PERFORMANCE OF
OTHER OBLIGATIONS OF ANY GRANTOR CONTAINED IN THIS AGREEMENT, THAT THE COVENANTS
OF SUCH GRANTOR CONTAINED IN THE SECTIONS REFERRED TO IN THIS SECTION 11.6 SHALL
BE SPECIFICALLY ENFORCEABLE AGAINST SUCH GRANTOR.

 

SECTION 11.7.                             DISPOSITIONS NOT AUTHORIZED.  NO
GRANTOR IS AUTHORIZED TO SELL OR OTHERWISE DISPOSE OF THE COLLATERAL EXCEPT AS
SET FORTH IN SECTION 4.1(D) AND NOTWITHSTANDING ANY COURSE OF

 

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DEALING BETWEEN ANY GRANTOR AND THE AGENT OR OTHER CONDUCT OF THE AGENT, NO
AUTHORIZATION TO SELL, LEASE OR TRANSFER OR OTHERWISE DISPOSE OF THE COLLATERAL
(EXCEPT AS SET FORTH IN SECTION 4.1(D)) SHALL BE BINDING UPON THE AGENT OR THE
SECURED PARTIES UNLESS SUCH AUTHORIZATION IS IN WRITING SIGNED BY THE AGENT WITH
THE CONSENT OR AT THE DIRECTION OF THE REQUIRED SECURED PARTIES.

 

SECTION 11.8.                             NO WAIVER; AMENDMENTS; CUMULATIVE
REMEDIES.  NO DELAY OR OMISSION OF THE AGENT TO EXERCISE ANY RIGHT OR REMEDY
GRANTED UNDER THIS AGREEMENT SHALL IMPAIR SUCH RIGHT OR REMEDY OR BE CONSTRUED
TO BE A WAIVER OF ANY DEFAULT OR AN ACQUIESCENCE THEREIN, AND ANY SINGLE OR
PARTIAL EXERCISE OF ANY SUCH RIGHT OR REMEDY SHALL NOT PRECLUDE ANY OTHER OR
FURTHER EXERCISE THEREOF OR THE EXERCISE OF ANY OTHER RIGHT OR REMEDY. NO
WAIVER, AMENDMENT OR OTHER VARIATION OF THE TERMS, CONDITIONS OR PROVISIONS OF
THIS AGREEMENT WHATSOEVER SHALL BE VALID UNLESS IN WRITING SIGNED BY THE AGENT
WITH THE CONCURRENCE OR AT THE DIRECTION OF THE LENDERS REQUIRED UNDER
SECTION 10.02 OF THE CREDIT AGREEMENT AND THEN ONLY TO THE EXTENT IN SUCH
WRITING SPECIFICALLY SET FORTH.  ALL RIGHTS AND REMEDIES CONTAINED IN THIS
AGREEMENT OR BY LAW AFFORDED SHALL BE CUMULATIVE AND ALL SHALL BE AVAILABLE TO
THE AGENT AND THE SECURED PARTIES UNTIL THE TERM LOAN OBLIGATIONS HAVE BEEN PAID
IN FULL.

 

SECTION 11.9.                             LIMITATION BY LAW; SEVERABILITY OF
PROVISIONS.  ALL RIGHTS, REMEDIES AND POWERS PROVIDED IN THIS AGREEMENT MAY BE
EXERCISED ONLY TO THE EXTENT THAT THE EXERCISE THEREOF DOES NOT VIOLATE ANY
APPLICABLE PROVISION OF LAW, AND ALL THE PROVISIONS OF THIS AGREEMENT ARE
INTENDED TO BE SUBJECT TO ALL APPLICABLE MANDATORY PROVISIONS OF LAW THAT MAY BE
CONTROLLING AND TO BE LIMITED TO THE EXTENT NECESSARY SO THAT THEY SHALL NOT
RENDER THIS AGREEMENT INVALID, UNENFORCEABLE OR NOT ENTITLED TO BE RECORDED OR
REGISTERED, IN WHOLE OR IN PART.  ANY PROVISION IN ANY THIS AGREEMENT THAT IS
HELD TO BE INOPERATIVE, UNENFORCEABLE, OR INVALID IN ANY JURISDICTION SHALL, AS
TO THAT JURISDICTION, BE INOPERATIVE, UNENFORCEABLE, OR INVALID WITHOUT
AFFECTING THE REMAINING PROVISIONS IN THAT JURISDICTION OR THE OPERATION,
ENFORCEABILITY, OR VALIDITY OF THAT PROVISION IN ANY OTHER JURISDICTION, AND TO
THIS END THE PROVISIONS OF THIS AGREEMENT ARE DECLARED TO BE SEVERABLE.

 

SECTION 11.10.                       REINSTATEMENT.  THIS AGREEMENT SHALL REMAIN
IN FULL FORCE AND EFFECT AND CONTINUE TO BE EFFECTIVE SHOULD ANY PETITION BE
FILED BY OR AGAINST ANY GRANTOR FOR LIQUIDATION OR REORGANIZATION, SHOULD ANY
GRANTOR BECOME INSOLVENT OR MAKE AN ASSIGNMENT FOR THE BENEFIT OF ANY CREDITOR
OR CREDITORS OR SHOULD A RECEIVER OR TRUSTEE BE APPOINTED FOR ALL OR ANY
SIGNIFICANT PART OF ITS GRANTOR’S ASSETS, AND SHALL CONTINUE TO BE EFFECTIVE OR
BE REINSTATED, AS THE CASE MAY BE, IF AT ANY TIME PAYMENT AND PERFORMANCE OF THE
OBLIGATIONS, OR ANY PART THEREOF, IS, PURSUANT TO APPLICABLE LAW, RESCINDED OR
REDUCED IN AMOUNT, OR MUST OTHERWISE BE RESTORED OR RETURNED BY ANY OBLIGEE OF
THE OBLIGATIONS, WHETHER AS A “VOIDABLE PREFERENCE,” “FRAUDULENT CONVEYANCE,” OR
OTHERWISE, ALL AS THOUGH SUCH PAYMENT OR PERFORMANCE HAD NOT BEEN MADE.  IN THE
EVENT THAT ANY PAYMENT, OR ANY PART THEREOF, IS RESCINDED, REDUCED, RESTORED OR
RETURNED, THE OBLIGATIONS SHALL BE REINSTATED AND DEEMED REDUCED ONLY BY SUCH
AMOUNT PAID AND NOT SO RESCINDED, REDUCED, RESTORED OR RETURNED.

 

SECTION 11.11.                       BENEFIT OF AGREEMENT.  THE TERMS AND
PROVISIONS OF THIS AGREEMENT SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF
EACH GRANTOR, THE AGENT AND THE PARTIES AND THEIR RESPECTIVE SUCCESSORS AND
PERMITTED ASSIGNS (INCLUDING ALL PERSONS WHO BECOME BOUND AS A DEBTOR TO THIS
AGREEMENT), EXCEPT THAT NO GRANTOR SHALL HAVE THE RIGHT TO ASSIGN ITS RIGHTS OR
DELEGATE ITS OBLIGATIONS UNDER THIS AGREEMENT OR ANY INTEREST HEREIN, WITHOUT
THE PRIOR WRITTEN CONSENT OF THE AGENT.  NO SALES OF PARTICIPATIONS,
ASSIGNMENTS, TRANSFERS, OR OTHER DISPOSITIONS OF ANY AGREEMENT GOVERNING THE
OBLIGATIONS OR ANY PORTION THEREOF OR INTEREST THEREIN SHALL IN ANY MANNER
IMPAIR THE LIEN GRANTED TO THE AGENT, FOR THE BENEFIT OF THE AGENT AND THE
SECURED PARTIES, HEREUNDER.

 

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SECTION 11.12.  SURVIVAL OF REPRESENTATIONS.  ALL REPRESENTATIONS AND WARRANTIES
OF EACH GRANTOR CONTAINED IN THIS AGREEMENT SHALL SURVIVE THE EXECUTION AND
DELIVERY OF THIS AGREEMENT.

 

SECTION 11.13.  TAXES AND EXPENSES.  EACH GRANTOR JOINTLY AND SEVERALLY AGREES
TO PAY ANY TAXES PAYABLE OR RULED PAYABLE BY FEDERAL OR STATE AUTHORITY IN
RESPECT OF THIS AGREEMENT, TOGETHER WITH INTEREST AND PENALTIES, IF ANY.  EACH
GRANTOR JOINTLY AND SEVERALLY AGREES TO REIMBURSE THE AGENT FOR ANY AND
REASONABLE DOCUMENTED ALL OUT-OF-POCKET EXPENSES PAID OR INCURRED BY THE AGENT
IN CONNECTION WITH THE PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION,
COLLECTION AND ENFORCEMENT OF THIS AGREEMENT AND IN THE AUDIT, ANALYSIS,
ADMINISTRATION, COLLECTION, PRESERVATION OR SALE OF THE COLLATERAL (INCLUDING
THE EXPENSES AND CHARGES ASSOCIATED WITH ANY PERIODIC OR SPECIAL AUDIT OF THE
COLLATERAL).  ANY AND ALL COSTS AND EXPENSES INCURRED BY ANY GRANTOR IN THE
PERFORMANCE OF ACTIONS REQUIRED PURSUANT TO THE TERMS HEREOF SHALL BE BORNE
SOLELY BY SUCH GRANTOR.

 

SECTION 11.14.  ADDITIONAL SUBSIDIARIES.  PURSUANT TO AND IN ACCORDANCE WITH
SECTION 5.11 OF THE TERM LOAN CREDIT AGREEMENT, EACH DOMESTIC SUBSIDIARY (OTHER
THAN ANY UNRESTRICTED SUBSIDIARY) OF THE BORROWER THAT WAS NOT IN EXISTENCE OR
NOT A SUBSIDIARY ON THE DATE HEREOF IS REQUIRED TO ENTER IN THIS AGREEMENT AS A
SUBSIDIARY PARTY PROMPTLY UPON BECOMING A SUBSIDIARY.  UPON EXECUTION AND
DELIVERY BY THE AGENT AND A SUBSIDIARY OF AN INSTRUMENT IN THE FORM OF EXHIBIT K
HERETO, SUCH SUBSIDIARY SHALL BECOME A SUBSIDIARY PARTY HEREUNDER WITH THE SAME
FORCE AND EFFECT AS IF ORIGINALLY NAMED AS A SUBSIDIARY PARTY HEREIN.  THE
EXECUTION AND DELIVERY OF ANY SUCH INSTRUMENT SHALL NOT REQUIRE THE CONSENT OF
ANY OTHER PERSON.  THE RIGHTS AND OBLIGATIONS OF EACH GRANTOR HEREUNDER SHALL
REMAIN IN FULL FORCE AND EFFECT NOTWITHSTANDING THE ADDITION OF ANY NEW PERSON
AS A PARTY TO THIS AGREEMENT.

 

SECTION 11.15.  HEADINGS.  THE TITLE OF AND SECTION HEADINGS IN THIS AGREEMENT
ARE FOR CONVENIENCE OF REFERENCE ONLY, AND SHALL NOT GOVERN THE INTERPRETATION
OF ANY OF THE TERMS AND PROVISIONS OF THIS AGREEMENT.

 

SECTION 11.16.  TERMINATION AND RELEASE.  (A)  THIS AGREEMENT SHALL CONTINUE IN
EFFECT UNTIL (I) THE TERM LOAN CREDIT AGREEMENT HAS BEEN TERMINATED PURSUANT TO
ITS EXPRESS TERMS AND (II) ALL OF THE TERM LOAN OBLIGATIONS AND HAVE BEEN
INDEFEASIBLY PAID AND PERFORMED IN FULL; PROVIDED, HOWEVER, THAT NO SUCH
TERMINATION SHALL BE EFFECTIVE AT ANY TIME WHEN ANY EXISTING NOTES OBLIGATIONS
REMAIN OUTSTANDING UNLESS AND UNTIL (I) THE BORROWER SHALL HAVE NOTIFIED THE
AGENT IN WRITING WHETHER AT SUCH TIME THERE IS OUTSTANDING ANY DEBT OF ANY
PERSON THAT IS SECURED BY THE EXISTING NOTES DESIGNATED COLLATERAL (WHICH
NOTIFICATION THE BORROWER HEREBY AGREES TO PROVIDE PROMPTLY UPON THE AGENT’S
REQUEST THEREFOR) AND (II) IF ANY SUCH SECURED DEBT IS OUTSTANDING AT SUCH TIME,
THE AGENT SHALL HAVE TAKEN SUCH ACTIONS, AT THE EXPENSE OF THE BORROWER, AS THE
BORROWER MAY REASONABLY REQUEST TO TRANSFER ALL COLLATERAL CONSISTING OF
EXISTING NOTES DESIGNATED COLLATERAL AND ALL RELATED LIENS THEREON AND SECURITY
INTERESTS THEREIN (WITHOUT ANY REPRESENTATION OR WARRANTIES (OTHER THAN A
REPRESENTATION AND WARRANTY AS TO NO LIENS ON THE EXISTING NOTES DESIGNATED
COLLATERAL CREATED BY THE AGENT IN ITS INDIVIDUAL CAPACITY)) TO THE EXISTING
NOTES TRUSTEE OR SUCH OTHER AGENT OR PERSON AS THE BORROWER MAY DIRECT (PROVIDED
FURTHER, HOWEVER, THAT IF SUCH OTHER SECURED DEBT IS UNDER THE REVOLVING
FACILITY CREDIT AGREEMENT, ALL SUCH COLLATERAL IN THE FORM OF POSSESSORY
COLLATERAL SHALL BE TRANSFERRED TO THE REVOLVING FACILITY AGENT, NOTWITHSTANDING
ANYTHING IN THE FOREGOING TO THE CONTRARY).

 

(B)                                 A SUBSIDIARY PARTY SHALL AUTOMATICALLY BE
RELEASED FROM ITS OBLIGATIONS HEREUNDER AND THE SECURITY INTERESTS CREATED
HEREUNDER IN THE COLLATERAL OF SUCH SUBSIDIARY PARTY SHALL

 

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BE AUTOMATICALLY RELEASED UPON THE CONSUMMATION OF ANY TRANSACTION PERMITTED
PURSUANT TO THE TERM LOAN CREDIT AGREEMENT AS A RESULT OF WHICH SUCH SUBSIDIARY
PARTY CEASES TO BE A SUBSIDIARY.

 

(C)                                  UPON ANY SALE, LEASE, TRANSFER OR OTHER
DISPOSITION BY ANY GRANTOR OF ANY COLLATERAL THAT IS PERMITTED UNDER
SECTION 4.1(D) TO ANY PERSON THAT IS NOT ANOTHER GRANTOR OR, UPON THE
EFFECTIVENESS OF ANY WRITTEN CONSENT TO THE RELEASE OF THE SECURITY INTEREST
GRANTED HEREBY IN ANY COLLATERAL PURSUANT TO SECTION 10.02 OF THE TERM LOAN
CREDIT AGREEMENT, THE SECURITY INTEREST IN SUCH COLLATERAL SHALL BE
AUTOMATICALLY RELEASED.

 

(D)                                 IN THE EVENT THAT RULE 3-10 OR RULE 3-16 OF
REGULATION S-X OF THE EXCHANGE ACT IS AMENDED, MODIFIED OR INTERPRETED BY THE
SEC OR ANY OTHER RELEVANT GOVERNMENTAL AUTHORITY TO REQUIRE (OR IS REPLACED WITH
ANOTHER RULE OR REGULATION, OR ANY OTHER LAW, RULE OR REGULATION IS ADOPTED,
WHICH WOULD REQUIRE) THE FILING WITH THE SEC (OR ANY OTHER GOVERNMENTAL
AUTHORITY) OF SEPARATE FINANCIAL STATEMENTS OF ANY SUBSIDIARY OF THE BORROWER
DUE TO THE FACT THAT THE EQUITY INTERESTS OF SUCH SUBSIDIARY ARE PLEDGED UNDER
THIS AGREEMENT, THEN THE EQUITY INTERESTS OF SUCH SUBSIDIARY SHALL AUTOMATICALLY
BE DEEMED NOT TO BE PART OF THE COLLATERAL TO THE EXTENT NECESSARY NOT TO BE
SUBJECT TO SUCH REQUIREMENT.  NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS
AGREEMENT, IF EQUITY INTERESTS OF ANY SUBSIDIARY ARE NOT REQUIRED TO BE PLEDGED
UNDER THIS AGREEMENT BECAUSE RULE 3-10 OR RULE 3-16 OF REGULATION S-X OF THE
EXCHANGE ACT WOULD REQUIRE THE FILING OF SEPARATE FINANCIAL STATEMENTS OF SUCH
SUBSIDIARY IF ITS EQUITY INTERESTS WERE SO PLEDGED, IN THE EVENT THAT RULE 3-10
OR RULE 3-16 OF REGULATION S-X OF THE EXCHANGE ACT IS AMENDED, MODIFIED OR
INTERPRETED BY THE SEC OR ANY OTHER RELEVANT GOVERNMENTAL AUTHORITY TO NO LONGER
REQUIRE (OR IS REPLACED WITH ANOTHER RULE OR REGULATION THAT WOULD NOT REQUIRE)
THE FILING OF SEPARATE FINANCIAL STATEMENTS OF SUCH SUBSIDIARY IF SOME OR ALL OF
ITS EQUITY INTERESTS ARE PLEDGED UNDER THIS AGREEMENT, THEN SUCH EQUITY
INTERESTS OF SUCH SUBSIDIARY SHALL AUTOMATICALLY BE DEEMED PART OF THE
COLLATERAL AND PLEDGED UNDER THIS AGREEMENT.

 

(E)                                  IN CONNECTION WITH ANY TERMINATION OR
RELEASE PURSUANT TO PARAGRAPH (A), (B), (C) OR (D) ABOVE, THE AGENT SHALL
PROMPTLY EXECUTE AND DELIVER TO ANY GRANTOR, AT SUCH GRANTOR’S EXPENSE, ALL UCC
TERMINATION STATEMENTS AND SIMILAR DOCUMENTS THAT SUCH GRANTOR SHALL REASONABLY
REQUEST TO EVIDENCE SUCH TERMINATION OR RELEASE.  ANY EXECUTION AND DELIVERY OF
DOCUMENTS PURSUANT TO THIS SECTION 11.16 SHALL BE WITHOUT RECOURSE TO OR
REPRESENTATION OR WARRANTY BY THE AGENT OR ANY SECURED PARTY.  WITHOUT LIMITING
THE PROVISIONS OF SECTION 11.13, THE BORROWER SHALL REIMBURSE THE AGENT UPON
DEMAND FOR ALL REASONABLE AND DOCUMENTED COSTS AND OUT OF POCKET EXPENSES,
INCLUDING THE FEES, CHARGES AND EXPENSES OF COUNSEL, INCURRED BY IT IN
CONNECTION WITH ANY ACTION CONTEMPLATED BY THIS SECTION 11.16.

 

SECTION 11.17.  ENTIRE AGREEMENT.  THIS AGREEMENT, TOGETHER WITH THE OTHER TERM
LOAN/NOTE DOCUMENTS AND THE INTERCREDITOR AGREEMENT,  EMBODIES THE ENTIRE
AGREEMENT AND UNDERSTANDING BETWEEN EACH GRANTOR AND THE AGENT RELATING TO THE
COLLATERAL AND SUPERSEDES ALL PRIOR AGREEMENTS AND UNDERSTANDINGS BETWEEN ANY
GRANTOR AND THE AGENT RELATING TO THE COLLATERAL.

 

SECTION 11.18.  CHOICE OF LAW.  THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

 

SECTION 11.19.  CONSENT TO JURISDICTION.  EACH GRANTOR HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY U.S. FEDERAL OR NEW YORK STATE
COURT SITTING IN NEW YORK, NEW YORK IN THE

 

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BOROUGH OF MANHATTAN IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OTHER TERM LOAN/NOTE DOCUMENT AND THE GRANTOR HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING
MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY
OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT
FORUM.  NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR ANY SECURED PARTY
TO BRING PROCEEDINGS AGAINST ANY GRANTOR IN THE COURTS OF ANY OTHER
JURISDICTION.  ANY JUDICIAL PROCEEDING BY ANY GRANTOR AGAINST THE AGENT OR ANY
SECURED PARTY OR ANY AFFILIATE OF THE AGENT OR ANY SECURED PARTY INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH THIS AGREEMENT OR ANY OTHER TERM LOAN/NOTE DOCUMENT SHALL BE
BROUGHT ONLY IN A COURT IN NEW YORK, NEW YORK IN THE BOROUGH OF MANHATTAN.

 

SECTION 11.20.  WAIVER OF JURY TRIAL. EACH GRANTOR, THE AGENT AND EACH SECURED
PARTY HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY
OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN
ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.

 

SECTION 11.21.  INDEMNITY.  EACH GRANTOR HEREBY AGREES TO INDEMNIFY THE AGENT
AND THE SECURED PARTIES, AND THEIR RESPECTIVE SUCCESSORS, ASSIGNS, AGENTS AND
EMPLOYEES, FROM AND AGAINST ANY AND ALL LOSSES, CLAIMS, DAMAGES, PENALTIES,
LIABILITIES, AND RELATED EXPENSES (INCLUDING, WITHOUT LIMITATION, ALL EXPENSES
OF LITIGATION OR PREPARATION THEREFOR WHETHER OR NOT THE AGENT OR ANY SECURED
PARTY IS A PARTY THERETO) IMPOSED ON, INCURRED BY OR ASSERTED AGAINST THE AGENT
OR THE SECURED PARTIES, OR THEIR RESPECTIVE SUCCESSORS, ASSIGNS, AGENTS AND
EMPLOYEES, IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT, OR THE
OWNERSHIP, DELIVERY, LEASE, POSSESSION, USE, OPERATION, CONDITION, SALE, RETURN
OR OTHER DISPOSITION OF ANY COLLATERAL (INCLUDING ANY CLAIM FOR PATENT,
TRADEMARK OR COPYRIGHT INFRINGEMENT).

 

SECTION 11.22.  COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED IN ANY NUMBER OF
COUNTERPARTS, ALL OF WHICH TAKEN TOGETHER SHALL CONSTITUTE ONE AGREEMENT, AND
ANY OF THE PARTIES HERETO MAY EXECUTE THIS AGREEMENT BY SIGNING ANY SUCH
COUNTERPART.

 

SECTION 11.23.  INTERCREDITOR AGREEMENT GOVERNS. NOTWITHSTANDING ANYTHING HEREIN
TO THE CONTRARY, THIS AGREEMENT, THE LIENS AND SECURITY INTERESTS CREATED HEREBY
AND THE RIGHTS, REMEDIES, DUTIES AND OBLIGATIONS PROVIDED FOR HEREIN ARE SUBJECT
IN ALL RESPECTS TO THE PROVISIONS OF THE INTERCREDITOR AGREEMENT AND, TO THE
EXTENT PROVIDED THEREIN, THE APPLICABLE SENIOR OBLIGATIONS SECURITY DOCUMENTS
(AS DEFINED IN THE INTERCREDITOR AGREEMENT). IN THE EVENT OF ANY CONFLICT OR
INCONSISTENCY BETWEEN THE PROVISIONS OF THE INTERCREDITOR AGREEMENT

 

35

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AND THIS AGREEMENT, THE PROVISIONS OF THE INTERCREDITOR AGREEMENT SHALL CONTROL.

 

SECTION 11.24.  DELIVERY OF COLLATERAL.  PRIOR TO THE REVOLVING FACILITY FIRST
LIEN COLLATERAL TRANSITION DATE, TO THE EXTENT ANY GRANTOR IS REQUIRED HEREUNDER
TO DELIVER COLLATERAL TO THE AGENT FOR PURPOSES OF POSSESSION AND CONTROL AND IS
UNABLE TO DO SO AS A RESULT OF HAVING PREVIOUSLY DELIVERED SUCH COLLATERAL TO
THE REVOLVING FACILITY AGENT IN ACCORDANCE WITH THE TERMS OF THE REVOLVING
FACILITY SECURITY DOCUMENTS, SUCH GRANTOR’S OBLIGATIONS HEREUNDER WITH RESPECT
TO SUCH DELIVERY SHALL BE DEEMED SATISFIED BY THE DELIVERY TO THE REVOLVING
FACILITY AGENT, ACTING AS A GRATUITOUS BAILEE OF THE AGENT.

 

SECTION 11.25.  MORTGAGES.  IN THE CASE OF A CONFLICT BETWEEN THIS AGREEMENT AND
THE MORTGAGES WITH RESPECT TO COLLATERAL THAT IS REAL PROPERTY (INCLUDING
FIXTURES), THE MORTGAGES SHALL GOVERN.  IN ALL OTHER CONFLICTS BETWEEN THIS
AGREEMENT AND THE MORTGAGES, THIS AGREEMENT SHALL GOVERN.

 

[Signature Page Follows]

 

36

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IN WITNESS WHEREOF, each Grantor and the Agent have executed this Agreement as
of the date first above written.

 

 

NEWTON ACQUISITION, INC.,

 

 

 

 

By:

/s/ Nelson A. Bangs

 

 

 

Name:

Nelson A. Bangs

 

 

 

Title:

Senior Vice President and General Counsel

 

 

 

 

NEWTON ACQUISITION MERGER SUB, INC.,

 

 

 

 

By:

/s/ Kewsong Lee

 

 

 

Name:

Kewsong Lee

 

 

 

Title:

Senior Vice President

 

 

 

 

THE NEIMAN MARCUS GROUP, INC.,

 

 

 

 

By:

/s/ Nelson A. Bangs

 

 

 

Name:

Nelson A. Bangs

 

 

 

Title:

Senior Vice President and General Counsel

 

 

 

EACH OF THE SUBSIDIARY PARTIES LISTED ON
EXHIBIT J HERETO,

 

 

 

 

By:

/s/ Nelson A. Bangs

 

 

 

Name:

Nelson A. Bangs

 

 

 

Title:

Vice President

 

 

 

NM NEVADA TRUST,

 

 

 

 

By:

/s/ Nelson A. Bangs

 

 

 

Name:

Nelson A. Bangs

 

 

 

Title:

Vice President

 

 

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CREDIT SUISSE, CAYMAN ISLANDS BRANCH,
as Agent

 

 

 

 

By:

/s/ Robert Hetu

 

 

 

Name:

Robert Hetu

 

 

 

Title:

Director

 

 

 

 

By:

/s/ Vanessa Gomez

 

 

Name:

Vanessa Gomez

 

 

Title:

Vice President

 

 

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