Exhibit 10.2

 

SECURITY AGREEMENT

 

THIS SECURITY AGREEMENT dated as of October 3, 2012 (this “Security Agreement”)
is being entered into among TILE SHOP HOLDINGS, INC., a Delaware corporation
(“Holdings”), THE TILE SHOP, LLC, a Delaware limited liability company (the
“Company”), EACH OF THE UNDERSIGNED SUBSIDIARIES OF HOLDINGS OR THE COMPANY AND
EACH OTHER PERSON WHO SHALL BECOME A PARTY HERETO BY EXECUTION OF A SECURITY
JOINDER AGREEMENT (each a “Guarantor” and, together with Holdings and the
Company, collectively, the “Grantors”), and BANK OF AMERICA, N.A., as
Administrative Agent (in such capacity, the “Administrative Agent”) for each of
the Secured Parties (as defined in the Credit Agreement referenced) below.

 

RECITALS:

 

A.           Pursuant to a Credit Agreement dated as of the date hereof (as
amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”), among Holdings, the Company, the Subsidiaries of the
Company from time to time party thereto, the Administrative Agent, Bank of
America, N.A., as L/C Issuer and Swing Line Lender, and the lenders now or
hereafter party thereto (the “Lenders”), the Lenders have agreed to provide to
the Borrowers a term loan facility and a revolving credit facility with a letter
of credit sublimit and swing line facility.

 

B.           Certain additional extensions of credit may be made from time to
time for the benefit of the Grantors pursuant to certain Secured Cash Management
Agreements and Secured Hedge Agreements (each as defined in the Credit
Agreement).

 

C.           It is a condition precedent to the Secured Parties’ obligations to
make and maintain such extensions of credit that the Grantors shall have
executed and delivered this Security Agreement to the Administrative Agent.

 

In order to induce the Secured Parties to from time to time make and maintain
extensions of credit under the Credit Agreement and such Secured Cash Management
Agreements and Secured Hedge Agreements, the parties hereto agree as follows:

 

1.          Certain Definitions. All capitalized terms used but not otherwise
defined herein shall have the meanings assigned thereto in the Credit Agreement.
Terms used in this Security Agreement that are not otherwise expressly defined
herein or in the Credit Agreement, and for which meanings are provided in the
Uniform Commercial Code of the State of New York (the “UCC”), shall have such
meanings unless the context requires otherwise. In addition, for purposes of
this Security Agreement, the following terms have the following definitions:

 

“Excluded Asset” means the real property and all improvements, including any
structures, located at the Company’s distribution center in Ottawa Lake,
Michigan.

 

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“Qualifying Control Agreement” means (a) with respect to Investment Property
credited to any securities account, an agreement executed by the applicable
securities intermediary substantially in such form and substance as may be
reasonably consented to by the Administrative Agent; (b) with respect to any
Deposit Account, a deposit account control agreement executed by the applicable
depositary bank substantially in such form and substance as may be reasonably
consented to by the Administrative Agent; and (c) with respect to any Investment
Property in the form of uncertificated securities, an agreement of the issuer of
such Investment Property in such form and substance as may be reasonably
consented to by the Administrative Agent sufficient to confer control (within
the meaning of Section 9-106 of the UCC) over such property and containing such
other terms and provisions as the Administrative Agent may reasonably request.

 

“Secured Obligations” means (a) as to each Borrower, all of the Obligations,
including, the payment and performance of its obligations and liabilities
(whether now existing or hereafter arising) (i) under the Credit Agreement and
each of the other Loan Documents (including this Security Agreement) to which it
is now or hereafter becomes a party, and (ii) any Secured Cash Management
Agreements and Secured Hedge Agreements to which any Loan Party is now or
hereafter becomes a party, and (b) as to each Guarantor, the payment and
performance of its obligations and liabilities (whether now existing or
hereafter arising) (i) under the Guaranty and each of the other Loan Documents
(including this Security Agreement) to which it is now or hereafter becomes a
party, and (ii) any Secured Cash Management Agreements and Secured Hedge
Agreements to which it is now or hereafter becomes a party.

 

2.          Grant of Security Interest. Each Grantor grants as collateral
security for the payment, performance and satisfaction of the Secured
Obligations to the Administrative Agent for the benefit of the Secured Parties a
continuing first priority security interest in and to, and collaterally assigns
to the Administrative Agent for the benefit of the Secured Parties, all of the
assets of such Grantor (other than the Excluded Asset) or in which such Grantor
has or may have or acquire an interest or the power to transfer rights therein,
whether now owned or existing or hereafter created, acquired or arising and
wheresoever located, including the following:

 

(a)          All accounts, and including accounts receivable, contracts, bills,
acceptances, choses in action, and other forms of monetary obligations at any
time owing to such Grantor arising out of property sold, leased, licensed,
assigned or otherwise disposed of or for services rendered or to be rendered by
such Grantor, and all of such Grantor’s rights with respect to any property
represented thereby, whether or not delivered, property returned by customers
and all rights as an unpaid vendor or lienor, including rights of stoppage in
transit and of recovering possession by proceedings including replevin and
reclamation (collectively referred to hereinafter as “Accounts”);

 

(b)          All inventory, including all goods manufactured or acquired for
sale or lease, and any piece goods, raw materials, work in process and finished
merchandise, component materials, and all supplies, goods, incidentals, office
supplies, packaging materials and any and all items used or consumed in the
operation of the business of such Grantor or which may contribute to the
finished product or to the sale, promotion and shipment thereof, in which such
Grantor now or at any time hereafter may have an interest, whether or not the
same is in transit or in the constructive, actual or exclusive occupancy or
possession of such Grantor or is held by such Grantor or by others for such
Grantor’s account (collectively referred to hereinafter as “Inventory”);

 

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(c)          All goods, including all machinery, equipment, motor vehicles,
parts, supplies, apparatus, appliances, tools, patterns, molds, dies,
blueprints, fittings, furniture, furnishings, fixtures and articles of tangible
personal property of every description, and all computer programs embedded in
any of the foregoing and all supporting information relating to such computer
programs (collectively referred to hereinafter as “Equipment”);

 

(d)          All general intangibles, including all rights now or hereafter
accruing to such Grantor under contracts, leases, agreements or other
instruments, including all contracts or contract rights to perform or receive
services, to purchase or sell goods, or to hold or use land or facilities, and
to enforce all rights thereunder, all causes of action, corporate or business
records, inventions, patents and patent rights, rights in mask works, designs,
trade names and trademarks and all goodwill associated therewith, trade secrets,
trade processes, copyrights, licenses, permits, franchises, customer lists,
computer programs and software, all internet domain names and registration
rights thereto, all internet websites and the content thereof, all payment
intangibles, all claims under guaranties, tax refund claims, all rights and
claims against carriers and shippers, leases, all claims under insurance
policies, all interests in general and limited partnerships, limited liability
companies, and other Persons not constituting Investment Property (as defined
below), all rights to indemnification and all other intangible personal property
and intellectual property of every kind and nature (collectively referred to
hereinafter as “General Intangibles”);

 

(e)          All deposit accounts, including demand, time, savings, passbook, or
other similar accounts maintained with any bank by or for the benefit of such
Grantor (collectively referred to hereinafter as “Deposit Accounts”);

 

(f)          All chattel paper, including tangible chattel paper, electronic
chattel paper, or any hybrid thereof (collectively referred to hereinafter as
“Chattel Paper”);

 

(g)         All investment property, including all securities, security
entitlements, securities accounts, commodity contracts and commodity accounts of
or maintained for the benefit of such Grantor, but excluding Pledged Interests
subject to any Pledge Agreement and Equity Interests in Foreign Subsidiaries not
required to be Pledged under the Pledge Agreement (collectively referred to
hereinafter as “Investment Property”);

 

(h)         All instruments, including all promissory notes (collectively
referred to hereinafter as “Instruments”);

 

(i)          All documents, including warehouse receipts, bills of lading and
other documents of title (collectively referred to hereinafter as “Documents”);

 

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(j)          All rights to payment or performance under letters of credit
including rights to proceeds of letters of credit (“Letter-of-Credit Rights”),
and all guaranties, endorsements, Liens, other Guarantee obligations or
supporting obligations of any Person securing or supporting the payment,
performance, value or liquidation of any of the foregoing (collectively, with
Letter-of-Credit Rights, referred to hereinafter as “Supporting Obligations”);

 

(k)         All books and records relating to any of the forgoing (including
customer data, credit files, ledgers, computer programs, printouts, and other
computer materials and records (and all media on which such data, files,
programs, materials and records are or may be stored)); and

 

(l)          All proceeds, products and replacements of, accessions to, and
substitutions for, any of the foregoing, including without limitation proceeds
of insurance policies insuring any of the foregoing.

 

All of the property and interests in property described in subsections (a)
through (l) are herein collectively referred to as the “Collateral.” For the
avoidance of doubt, the Collateral shall not mean or include the Excluded Asset.

 

3.           Perfection. As of the date of execution of this Security Agreement
or Security Joinder Agreement by each Grantor, as applicable (with respect to
each Grantor, its “Applicable Date”), such Grantor shall have:

 

(a)         furnished the Administrative Agent with duly authorized financing
statements in form, number and substance suitable for filing, sufficient under
applicable law, and satisfactory to the Administrative Agent in order that upon
the filing of the same the Administrative Agent, for the benefit of the Secured
Parties, shall have a duly perfected security interest in all Collateral in
which a security interest can be perfected by the filing of financing
statements;

 

(b)        to the extent expressly required by the terms hereof or of the Credit
Agreement, or otherwise as the Administrative Agent may request, furnished the
Administrative Agent with properly executed Qualifying Control Agreements,
issuer acknowledgments of the Administrative Agent’s interest in
Letter-of-Credit Rights, and evidence of the placement of a restrictive legend
on tangible chattel paper (and the tangible components of electronic Chattel
Paper), and taken appropriate action acceptable to the Administrative Agent
sufficient to establish the Administrative Agent’s control of electronic Chattel
Paper (and the electronic components of hybrid Chattel Paper), as appropriate,
with respect to Collateral in which either (i) a security interest can be
perfected only by control or such restrictive legending, or (ii) a security
interest perfected by control or accompanied by such restrictive legending shall
have priority as against a lien creditor, a purchaser of such Collateral from
the applicable Grantor, or a security interest perfected by Persons not having
control or not accompanied by such restrictive legending, in each case in form
and substance acceptable to the Administrative Agent and sufficient under
applicable law so that the Administrative Agent, for the benefit of the Secured
Parties, shall have a security interest in all such Collateral perfected by
control; and

 

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(c)         to the extent expressly required by the terms hereof or of the
Credit Agreement, or otherwise as the Administrative Agent may request,
delivered to the Administrative Agent possession of all Collateral with respect
to which either a security interest can be perfected only by possession or a
security interest perfected by possession shall have priority as against Persons
not having possession, and including in the case of Instruments, Documents, and
Investment Property in the form of certificated securities, duly executed
endorsements or stock powers in blank, as the case may be, affixed thereto in
form and substance acceptable to the Administrative Agent and sufficient under
applicable law so that the Administrative Agent, for the benefit of the Secured
Parties, shall have a security interest in all such Collateral perfected by
possession;

 

with the effect that the Liens conferred in favor of the Administrative Agent
shall be and remain duly perfected and of first priority subject only, to the
extent applicable, to Liens allowed to exist under Section 7.01 of the Credit
Agreement (“Permitted Liens”). All financing statements (including all
amendments thereto and continuations thereof), control agreements, certificates,
acknowledgments, stock powers and other documents, electronic identification,
restrictive legends, and instruments furnished in connection with the creation,
enforcement, protection, perfection or priority of the Administrative Agent’s
security interest in Collateral, including such items as are described above in
this Section 3, are sometimes referred to herein as “Perfection Documents”. The
delivery of possession of items of or evidencing Collateral, causing other
Persons to execute and deliver Perfection Documents as appropriate, the filing
or recordation of Perfection Documents, the establishment of control over items
of Collateral, and the taking of such other actions as may be necessary or
advisable in the determination of the Administrative Agent to create, enforce,
protect, perfect, or establish or maintain the priority of, the security
interest of the Administrative Agent for the benefit of the Secured Parties in
the Collateral is sometimes referred to herein as “Perfection Action”.

 

4.          Maintenance of Security Interest; Further Assurances.

 

(a)         Each Grantor will from time to time at its own expense, deliver
specific assignments of Collateral or such other Perfection Documents, and take
such other or additional Perfection Action, as may be required by the terms of
the Loan Documents or as the Administrative Agent may reasonably request in
connection with the administration or enforcement of this Security Agreement or
related to the Collateral or any part thereof in order to carry out the terms of
this Security Agreement, to perfect, protect, maintain the priority of or
enforce the Administrative Agent’s security interest in the Collateral, subject
only to Permitted Liens, or otherwise to better assure and confirm unto the
Administrative Agent its rights, powers and remedies for the benefit of the
Secured Parties hereunder. Without limiting the foregoing, each Grantor hereby
irrevocably authorizes the Administrative Agent to file (with, or to the extent
permitted by applicable law, without the signature of the Grantor appearing
thereon) financing statements (including amendments thereto and initial
financing statements in lieu of continuation statements) or other Perfection
Documents (including copies thereof) showing such Grantor as “debtor” at such
time or times and in all filing offices as the Administrative Agent may from
time to time determine to be necessary or advisable to perfect or protect the
rights of the Administrative Agent and the Secured Parties hereunder, or
otherwise to give effect to the transactions herein contemplated, any of which
Perfection Documents, at the Administrative Agent’s election, may describe the
Collateral as or including all personal property of the Grantor. Each Grantor
hereby irrevocably ratifies and acknowledges the Administrative Agent’s
authority to have effected filings of Perfection Documents made by the
Administrative Agent prior to its Applicable Date.

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(b)         With respect to any and all Collateral, each Grantor agrees to do
and cause to be done all things necessary to perfect, maintain the priority of
and keep in full force the security interest granted in favor of the
Administrative Agent for the benefit of the Secured Parties, including, but not
limited to, the prompt payment upon demand therefor by the Administrative Agent
of all fees and expenses (including documentary stamp, excise or intangibles
taxes) incurred in connection with the preparation, delivery, or filing of any
Perfection Document or the taking of any Perfection Action to perfect, protect
or enforce a security interest in Collateral in favor of the Administrative
Agent for the benefit of the Secured Parties, subject only to Permitted Liens.
All amounts not so paid when due shall constitute additional Secured Obligations
and (in addition to other rights and remedies resulting from such nonpayment)
shall bear interest from the date of demand until paid in full at the Default
Rate.

 

(c)         Each Grantor agrees to maintain among its books and records
appropriate notations or evidence of, and to make or cause to be made
appropriate disclosure upon its financial statements of, the security interest
granted hereunder to the Administrative Agent for the benefit of the Secured
Parties.

 

(d)         Each Grantor agrees that, in the event any proceeds (other than
goods) of Collateral shall be or become commingled with other property not
constituting Collateral, then such proceeds may, to the extent permitted by law,
be identified by application of the lowest intermediate balance rule to such
commingled property.

 

5.           Receipt of Payment. In the event an Event of Default shall occur
and be continuing and a Grantor (or any of its Affiliates, subsidiaries,
stockholders, directors, officers, employees or agents) shall receive any
proceeds of Collateral, including without limitation monies, checks, notes,
drafts or any other items of payment, each Grantor shall hold all such items of
payment in trust for the Administrative Agent for the benefit of the Secured
Parties, and as the property of the Administrative Agent for the benefit of the
Secured Parties, separate from the funds and other property of such Grantor, and
no later than the first Business Day following the receipt thereof, at the
election of the Administrative Agent, such Grantor shall cause such Collateral
to be forwarded to the Administrative Agent for its custody, possession and
disposition on behalf of the Secured Parties in accordance with the terms hereof
and of the other Loan Documents.

 

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6.           Preservation and Protection of Collateral.

 

(a)         The Administrative Agent shall be under no duty or liability with
respect to the collection, protection or preservation of the Collateral, or
otherwise. Each Grantor shall be responsible for the safekeeping of its
Collateral, and in no event shall the Administrative Agent have any
responsibility for (i) any loss or damage thereto or destruction thereof
occurring or arising in any manner or fashion from any cause, (ii) any
diminution in the value thereof, or (iii) any act or default of any carrier,
warehouseman, bailee or forwarding agency thereof or other Person in any way
dealing with or handling such Collateral.

 

(b)         Each Grantor shall keep and maintain its tangible personal property
Collateral in good operating condition and repair, ordinary wear and tear
excepted. No Grantor shall permit any such items to become a fixture to real
property (unless such Grantor has granted the Administrative Agent for the
benefit of the Secured Parties a Lien on such real property having a priority
acceptable to the Administrative Agent) or accessions to other personal
property.

 

(c)         Each Grantor agrees (i) to pay when due all taxes, charges and
assessments against the Collateral in which it has any interest, unless being
contested in good faith by appropriate proceedings diligently conducted and
against which adequate reserves have been established in accordance with GAAP
applied on a basis consistent with the application of GAAP in the Audited
Financial Statements and evidenced to the satisfaction of the Administrative
Agent and provided that all enforcement proceedings in the nature of levy or
foreclosure are effectively stayed, and (ii) to cause to be terminated and
released all Liens (other than Permitted Liens) on the Collateral. Upon the
failure of any Grantor to so pay or contest such taxes, charges, or assessments,
or cause such Liens to be terminated, the Administrative Agent at its option may
pay or contest any of them or amounts relating thereto (the Administrative Agent
having the sole right to determine the legality or validity and the amount
necessary to discharge such taxes, charges, Liens or assessments) but shall not
have any obligation to make any such payment or contest. All sums so disbursed
by the Administrative Agent, including all reasonable fees and expenses of
counsel (collectively, “Attorneys’ Costs”), court costs, expenses and other
charges related thereto, shall be payable on demand by the applicable Grantor to
the Administrative Agent and shall be additional Secured Obligations secured by
the Collateral, and any amounts not so paid on demand (in addition to other
rights and remedies resulting from such nonpayment) shall bear interest from the
date of demand until paid in full at the Default Rate.

 

7.          Status of Grantors and Collateral Generally. Each Grantor represents
and warrants to, and covenants with, the Administrative Agent for the benefit of
the Secured Parties, with respect to itself and the Collateral as to which it
has or acquires any interest, that:

 

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(a)          It is at its Applicable Date (or as to Collateral acquired after
its Applicable Date will be upon the acquisition of the same) and, except as
permitted by the Credit Agreement and subsection (b) of this Section 7, will
continue to be, the owner of the Collateral, free and clear of all Liens, other
than the security interest hereunder in favor of the Administrative Agent for
the benefit of the Secured Parties and Permitted Liens, and that it will at its
own cost and expense defend such Collateral and any products and proceeds
thereof against all claims and demands of all Persons (other than holders of
Permitted Liens) to the extent of their claims permitted under the Credit
Agreement at any time claiming the same or any interest therein adverse to the
Secured Parties. Upon the failure of any Grantor to so defend, the
Administrative Agent may do so at its option but shall not have any obligation
to do so. All sums so disbursed by the Administrative Agent, including
Attorneys’ Costs, court costs, expenses and other charges related thereto, shall
be payable on demand by the applicable Grantor to the Administrative Agent and
shall be additional Secured Obligations secured by the Collateral, and any
amounts not so paid on demand (in addition to other rights and remedies
resulting from such nonpayment) shall bear interest from the date of demand
until paid in full at the Default Rate.

 

(b)          It shall not (i) sell, assign, transfer, lease, license or
otherwise dispose of any of, or grant any option with respect to, the
Collateral, except for Dispositions permitted under the Credit Agreement, (ii)
create or suffer to exist any Lien upon or with respect to any of the Collateral
except for the security interests created by this Security Agreement and
Permitted Liens, or (iii) take any other action in connection with any of the
Collateral that would materially impair the value of the interest or rights of
such Grantor in the Collateral taken as a whole or that would materially impair
the interest or rights of the Administrative Agent for the benefit of the
Secured Parties.

 

(c)          It has full power, legal right and lawful authority to enter into
this Security Agreement (and any Security Joinder Agreement applicable to it)
and to perform its terms, including the grant of the security interests in the
Collateral herein provided for.

 

(d)          No authorization, consent, approval or other action by, and no
notice to or filing with, any Governmental Authority or any other Person which
has not been given or obtained, as the case may be, is required either (i) for
the grant by such Grantor of the security interests granted hereby or for the
execution, delivery or performance of this Security Agreement (or any Security
Joinder Agreement) by such Grantor, or (ii) for the perfection of or the
exercise by the Administrative Agent, on behalf of the Secured Parties, of its
rights and remedies hereunder, except for action required by the UCC to perfect
and exercise remedies with respect to the security interest conferred hereunder.

 

(e)          No effective financing statement or other Perfection Document
similar in effect, nor any other Perfection Action, covering all or any part of
the Collateral purported to be granted or taken by or on behalf of such Grantor
(or by or on behalf of any other Person and which remains effective as against
all or any part of the Collateral) has been filed in any recording office,
delivered to another Person for filing (whether upon the occurrence of a
contingency or otherwise), or otherwise taken, as the case may be, except such
as pertain to Permitted Liens and such as may have been filed for the benefit
of, delivered to, or taken in favor of, the Administrative Agent for the benefit
of the Secured Parties in connection with the security interests conferred
hereunder.

 

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(f)          Schedule 7(f) attached hereto contains true and complete
information as to each of the following: (i) the exact legal name of each
Grantor as it appears in its Organization Documents as of its Applicable Date
and at any time during the five (5) year period ending as of its Applicable Date
(the “Covered Period”), (ii) the jurisdiction of formation and form of
organization of each Grantor, and the identification number of such Grantor in
its jurisdiction of formation (if any), (iii) each address of the chief
executive office of each Grantor as of its Applicable Date and at any time
during the Covered Period, (iv) all trade names or trade styles used by such
Grantor as of its Applicable Date and at any time during the Covered Period, (v)
the address of each location of such Grantor at which any tangible personal
property Collateral (including Account Records and Account Documents) is located
at its Applicable Date or has been located at any time during the Covered
Period, (vi) with respect to each location described in clause (v) that is not
owned beneficially and of record by such Grantor, the name and address of the
owner thereof; and (vii) the name of each Person other than such Grantor and the
address of such Person at which any tangible personal property Collateral of
such Grantor is held under any warehouse, consignment, bailment or other
arrangement as of its Applicable Date. No Grantor shall change its name, change
its jurisdiction of formation (whether by reincorporation, merger or otherwise),
change the location of its chief executive office, or utilize any additional
location where tangible personal property Collateral (including Account Records
and Account Documents) may be located, except in each case upon giving not less
than thirty (30) days’ prior written notice to the Administrative Agent and
taking or causing to be taken at such Grantor’s expense all such Perfection
Action, including the delivery of such Perfection Documents, as may be
reasonably requested by the Administrative Agent to perfect or protect, or
maintain the perfection and priority of, the Lien of the Administrative Agent
for the benefit of the Secured Parties in Collateral contemplated hereunder.

 

(g)        No Grantor shall engage in any consignment transaction in respect of
any of the Collateral, whether as consignee or consignor, without the prior
written consent of the Administrative Agent in each instance, other than
consignments by such Grantor as consignor of Inventory at no time having an
aggregate value in excess of $500,000.

 

(h)        No Grantor shall cause, suffer or permit any of the tangible personal
property Collateral (i) to be evidenced by any document of title (except for
shipping documents as necessary or customary to effect the receipt of raw
materials or components or the delivery of inventory to customers, in each case
in the ordinary course of business) or (ii) except for Inventory in transit in
the ordinary course of business, to be in the possession, custody or control of
any warehouseman or other bailee without the prior written consent of the
Administrative Agent in each instance, unless such location and Person are set
forth on Schedule 7(f).

 

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(i)          No tangible personal property Collateral is or shall be located at
any location that is leased by such Grantor from any other Person other than
Inventory the value of which, when aggregated with all other Inventory kept at
any location which is leased by all Grantors, is less than $500,000, unless (x)
such location and lessor is set forth on Schedule 7(f) attached hereto or such
Grantor provides not less than thirty (30) days’ prior written notice thereof to
the Administrative Agent, (y) such Granor has complied with the requirements of
Section 4.01(a)(xi) of the Credit Agreement with respect to such location, and
(z) the Grantor shall have caused at its expense to be prepared and executed
such additional Perfection Documents and to be taken such other Perfection
Action as the Administrative Agent may deem necessary or advisable to carry out
the transactions contemplated by this Security Agreement.

 

8.            Inspection. The Administrative Agent (by any of its officers,
employees and agents), on behalf of the Secured Parties, shall have the right
upon prior notice to an executive officer of any Grantor, and at any reasonable
times during such Grantor’s usual business hours, to inspect the Collateral, all
records related thereto (and to make extracts or copies from such records), and
the premises upon which any of the Collateral is located, to discuss such
Grantor’s affairs and finances with any Person (other than Persons obligated on
any Accounts (“Account Debtors”) except as expressly otherwise permitted in the
Loan Documents) and to verify with any Person other than (except as expressly
otherwise permitted in the Loan Documents) Account Debtors the amount, quality,
quantity, value and condition of, or any other matter relating to, the
Collateral and, if an Event of Default has occurred and is continuing, to
discuss such Grantor’s affairs and finances with such Grantor’s Account Debtors
and to verify the amount, quality, value and condition of, or any other matter
relating to, the Collateral with such Account Debtors; provided, however, that
when an Event of Default exists the Administrative Agent or any Lender (or any
of their respective officers and designated representatives) may do any of the
foregoing at the expense of the Grantors at any time during normal business
hours and without advance notice.

 

9.            Specific Collateral.

 

(a)           Accounts. With respect to its Accounts whether now existing or
hereafter created or acquired and wheresoever located, each Grantor represents,
warrants and covenants to the Administrative Agent for the benefit of the
Secured Parties that:

 

(i)          Each Grantor shall keep accurate and complete records of its
Accounts (“Account Records”) and from time to time at intervals designated by
the Administrative Agent such Grantor shall provide the Administrative Agent
with a schedule of Accounts in form and substance reasonably acceptable to the
Administrative Agent describing all Accounts created or acquired by such Grantor
(“Schedule of Accounts”); provided, however, that such Grantor’s failure to
execute and deliver any such Schedule of Accounts shall not affect or limit the
Administrative Agent’s security interest or other rights in and to any Accounts
for the benefit of the Secured Parties. If requested by the Administrative
Agent, each Grantor shall furnish the Administrative Agent with copies of proof
of delivery and other documents relating to the Accounts so scheduled, including
without limitation repayment histories and present status reports (collectively,
“Account Documents”) and such other matter and information relating to the
status of then existing Accounts as the Administrative Agent shall request.

 

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(ii)         All Account Records and Account Documents are and shall at all
times be located only at such Grantor’s current chief executive office as set
forth on Schedule 7(f) attached hereto, such other locations as are specifically
identified on Schedule 7(f) attached hereto as an “Account Documents location,”
or as to which the Grantor has complied with Section 7(f) hereof.

 

(iii)        The Accounts are genuine, are in all respects what they purport to
be, are not evidenced by an instrument or document or, if evidenced by an
instrument or document, are only evidenced by one original instrument or
document.

 

(iv)        The Accounts cover bona fide sales, leases, licenses or other
dispositions of property usually dealt in by such Grantor, or the rendition by
such Grantor of services, to an Account Debtor in the ordinary course of
business.

 

(v)         The property or services giving rise thereto are not, and were not
at the time of the sale or performance thereof, subject to any Lien, claim,
encumbrance or security interest, except those of the Administrative Agent for
the benefit of Secured Parties and Permitted Liens.

 

(vi)        The amounts of the face value of any Account shown or reflected on
any Schedule of Accounts, invoice statement, or certificate delivered to the
Administrative Agent, are actually owing to such Grantor and are not contingent
for any reason; and there are no setoffs, discounts, allowances, claims,
counterclaims or disputes of any kind or description in an amount greater than
$500,000 in the aggregate, or greater than $250,000 individually, existing or
asserted with respect thereto and such Grantor has not made any agreement with
any Account Debtor thereunder for any deduction therefrom, except as may be
stated in the Schedule of Accounts and reflected in the calculation of the face
value of each respective invoice related thereto.

 

(b)          Inventory. With respect to its Inventory whether now existing or
hereafter created or acquired and wheresoever located, each Grantor represents,
warrants and covenants to the Administrative Agent for the benefit of the
Secured Parties that:

 

(i)          Each Grantor shall keep accurate and complete records itemizing and
describing the kind, type, location and quantity of Inventory, its cost therefor
and the selling price of Inventory held for sale, and the daily withdrawals
therefrom and additions thereto, and shall furnish to the Administrative Agent
from time to time at reasonable intervals designated by the Administrative
Agent, a current schedule of Inventory (“Schedule of Inventory”) based upon its
most recent physical inventory and its daily inventory records. Each Grantor
shall conduct a physical inventory no less frequently than annually, and shall
furnish to the Administrative Agent such other documents and reports thereof as
the Administrative Agent shall reasonably request with respect to the Inventory.

 

11

 

 

(ii)         All Inventory, other than Inventory having a value of less than
$500,000 in the aggregate for all locations, is and shall at all times be
located only at such Grantor’s locations as set forth on Schedule 7(f) attached
hereto or at such other locations as to which such Grantor has complied with
Section 7(f) hereof or is in transit to such a location1. No Grantor shall,
other than in the ordinary course of business in connection with its transit,
sale, lease, license or other permitted Disposition, remove any Inventory having
an aggregate value in excess of that stated in the preceding sentence from such
locations.

 

(iii )      If any Account Debtor returns any Inventory to a Grantor after
shipment thereof, and such return generates a credit in excess of $50,000 on any
individual Account or $200,000 in the aggregate on any Accounts of such Account
Debtor, such Grantor shall notify the Administrative Agent in writing of the
same as soon as practicable.

 

(c)          Equipment. With respect to its Equipment whether now existing or
hereafter created or acquired and wheresoever located, each Grantor represents,
warrants and covenants to the Administrative Agent for the benefit of the
Secured Parties that:

 

(i)          The Grantors, as soon as practicable following a request therefor
by the Administrative Agent, shall deliver to the Administrative Agent any and
all evidence of ownership of any of the Equipment (including without limitation
certificates of title and applications for title).

 

(ii)         The Grantors shall maintain accurate, itemized records describing
the kind, type, quality, quantity and value of its Equipment and shall furnish
the Administrative Agent upon request with a current schedule containing the
foregoing information, but, other than during the continuance of an Event of
Default, not more often than once per fiscal quarter.

 

(iii)        All Equipment, other than Equipment having a value of less than
$500,000 in the aggregate for all locations, is and shall at all times be
located only at such Grantor’s locations as set forth on Schedule 7(f) attached
hereto or at such other locations as to which such Grantor has complied with
Section 7(f) hereof. No Grantor shall, other than as expressly permitted under
the Credit Agreement, sell, lease, transfer, dispose of or remove any Equipment
having an aggregate value in excess of that stated in the preceding sentence
from such locations.

 

(d)          Supporting Obligations. With respect to its Supporting Obligations
whether now existing or hereafter created or acquired and wheresoever located,
each Grantor represents, warrants and covenants to the Administrative Agent for
the benefit of the Secured Parties that each Grantor shall, upon the request of
the Administrative Agent from time to time following the occurrence and during
the continuance of any Default or Event of Default, deliver to the
Administrative Agent the originals of all documents evidencing or constituting
Supporting Obligations, together with such other documentation (executed as
appropriate by the Grantor) and information as may be necessary to enable the
Administrative Agent to realize upon the Supporting Obligations in accordance
with their respective terms or transfer the Supporting Obligations as may be
permitted under the Loan Documents or by applicable law.

 

12

 

 

(e)          Investment Property. With respect to its Investment Property
whether now existing or hereafter created or acquired and wheresoever located,
each Grantor represents, warrants and covenants to the Administrative Agent for
the benefit of the Secured Parties that:

 

(i)          Schedule 9(e) attached hereto contains a true and complete
description of (x) the name and address of each securities intermediary with
which such Grantor maintains a securities account in which Investment Property
is or may at any time be credited or maintained, and (y) all other Investment
Property of such Grantor other than interests in Subsidiaries in which such
Grantor has granted a Lien to the Administrative Agent for the benefit of the
Secured Parties pursuant to a Pledge Agreement.

 

(ii)         Except with the express prior written consent of the Administrative
Agent in each instance, all Investment Property other than interests in
Subsidiaries in which such Grantor has granted a Lien to the Administrative
Agent for the benefit of the Secured Parties pursuant to a Pledge Agreement
shall be maintained at all times in the form of (a) certificated securities,
which certificates shall have been delivered to the Administrative Agent
together with duly executed undated stock powers endorsed in blank pertaining
thereto, or (b) security entitlements credited to one or more securities
accounts as to each of which the Administrative Agent has received (1) copies of
the account agreement between the applicable securities intermediary and the
Grantor and the most recent statement of account pertaining to such securities
account (each certified to be true and correct by an officer of the Grantor) and
(2) a Qualifying Control Agreement from the applicable securities intermediary
which remains in full force and effect and as to which the Administrative Agent
has not received any notice of termination. Without limiting the generality of
the foregoing, no Grantor shall cause, suffer or permit any Investment Property
to be credited to or maintained in any securities account not listed on Schedule
9(e) attached hereto except in each case upon giving not less than thirty (30)
days’ prior written notice to the Administrative Agent and taking or causing to
be taken at such Grantor’s expense all such Perfection Action, including the
delivery of such Perfection Documents, as may be reasonably requested by the
Administrative Agent to perfect or protect, or maintain the perfection and
priority of, the Lien of the Administrative Agent for the benefit of the Secured
Parties in Collateral contemplated hereunder.

 

(iii)        All dividends and other distributions with respect to any of the
Investment Property shall be subject to the security interest conferred
hereunder, provided, however, that cash dividends paid to a Grantor as record
owner of the Investment Property may be disbursed to and retained by such
Grantor so long as no Default or Event of Default shall have occurred and be
continuing, free from any Lien hereunder.

 

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(iv)        So long as no Default or Event of Default shall have occurred and be
continuing, the registration of Investment Property in the name of a Grantor as
record and beneficial owner shall not be changed and such Grantor shall be
entitled to exercise all voting and other rights and powers pertaining to
Investment Property for all purposes not inconsistent with the terms hereof or
of any Qualifying Control Agreement relating thereto.

 

(v)         Upon the occurrence and during the continuance of any Default or
Event of Default, at the option of the Administrative Agent, all rights of the
Grantors to exercise the voting or consensual rights and powers which it is
authorized to exercise pursuant to clause (iv) immediately above shall cease and
the Administrative Agent may thereupon (but shall not be obligated to), at its
request, cause such Collateral to be registered in the name of the
Administrative Agent or its nominee or agent for the benefit of the Secured
Parties and/or exercise such voting or consensual rights and powers as appertain
to ownership of such Collateral, and to that end each Grantor hereby appoints
the Administrative Agent as its proxy, with full power of substitution, to vote
and exercise all other rights as a shareholder with respect to such Investment
Property upon the occurrence and during the continuance of any Default or Event
of Default, which proxy is coupled with an interest and is irrevocable until the
Facility Termination Date, and each Grantor hereby agrees to provide such
further proxies as the Administrative Agent may request; provided, however, that
the Administrative Agent in its discretion may from time to time refrain from
exercising, and shall not be obligated to exercise, any such voting or
consensual rights or such proxy.

 

(vi)        Upon the occurrence and during the continuance of any Default or
Event of Default, all rights of the Grantors to receive and retain cash
dividends and other distributions upon or in respect to Investment Property
pursuant to clause (iii) above shall cease and shall thereupon be vested in the
Administrative Agent for the benefit of the Secured Parties, and each Grantor
shall, or shall cause, all such cash dividends and other distributions with
respect to the Investment Property to be promptly delivered to the
Administrative Agent (together, if the Administrative Agent shall request, with
any documents related thereto) to be held, released or disposed of by it
hereunder or, at the option of the Administrative Agent, to be applied to the
Secured Obligations.

 

(f)          Deposit Accounts. With respect to its Deposit Accounts whether now
existing or hereafter created or acquired and wheresoever located, each Grantor
represents, warrants and covenants to the Administrative Agent for the benefit
of the Secured Parties that:

 

14

 

 

(i)          Schedule 9(f) attached hereto contains a true and complete
description of the name and address of each depositary institution with which
such Grantor maintains a Deposit Account in which collected balances or deposits
in excess of $100,000 are or may at any time be credited or maintained.

 

(ii)         Except with the express prior written consent of the Administrative
Agent in each instance, all Deposit Accounts in which collected balances or
deposits in excess of $100,000 are or may at any time be credited or maintained
shall be maintained at all times with depositary institutions as to which the
Administrative Agent shall have received a Qualifying Control Agreement. Without
limiting the generality of the foregoing, no Grantor shall cause, suffer or
permit (x) any deposit in excess of $100,000 to be evidenced by a certificate of
deposit unless such certificate of deposit is a negotiable instrument and
immediately upon receipt thereof such certificate shall have been delivered to
the Administrative Agent, together with a duly executed undated assignment in
blank affixed thereto, or (y) any Deposit Account not listed on Schedule 9(f)
attached hereto in which collected balances or deposits in excess of $100,000
are or may at any time be credited or maintained to be opened or maintained
except in each case upon giving not less than thirty (30) days’ prior written
notice to the Administrative Agent and taking or causing to be taken at such
Grantor’s expense all such Perfection Action, including the delivery of such
Perfection Documents, as may be reasonably requested by the Administrative Agent
to perfect or protect, or maintain the perfection and priority of, the Lien of
the Administrative Agent for the benefit of the Secured Parties in Collateral
contemplated hereunder.

 

(g)          Chattel Paper. With respect to its Chattel Paper whether now
existing or hereafter created or acquired and wheresoever located, each Grantor
represents, warrants and covenants to the Administrative Agent for the benefit
of the Secured Parties that:

 

(i)          Each Grantor shall at all times retain sole physical possession of
the originals of all Chattel Paper (other than electronic Chattel Paper and the
electronic components of hybrid Chattel Paper); provided, however, that (x) upon
the request of the Administrative Agent upon the occurrence and during the
continuance of any Default or Event of Default, such Grantor shall immediately
deliver physical possession of such Chattel Paper to the Administrative Agent or
its designee, and (y) in the event that there shall be created more than one
original counterpart of any physical document that alone or in conjunction with
any other physical or electronic document constitutes Chattel Paper, then such
counterparts shall be numbered consecutively starting with “1” and such Grantor
shall retain the counterpart numbered “1”.

 

15

 

 

(ii)         All counterparts of all tangible Chattel Paper (and the tangible
components of hybrid Chattel Paper) shall immediately upon the creation or
acquisition thereof by any Grantor be conspicuously legended as follows: “A
FIRST PRIORITY SECURITY INTEREST IN THIS CHATTEL PAPER HAS BEEN GRANTED TO BANK
OF AMERICA, N.A., FOR ITSELF AND AS ADMINISTRATIVE AGENT FOR CERTAIN SECURED
PARTIES PURSUANT TO A SECURITY AGREEMENT DATED AS OF OCTOBER 3, 2012, AS AMENDED
FROM TIME TO TIME. NO SECURITY INTEREST OR OTHER INTEREST IN FAVOR OF ANY OTHER
PERSON MAY BE CREATED BY THE TRANSFER OF PHYSICAL POSSESSION OF THIS CHATTEL
PAPER OR OF ANY COUNTERPART HEREOF EXCEPT BY OR WITH THE CONSENT OF THE
AFORESAID ADMINISTRATIVE AGENT AS PROVIDED IN SUCH SECURITY AGREEMENT.” In the
case of electronic Chattel Paper (including the electronic components of hybrid
Chattel Paper), no Grantor shall create or acquire any such Chattel Paper
unless, prior to such acquisition or creation, it shall have taken such
Perfection Action as the Administrative Agent may require to perfect by control
the security interest of the Administrative Agent for the benefit of the Secured
Parties in such Collateral.

 

(iii)        Other than in the ordinary course of business and in keeping with
reasonable and customary practice, no Grantor shall amend, modify, waive or
terminate any provision of, or fail to exercise promptly and diligently each
material right or remedy conferred under or in connection with, any Chattel
Paper, in any case in such a manner as could reasonably be expected to
materially adversely affect the value of affected Chattel Paper as collateral.

 

(h)          Instruments. With respect to its Instruments whether now existing
or hereafter created or acquired and wheresoever located, each Grantor
represents, warrants and covenants to the Administrative Agent for the benefit
of the Secured Parties that:

 

(i)          Each Grantor shall upon the request of the Administrative Agent
from time to time following the occurrence and during the continuance of any
Default or Event of Default, deliver to the Administrative Agent the originals
of all such Instruments, together with duly executed undated endorsements in
blank affixed thereto and such other documentation and information as may be
necessary to enable the Administrative Agent to realize upon the Instruments in
accordance with their respective terms or transfer the Instruments as may be
permitted under the Loan Documents or by applicable law.

 

(ii)         Other than in the ordinary course of business and in keeping with
reasonable and customary practice, no Grantor shall amend, modify, waive or
terminate any provision of, or fail to exercise promptly and diligently each
material right or remedy conferred under or in connection with, any Instrument,
in any case in such a manner as could reasonably be expected to materially
adversely affect the value of affected Instrument as collateral.

 

10.         Casualty and Liability Insurance Required.

 

(a)          Each Grantor will keep the Collateral continuously insured against
such risks as are customarily insured against by businesses of like size and
type engaged in the same or similar operations including:

 

16

 

 

(i)          casualty insurance on the Inventory and the Equipment in an amount
not less than the full insurable value thereof, against loss or damage by theft,
fire, lightning and other hazards ordinarily included under uniform broad form
standard extended coverage policies, limited only as may be provided in the
standard broad form of extended coverage endorsement at the time in use in the
states in which the Collateral is located;

 

(ii)         comprehensive general liability insurance against claims for bodily
injury, death or property damage occurring with or about such Collateral (such
coverage to include provisions waiving subrogation against the Secured Parties),
with the Administrative Agent and the Lenders as additional insureds thereunder,
in amounts as shall be reasonably satisfactory to Administrative Agent;

 

(iii)        liability insurance with respect to the operation of its facilities
under the workers’ compensation laws of the states in which such Collateral is
located, in amounts as shall be reasonably satisfactory to Administrative Agent;
and

 

(iv)        business interruption insurance in amounts as shall be reasonably
satisfactory to Administrative Agent.

 

(b)          Each insurance policy obtained in satisfaction of the requirements
of Section 10(a):

 

(i)          may be provided by blanket policies now or hereafter maintained by
each or any Grantor or by any Borrower;

 

(ii)         shall be issued by such insurer (or insurers) as shall be
financially responsible, of recognized standing and reasonably acceptable to the
Administrative Agent;

 

(iii)        shall be in such form and have such provisions (including without
limitation the loss payable clause, the waiver of subrogation clause, the
deductible amount, if any, and the standard mortgagee endorsement clause) as are
generally considered standard provisions for the type of insurance involved and
are reasonably acceptable in all respects to the Administrative Agent;

 

(iv)        shall prohibit cancellation or substantial modification, termination
or lapse in coverage by the insurer without at least thirty (30) days’ prior
written notice to the Administrative Agent, except for non-payment of premium,
as to which such policies shall provide for at least ten (10) days’ prior
written notice to the Administrative Agent;

 

(v)         without limiting the generality of the foregoing, all insurance
policies where applicable under Section 10(a)(i) carried on the Collateral shall
name the Administrative Agent, for the benefit of the Secured Parties, as loss
payee and the Administrative Agent and Lenders as parties insured thereunder in
respect of any claim for payment.

 

17

 

  

(c)         Prior to expiration of any such policy, such Grantor shall furnish
the Administrative Agent with evidence satisfactory to the Administrative Agent
that the policy or certificate has been renewed or replaced or is no longer
required by this Security Agreement.

 

(d)         Each Grantor hereby makes, constitutes and appoints the
Administrative Agent (and all officers, employees or agents designated by the
Administrative Agent), for the benefit of the Secured Parties, as such Grantor’s
true and lawful attorney (and agent-in-fact) for the purpose of making, settling
and adjusting claims under such policies of insurance, endorsing the name of
such Grantor on any check, draft, instrument or other item or payment for the
proceeds of such policies of insurance and for making all determinations and
decisions with respect to such policies of insurance, which appointment is
coupled with an interest and is irrevocable; provided, however, that the powers
pursuant to such appointment shall be exercisable only upon the occurrence and
during the continuation of an Event of Default.

 

(e)         In the event such Grantor shall fail to maintain, or fail to cause
to be maintained, the full insurance coverage required hereunder or shall fail
to keep any of its Collateral in good repair and good operating condition, the
Administrative Agent may (but shall be under no obligation to), without waiving
or releasing any Secured Obligation or Default or Event of Default by such
Grantor hereunder, contract for the required policies of insurance and pay the
premiums on the same or make any required repairs, renewals and replacements;
and all sums so disbursed by Administrative Agent, including reasonable
Attorneys’ Costs, court costs, expenses and other charges related thereto, shall
be payable on demand by such Grantor to the Administrative Agent, shall be
additional Secured Obligations secured by the Collateral, and (in addition to
other rights and remedies resulting from such nonpayment) shall bear interest
from the date of demand until paid in full at the Default Rate.

 

(f)          Each Grantor agrees that to the extent that it shall fail to
maintain, or fail to cause to be maintained, the full insurance coverage
required by Section 10(a), it shall in the event of any loss or casualty pay
promptly to the Administrative Agent, for the benefit of the Secured Parties,
such amount as would have been received as an Extraordinary Receipt by the
Administrative Agent, for the benefit of the Secured Parties, had such insurance
been carried to the extent required.

 

(g)         Any Extraordinary Receipt received in connection with the insurance
carried pursuant to the provisions of Sections 10(a)(i), 10(a)(ii) and
10(a)(iii) shall be applied in accordance with Section 2.05 of the Credit
Agreement.

 

18

 

 

(h)         In case of any material damage to, destruction or loss of, or claim
or proceeding against, all or any material part of the Collateral pledged
hereunder by a Grantor, such Grantor shall give prompt notice thereof to the
Administrative Agent. Each such notice shall describe generally the nature and
extent of such damage, destruction, loss, claim or proceeding. Subject to
Section 10(d), each Grantor is hereby authorized and empowered to adjust or
compromise any loss under any such insurance other than losses relating to
claims made directly against any Secured Party as to which the insurance
described in Section 10(a)(ii) or (iii) is applicable.

 

(i)          The provisions contained in this Security Agreement pertaining to
insurance shall be cumulative with any additional provisions imposing additional
insurance requirements with respect to the Collateral or any other property on
which a Lien is conferred under any Collateral Document.

 

11.         Rights and Remedies Upon Event of Default. Upon and after an Event
of Default, the Administrative Agent shall have the following rights and
remedies on behalf of the Secured Parties in addition to any rights and remedies
set forth elsewhere in this Security Agreement or the other Loan Documents, all
of which may be exercised with or, if allowed by law, without notice to a
Grantor:

 

(a)         All of the rights and remedies of a secured party under the UCC or
under other applicable law, all of which rights and remedies shall be
cumulative, and none of which shall be exclusive, to the extent permitted by
law, in addition to any other rights and remedies contained in this Security
Agreement or any other Loan Document;

 

(b)         The right to foreclose the Liens and security interests created
under this Security Agreement by any available judicial procedure or without
judicial process;

 

(c)         The right to (i) enter upon the premises of a Grantor through
self-help and without judicial process, without first obtaining a final judgment
or giving such Grantor notice or opportunity for a hearing on the validity of
the Administrative Agent’s claim and without any obligation to pay rent to such
Grantor, or any other place or places where any Collateral is located and kept,
and remove the Collateral therefrom to the premises of the Administrative Agent
or any agent of the Administrative Agent, for such time as the Administrative
Agent may desire, in order effectively to collect or liquidate the Collateral,
(ii) require such Grantor or any bailee or other agent of such Grantor to
assemble the Collateral and make it available to the Administrative Agent at a
place to be designated by the Administrative Agent that is reasonably convenient
to both parties, and (iii) notify any or all Persons party to a Qualifying
Control Agreement or who otherwise have possession of or control over any
Collateral of the occurrence of an Event of Default and other appropriate
circumstances, and exercise control over and take possession or custody of any
or all Collateral in the possession, custody or control of such other Persons;

 

19

 

 

(d)          The right to (i) exercise all of a Grantor’s rights and remedies
with respect to the collection of Accounts, Chattel Paper, Instruments,
Supporting Obligations and General Intangibles (collectively, “Payment
Collateral”), including the right to demand payment thereof and enforce payment,
by legal proceedings or otherwise; (ii) settle, adjust, compromise, extend or
renew all or any Payment Collateral or any legal proceedings pertaining thereto;
(iii) discharge and release all or any Payment Collateral; (iv) take control, in
any manner, of any item of payment or proceeds referred to in Section 5 above;
(v) prepare, file and sign a Grantor’s name on any Proof of Claim in bankruptcy,
notice of Lien, assignment or satisfaction of Lien or similar document in any
action or proceeding adverse to any obligor under any Payment Collateral or
otherwise in connection with any Payment Collateral; (vi) endorse the name of a
Grantor upon any chattel paper, document, instrument, invoice, freight bill,
bill of lading or similar document or agreement relating to any Collateral;
(vii) use the information recorded on or contained on a Grantor’s internet
website or otherwise in any data processing equipment and computer hardware and
software relating to any Collateral to which a Grantor has access; (viii) open
such Grantor’s mail and collect any and all amounts due to such Grantor from any
Account Debtors or other obligor in respect of Payment Collateral; (ix) take
over such Grantor’s post office boxes or make other arrangements as the
Administrative Agent, on behalf of the Secured Parties, deems necessary to
receive such Grantor’s mail, including notifying the post office authorities to
change the address for delivery of such Grantor’s mail to such address as the
Administrative Agent, on behalf of the Secured Parties, may designate; (x)
notify any or all Account Debtors or other obligor on any Payment Collateral
that such Payment Collateral has been assigned to the Administrative Agent for
the benefit of the Secured Parties and that Administrative Agent has a security
interest therein for the benefit of the Secured Parties (provided that the
Administrative Agent may at any time give such notice to an Account Debtor that
is a department, agency or authority of the United States government); each
Grantor hereby agrees that any such notice, in the Administrative Agent’s sole
discretion, may (but need not) be sent on such Grantor’s stationery, in which
event such Grantor shall co-sign such notice with the Administrative Agent if
requested to do so by the Administrative Agent; and (xi) do all acts and things
and execute all documents necessary, in Administrative Agent’s sole discretion,
to collect the Payment Collateral; and

 

20

 

 

(e)          The right to sell all or any Collateral in its then existing
condition, or after any further manufacturing or processing thereof, at such
time or times, at public or private sale or sales, with such notice as may be
required by law, in lots or in bulk, for cash or on credit, with or without
representations and warranties, all as the Administrative Agent, in its sole
discretion, may deem advisable. The Administrative Agent shall have the right to
conduct such sales on a Grantor’s premises or elsewhere and shall have the right
to use a Grantor’s premises without charge for such sales for such time or times
as the Administrative Agent may see fit. The Administrative Agent may, if it
deems it reasonable, postpone or adjourn any sale of the Collateral from time to
time by an announcement at the time and place of such postponed or adjourned
sale, and such sale may, without further notice, be made at the time and place
to which it was so adjourned. Each Grantor agrees that the Administrative Agent
has no obligation to preserve rights to the Collateral against prior parties or
to marshal any Collateral for the benefit of any Person. The Administrative
Agent for the benefit of the Secured Parties is hereby granted an irrevocable
fully paid license or other right (including each Grantor’s rights under any
license or any franchise agreement), each of which shall remain in full force
and effect until the Facility Termination Date, to use, without charge, each of
the labels, patents, copyrights, names, trade secrets, trade names, trademarks
and advertising matter, or any property of a similar nature owned or licensed by
any Grantor, as it pertains to the Collateral, in completing production of,
advertising for sale and selling any Collateral. If any of the Collateral shall
require repairs, maintenance, preparation or the like, or is in process or other
unfinished state, the Administrative Agent shall have the right, but shall not
be obligated, to perform such repairs, maintenance, preparation, processing or
completion of manufacturing for the purpose of putting the same in such saleable
form as the Administrative Agent shall deem appropriate, but the Administrative
Agent shall have the right to sell or dispose of the Collateral without such
processing and no Grantor shall have any claim against the Administrative Agent
for the value that may have been added to such Collateral with such processing.
In addition, each Grantor agrees that in the event notice is necessary under
applicable law, written notice mailed to such Grantor in the manner specified
herein ten (10) days prior to the date of public sale of any of the Collateral
or prior to the date after which any private sale or other disposition of the
Collateral will be made shall constitute commercially reasonable notice to such
Grantor. All notice is hereby waived with respect to any of the Collateral which
threatens to decline speedily in value or is of a type customarily sold on a
recognized market. The Administrative Agent may purchase all or any part of the
Collateral at public or, if permitted by law, private sale, free from any right
of redemption which is hereby expressly waived by such Grantor and, in lieu of
actual payment of such purchase price, may set off the amount of such price
against the Secured Obligations.

 

The net cash proceeds resulting from the collection, liquidation, sale or other
disposition of the Collateral shall be applied first to the expenses (including
all Attorneys’ Costs) of retaking, holding, storing, processing and preparing
for sale, selling, collecting, liquidating and the like, and then to the
satisfaction of all Secured Obligations in accordance with the terms of Section
8.03 of the Credit Agreement. Each Grantor shall be liable to the Administrative
Agent, for the benefit of the Secured Parties, and shall pay to the
Administrative Agent, for the benefit of the Secured Parties, on demand any
deficiency which may remain after such sale, disposition, collection or
liquidation of the Collateral.

 

12.         Attorney-in-Fact. Each Grantor hereby appoints the Administrative
Agent as the Grantor’s attorney-in-fact for the purposes of carrying out the
provisions of this Security Agreement and taking any action and executing any
instrument which the Administrative Agent may deem necessary or advisable to
accomplish the purposes hereof, which appointment is irrevocable and coupled
with an interest; provided, that the Administrative Agent shall have and may
exercise rights under this power of attorney only upon the occurrence and during
the continuance of an Event of Default. Without limiting the generality of the
foregoing, upon the occurrence and during the continuance of an Event of
Default, the Administrative Agent shall have the right and power

 

(a)          to ask, demand, collect, sue for, recover, compromise, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;

 

(b)          to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clause (a) above;

 

21

 

  

(c)          to endorse such Grantor’s name on any checks, notes, drafts or any
other payment relating to or constituting proceeds of the Collateral which comes
into the Administrative Agent’s possession or the Administrative Agent’s
control, and deposit the same to the account of the Administrative Agent, for
the benefit of the Secured Parties, on account and for payment of the Secured
Obligations;

 

(d)          to file any claims or take any action or institute any proceedings
that the Administrative Agent may deem necessary or desirable for the collection
of any of the Collateral or otherwise to enforce the rights of the
Administrative Agent, for the benefit of the Secured Parties, with respect to
any of the Collateral; and

 

(e)          to execute, in connection with any sale or other disposition of
Collateral provided for herein, any endorsement, assignments, or other
instruments of conveyance or transfer with respect thereto.

 

13.         Reinstatement. The granting of a security interest in the Collateral
and the other provisions hereof shall continue to be effective or be reinstated,
as the case may be, if at any time any payment of any of the Secured Obligations
is rescinded or must otherwise be returned by any Secured Party or is repaid by
any Secured Party in whole or in part in good faith settlement of a pending or
threatened avoidance claim, whether upon the insolvency, bankruptcy or
reorganization of any Grantor or any other Loan Party or otherwise, all as
though such payment had not been made. The provisions of this Section 13 shall
survive repayment of all of the Secured Obligations and the termination or
expiration of this Security Agreement in any manner, including but not limited
to termination upon occurrence of the Facility Termination Date.

 

14.         Certain Waivers by the Grantors. Each Grantor waives to the extent
permitted by applicable law (a) any right to require any Secured Party or any
other obligee of the Secured Obligations to (x) proceed against any Person or
entity, including without limitation any Loan Party, (y) proceed against or
exhaust any Collateral or other collateral for the Secured Obligations, or (z)
pursue any other remedy in its power; (b) any defense arising by reason of any
disability or other defense of any other Person, or by reason of the cessation
from any cause whatsoever of the liability of any other Person or entity, (c)
any right of subrogation, and (d) any right to enforce any remedy which any
Secured Party or any other obligee of the Secured Obligations now has or may
hereafter have against any other Person and any benefit of and any right to
participate in any collateral or security whatsoever now or hereafter held by
the Administrative Agent for the benefit of the Secured Parties. Each Grantor
authorizes each Secured Party and each other obligee of the Secured Obligations
without notice (except notice required by applicable law) or demand and without
affecting its liability hereunder or under the Loan Documents from time to time
to: (i) take and hold security, other than the Collateral herein described, for
the payment of such Secured Obligations or any part thereof, and exchange,
enforce, waive and release the Collateral herein described or any part thereof
or any such other security; and (ii) apply such Collateral or other security and
direct the order or manner of sale thereof as such Secured Party or obligee in
its discretion may determine.

 

22

 

 

The Administrative Agent may at any time deliver (without representation,
recourse or warranty) the Collateral or any part thereof to a Grantor and the
receipt thereof by such Grantor shall be a complete and full acquittance for the
Collateral so delivered, and the Administrative Agent shall thereafter be
discharged from any liability or responsibility therefor.

 

15.         Continued Powers. Until the Facility Termination Date shall have
occurred, the power of sale and other rights, powers and remedies granted to the
Administrative Agent for the benefit of the Secured Parties hereunder shall
continue to exist and may be exercised by the Administrative Agent at any time
and from time to time irrespective of the fact that any of the Secured
Obligations or any part thereof may have become barred by any statute of
limitations or that any part of the liability of any Grantor may have ceased.

 

16.         Other Rights. The rights, powers and remedies given to the
Administrative Agent for the benefit of the Secured Parties by this Security
Agreement shall be in addition to all rights, powers and remedies given to the
Administrative Agent or any Secured Party under any other Loan Document or by
virtue of any statute or rule of law. Any forbearance or failure or delay by the
Administrative Agent in exercising any right, power or remedy hereunder shall
not be deemed to be a waiver of such right, power or remedy, and any single or
partial exercise of any right, power or remedy hereunder shall not preclude the
further exercise thereof; and every right, power and remedy of the Secured
Parties shall continue in full force and effect until such right, power or
remedy is specifically waived in accordance with the terms of the Credit
Agreement.

 

17.         Anti-Marshaling Provisions. The right is hereby given by each
Grantor to the Administrative Agent, for the benefit of the Secured Parties, to
make releases (whether in whole or in part) of all or any part of the Collateral
agreeable to the Administrative Agent without notice to, or the consent,
approval or agreement of other parties and interests, including junior lienors,
which releases shall not impair in any manner the validity of or priority of the
Liens and security interests in the remaining Collateral conferred hereunder,
nor release any Grantor from personal liability for the Secured Obligations.
Notwithstanding the existence of any other security interest in the Collateral
held by the Administrative Agent, for the benefit of the Secured Parties, the
Administrative Agent shall have the right to determine the order in which any or
all of the Collateral shall be subjected to the remedies provided in this
Security Agreement. Each Grantor hereby waives any and all right to require the
marshaling of assets in connection with the exercise of any of the remedies
permitted by applicable law or provided herein or in any other Loan Document.

 

18.         Entire Agreement. This Security Agreement and each Security Joinder
Agreement, together with the Credit Agreement and other Loan Documents,
constitutes and expresses the entire understanding between the parties hereto
with respect to the subject matter hereof, and supersedes all prior
negotiations, agreements and understandings, inducements, commitments or
conditions, express or implied, oral or written, except as contained in the Loan
Documents. The express terms hereof and of the Security Joinder Agreements
control and supersede any course of performance or usage of the trade
inconsistent with any of the terms hereof or thereof. Neither this Security
Agreement nor any Security Joinder Agreement nor any portion or provision hereof
or thereof may be changed, altered, modified, supplemented, discharged,
canceled, terminated, or amended orally or in any manner other than as provided
in the Credit Agreement.

 

23

 

 

19.         Third Party Reliance. Each Grantor hereby consents and agrees that
all issuers of or obligors in respect of any Collateral, and all securities
intermediaries, warehousemen, bailees, public officials and other Persons having
any interest in, possession of, control over or right, privilege, duty or
discretion in respect of, any Collateral shall be entitled to accept the
provisions hereof and of the Security Joinder Agreements as conclusive evidence
of the right of the Administrative Agent, on behalf of the Secured Parties, to
exercise its rights hereunder or thereunder with respect to the Collateral,
notwithstanding any other notice or direction to the contrary heretofore or
hereafter given by any Grantor or any other Person to any of such Persons.

 

20.         Binding Agreement; Assignment. This Security Agreement and each
Security Joinder Agreement, and the terms, covenants and conditions hereof and
thereof, shall be binding upon and inure to the benefit of the parties hereto,
and to their respective successors and assigns, except that no Grantor shall be
permitted to assign this Security Agreement, any Security Joinder Agreement or
any interest herein or therein or, except as expressly permitted herein or in
the Credit Agreement, in the Collateral or any part thereof or interest therein.
Without limiting the generality of the foregoing sentence of this Section 20,
any Lender may assign to one or more Persons, or grant to one or more Persons
participations in or to, all or any part of its rights and obligations under the
Credit Agreement (to the extent permitted by the Credit Agreement); and to the
extent of any such assignment or participation such other Person shall, to the
fullest extent permitted by law, thereupon become vested with all the benefits
in respect thereof granted to such Lender herein or otherwise, subject however,
to the provisions of the Credit Agreement, including Article IX thereof
(concerning the Administrative Agent) and Section 10.06 thereof (concerning
assignments and participations). All references herein to the Administrative
Agent and to the Secured Parties shall include any successor thereof or
permitted assignee, and any other obligees from time to time of the Secured
Obligations.

 

21.         Secured Cash Management Agreements and Secured Hedging Agreements.
No Secured Party (other than the Administrative Agent) that obtains the benefit
of this Security Agreement shall have any right to notice of any action or to
consent to, direct or object to any action hereunder or otherwise in respect of
the Collateral (including the release or impairment of any Collateral) other
than in its capacity as a Lender and, in such case, only to the extent expressly
provided in the Loan Documents. Notwithstanding any other provision of this
Security Agreement to the contrary, the Administrative Agent shall only be
required to verify the payment of, or that other satisfactory arrangement have
been made with respect to, the Secured Obligations arising under Secured Cash
Management Agreements and Secured Hedge Agreements to the extent the
Administrative Agent has received written notice of such Obligations, together
with such supporting documentation as it may request, from the applicable Cash
Management Bank or Hedge Bank, as the case may be. Each Secured Party not a
party to the Credit Agreement that obtains the benefit of this Security
Agreement shall be deemed to have acknowledged and accepted the appointment of
the Administrative Agent pursuant to the terms of the Credit Agreement, and that
with respect to the actions and omissions of the Administrative Agent hereunder
or otherwise relating hereto that do or may affect such Secured Party, the
Administrative Agent and each of its Related Parties shall be entitled to all
the rights, benefits and immunities conferred under Article IX of the Credit
Agreement.

 

24

 

 

22.         Severability. The provisions of this Security Agreement are
independent of and separable from each other. If any provision hereof shall for
any reason be held invalid or unenforceable, such invalidity or unenforceability
shall not affect the validity or enforceability of any other provision hereof,
but this Security Agreement shall be construed as if such invalid or
unenforceable provision had never been contained herein.

 

23.         Counterparts. This Security Agreement may be executed in any number
of counterparts each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Security
Agreement to produce or account for more than one such counterpart executed by
the Grantor against whom enforcement is sought. Without limiting the foregoing
provisions of this Section 23, the provisions of Section 10.10 of the Credit
Agreement shall be applicable to this Security Agreement.

 

24.         Termination. Subject to the provisions of Section 13, this Security
Agreement and each Security Joinder Agreement, and all obligations of the
Grantors hereunder (excluding those obligations and liabilities that expressly
survive such termination) shall terminate without delivery of any instrument or
performance of any act by any party on the Facility Termination Date. Upon such
termination of this Security Agreement, the Administrative Agent shall, at the
request and sole expense of the Grantors, promptly deliver to the Grantors such
termination statements and take such further actions as the Grantors may
reasonably request to terminate of record, or otherwise to give appropriate
notice of the termination of, any Lien conferred hereunder.

 

25.         Notices. Any notice required or permitted hereunder shall be given
(a) with respect to the Borrowers, at the address for the giving of notice to
the Company then in effect under the Credit Agreement, (b) with respect to any
Grantor, at the address then in effect for the giving of notices to such Grantor
under the Guaranty to which it is a party, and (c) with respect to the
Administrative Agent or a Lender, at the Administrative Agent’s address
indicated in Schedule 10.02 of the Credit Agreement. All such addresses may be
modified, and all such notices shall be given and shall be effective, as
provided in Schedule 10.02 of the Credit Agreement for the giving and
effectiveness of notices and modifications of addresses thereunder.

 

26.         Joinder. Each Person that shall at any time execute and deliver to
the Administrative Agent a Security Joinder Agreement substantially in the form
attached as Exhibit A hereto shall thereupon irrevocably, absolutely and
unconditionally become a party hereto and obligated hereunder as a Grantor and
shall have thereupon pursuant to Section 2 hereof granted a security interest in
and collaterally assigned to the Administrative Agent for the benefit of the
Secured Parties all Collateral in which it has at its Applicable Date or
thereafter acquires any interest or the power to transfer, and all references
herein and in the other Loan Documents to the Grantors or to the parties to this
Security Agreement shall be deemed to include such Person as a Grantor
hereunder. Each Security Joinder Agreement shall be accompanied by the
Supplemental Schedules referred to therein, appropriately completed with
information relating to the Grantor executing such Security Joinder Agreement
and its property. Each of the applicable Schedules attached hereto shall be
deemed amended and supplemented without further action by such information
reflected on the Supplemental Schedules.

 

25

 

 

27.         Rules of Interpretation. The rules of interpretation contained in
Section 1.02 of the Credit Agreement shall be applicable to this Security
Agreement and each Security Joinder Agreement and are hereby incorporated by
reference. All representations and warranties contained herein shall survive the
delivery of documents and any Credit Extensions referred to herein or secured
hereby.

 

28.         Governing Law; Waivers.

 

(a)          THIS SECURITY AGREEMENT AND EACH SECURITY JOINDER AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE;
PROVIDED THAT (i) WITH RESPECT TO THOSE INSTANCES IN WHICH THE APPLICABLE CHOICE
OF LAWS RULES OF SUCH STATE, INCLUDING SECTION 9-301 OF THE UCC, REQUIRE THAT
THE MANNER OF CREATION OF A SECURITY INTEREST IN SPECIFIC COLLATERAL OR THE
MANNER OR EFFECT OF PERFECTION OR NONPERFECTION OR THE RULES GOVERNING PRIORITY
OF SECURITY INTERESTS ARE TO BE GOVERNED BY THE LAWS OF ANOTHER JURISDICTION,
THEN THE LAWS OF SUCH OTHER JURISDICTION SHALL GOVERN SUCH MATTERS, (ii) EACH
CONTROL AGREEMENT (INCLUDING EACH QUALIFYING CONTROL AGREEMENT) APPLICABLE TO
ANY SECURITIES ACCOUNT OR DEPOSIT ACCOUNT SHALL BE GOVERNED BY THE LAWS OF THE
JURISDICTION SPECIFIED IN SUCH CONTROL AGREEMENT, OR OTHERWISE BY THE LAWS OF
THE JURISDICTION THAT GOVERN THE SECURITIES ACCOUNT OR DEPOSIT ACCOUNT TO WHICH
SUCH CONTROL AGREEMENT RELATES, AND (iii) IN THOSE INSTANCES IN WHICH THE LAWS
OF THE JURISDICTION IN WHICH COLLATERAL IS LOCATED GOVERN MATTERS PERTAINING TO
THE METHODS AND EFFECT OF REALIZING ON COLLATERAL, SUCH LAWS SHALL BE GIVEN
EFFECT WITH RESPECT TO SUCH MATTERS.

 

(b)          EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND CONSENTS
THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SECURITY
AGREEMENT OR ANY SECURITY JOINDER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREIN OR THEREIN MAY BE INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE
COUNTY OF NEW YORK STATE OF NEW YORK, UNITED STATES OF AMERICA AND, BY THE
EXECUTION AND DELIVERY OF THIS SECURITY AGREEMENT OR A SECURITY JOINDER
AGREEMENT, EXPRESSLY WAIVES ANY OBJECTION THAT IT MAY HAVE NOW OR HEREAFTER TO
THE LAYING OF THE VENUE OR TO THE JURISDICTION OF ANY SUCH SUIT, ACTION OR
PROCEEDING, AND IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.

 

26

 

 

(c)          EACH GRANTOR AGREES THAT SERVICE OF PROCESS MAY BE MADE BY PERSONAL
SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL PROCESS IN ANY
SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR CERTIFIED MAIL (POSTAGE
PREPAID) TO THE ADDRESS OF SUCH PARTY PROVIDED IN SECTION 25 OR BY ANY OTHER
METHOD OF SERVICE PROVIDED FOR UNDER THE APPLICABLE LAWS IN EFFECT IN THE STATE
OF NEW YORK.

 

(d)          NOTHING CONTAINED IN SUBSECTIONS (b) OR (c) HEREOF SHALL PRECLUDE
THE ADMINISTRATIVE AGENT FROM BRINGING ANY SUIT, ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR ANY SECURITY JOINDER AGREEMENT
OR THE OTHER LOAN DOCUMENTS IN THE COURTS OF ANY PLACE WHERE ANY OTHER PARTY OR
ANY OF SUCH PARTY’S PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT
PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, EACH GRANTOR HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND EXPRESSLY WAIVES,
IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING, THE JURISDICTION OF ANY OTHER
COURT OR COURTS WHICH NOW OR HEREAFTER, BY REASON OF ITS PRESENT OR FUTURE
DOMICILE, OR OTHERWISE, MAY BE AVAILABLE UNDER APPLICABLE LAW.

 

(e)          IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER OR RELATED TO THIS SECURITY AGREEMENT OR ANY SECURITY JOINDER
AGREEMENT OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT
MAY IN THE FUTURE BE DELIVERED IN CONNECTION WITH THE FOREGOING, EACH PARTY
HEREBY AGREES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH ACTION
OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY AND HEREBY
EXPRESSLY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH
PERSON MAY HAVE TO TRIAL BY JURY IN ANY SUCH ACTION, SUIT OR PROCEEDING.

 

(f)          EACH GRANTOR HEREBY EXPRESSLY WAIVES ANY OBJECTION IT MAY HAVE THAT
ANY COURT TO WHOSE JURISDICTION IT HAS SUBMITTED PURSUANT TO THE TERMS HEREOF IS
AN INCONVENIENT FORUM.

 

[Signature pages follow.]

 

27

 

 

IN WITNESS WHEREOF, the parties have duly executed this Security Agreement on
the day and year first written above.

 

  GRANTORS:       TILE SHOP HOLDINGS, INC.       By: /s/ Timothy C. Clayton  
Name:    Timothy C. Clayton   Title: CFO & Senior Vice President

 

  THE TILE SHOP, LLC       By: /s/ Timothy C. Clayton   Name:    Timothy C.
Clayton   Title: CFO & Senior Vice President       ILTS, LLC       By: /s/
Timothy C. Clayton   Name: Timothy C. Clayton   Title: CFO & Senior Vice
President

 

  JWC ACQUISITION CORP.       By: /s/ Timothy C. Clayton   Name:    Timothy C.
Clayton   Title: CFO & Senior Vice President

 

  THE TILE SHOP OF MICHIGAN, LLC       By: /s/ Timothy C. Clayton   Name:   
Timothy C. Clayton   Title: CFO & Senior Vice President

 

Security Agreement

Signature Page

 

 

 

 

  ADMINISTRATIVE AGENT:       BANK OF AMERICA,  N.A., as Administrative Agent  
    By: /s/ Charlene Wright - Jones                           Name:     Charlene
Wright - Jones   Title: Vice President

 

Security Agreement

Signature Page