Exhibit 10.2
AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT
     THIS AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT (as it may be
amended or modified from time to time, the “Security Agreement”) is entered into
as of January 30, 2009 by and between A. H. BELO CORPORATION, a Delaware
corporation (“Belo”), THE DALLAS MORNING NEWS, INC., a Delaware corporation
(“Dallas”), DENTON PUBLISHING COMPANY, a Texas corporation (“Denton”), DFW
PRINTING COMPANY, INC., a Delaware corporation (“DFW”), DMI ACQUISITION SUB,
INC., a Delaware corporation (“DMI”), PRESS-ENTERPRISE COMPANY, a California
corporation (“Press”), THE PROVIDENCE JOURNAL COMPANY, a Delaware corporation
(“Providence”) and certain of their Subsidiaries who are listed on the signature
pages hereto (each a “Grantor”, and collectively, the “Grantors”), and JPMORGAN
CHASE BANK, N.A., in its capacity as administrative agent (the “Administrative
Agent”) for the lenders party to the Credit Agreement referred to below.
PRELIMINARY STATEMENT
     Belo, Dallas, Denton, DFW, DMI, Press and Providence entered into that
certain Security Agreement dated as of October 23, 2008 (the “Original Security
Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent for the
lenders party to that certain Credit Agreement dated as of February 4, 2008 (as
amended by that certain First Amendment and Waiver dated as of October 23, 2008,
the “Original Credit Agreement”).
     The Grantors, the Administrative Agent, the Loan Parties and the Lenders
are entering into an Amended and Restated Credit Agreement dated as of
January 30, 2009 (as it may be amended or modified from time to time, the
“Credit Agreement”), which Credit Agreement amends and restates the Original
Credit Agreement. The Grantors also desire, among other things, to amend and
restate the Original Security Agreement in its entirety by entering into this
Security Agreement.
     ACCORDINGLY, the Grantors and the Administrative Agent, on behalf of the
Lenders, hereby agree as follows:
ARTICLE I.
DEFINITIONS
     1.1. Terms Defined in Credit Agreement. All capitalized terms used herein
and not otherwise defined shall have the meanings assigned to such terms in the
Credit Agreement.
     1.2. Terms Defined in UCC. Terms defined in the UCC which are not otherwise
defined in this Security Agreement are used herein as defined in the UCC.
     1.3. Definitions of Certain Terms Used Herein. As used in this Security
Agreement, in addition to the terms defined in the Preliminary Statement, the
following terms shall have the following meanings:
     “Accounts” shall have the meaning set forth in Article 9 of the UCC.
     “Article” means a numbered article of this Security Agreement, unless
another document is specifically referenced.
     “Chattel Paper” shall have the meaning set forth in Article 9 of the UCC.
     “Collateral” shall have the meaning set forth in Article II.
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     “Collateral Access Agreement” means any landlord waiver or other agreement,
in form and substance satisfactory to the Administrative Agent, between the
Administrative Agent and any third party (including any bailee, consignee,
customs broker, or other similar Person) in possession of any Collateral or any
landlord of any Loan Party for any real property where any Collateral is
located, as such landlord waiver or other agreement may be amended, restated, or
otherwise modified from time to time.
     “Collateral Deposit Account” shall have the meaning set forth in
Section 7.1(a).
     “Collateral Report” means any certificate (including any Borrowing Base
Certificate), report or other document delivered by any Grantor to the
Administrative Agent or any Lender with respect to the Collateral pursuant to
any Loan Document.
     “Collection Account” shall have the meaning set forth in Section 7.1(b).
     “Commercial Tort Claims” means the existing commercial tort claims of the
Grantor listed in Exhibit I.
     “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.
     “Default” means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
     “Deposit Account Control Agreement” means an agreement, in form and
substance satisfactory to the Administrative Agent, among any Loan Party, a
banking institution holding such Loan Party’s funds, and the Administrative
Agent with respect to collection and control of all deposits and balances held
in a deposit account maintained by any Loan Party with such banking institution.
     “Deposit Accounts” shall have the meaning set forth in Article 9 of the
UCC.
     “Documents” 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 an event described in Section 5.1.
     “Exhibit” refers to a specific exhibit to this Security Agreement, unless
another document is specifically referenced.
     “General Intangibles” 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.
     “Instruments” shall have the meaning set forth in Article 9 of the UCC.
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     “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.
     “Letter-of-Credit Rights” shall have the meaning set forth in Article 9 of
the UCC.
     “Licenses” means, with respect to any Person, all of such Person’s right,
title, and interest in and to (a) any and all licensing agreements or similar
arrangements in and to its Patents, Copyrights, or 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.
     “Lock Boxes” shall have the meaning set forth in Section 7.1(a).
     “Lock Box Agreements” shall have the meaning set forth in Section 7.1(a).
     “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.
     “Pledged Collateral” means all Instruments, Securities and other Investment
Property of the Grantors, whether or not physically delivered to the
Administrative Agent pursuant to this Security Agreement.
     “Receivables” means the Accounts, Chattel Paper, Documents, Investment
Property, Instruments and any other rights or claims to receive money which are
General Intangibles or which are otherwise included as Collateral.
     “Required Secured Parties” means (a) prior to an acceleration of the
Obligations under the Credit Agreement, the Required Lenders, (b) after an
acceleration of the Obligations under the Credit Agreement but prior to the date
upon which the Credit Agreement has terminated by its terms and all of the
obligations thereunder have been paid in full, Lenders holding in the aggregate
at least a majority of the total of the Aggregate Credit Exposure, and (c) after
the Credit Agreement has terminated by its terms and all of the Obligations
thereunder have been paid in full (whether or not the Obligations under the
Credit Agreement were ever accelerated), Lenders holding in the aggregate at
least a majority of the aggregate net early termination payments and all other
amounts then due and unpaid from any Grantor to the Lenders under a Swap
Agreement, as determined by the Administrative Agent in its reasonable
discretion.
     “Section” means a numbered section of this Security Agreement, unless
another document is specifically referenced.
     “Security” has the meaning set forth in Article 8 of the UCC.
     “Stock Rights” means all dividends, instruments or other distributions and
any other right or property which the Grantors 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 and any right to receive earnings, in which the
Grantors now have or hereafter acquire any right, issued by an issuer of such
Equity Interest.
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     “Supporting Obligations” shall have the meaning set forth in Article 9 of
the UCC.
     “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.
     “UCC” means the Uniform Commercial Code, as in effect from time to time, of
the State of Texas or of any other state the laws of which are required as a
result thereof to be applied in connection with the attachment, perfection or
priority of, or remedies with respect to, Administrative Agent’s or any Lender’s
Lien on any Collateral.
     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 Administrative
Agent, on behalf of and for the ratable benefit of the Lenders, 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 whether owned or consigned by or to, or leased from
or to, such Grantor, and regardless of where located (all of which will be
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 General Intangibles;     (vii)   all Goods;     (viii)   all
Instruments;     (ix)   all Inventory;     (x)   all Investment Property
including or in addition, the following:

          (i) all the capital stock, partnership interests, membership interests
and other ownership interests issued by, and all other ownership interest in all
Subsidiaries (other than Foreign
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Subsidiaries) now existing and hereafter created or acquired and owned by such
Grantor;
          (ii) all the capital stock, partnership interests, membership
interests and other ownership interests issued by, and all other ownership
interest in all Foreign Subsidiaries of such Grantor, whether now owned or
hereafter acquired, provided that no more than and not less than sixty–six and
two-thirds percent (66 2/3%) of the capital stock or other ownership interest in
each such Foreign Subsidiary which is entitled to vote is pledged hereunder
(provided that the security interest in Investment Property under this clause
(x) shall not attach to the interest of (A) Belo Enterprises, Inc. in iArchives,
Inc., (B) Belo Enterprises, Inc. in Mochila, Inc. or (C) True North Real Estate
LLC in Sawbuck Realty, Inc., in each case listed in Schedule 6.04, respectively,
if and to the extent that (1) any term of the agreement evidencing such
Investment Property prohibits, restricts, or requires the consent of a Person
other than a Borrower or a Subsidiary to, such security interest or provides
that the grant of any such security interest would give rise to a default under
such agreement and (2) any such term described in clause (1) preceding is
(y) effective under applicable Requirements of Law other than the UCC and (z) is
not deemed ineffective under the UCC);

  (xi)   all cash or cash equivalents;     (xii)   all letters of credit,
Letter-of-Credit Rights and Supporting Obligations;     (xiii)   all Deposit
Accounts with any bank or other financial institution;     (xiv)   all
Commercial Tort Claims; and     (xv)   and 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 Secured
Obligations.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
     Each Grantor represents and warrants to the Administrative Agent and the
Lenders that:
     3.1. Title, Perfection and Priority. Such 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 for Liens permitted under Section 4.1(e), and has
full power and authority to grant to the Administrative Agent the security
interest in such Collateral pursuant
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hereto. When financing statements in proper form and identifying the Collateral
have been filed in the appropriate offices against such Grantor in the locations
listed on Exhibit G, the Administrative Agent will have a fully perfected first
priority security interest in that Collateral of the Grantor in which a security
interest may be perfected by filing, subject only to Liens permitted under
Section 4.1(e).
     3.2. Type and Jurisdiction of Organization, Organizational and
Identification Numbers. The type of entity of such Grantor, its state of
organization, the organizational number issued to it by its state of
organization and its federal employer identification number are set forth on
Exhibit A.
     3.3. Principal Location. Such 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), are disclosed in Exhibit A; such Grantor
has no other places of business except those set forth in Exhibit A.
     3.4. Collateral Locations. All of such Grantor’s locations where Collateral
is located are listed on Exhibit A. All of said locations are owned by such
Grantor except for locations (i) which are leased by the Grantor as lessee and
designated in Part VII(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 VII(c) of Exhibit A.
     3.5. Deposit Accounts. All of such Grantor’s Deposit Accounts are listed on
Exhibit B.
     3.6. Exact Names. Such Grantor’s name in which it has executed this
Security 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. Such Grantor has not, 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, or been a party to any acquisition.
     3.7. Letter-of-Credit Rights and Chattel Paper. Exhibit C lists all
Letter-of-Credit Rights and Chattel Paper of such Grantor. All action by such
Grantor necessary or desirable to protect and perfect the Administrative Agent’s
Lien on each item listed on Exhibit C (including the delivery of all originals
and the placement of a legend on all Chattel Paper as required hereunder) has
been duly taken. The Administrative Agent will have a fully perfected first
priority security interest in the Collateral listed on Exhibit C, subject only
to Liens permitted under Section 4.1(e).
     3.8. Accounts and Chattel Paper.
          (a) The names of the obligors, amounts owing, due dates and other
information with respect to its Accounts and Chattel Paper are and will be
correctly stated in all material respects in all records of such Grantor
relating thereto and in all invoices and Collateral Reports with respect thereto
furnished to the Administrative Agent by such Grantor from time to time. As of
the time when each Account or each item of Chattel Paper arises, such Grantor
shall be deemed to have represented and warranted that such Account or Chattel
Paper, as the case may be, and all records relating thereto, are genuine and in
all respects what they purport to be.
          (b) With respect to its Accounts, except as specifically disclosed on
the most recent Collateral Report, (i) all Accounts are Eligible Accounts;
(ii) all Accounts represent bona fide sales of Inventory or rendering of
services to Account Debtors in the ordinary course of such Grantor’s business
and are not evidenced by a judgment, Instrument or Chattel Paper; (iii) there
are no setoffs, claims or disputes existing or asserted with respect thereto and
such Grantor has not made any agreement with any Account Debtor for any
extension of time for the payment thereof, any compromise or settlement for less
than the full amount thereof, any release of any Account Debtor from liability
therefor, or any deduction therefrom except a discount or allowance allowed by
such Grantor in the ordinary course of its business
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for prompt payment and disclosed to the Administrative Agent; (iv) to such
Grantor’s knowledge, there are no facts, events or occurrences which in any way
impair the validity or enforceability thereof or could reasonably be expected to
reduce the amount payable thereunder as shown on such Grantor’s books and
records and any invoices, statements and Collateral Reports with respect
thereto; (v) such Grantor has not received any written notice of proceedings or
actions which are threatened or pending against any Account Debtor which might
result in any adverse change in such Account Debtor’s financial condition; and
(vi) such Grantor has no knowledge that any Account Debtor is unable generally
to pay its debts as they become due.
          (c) In addition, with respect to all of its Accounts, (i) the amounts
shown on all invoices, statements and Collateral Reports with respect thereto
are actually and absolutely owing to such Grantor as indicated thereon and are
not in any way contingent; (ii) no payments have been or shall be made thereon
except payments immediately delivered to a Lock Box or a Collateral Deposit
Account as required pursuant to Section 7.1; and (iii) to such Grantor’s
knowledge, all Account Debtors have the capacity to contract.
     3.9. Inventory. With respect to any of its Inventory scheduled or listed on
the most recent Collateral Report, (a) such Inventory (other than Inventory in
transit) is located at one of such Grantor’s locations set forth on Exhibit A,
(b) no Inventory (other than Inventory in transit) is now, or shall at any time
or times hereafter be stored at any other location except as permitted by
Section 4.1(g), (c) such Grantor has good, indefeasible and merchantable title
to such Inventory and such Inventory is not subject to any Lien or security
interest or document whatsoever except for Liens permitted under Section 4.1(e),
(d) except as specifically disclosed in the most recent Collateral Report, such
Inventory is Eligible Inventory of good and merchantable quality, free from any
defects, (e) such Inventory is not subject to any licensing, patent, royalty,
trademark, trade name or copyright agreements with any third parties which would
require any consent of any third party upon sale or disposition of that
Inventory or the payment of any monies to any third party upon such sale or
other disposition, (f) such Inventory has been produced in accordance with the
Federal Fair Labor Standards Act of 1938, as amended, and all rules, regulations
and orders thereunder and (g) the completion of manufacture, sale or other
disposition of such Inventory by the Administrative Agent during the existence
of an Event of Default shall not require the consent of any Person and shall not
constitute a breach or default under any contract or agreement to which such
Grantor is a party or to which Inventory is subject.
     3.10. Intellectual Property. Such Grantor does not have any interest in, or
title to, any Patent or Trademark except as set forth in Exhibit D. This
Security Agreement is effective to create a valid and continuing Lien and, upon
filing of appropriate financing statements in the offices listed on Exhibit G
and this Security Agreement with the United States Patent and Trademark Office,
fully perfected first priority security interests in favor of the Administrative
Agent on such Grantor’s Patents and Trademarks, such perfected security
interests are enforceable as such as against any and all creditors of and
purchasers from such Grantor; and all action necessary or desirable to protect
and perfect the Administrative Agent’s Lien on such Grantor’s Patents or
Trademarks shall have been duly taken.
     3.11. Filing Requirements. None of its Equipment is covered by any
certificate of title, except for the vehicles described in Part I of Exhibit E.
None of the Collateral owned by it is of a type for which security interests or
liens may be perfected by filing under any federal statute except for (a) the
vehicles described in Part II of Exhibit E and (b) Patents and Trademarks held
by such Grantor and described in Exhibit D.
     3.12. No Financing Statements, Security Agreements. No financing statement
or security agreement describing all or any portion of the Collateral which has
not lapsed or been terminated naming such Grantor as debtor has been filed or is
of record in any jurisdiction except (a) for financing statements
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or security agreements naming the Administrative Agent on behalf of the Lenders
as the secured party and (b) as permitted by Section 4.1(e).
     3.13. Pledged Collateral.
          (a) Exhibit F sets forth a complete and accurate list of all Pledged
Collateral owned by such Grantor. Such 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 Administrative Agent for the benefit of the Lenders hereunder.
Such Grantor further represents and warrants that (i) all Pledged Collateral
owned by it constituting an Equity Interest has been (to the extent such
concepts are relevant with respect to such Pledged Collateral) duly authorized,
validly issued, are fully paid and non-assessable, (ii) with respect to any
certificates delivered to the Administrative 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 Administrative Agent so
that the Administrative Agent may take steps to perfect its security interest
therein as a General Intangible, (iii) all such Pledged Collateral held by a
securities intermediary is covered by a control agreement among such Grantor,
the securities intermediary and the Administrative Agent pursuant to which the
Administrative Agent has Control and (iv) all Pledged Collateral which
represents Indebtedness owed to such 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, to such Grantor’s
knowledge, such issuer is not in default thereunder.
          (b) In addition, (i) none of the Pledged Collateral owned by it 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) there are existing no options, warrants, calls
or commitments of any character whatsoever relating to such Pledged Collateral
or which obligate the issuer of any Equity Interest included in the Pledged
Collateral to issue additional Equity Interests, 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 such
Grantor of such Pledged Collateral pursuant to this Security Agreement or for
the execution, delivery and performance of this Security Agreement by such
Grantor, or for the exercise by the Administrative Agent of the voting or other
rights provided for in this Security Agreement or for the remedies in respect of
the Pledged Collateral pursuant to this Security 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 in Exhibit F, such Grantor owns 100% of the
issued and outstanding Equity Interests which constitute Pledged Collateral
owned by it and none of the Pledged Collateral which represents Indebtedness
owed to such Grantor is subordinated in right of payment to other Indebtedness
or subject to the terms of an indenture.
ARTICLE IV.
COVENANTS
     From the date of this Security Agreement, and thereafter until this
Security Agreement is terminated, each Grantor agrees that:
     4.1. General.
          (a) Collateral Records. Such Grantor will maintain complete and
accurate books and records with respect to the Collateral owned by it, and
furnish to the Administrative Agent, with sufficient
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copies for each of the Lenders, such reports relating to such Collateral as the
Administrative Agent shall from time to time request.
          (b) Authorization to File Financing Statements; Ratification. Such
Grantor hereby authorizes the Administrative Agent to file, and if requested
will deliver to the Administrative Agent, all financing statements and other
documents and take such other actions as may from time to time be requested by
the Administrative Agent in order to maintain a first perfected security
interest in and, if applicable, Control of, the Collateral owned by such
Grantor. Any financing statement filed by the Administrative Agent may be filed
in any filing office in any UCC jurisdiction and may (i) indicate such Grantor’s
Collateral (1) as all assets of the 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 UCC or such jurisdiction, or (2) by any
other description which reasonably approximates the description contained in
this Security 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 such Grantor is
an organization, the type of organization and any organization identification
number issued to such Grantor, and (B) in the case of a financing statement
filed as a fixture filing or indicating such Grantor’s Collateral as
as-extracted collateral or timber to be cut, a sufficient description of real
property to which the Collateral relates. Such Grantor also agrees to furnish
any such information to the Administrative Agent promptly upon request. Such
Grantor also ratifies its authorization for the Administrative Agent to have
filed in any UCC jurisdiction any initial financing statements or amendments
thereto if filed prior to the date hereof.
          (c) Further Assurances. Such Grantor will, if so requested by the
Administrative Agent, furnish to the Administrative Agent, as often as the
Administrative Agent requests, statements and schedules further identifying and
describing the Collateral owned by it and such other reports and information in
connection with its Collateral as the Administrative Agent may reasonably
request, all in such reasonable detail as the Administrative Agent may specify.
Such 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
Administrative Agent in its Collateral and the priority thereof against any Lien
not expressly permitted hereunder.
          (d) Disposition of Collateral. Such Grantor will not sell, lease or
otherwise dispose of the Collateral owned by it except for dispositions
specifically permitted pursuant to Section 6.05 of the Credit Agreement.
          (e) Liens. Such Grantor will not create, incur, or suffer to exist any
Lien on the Collateral owned by it except (i) the security interest created by
this Security Agreement, and (ii) other Permitted Encumbrances.
          (f) Other Financing Statements. Such Grantor will not authorize the
filing of any financing statement naming it as debtor covering all or any
portion of the Collateral owned by it, except as permitted by Section 4.1(e).
Such 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 Administrative Agent, subject
to such Grantor’s rights under Section 9-509(d)(2) of the UCC.
          (g) Locations. Such Grantor will not (i) maintain any Collateral owned
by it at any location other than those locations listed on Exhibit A,
(ii) otherwise change, or add to, such locations without the Administrative
Agent’s prior written consent as required by the Credit Agreement (and if the
Administrative Agent gives such consent, such Grantor will concurrently
therewith obtain a Collateral Access Agreement for each such location to the
extent such Grantor wants to include Accounts for which books and records are at
such location or Inventory at such location in the Borrowing Base), or
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(iii) change its principal place of business or chief executive office from the
location identified on Exhibit A, other than as permitted by the Credit
Agreement.
          (h) Compliance with Terms. Such Grantor will perform and comply with
all obligations in respect of the Collateral owned by it and all material
agreements to which it is a party or by which it is bound relating to such
Collateral.
     4.2. Receivables.
          (a) Certain Agreements on Receivables. Such Grantor will not 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, so long as no Event of Default exists,
such Grantor may reduce the amount of Accounts arising from the sale of
Inventory in accordance with its present policies and in the ordinary course of
business.
          (b) Collection of Receivables. Except as otherwise provided in this
Security Agreement, such Grantor will collect and enforce, at such Grantor’s
sole expense, all amounts due or hereafter due to such Grantor under the
Receivables owned by it.
          (c) Delivery of Invoices. Such Grantor will deliver to the
Administrative Agent immediately upon its request duplicate invoices with
respect to each Account owned by it bearing such language of assignment as the
Administrative Agent shall specify.
          (d) Disclosure of Counterclaims on Receivables. If (i) any discount,
credit or agreement to make a rebate or to otherwise reduce the amount owing on
any Receivable owned by such Grantor exists or (ii) if, to the knowledge of such
Grantor, any dispute, setoff, claim, counterclaim or defense exists or has been
asserted or threatened with respect to any such Receivable, such Grantor will
promptly disclose such fact to the Administrative Agent in writing. Such Grantor
shall send the Administrative Agent a copy of each credit memorandum in excess
of $100,000 as soon as issued, and such Grantor shall promptly report each
credit memo and each of the facts required to be disclosed to the Administrative
Agent in accordance with this Section 4.2(d) on the Borrowing Base Certificates
submitted by it.
          (e) Electronic Chattel Paper. Such Grantor shall take all steps
necessary to grant the Administrative Agent Control of all electronic chattel
paper in accordance with the UCC and all “transferable records” as defined in
each of the Uniform Electronic Transactions Act and the Electronic Signatures in
Global and National Commerce Act.
     4.3. Inventory and Equipment.
          (a) Maintenance of Goods. Such Grantor will do all things necessary to
maintain, preserve, protect and keep its Inventory and the Equipment in good
repair and working and saleable condition, except for damaged or defective goods
arising in the ordinary course of such Grantor’s business and except for
ordinary wear and tear in respect of the Equipment.
          (b) Returned Inventory. If an Account Debtor returns any Inventory to
such Grantor when no Event of Default exists, then such Grantor shall promptly
determine the reason for such return and, to the extent such Account Debtor is
entitled to a refund, shall issue a credit memorandum to the Account Debtor in
the appropriate amount. Such Grantor shall immediately report to the
Administrative Agent any return involving an amount in excess of $25,000. Each
such report shall indicate the reasons for the returns and the locations and
condition of the returned Inventory. In the event any Account Debtor returns
Inventory to such Grantor when an Event of Default exists, such Grantor, upon
the request of the
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Administrative Agent, shall: (i) hold the returned Inventory in trust for the
Administrative Agent; (ii) segregate all returned Inventory from all of its
other property; (iii) dispose of the returned Inventory solely according to the
Administrative Agent’s written instructions; and (iv) not issue any credits or
allowances with respect thereto without the Administrative Agent’s prior written
consent. All returned Inventory shall be subject to the Administrative Agent’s
Liens thereon. Whenever any Inventory is returned, the related Account shall be
deemed ineligible to the extent of the amount owing by the Account Debtor with
respect to such returned Inventory and such returned Inventory shall not be
Eligible Inventory if not in good repair and working and saleable condition.
          (c) Inventory Count. Such Grantor will conduct a physical count of its
Inventory at least once per Fiscal Year, and after and during the continuation
of an Event of Default, at such other times as the Administrative Agent
requests. Such Grantor, at its own expense, shall deliver to the Administrative
Agent the results of each physical verification, which such Grantor has made, or
has caused any other Person to make on its behalf, of all or any portion of its
Inventory.
          (d) Equipment. Such Grantor shall promptly inform the Administrative
Agent of any additions to or deletions from its Equipment which individually
exceed $250,000. Such Grantor shall not permit any Equipment to become a fixture
with respect to real property or to become an accession with respect to other
personal property with respect to which real or personal property the
Administrative Agent does not have a Lien. Such Grantor will not, without the
Administrative Agent’s prior written consent, alter or remove any identifying
symbol or number on any of such Grantor’s Equipment constituting Collateral.
          (e) Titled Vehicles. Such Grantor will give the Administrative Agent
notice of its acquisition of any vehicle covered by a certificate of title and
deliver to the Administrative Agent, upon request, the original of any vehicle
title certificate and provide and/or file all other documents or instruments
necessary to have the Lien of the Administrative Agent noted on any such
certificate or with the appropriate state office.
     4.4. Delivery of Instruments, Securities, Chattel Paper and Documents. Such
Grantor will (a) deliver to the Administrative Agent immediately upon execution
of this Security Agreement the originals of all Chattel Paper, Securities and
Instruments constituting Collateral owned by it (if any then exist), (b) hold in
trust for the Administrative Agent upon receipt and immediately thereafter
deliver to the Administrative Agent any such Chattel Paper, Securities and
Instruments constituting Collateral, (c) upon the Administrative Agent’s
request, deliver to the Administrative Agent (and thereafter hold in trust for
the Administrative Agent upon receipt and immediately deliver to the
Administrative Agent) any Document evidencing or constituting Collateral and
(d) upon the Administrative Agent’s request, deliver to the Administrative Agent
a duly executed amendment to this Security Agreement, in the form of Exhibit H
hereto (the “Amendment”), pursuant to which such Grantor will pledge such
additional Collateral. Such Grantor hereby authorizes the Administrative Agent
to attach each Amendment to this Security Agreement and agrees that all
additional Collateral owned by it set forth in such Amendments shall be
considered to be part of the Collateral.
     4.5. Uncertificated Pledged Collateral. Such Grantor will permit the
Administrative 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 owned by it 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 Administrative Agent granted pursuant to
this Security Agreement. With respect to any Pledged Collateral owned by it,
such Grantor will take any actions necessary to cause (a) the issuers of
uncertificated securities which are Pledged Collateral and
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(b) any securities intermediary which is the holder of any such Pledged
Collateral, to cause the Administrative Agent to have and retain Control over
such Pledged Collateral. Without limiting the foregoing, such Grantor will, with
respect to any such Pledged Collateral held with a securities intermediary,
cause such securities intermediary to enter into a control agreement with the
Administrative Agent, in form and substance satisfactory to the Administrative
Agent, giving the Administrative Agent Control.
     4.6. Pledged Collateral.
          (a) Changes in Capital Structure of Issuers. Such Grantor will not
(i) permit or suffer any issuer of an Equity Interest constituting Pledged
Collateral owned by it to dissolve, merge, liquidate, retire any of its Equity
Interests or other Instruments or Securities evidencing ownership, reduce its
capital, sell or encumber all or substantially all of its assets (except for
Permitted Encumbrances and sales of assets permitted pursuant to Section 4.1(d))
or merge or consolidate with any other entity (except as permitted under
Section 6.03 of the Credit Agreement), or (ii) vote any such Pledged Collateral
in favor of any of the foregoing.
          (b) Issuance of Additional Securities. Such Grantor will not permit or
suffer the issuer of an Equity Interest constituting Pledged Collateral owned by
it to issue additional Equity Interests, any right to receive the same or any
right to receive earnings, except to such Grantor.
          (c) Registration of Pledged Collateral. Such Grantor will permit any
registerable Pledged Collateral owned by it to be registered in the name of the
Administrative Agent or its nominee at any time at the option of the Required
Secured Parties.
          (d) Exercise of Rights in Pledged Collateral.
          (i) Without in any way limiting the foregoing and subject to
clause (ii) below, such Grantor shall have the right to exercise all voting
rights or other rights relating to the Pledged Collateral owned by it for all
purposes not inconsistent with this Security Agreement, the Credit Agreement or
any other Loan Document; provided however, that no vote or other right shall be
exercised or action taken which would have the effect of impairing the rights of
the Administrative Agent in respect of such Pledged Collateral.
          (ii) Such Grantor will permit the Administrative Agent or its nominee
at any time during the existence of an Event of Default, without notice, to
exercise all voting rights or other rights relating to the Pledged Collateral
owned by it, including, without limitation, exchange, subscription or any other
rights, privileges, or options pertaining to any Equity Interest or Investment
Property constituting such Pledged Collateral as if it were the absolute owner
thereof.
          (iii) Such Grantor shall be entitled to collect and receive for its
own use all cash dividends and interest paid in respect of the Pledged
Collateral owned by it to the extent not in violation of the Credit Agreement
other than any of the following distributions and payments (collectively
referred to as the “Excluded Payments”): (A) dividends and interest paid or
payable other than in cash in respect of such Pledged Collateral, and
instruments and other property received, receivable or otherwise distributed in
respect of, or in exchange for, any Pledged Collateral; (B) dividends and other
distributions paid or payable in cash in respect of such Pledged Collateral in
connection with a partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid-in capital of an issuer;
and (C) cash paid,
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payable or otherwise distributed, in respect of principal of, or in redemption
of, or in exchange for, such Pledged Collateral; provided however, that until
actually paid, all rights to such distributions shall remain subject to the Lien
created by this Security Agreement; and
          (iv) All Excluded Payments and all other distributions in respect of
any of the Pledged Collateral owned by such Grantor, whenever paid or made,
shall be delivered to the Administrative Agent to hold as Pledged Collateral and
shall, if received by such Grantor, be received in trust for the benefit of the
Administrative Agent, be segregated from the other property or funds of such
Grantor, and be forthwith delivered to the Administrative Agent as Pledged
Collateral in the same form as so received (with any necessary endorsement).
     4.7. Intellectual Property.
          (a) Such Grantor will use its best efforts to secure all consents and
approvals necessary or appropriate for the assignment to or benefit of the
Administrative Agent of any License held by such Grantor and to enforce the
security interests granted hereunder.
          (b) Such Grantor shall notify the Administrative Agent immediately if
it knows that any application or registration relating to any Patent or
Trademark (now or hereafter existing) may become abandoned or dedicated, or of
any 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 or any court) regarding such Grantor’s ownership of any
Patent or Trademark, its right to register the same, or to keep and maintain the
same.
          (c) In no event shall such Grantor, either directly or through any
agent, employee, licensee or designee, file an application for the registration
of any Patent or Trademark with the United States Patent and Trademark Office or
any similar office or agency without giving the Administrative Agent prior
written notice thereof, and, upon request of the Administrative Agent, such
Grantor shall execute and deliver any and all security agreements as the
Administrative Agent may request to evidence the Administrative Agent’s first
priority security interest on such Patent or Trademark and the General
Intangibles of such Grantor relating thereto or represented thereby.
          (d) Such Grantor shall take all actions necessary or requested by the
Administrative Agent to maintain and pursue each application, to obtain the
relevant registration and to maintain the registration of each of its Patents,
Trademarks or Copyrights (now or hereafter existing) to the extent commercially
reasonable to do so, including the filing of applications for renewal,
affidavits of use, affidavits of noncontestability and opposition and
interference and cancellation proceedings, unless the Administrative Agent shall
reasonably determine that such Patent or Trademark is not material to the
conduct of such Grantor’s business.
          (e) Such Grantor shall, unless it shall reasonably determine that such
Patent, Trademark or Copyright is in no way material to the conduct of its
business or operations, promptly sue for infringement, misappropriation or
dilution and to recover any and all damages for such infringement,
misappropriation or dilution, and, subject to Section 4.16 hereof, shall take
such other actions as the Administrative Agent shall deem appropriate under the
circumstances to protect such Patent, Trademark or Copyright. In the event that
such Grantor institutes suit because any of its Patents, Trademarks or
Copyrights constituting Collateral is infringed upon, or misappropriated or
diluted by a third party, such Grantor shall comply with Section 4.8.
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     4.8. Commercial Tort Claims. Such Grantor shall promptly, and in any event
within five Business Days after the same is acquired by it, notify the
Administrative Agent of any commercial tort claim (as defined in the UCC)
acquired by it and, unless the Administrative Agent otherwise consents, such
Grantor shall enter into an amendment to this Security Agreement, in the form of
Exhibit H hereto, granting to Administrative Agent a first priority security
interest in such commercial tort claim.
     4.9. Letter-of-Credit Rights. If such Grantor is or becomes the beneficiary
of a letter of credit, it shall promptly, and in any event within two Business
Days after becoming a beneficiary, notify the Administrative Agent thereof and
cause the issuer and/or confirmation bank to (i) consent to the assignment of
any Letter-of-Credit Rights to the Administrative Agent and (ii) agree to direct
all payments thereunder to a Deposit Account at the Administrative Agent or
subject to a Deposit Account Control Agreement for application to the Secured
Obligations, in accordance with Section 2.18 of the Credit Agreement, all in
form and substance reasonably satisfactory to the Administrative Agent.
     4.10. Federal, State or Municipal Claims. Such Grantor will promptly notify
the Administrative Agent of any Collateral which constitutes a claim against the
United States government or any state or local government or any instrumentality
or agency thereof, the assignment of which claim is restricted by federal, state
or municipal law.
     4.11. No Interference. Such Grantor agrees that it will not interfere with
any right, power and remedy of the Administrative Agent provided for in this
Security 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
Administrative Agent of any one or more of such rights, powers or remedies.
     4.12. 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”, such 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 flood insurance required by this Section shall be in an amount equal
to the lesser of the total Commitment or the total replacement cost value of the
improvements.
          (b) All insurance policies required hereunder and under Section 5.09
of the Credit Agreement shall name the Administrative Agent (for the benefit of
the Administrative Agent and the Lenders) 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
Administrative Agent, which provide that: (i) all proceeds thereunder with
respect to any Collateral shall be payable to the Administrative 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 days prior written notice given to the Administrative Agent.
          (c) All premiums on any such insurance shall be paid when due by such
Grantor, and copies of the policies delivered to the Administrative Agent. If
such Grantor fails to obtain any insurance as required by this Section, the
Administrative Agent may obtain such insurance at the Grantor’s expense.
     4.13. Collateral Access Agreements. With respect to such locations or
warehouse space leased as of the Effective Date and thereafter, if the
Administrative Agent has not received a Collateral Access Agreement as of the
Effective Date (or, if later, as of the date such location is acquired or
leased), Grantor’s Accounts for which books and records are at such location and
Inventory at that location shall be excluded from the Borrowing Base. After the
Effective Date, no real property or warehouse space
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shall be leased by such Grantor and no Inventory shall be shipped to a processor
or converter under arrangements established after the Effective Date, unless and
until a satisfactory Collateral Access Agreement shall first have been obtained
with respect to such location and if it has not been obtained, Grantor’s
Accounts for which books and records are at that location and Inventory at that
location shall be excluded from the Borrowing Base. Such Grantor shall timely
and fully pay and perform its obligations under all leases and other agreements
with respect to each leased location or third party warehouse where any
Collateral is or may be located.
     4.14. Deposit Account Control Agreements. Such Grantor will provide to the
Administrative Agent a Deposit Account Control Agreement duly executed on behalf
of each financial institution holding a Deposit Account of such Grantor as set
forth in the Security Agreement; provided that, unless an Event of Default has
occurred and is continuing, no Grantor shall be required to provide a Deposit
Account Control Agreement for any Deposit Account with an account balance of
less than $10,000 so long as (a) such Deposit Account is not a Collateral
Deposit Account (as defined herein) and (b) the aggregate account balance in all
such Deposit Accounts shall not exceed $100,000 at any time.
     4.15. Change of Name or Location; Change of Fiscal Year. Such Grantor shall
not (a) change its name as it appears in official filings in the state of its
incorporation or organization, (b) change its chief executive office, principal
place of business, mailing address, corporate offices or warehouses or locations
at which Collateral is held or stored, or the location of its records concerning
the Collateral as set forth in the Security Agreement, (c) change the type of
entity that it is, (d) change its organization identification number, if any,
issued by its state of incorporation or other organization, or (e) change its
state of incorporation or organization, in each case, unless the Administrative
Agent shall have received at least thirty days prior written notice of such
change and the Administrative Agent shall have acknowledged in writing that
either (1) such change will not adversely affect the validity, perfection or
priority of the Administrative Agent’s security interest in the Collateral, or
(2) any reasonable action requested by the Administrative Agent in connection
therewith has been completed or taken (including any action to continue the
perfection of any Liens in favor of the Administrative Agent, on behalf of
Lenders, in any Collateral), provided that, any new location shall be in the
continental U.S. Such Grantor shall not change its fiscal year which currently
ends on December 31.
     4.16. Copyrights; Exceptions to Perfection. Notwithstanding anything to the
contrary herein, except to the extent requested by the Administrative Agent
during the existence of a Default, no Grantor shall be required to (a) provide a
list of such Grantor’s Copyrights or (b) file any security agreement with the
United States Copyright Office to further perfect the Administrative Agent’s
security interest in the Copyrights of such Grantor. If a Default exists and the
Administrative Agent requests, then the Grantors shall take such action as the
Administrative Agent may request to perfect and protect the security interests
of the Administrative Agent in all Copyrights of the Grantors including, without
limitation, executing, delivering and filing a security agreement with the
United States Copyright Office.
ARTICLE V.
EVENTS OF DEFAULT AND REMEDIES
     5.1. Events of Default. The occurrence of any one or more of the following
events shall constitute an Event of Default hereunder:
          (a) Any representation or warranty made by or on behalf of any Grantor
under or in connection with this Security Agreement shall be materially false as
of the date on which made.
          (b) The breach by any Grantor of any of the terms or provisions of
Article IV or Article VII.
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          (c) The breach by any Grantor (other than a breach which constitutes
an Event of Default under any other Section of this Article V) of any of the
terms or provisions of this Security Agreement which is not remedied within ten
days after such breach.
          (d) The occurrence of any “Event of Default” under, and as defined in,
the Credit Agreement.
          (e) Any Equity Interest which is included within the Collateral shall
at any time constitute a Security or the issuer of any such Equity Interest
shall take any action to have such interests treated as a Security unless
(i) all certificates or other documents constituting such Security have been
delivered to the Administrative Agent and such Security is properly defined as
such under Article 8 of the UCC of the applicable jurisdiction, whether as a
result of actions by the issuer thereof or otherwise, or (ii) the Administrative
Agent has entered into a control agreement with the issuer of such Security or
with a securities intermediary relating to such Security and such Security is
defined as such under Article 8 of the UCC of the applicable jurisdiction,
whether as a result of actions by the issuer thereof or otherwise.
     5.2. Remedies.
          (a) During the existence of an Event of Default, the Administrative
Agent may, with the concurrence or at the direction of the Required Secured
Parties, exercise any or all of the following rights and remedies:
          (i) those rights and remedies provided in this Security Agreement, the
Credit Agreement, or any other Loan Document; provided that, this Section 5.2(a)
shall not be understood to limit any rights or remedies available to the
Administrative Agent and the Lenders prior to an Event of Default;
          (ii) those rights and remedies available to a secured party under the
UCC 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
Deposit Account Control Agreement or any other control agreement with any
securities intermediary and take any action therein permitted under such Deposit
Account Control Agreement or other control agreement with respect to such
Collateral;
          (iv) without notice (except as specifically provided in Section 8.1 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 any 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 Administrative Agent may deem commercially reasonable;
and
          (v) concurrently with written notice to the applicable Grantor,
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
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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 Administrative Agent was the outright owner thereof.
          (b) The Administrative Agent, on behalf of the Lenders, shall comply
with any applicable state or federal law requirements in connection with 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 Administrative Agent shall have the right upon any such public
sale or sales and, to the extent permitted by law, upon any such private sale or
sales, to purchase for the benefit of the Administrative Agent and the Lenders,
the whole or any part of the Collateral so sold, free of any right of equity
redemption, which equity redemption the Grantor hereby expressly releases.
          (d) Until the Administrative Agent is able to effect a sale, lease, or
other disposition of Collateral, the Administrative 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 its value or for any
other purpose deemed appropriate by the Administrative Agent. The Administrative
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 Administrative Agent’s
remedies (for the benefit of the Administrative Agent and Lenders), with respect
to such appointment without prior notice or hearing as to such appointment.
          (e) If, after the Credit Agreement has terminated by its terms and all
of the Obligations have been paid in full, there remain Swap Obligations
outstanding, the Required Secured Parties may exercise the remedies provided in
this Section 5.2 upon the occurrence of any event which would allow or require
the termination or acceleration of any Swap Obligations pursuant to the terms of
the Swap Agreement.
          (f) Notwithstanding the foregoing, neither the Administrative Agent
nor the Lenders shall be required to (i) make any demand upon, or pursue or
exhaust any of their rights or remedies against, any Grantor, any other obligor,
guarantor, pledgor or any other Person with respect to the payment of the
Secured 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 Secured Obligations or to
resort to the Collateral or any such guarantee in any particular order, or
(iii) effect a public sale of any Collateral.
          (g) Each Grantor recognizes that the Administrative 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 in accordance with
clause (a) above. 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
Administrative 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 the applicable Grantor and the issuer would agree to do
so.
     5.3. Grantor’s Obligations Upon Event of Default. Upon the request of the
Administrative Agent during the existence of an Event of Default, each Grantor
will:
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          (a) assemble and make available to the Administrative Agent the
Collateral and all books and records relating thereto at any place or places
specified by the Administrative Agent, whether at a Grantor’s premises or
elsewhere;
          (b) permit the Administrative Agent, by the Administrative 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, 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 the Grantor for such use
and occupancy;
          (c) prepare and file, or cause an issuer of Pledged Collateral to
prepare and file, with the Securities and Exchange Commission or any other
applicable government agency, registration statements, a prospectus and such
other documentation in connection with the Pledged Collateral as the
Administrative Agent may request, all in form and substance satisfactory to the
Administrative Agent, and furnish to the Administrative Agent, or cause an
issuer of Pledged Collateral to furnish to the Administrative Agent, any
information regarding the Pledged Collateral in such detail as the
Administrative Agent may specify;
          (d) take, or cause an issuer of Pledged Collateral to take, any and
all actions necessary to register or qualify the Pledged Collateral to enable
the Administrative Agent to consummate a public sale or other disposition of the
Pledged Collateral; and
          (e) at its own expense, cause the independent certified public
accountants then engaged by each Grantor to prepare and deliver to the
Administrative Agent and each Lender, at any time, and from time to time,
promptly upon the Administrative Agent’s request, the following reports with
respect to the applicable Grantor: (i) a reconciliation of all Accounts; (ii) an
aging of all Accounts; (iii) trial balances; and (iv) a test verification of
such Accounts.
     5.4. Grant of Intellectual Property License. For the purpose of enabling
the Administrative Agent to exercise the rights and remedies under this
Article V at such time as the Administrative Agent shall be lawfully entitled to
exercise such rights and remedies, each Grantor hereby (a) grants to the
Administrative Agent, for the benefit of the Administrative Agent and the
Lenders, to the extent permitted without the consent of a third party, an
irrevocable, nonexclusive license (exercisable without payment of royalty or
other compensation to any Grantor) to use, license or sublicense any
intellectual property rights now owned or hereafter acquired by such Grantor,
and 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 the Administrative Agent may sell any of such
Grantor’s Inventory directly to any person, including without limitation persons
who have previously purchased the Grantor’s Inventory from such Grantor and in
connection with any such sale or other enforcement of the Administrative Agent’s
rights under this Security Agreement, may sell Inventory which bears any
Trademark owned by or licensed to such Grantor and any Inventory that is covered
by any Copyright owned by or licensed to such Grantor and the Administrative
Agent may finish any work in process and affix any Trademark owned by or
licensed to such Grantor and sell such Inventory as provided herein.
ARTICLE VI.
ACCOUNT VERIFICATION; ATTORNEY IN FACT; PROXY
     6.1. Account Verification. The Administrative Agent may at any time, in the
Administrative Agent’s own name, in the name of a nominee of the Administrative
Agent, or in the name of any Grantor communicate (by mail, telephone, facsimile
or otherwise) with the Account Debtors of any such Grantor,
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parties to contracts with any such Grantor and obligors in respect of
Instruments of any such Grantor to verify with such Persons, to the
Administrative Agent’s reasonable satisfaction, the existence, amount, terms of,
and any other matter relating to, Accounts, Instruments, Chattel Paper, payment
intangibles and/or other Receivables.
     6.2. Authorization for Secured Party to Take Certain Action.
          (a) Each Grantor irrevocably authorizes the Administrative Agent at
any time and from time to time in the sole discretion of the Administrative
Agent and appoints the Administrative Agent as its attorney in fact (i) to
execute on behalf of such Grantor as debtor and to file financing statements
necessary or desirable in the Administrative Agent’s sole discretion to perfect
and to maintain the perfection and priority of the Administrative Agent’s
security interest in the Collateral, (ii) to endorse and collect any cash
proceeds of the Collateral, (iii) to file a carbon, photographic or other
reproduction of this Security 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 does not add new
collateral or add a debtor) in such offices as the Administrative Agent in its
sole discretion deems necessary or desirable to perfect and to maintain the
perfection and priority of the Administrative Agent’s security interest in the
Collateral, (iv) 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 Administrative Agent Control over such Pledged Collateral,
(v) to apply the proceeds of any Collateral received by the Administrative Agent
to the Secured Obligations as provided in Section 7.3, (vi) to discharge past
due taxes, assessments, charges, fees or Liens on the Collateral (except for
such Liens as are specifically permitted hereunder), (vii) to contact Account
Debtors for any reason, (viii) to demand payment or enforce payment of the
Receivables in the name of the Administrative Agent or such Grantor and to
endorse any and all checks, drafts, and other instruments for the payment of
money relating to the Receivables, (ix) to sign such Grantor’s name on any
invoice or bill of lading relating to the Receivables, drafts against any
Account Debtor of the Grantor, assignments and verifications of Receivables,
(x) to exercise all of such Grantor’s rights and remedies with respect to the
collection of the Receivables and any other Collateral, (xi) to settle, adjust,
compromise, extend or renew the Receivables, (xii) to settle, adjust or
compromise any legal proceedings brought to collect Receivables, (xiii) to
prepare, file and sign such Grantor’s name on a proof of claim in bankruptcy or
similar document against any Account Debtor of such Grantor, (xiv) to prepare,
file and sign such Grantor’s name on any notice of Lien, assignment or
satisfaction of Lien or similar document in connection with the Receivables,
(xv) to change the address for delivery of mail addressed to such Grantor to
such address as the Administrative Agent may designate and to receive, open and
dispose of all mail addressed to such Grantor, and (xvi) to do all other acts
and things necessary to carry out this Security Agreement; and such Grantor
agrees to reimburse the Administrative Agent on demand for any payment made or
any expense incurred by the Administrative Agent in connection with any of the
foregoing; provided that, this authorization shall not relieve such Grantor of
any of its obligations under this Security Agreement or under the Credit
Agreement.
          (b) All acts of said attorney or designee are hereby ratified and
approved. The powers conferred on the Administrative Agent, for the benefit of
the Administrative Agent and Lenders, under this Section 6.2 are solely to
protect the Administrative Agent’s interests in the Collateral and shall not
impose any duty upon the Administrative Agent or any Lender to exercise any such
powers.
     6.3. Proxy. EACH GRANTOR HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS THE
ADMINISTRATIVE AGENT AS ITS PROXY AND ATTORNEY-IN-FACT (AS SET FORTH IN SECTION
6.2 ABOVE) WITH RESPECT TO ITS 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
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COLLATERAL, THE APPOINTMENT OF THE ADMINISTRATIVE 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), DURING THE EXISTENCE OF AN EVENT OF
DEFAULT.
     6.4. Nature of Appointment; Limitation of Duty. THE APPOINTMENT OF THE
ADMINISTRATIVE AGENT AS PROXY AND ATTORNEY-IN-FACT IN THIS ARTICLE VI IS COUPLED
WITH AN INTEREST AND SHALL BE IRREVOCABLE UNTIL THE DATE ON WHICH THIS SECURITY
AGREEMENT IS TERMINATED IN ACCORDANCE WITH SECTION 8.14. NOTWITHSTANDING
ANYTHING CONTAINED HEREIN, NEITHER THE ADMINISTRATIVE AGENT, NOR ANY LENDER, 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 IN RESPECT OF DAMAGES
ATTRIBUTABLE SOLELY 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 VII.
COLLECTION AND APPLICATION OF COLLATERAL PROCEEDS; DEPOSIT ACCOUNTS
     7.1. Collection of Receivables.
          (a) On or before February 13, 2009, each Grantor shall (a) execute and
deliver to the Administrative Agent Deposit Account Control Agreements for each
Deposit Account maintained by such Grantor at an institution other than the
Administrative Agent into which all cash, checks or other similar payments
relating to or constituting payments made in respect of Receivables will be
deposited (a “Collateral Deposit Account”), which Collateral Deposit Accounts
are identified as such on Exhibit B, and (b) establish lock box service (the
“Lock Boxes”) with the bank(s) set forth in Exhibit B, which lock boxes shall be
subject to irrevocable lockbox agreements in the form provided by or otherwise
acceptable to the Administrative Agent and shall be accompanied by an
acknowledgment by the bank where the Lock Box is located of the Lien of the
Administrative Agent granted hereunder and of irrevocable instructions to wire
all amounts collected therein to the Collection Account (a “Lock Box
Agreement”). After the Effective Date, each Grantor will comply with the terms
of Section 7.2.
          (b) Each Grantor shall direct all of its Account Debtors to forward
payments directly to Lock Boxes subject to Lock Box Agreements. The
Administrative Agent shall have sole access to the Lock Boxes at all times and
each Grantor shall take all actions necessary to grant the Administrative Agent
such sole access. At no time shall any Grantor remove any item from a Lock Box
or from a Collateral Deposit Account without the Administrative Agent’s prior
written consent. If any Grantor should refuse or neglect to notify any Account
Debtor to forward payments directly to a Lock Box subject to a Lock Box
Agreement after written notice from the Administrative Agent, the Administrative
Agent shall, notwithstanding the language set forth in Section 6.2(b), be
entitled to make such notification directly to Account Debtor. If
notwithstanding the foregoing instructions, any Grantor receives any
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proceeds of any Receivables, such Grantor shall receive such payments as the
Administrative Agent’s trustee, and shall immediately deposit all cash, checks
or other similar payments related to or constituting payments made in respect of
Receivables received by it to a Collateral Deposit Account. All funds deposited
into any Lock Box subject to a Lock Box Agreement or a Collateral Deposit
Account will be swept on a daily basis into a collection account maintained by
such Grantor with the Administrative Agent (the “Collection Account”). The
Administrative Agent shall hold and apply funds received into the Collection
Account as provided by the terms of Section 7.3.
     7.2. Covenant Regarding New Deposit Accounts; Lock Boxes. Before opening or
replacing any Collateral Deposit Account, other Deposit Account, or establishing
a new Lock Box, each Grantor shall (a) obtain the Administrative Agent’s consent
in writing to the opening of such Deposit Account or Lock Box, and (b) cause
each bank or financial institution in which it seeks to open (i) a Deposit
Account, to enter into a Deposit Account Control Agreement with the
Administrative Agent in order to give the Administrative Agent Control of such
Deposit Account, or (ii) a Lock Box, to enter into a Lock Box Agreement with the
Administrative Agent in order to give the Administrative Agent Control of the
Lock Box. In the case of Deposit Accounts or Lock Boxes maintained with Lenders,
the terms of such letter shall be subject to the provisions of the Credit
Agreement regarding setoffs. Notwithstanding the foregoing, no Grantor shall be
required to provide a Deposit Account Control Agreement for any Deposit Account
with an account balance of less than $10,000 so long as (i) such Deposit Account
is not a Collateral Deposit Account and (ii) the aggregate account balance in
all such Deposit Accounts shall not exceed $100,000 at any time.
     7.3. Application of Proceeds; Deficiency. All amounts deposited in the
Collection Account shall be deemed received by the Administrative Agent in
accordance with Section 2.18 of the Credit Agreement and shall, after having
been credited to the Collection Account, be applied (and allocated) by
Administrative Agent in accordance with Section 2.10(b) of the Credit Agreement.
The Administrative Agent shall require all other cash proceeds of the
Collateral, which are not required to be applied to the Obligations pursuant to
Section 2.11 of the Credit Agreement, to be deposited in a special non-interest
bearing cash collateral account with the Administrative Agent and held there as
security for the Secured Obligations. No Grantor shall have any control
whatsoever over said cash collateral account. Any such proceeds of the
Collateral shall be applied in the order set forth in Section 2.18 of the Credit
Agreement unless a court of competent jurisdiction shall otherwise direct. The
balance, if any, after all of the Secured Obligations have been satisfied, shall
be deposited by the Administrative Agent into such Grantor’s general operating
account with the Administrative Agent. The Grantors shall remain liable for any
deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all Secured Obligations, including any attorneys’ fees and
other expenses incurred by Administrative Agent or any Lender to collect such
deficiency.
ARTICLE VIII.
GENERAL PROVISIONS
     8.1. 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 Article IX, at least ten 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 Administrative Agent or any Lender 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 Administrative Agent or
such Lender 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
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and advantage of, and covenants not to assert against the Administrative Agent
or any Lender, 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 Security 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 Security
Agreement or any Collateral.
     8.2. Limitation on Administrative Agent’s and Lenders’ Duty with Respect to
the Collateral. The Administrative Agent shall have no obligation to clean-up or
otherwise prepare the Collateral for sale . The Administrative Agent and each
Lender shall use reasonable care with respect to the Collateral in its
possession or under its control. Neither the Administrative Agent nor any Lender
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 Administrative Agent
or such Lender, 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 Administrative Agent to exercise remedies
in a commercially reasonable manner, each Grantor acknowledges and agrees that
it is commercially reasonable for the Administrative Agent (i) to fail to incur
expenses deemed significant by the Administrative 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 such Grantor, for
expressions of interest in acquiring all or any portion of such Collateral,
(vii) to hire 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 Administrative
Agent against risks of loss, collection or disposition of Collateral or to
provide to the Administrative Agent a guaranteed return from the collection or
disposition of Collateral, or (xii) to the extent deemed appropriate by the
Administrative Agent, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist the Administrative Agent
in the collection or disposition of any of the Collateral. Each Grantor
acknowledges that the purpose of this Section 8.2 is to provide non-exhaustive
indications of what actions or omissions by the Administrative Agent would be
commercially reasonable in the Administrative Agent’s exercise of remedies
against the Collateral and that other actions or omissions by the Administrative
Agent shall not be deemed commercially unreasonable solely on account of not
being indicated in this Section 8.2. Without limitation upon the foregoing,
nothing contained in this Section 8.2 shall be construed to grant any rights to
any Grantor or to impose any duties on the Administrative Agent that would not
have been granted or imposed by this Security Agreement or by applicable law in
the absence of this Section 8.2.
     8.3. Compromises and Collection of Collateral. The Grantors and the
Administrative 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
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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 Administrative 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
Administrative Agent in its sole discretion shall determine or abandon any
Receivable, and any such action by the Administrative Agent shall be
commercially reasonable so long as the Administrative Agent acts in good faith
based on information known to it at the time it takes any such action.
     8.4. Secured Party Performance of Debtor Obligations. Without having any
obligation to do so, the Administrative Agent may perform or pay any obligation
which any Grantor has agreed to perform or pay in this Security Agreement and
the Grantors shall reimburse the Administrative Agent for any amounts paid by
the Administrative Agent pursuant to this Section 8.4. The Grantors’ obligation
to reimburse the Administrative Agent pursuant to the preceding sentence shall
be a Secured Obligation payable on demand.
     8.5. Specific Performance of Certain Covenants. Each Grantor acknowledges
and agrees that a breach of any of the covenants contained in Sections 4.1(d),
4.1(e), 4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.12, 4.13, 4.14, 4.15, 5.3, or 8.7
or in Article VII will cause irreparable injury to the Administrative Agent and
the Lenders, that the Administrative Agent and Lenders have no adequate remedy
at law in respect of such breaches and therefore agrees, without limiting the
right of the Administrative Agent or the Lenders to seek and obtain specific
performance of other obligations of the Grantors contained in this Security
Agreement, that the covenants of the Grantors contained in the Sections referred
to in this Section 8.5 shall be specifically enforceable against the Grantors.
     8.6. 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 dealing between any Grantor and the Administrative
Agent or other conduct of the Administrative Agent, no authorization to sell or
otherwise dispose of the Collateral (except as set forth in Section 4.1(d))
shall be binding upon the Administrative Agent or the Lenders unless such
authorization is in writing signed by the Administrative Agent with the consent
or at the direction of the Required Secured Parties.
     8.7. No Waiver; Amendments; Cumulative Remedies. No delay or omission of
the Administrative Agent or any Lender to exercise any right or remedy granted
under this Security 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 Security Agreement whatsoever shall be valid unless in writing signed by
the Administrative Agent with the concurrence or at the direction of the Lenders
required under Section 9.02 of the Credit Agreement and then only to the extent
in such writing specifically set forth. All rights and remedies contained in
this Security Agreement or by law afforded shall be cumulative and all shall be
available to the Administrative Agent and the Lenders until the Secured
Obligations have been paid in full.
     8.8. Limitation by Law; Severability of Provisions. All rights, remedies
and powers provided in this Security 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 Security 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
Security Agreement invalid, unenforceable or not entitled to be recorded or
registered, in whole or in part. Any provision in any this Security Agreement
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be
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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
Security Agreement are declared to be severable.
     8.9. Reinstatement. This Security 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 any
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 Secured 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 Secured
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 Secured Obligations shall be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or returned.
     8.10. Benefit of Agreement. The terms and provisions of this Security
Agreement shall be binding upon and inure to the benefit of the Grantors, the
Administrative Agent and the Lenders and their respective successors and assigns
(including all persons who become bound as a debtor to this Security Agreement),
except that no Grantor shall have the right to assign its rights or delegate its
obligations under this Security Agreement or any interest herein, without the
prior written consent of the Administrative Agent. No sales of participations,
assignments, transfers, or other dispositions of any agreement governing the
Secured Obligations or any portion thereof or interest therein shall in any
manner impair the Lien granted to the Administrative Agent, for the benefit of
the Administrative Agent and the Lenders, hereunder.
     8.11. Survival of Representations. All representations and warranties of
the Grantors contained in this Security Agreement shall survive the execution
and delivery of this Security Agreement.
     8.12. Taxes and Expenses. Any taxes (including income taxes) payable or
ruled payable by Federal or State authority in respect of this Security
Agreement shall be paid by the Grantors, together with interest and penalties,
if any. The Grantors shall reimburse the Administrative Agent for any and all
out-of-pocket expenses and internal charges (including reasonable attorneys’,
auditors’ and accountants’ fees and reasonable time charges of attorneys,
paralegals, auditors and accountants who may be employees of the Administrative
Agent) paid or incurred by the Administrative Agent in connection with the
preparation, execution, delivery, administration, collection and enforcement of
this Security 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 the Grantors in the performance of actions
required pursuant to the terms hereof shall be borne solely by the Grantors.
     8.13. Headings. The title of and section headings in this Security
Agreement are for convenience of reference only, and shall not govern the
interpretation of any of the terms and provisions of this Security Agreement.
     8.14. Termination. This Security Agreement shall continue in effect
(notwithstanding the fact that from time to time there may be no Secured
Obligations outstanding) until (i) the Credit Agreement has terminated pursuant
to its express terms and (ii) all of the Secured Obligations have been
indefeasibly paid and performed in full (or with respect to any outstanding
Letters of Credit, a cash deposit or Supporting Letter of Credit has been
delivered to the Administrative Agent as required by the Credit Agreement) and
no commitments of the Administrative Agent or the Lenders which would give rise
to any Secured Obligations are outstanding.
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     8.15. Entire Agreement. This Security Agreement embodies the entire
agreement and understanding between the Grantors and the Administrative Agent
relating to the Collateral and supersedes all prior agreements and
understandings between the Grantors and the Administrative Agent relating to the
Collateral.
     8.16. CHOICE OF LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS)
OF THE STATE OF TEXAS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL
BANKS.
     8.17. CONSENT TO JURISDICTION. EACH GRANTOR HEREBY IRREVOCABLY SUBMITS TO
THE NON-EXCLUSIVE JURISDICTION OF ANY U.S. FEDERAL OR TEXAS STATE COURT SITTING
IN DALLAS, TEXAS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT AND EACH 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 ADMINISTRATIVE AGENT OR ANY LENDER
TO BRING PROCEEDINGS AGAINST ANY GRANTOR IN THE COURTS OF ANY OTHER
JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY GRANTOR AGAINST THE ADMINISTRATIVE
AGENT OR ANY LENDER OR ANY AFFILIATE OF THE AGENT OR ANY LENDER INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE
BROUGHT ONLY IN A COURT IN DALLAS, TEXAS.
     8.18. WAIVER OF JURY TRIAL. EACH GRANTOR, THE ADMINISTRATIVE AGENT AND EACH
LENDER 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 SECURITY AGREEMENT OR
ANY OTHER LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
     8.19. Indemnity. Each Grantor hereby agrees to indemnify the Administrative
Agent and the Lenders, and their respective successors, assigns, agents and
employees, from and against any and all liabilities, damages, penalties, suits,
costs, and expenses of any kind and nature (including, without limitation, all
expenses of litigation or preparation therefor whether or not the Administrative
Agent or any Lender is a party thereto) imposed on, incurred by or asserted
against the Administrative Agent or the Lenders, or their respective successors,
assigns, agents and employees, in any way relating to or arising out of this
Security Agreement, or the manufacture, purchase, acceptance, rejection,
ownership, delivery, lease, possession, use, operation, condition, sale, return
or other disposition of any Collateral (including, without limitation, latent
and other defects, whether or not discoverable by the Administrative Agent or
the Lenders or any Grantor, and any claim for Patent, Trademark or Copyright
infringement).
     8.20. Counterparts. This Security 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 Security Agreement by signing any
such counterpart.
     8.21. Amendment and Restatement. This Security Agreement amends and
restates the Original Security Agreement in its entirety but does not extinguish
the Liens which were created thereby in the
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collateral pledged under the Original Security Agreement, which Liens are
continued under the terms of this Security Agreement.
ARTICLE IX.
NOTICES
     9.1. Sending Notices. Any notice required or permitted to be given under
this Security Agreement shall be sent by United States mail, telecopier,
personal delivery or nationally established overnight courier service, and shall
be deemed received (a) when received, if sent by hand or overnight courier
service, or mailed by certified or registered mail notices or (b) when sent, if
sent by telecopier (except that, if not given during normal business hours for
the recipient, shall be deemed to have been given at the opening of business on
the next Business Day for the recipient), in each case addressed to the Grantors
at the notice address set forth on Exhibit A, and to the Administrative Agent
and the Lenders at the addresses set forth in accordance with Section 9.01 of
the Credit Agreement.
     9.2. Change in Address for Notices. Each of the Grantors, the
Administrative Agent and the Lenders may change the address for service of
notice upon it by a notice in writing to the other parties.
ARTICLE X.
THE ADMINISTRATIVE AGENT
     JPMorgan Chase Bank, N.A. has been appointed Administrative Agent for the
Lenders hereunder pursuant to Article VIII of the Credit Agreement. It is
expressly understood and agreed by the parties to this Security Agreement that
any authority conferred upon the Administrative Agent hereunder is subject to
the terms of the delegation of authority made by the Lenders to the
Administrative Agent pursuant to the Credit Agreement, and that the
Administrative Agent has agreed to act (and any successor Administrative Agent
shall act) as such hereunder only on the express conditions contained in such
Article VIII. Any successor Administrative Agent appointed pursuant to
Article VIII of the Credit Agreement shall be entitled to all the rights,
interests and benefits of the Administrative Agent hereunder.
[Signature Page Follows]
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     IN WITNESS WHEREOF, the Grantors and the Administrative Agent have executed
this Security Agreement as of the date first above written.

            GRANTORS:

A.H. BELO CORPORATION
      By:   /s/ Alison K. Engel       Alison K. Engel,        Senior Vice
President/Chief Financial Officer        THE DALLAS MORNING NEWS, INC.
      By:   /s/ Alison K. Engel       Alison K. Engel,       
Treasurer/Assistant Secretary        DENTON PUBLISHING COMPANY
      By:   /s/ Alison K. Engel       Alison K. Engel,       
Treasurer/Assistant Secretary        DFW PRINTING COMPANY, INC.
      By:   /s/ Alison K. Engel       Alison K. Engel,       
Treasurer/Assistant Secretary        DMI ACQUISITION SUB, INC.
      By:   /s/ Alison K. Engel       Alison K. Engel,       
Treasurer/Assistant Secretary     

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            PRESS-ENTERPRISE COMPANY
      By:   /s/ Alison K. Engel       Alison K. Engel,       
Treasurer/Assistant Secretary        THE PROVIDENCE JOURNAL COMPANY
      By:   /s/ Alison K. Engel       Alison K. Engel,       
Treasurer/Assistant Secretary        A.H. BELO MANAGEMENT SERVICES, INC.
      By:   /s/ Alison K. Engel       Alison K. Engel,       
Treasurer/Assistant Secretary        AL DIA, INC.
      By:   /s/ Alison K. Engel       Alison K. Engel,       
Treasurer/Assistant Secretary        THE BELO COMPANY
      By:   /s/ Julian H. Baumann, Jr.       Julian H. Baumann, Jr.,        Vice
President/Assistant Secretary        BELO ENTERPRISES, INC.
      By:   /s/ Julian H. Baumann, Jr.       Julian H. Baumann, Jr.,        Vice
President/Assistant Secretary     

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            BELO INTERACTIVE, INC.
      By:   /s/ Alison K. Engel       Alison K. Engel,       
Treasurer/Assistant Secretary        BELO INVESTMENTS II, INC.
      By:   /s/ Julian H. Baumann, Jr.       Julian H. Baumann, Jr.,        Vice
President/Assistant Secretary        BELO TECHNOLOGY ASSETS, INC.
      By:   /s/ Alison K. Engel       Alison K. Engel,       
Treasurer/Assistant Secretary        NEWS-TEXAN, INC.
      By:   /s/ Alison K. Engel       Alison K. Engel,       
Treasurer/Assistant Secretary        PROVIDENCE HOLDINGS, INC.
      By:   /s/ Julian H. Baumann, Jr.       Julian H. Baumann, Jr.,        Vice
President/Assistant Secretary        RHODE ISLAND MONTHLY COMMUNICATIONS, INC.
      By:   /s/ Alison K. Engel       Alison K. Engel,       
Treasurer/Assistant Secretary     

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                  TDMN NEW PRODUCTS, INC.
 
           
 
  By:   /s/ Alison K. Engel                   Alison K. Engel,        
Treasurer/Assistant Secretary
 
                TRUE NORTH REAL ESTATE LLC
 
                By:   A. H. Belo Corporation, its the sole member
 
           
 
      By:   /s/ Alison K. Engel
 
           
 
          Alison K. Engel, Senior Vice President/Chief Financial Officer
 
                WASHINGTON STREET GARAGE CORPORATION
 
           
 
  By:   /s/ Alison K. Engel                   Alison K. Engel,        
Treasurer/Assistant Secretary
 
                ADMINISTRATIVE AGENT:
 
                JPMORGAN CHASE BANK, N.A.,     as Administrative Agent
 
           
 
  By:   /s/ Jeff A. Tompkins                   Name: Jeff A. Tompkins
 
                    Title: Vice President
 
           

AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT, Page 30