exv10w2



 





Exhibit 10.2




EXECUTION COPY




PATRIOT COAL CORPORATION




PLEDGE AND SECURITY AGREEMENT




dated as of October 31, 2007




between




EACH OF THE GRANTORS PARTY HERETO




and




BANK OF AMERICA, N.A.,




as Administrative Agent




 









 





TABLE OF CONTENTS




	 	 	 
	 	 	PAGE
	 
	 	 
	SECTION 1. DEFINITIONS; GRANT OF SECURITY
	 	1
	     1.1 General Definitions
	 	1
	1.2 Definitions; Interpretation
	 	6
	 
	 	 
	SECTION 2. GRANT OF SECURITY
	 	7
	2.1 Grant of Security
	 	7
	2.2 Certain Limited Exclusions
	 	8
	 
	 	 
	SECTION 3. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE
	 	9
	3.1 Security for Obligations
	 	9
	3.2 Continuing Liability Under Collateral
	 	9
	 
	 	 
	SECTION 4. CERTAIN PERFECTION REQUIREMENTS
	 	9
	4.1 Delivery Requirements
	 	9
	4.2 Control Requirements
	 	10
	4.3 Intellectual Property Recording Requirements
	 	10
	4.4 Other Actions
	 	11
	 
	 	 
	SECTION 5. REPRESENTATIONS AND WARRANTIES
	 	11
	5.1 Grantor Information & Status
	 	11
	5.2 Collateral Identification, Special Collateral
	 	12
	5.3 Ownership of Collateral and Absence of Other Liens
	 	12
	5.4 Status of Security Interest
	 	12
	5.5 Goods & Receivables
	 	13
	5.6 Pledged Equity Interests, Investment Related Property
	 	13
	5.7 Intellectual Property
	 	13
	 
	 	 
	SECTION 6. COVENANTS AND AGREEMENTS
	 	15
	6.1 Grantor Information & Status
	 	15
	6.2 Collateral Identification; Special Collateral
	 	15
	6.3 Ownership of Collateral and Absence of Other Liens
	 	15
	6.4 Status of Security Interest
	 	16
	6.5 Goods & Receivables
	 	16
	6.6 Pledged Equity Interests, Investment Related Property
	 	17
	6.7 Intellectual Property
	 	19
	6.8 [Reserved]
	 	20
	6.9 As-Extracted Collateral
	 	20
	 
	 	 
	SECTION 7. ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES; ADDITIONAL GRANTORS
	 	20
	7.1 [Reserved]
	 	20
	7.2 Further Assurances
	 	20
	7.3 Additional Grantors
	 	21
	 
	 	 
	SECTION 8. ADMINISTRATIVE AGENT APPOINTED ATTORNEY-IN-FACT
	 	21
	8.1 Power of Attorney
	 	21
	8.2 No Duty on the Part of Administrative Agent or Secured Parties
	 	22






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	 	 	PAGE
	 
	SECTION 9. REMEDIES
	 	23
	9.1 Generally
	 	23
	9.2 Application of Proceeds
	 	24
	9.3 Sales on Credit
	 	24
	9.4 Investment Related Property
	 	25
	9.5 Grant of Intellectual Property License
	 	25
	9.6 [Reserved]
	 	25
	9.7 Cash Proceeds; Deposit Accounts
	 	25
	 
	 	 
	SECTION 10. ADMINISTRATIVE AGENT
	 	26
	 
	 	 
	SECTION 11. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS
	 	26
	 
	 	 
	SECTION 12. STANDARD OF CARE; ADMINISTRATIVE AGENT MAY PERFORM
	 	27
	 
	 	 
	SECTION 13. MISCELLANEOUS
	 	27
	 
	 	 
	SCHEDULE 5.1 — GENERAL INFORMATION
	 	 
	 
	 	 
	SCHEDULE 5.2 — COLLATERAL IDENTIFICATION 
	 	 
	 
	 	 
	SCHEDULE 5.4 — FINANCING STATEMENTS
	 	 
	 
	 	 
	SCHEDULE 5.5 — GOVERNMENT RECEIVABLES; LOCATION OF EQUIPMENT AND INVENTORY
	 	 
	 
	 	 
	SCHEDULE 6.9 — AS-EXTRACTED COLLATERAL 
	 	 
	 
	 	 
	EXHIBIT A — PLEDGE SUPPLEMENT
	 	 
	 
	 	 
	EXHIBIT B — UNCERTIFICATED SECURITIES CONTROL AGREEMENT 
	 	 
	 
	 	 
	EXHIBIT C — SECURITIES ACCOUNT CONTROL AGREEMENT 
	 	 
	 
	 	 
	EXHIBIT D — [RESERVED]
	 	 
	 
	 	 
	EXHIBIT E — TRADEMARK SECURITY AGREEMENT 
	 	 
	 
	 	 
	EXHIBIT F — COPYRIGHT SECURITY AGREEMENT 
	 	 
	 
	 	 
	EXHIBIT G — PATENT SECURITY AGREEMENT
	 	 







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          This PLEDGE AND SECURITY AGREEMENT, dated as of October 31, 2007 (this “Agreement”), between
Patriot Coal Corporation (the “Borrower”), each of the subsidiaries of the Borrower party hereto
from time to time, whether as an original signatory hereto or as an Additional Grantor (as herein
defined) (together with the Borrower, the “Grantors”), and Bank of America, N.A., as administrative
agent for the Secured Parties (as herein defined) (in such capacity as administrative agent,
together with its successors and permitted assigns, the “Administrative Agent”).




RECITALS:




     WHEREAS, reference is made to that certain Credit Agreement, dated as of the date hereof (as
it may be amended, restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”), by and among Borrower, the lenders party thereto from time to time (the “Lenders”),
and the Administrative Agent;



     WHEREAS, subject to the terms and conditions of the Credit Agreement, certain Grantors may
enter into one or more Secured Hedge Agreements with one or more Hedge Banks and one or more
Secured Cash Management Agreements with one or more Cash Management Banks;



     WHEREAS, in consideration of the extensions of credit and other accommodations of Lenders,
Hedge Banks and Cash Management Banks as set forth in the Credit Agreement, the Secured Hedge
Agreements and Secured Cash Management Agreements, respectively, each Grantor has agreed to secure
such Grantor’s obligations under the Loan Documents, the Secured Hedge Agreements and the Secured
Cash Management Agreements as set forth herein; and



     NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants
herein contained, each Grantor and the Administrative Agent agree as follows:



SECTION 1. DEFINITIONS; GRANT OF SECURITY.




     1.1 General Definitions. In this Agreement, the following terms shall have the following
meanings:



          “Additional Grantors” shall have the meaning assigned in Section 7.3.
          
“Agreement” shall have the meaning set forth in the preamble.



          “Borrower” shall have the meaning set forth in the recitals.


          
“Cash Proceeds” shall have the meaning assigned in Section 9.7. “Collateral” shall have the meaning
assigned in Section 2.1.




          “Collateral Account” shall mean any account established by the Administrative Agent.




          “Administrative Agent” shall have the meaning set forth in the preamble.




          “Collateral Records” shall mean books, records, ledger cards, files, correspondence, customer
lists, supplier lists, blueprints, technical specifications, manuals,






 









 







computer software and related documentation, computer printouts, tapes, disks and other electronic
storage media and related data processing software and similar items that at any time evidence or
contain information relating to any of the Collateral or are otherwise necessary or helpful in the
collection thereof or realization thereupon.




          “Collateral Support” shall mean all property (real or personal) assigned, hypothecated or
otherwise securing any Collateral and shall include any security agreement or other agreement
granting a lien or security interest in such real or personal property.




          “Control” shall mean: (1) with respect to any Deposit Accounts, control within the meaning of
Section 9-104 of the UCC, (2) with respect to any Securities Accounts, Security Entitlements,
Commodity Contract or Commodity Account, control within the meaning of Section 9-106 of the UCC,
(3) with respect to any Uncertificated Securities, control within the meaning of Section 8-106(c)
of the UCC, (4) with respect to any Certificated Security, control within the meaning of Section
8-106(a) or (b) of the UCC, (5) with respect to any Electronic Chattel Paper, control within the
meaning of Section 9-105 of the UCC, (6) with respect to Letter of Credit Rights, control within
the meaning of Section 9-107 of the UCC and (7) with respect to any “transferable record"(as that
term is defined in Section 201 of the Federal Electronic Signatures in Global and National Commerce
Act or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant
jurisdiction), control within the meaning of Section 201 of the Federal Electronic Signatures in
Global and National Commerce Act or in Section 16 of the Uniform Electronic Transactions Act as in
effect in the jurisdiction relevant to such transferable record.




          “Copyright Licenses” shall mean any and all agreements, licenses and covenants (whether or not
in writing) providing for the granting of any right in or to any Copyright or otherwise providing
for a covenant not to sue with respect to any Copyright (whether such Grantor is licensee or
licensor thereunder) including, without limitation, each agreement required to be listed in
Schedule 5.2(II) under the heading “Copyright Licenses” (as such schedule may be amended or
supplemented from time to time).




          “Copyrights” shall mean all United States, and foreign copyrights (including Community
designs), including but not limited to copyrights in software and all rights in and to databases,
and all Mask Works (as defined under 17 U.S.C. 901 of the U.S. Copyright Act), whether registered
or unregistered and whether or not the underlying works of authorship have been published, moral
rights, reversionary interests, termination rights, and, with respect to any and all of the
foregoing: (i) all registrations and applications therefor including, without limitation, the
registrations and applications required to be listed in Schedule 5.2(II) under the heading
“Copyrights” (as such schedule may be amended or supplemented from time to time), (ii) all
extensions and renewals thereof, (iii) the rights to sue or otherwise recover for past, present and
future infringements thereof, and (iv) all Proceeds of the foregoing, including, without
limitation, license fees, royalties, income, payments, claims, damages and proceeds of suit now or
hereafter due and/or payable with respect thereto, and (v) all other rights of any kind accruing
thereunder or pertaining thereto throughout the world.




          “Credit Agreement” shall have the meaning set forth in the recitals.




          “Excluded Asset” shall mean any asset of any Grantor excluded from the security interest
hereunder by virtue of Section 2.2 hereof but only to the extent, and for so long as, so excluded
thereunder.







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          “Grantors” shall have the meaning set forth in the preamble.




          “Indemnitee” shall mean the Administrative Agent, and its and its Affiliates’ officers, partners,
directors, trustees, employees, agents.




          “Insurance” shall mean (i) all insurance policies covering any or all of the Collateral (regardless
of whether the Administrative Agent is the loss payee thereof) and (ii) any key man life insurance
policies.




          “Intellectual Property” shall mean the collective reference to all rights, priorities and
privileges relating to intellectual property, whether arising under the United States or foreign
laws or otherwise, including, without limitation, the Copyrights, the Copyright Licenses, the
Patents, the Patent Licenses, the Trademarks, the Trademark Licenses, the Trade Secrets, and the
Trade Secret Licenses, and the right to sue or otherwise recover for past, present and future
infringement, misappropriation, dilution or other impairment or violation thereof, including the
right to receive all Proceeds therefrom, including, without limitation, license fees, royalties,
income, payments, claims, damages and proceeds of suit, now or hereafter due and/or payable with
respect thereto.




          “Intellectual Property Licenses” shall mean, collectively, the Copyright Licenses, Patent Licenses,
Trademark Licenses and Trade Secret Licenses.




          “Investment Accounts” shall mean the Collateral Account, Securities Accounts, Commodities Accounts
and Deposit Accounts.




          “Investment Related Property” shall mean: (i) all “investment property” (as such term is defined in
Article 9 of the UCC) and (ii) all of the following (regardless of whether classified as investment
property under the UCC): all Pledged Equity Interests, Pledged Debt, the Investment Accounts and
certificates of deposit.




          “Lender” shall have the meaning set forth in the recitals.




          “Majority Holder” shall have the meaning set forth in Section 10.




          “Material Contracts” means the Related Documents (as defined in the Credit Agreement).




          “Material Intellectual Property” shall mean any Intellectual Property included in the Collateral
which is material to the business of any Grantor.




          “Non-Assignable Contract” shall mean any agreement, contract or license to which any Grantor is a
party that by its terms purports to restrict or prevent the assignment or granting of a security
interest therein (either by its terms or by any federal or state statutory prohibition or otherwise
irrespective of whether such prohibition or restriction is enforceable under Section 9-406 through
409 of the UCC).




          “Patent Licenses” shall mean all agreements, licenses and covenants (whether or not in writing)
providing for the granting of any right in or to any Patent or otherwise providing for a covenant
not to sue with respect to any Patent (whether such Grantor is licensee or licensor thereunder)
including, without limitation, each agreement required to be listed in







3









 







Schedule 5.2(II) under the heading “Patent Licenses” (as such schedule may be amended or
supplemented from time to time).




          “Patents” shall mean all United States and foreign patents and certificates of invention,
inventions or similar industrial property rights, and applications for any of the foregoing,
including, but not limited to: (i) each patent and patent application required to be listed in
Schedule 5.2(II) under the heading “Patents” (as such schedule may be amended or supplemented from
time to time), (ii) all reissues, divisions, continuations, continuations-in-part, extensions,
renewals, and reexaminations thereof, (iii) all improvements thereto, (iv) all rights to sue or
otherwise recover for past, present and future infringements thereof, (v) all Proceeds of the
foregoing, including, without limitation, license fees, royalties, income, payments, claims,
damages, and proceeds of suit now or hereafter due and/or payable with respect thereto, and (vi)
all other rights of any kind accruing thereunder or pertaining thereto throughout the world.




          “Pledge Supplement” shall mean any supplement to this agreement in substantially the form of
Exhibit A.




          “Pledged Debt” shall mean all indebtedness for borrowed money owed to such Grantor, whether or not
evidenced by any Instrument, including, without limitation, all indebtedness described on Schedule
5.2(I) under the heading “Pledged Debt” (as such schedule may be amended or supplemented from time
to time), issued by the obligors named therein, the instruments, if any, evidencing such any of the
foregoing, and all interest, cash, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for any or all of the
foregoing.




          “Pledged Equity Interests” shall mean all Pledged Stock, Pledged LLC Interests, Pledged Partnership
Interests and any other participation or interests in any equity or profits of any business entity
including, without limitation, any trust.




          “Pledged LLC Interests” shall mean all interests in any limited liability company and each series
thereof including, without limitation, all limited liability company interests listed on Schedule
5.2(I) under the heading “Pledged LLC Interests” (as such schedule may be amended or supplemented
from time to time) and the certificates, if any, representing such limited liability company
interests and any interest of such Grantor on the books and records of such limited liability
company or on the books and records of any securities intermediary pertaining to such interest and
all dividends, distributions, cash, warrants, rights, options, instruments, securities and other
property or proceeds from time to time received, receivable or otherwise distributed in respect of
or in exchange for any or all of such limited liability company interests.




          “Pledged Partnership Interests” shall mean all interests in any general partnership, limited
partnership, limited liability partnership or other partnership including, without limitation, all
partnership interests listed on Schedule 5.2(I) under the heading “Pledged Partnership Interests”
(as such schedule may be amended or supplemented from time to time) and the certificates, if any,
representing such partnership interests and any interest of such Grantor on the books and records
of such partnership or on the books and records of any securities intermediary pertaining to such
interest and all dividends, distributions, cash, warrants, rights, options, instruments, securities
and other property or proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such partnership interests.






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          “Pledged Stock” shall mean all shares of capital stock owned by such Grantor, including, without
limitation, all shares of capital stock described on Schedule 5.2(I) under the heading “Pledged
Stock” (as such schedule may be amended or supplemented from time to time), and the certificates,
if any, representing such shares and any interest of such Grantor in the entries on the books of
the issuer of such shares or on the books of any securities intermediary pertaining to such shares,
and all dividends, distributions, cash, warrants, rights, options, instruments, securities and
other property or proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such shares.




          “Pledge Supplement” shall mean an agreement substantially in the form of Exhibit A hereto.




          “Receivables” shall mean all rights to payment, whether or not earned by performance, for goods or
other property sold, leased, licensed, assigned or otherwise disposed of, or services rendered or
to be rendered, including, without limitation all such rights constituting or evidenced by any
Account, Chattel Paper, Instrument, General Intangible or Investment Related Property, together
with all of Grantor’s rights, if any, in any goods or other property giving rise to such right to
payment and all Collateral Support and Supporting Obligations related thereto and all Receivable
Records.




          “Receivables Records” shall mean (i) all original copies of all documents, instruments or other
writings or electronic records or other Records evidencing the Receivables, (ii) all books,
correspondence, credit or other files, Records, ledger sheets or cards, invoices, and other papers
relating to Receivables, including, without limitation, all tapes, cards, computer tapes, computer
discs, computer runs, record keeping systems and other papers and documents relating to the
Receivables, whether in the possession or under the control of Grantor or any computer bureau or
agent from time to time acting for Grantor or otherwise, (iii) all evidences of the filing of
financing statements and the registration of other instruments in connection therewith, and
amendments, supplements or other modifications thereto, notices to other creditors, secured parties
or agents thereof, and certificates, acknowledgments, or other writings, including, without
limitation, lien search reports, from filing or other registration officers, (iv) all credit
information, reports and memoranda relating thereto and (v) all other written or non-written forms
of information related in any way to the foregoing or any Receivable.




          “Secured Obligations” shall have the meaning assigned in Section 3.1.




          “Secured Parties” means, collectively, the Administrative Agent, the Lenders, the L/C Issuer, the
Hedge Banks, the Cash Management Banks, each co-agent or sub-agent appointed by the Administrative
Agent from time to time pursuant to Section 9.05 of the Credit Agreement, and the other Persons the
Obligations owing to which are or are purported to be secured by the Collateral under the terms of
the Collateral Documents.




          “Securities” shall mean any stock, shares, partnership interests, voting trust certificates,
certificates of interest or participation in any profit-sharing agreement or arrangement, options,
warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured,
convertible, subordinated or otherwise, or in general any instruments commonly known as
“securities” or any certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire,
any of the foregoing.






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          “Securities Act” shall mean the Securities Act of 1933, as amended from time to time, and any
successor statute.




          “Trademark Licenses” shall mean any and all agreements, licenses and covenants (whether or not in
writing) providing for the granting of any right in or to any Trademark or otherwise providing for
a covenant not to sue or permitting co-existence with respect to any Trademark (whether such
Grantor is licensee or licensor thereunder) including, without limitation, each agreement required
to be listed in Schedule 5.2(II) under the heading “Trademark Licenses” (as such schedule may be
amended or supplemented from time to time).




          “Trademarks” shall mean all United States, and foreign trademarks, trade names, trade dress,
corporate names, company names, business names, fictitious business names, Internet domain names,
service marks, certification marks, collective marks, logos, other source or business identifiers,
designs and general intangibles of a like nature, whether or not registered, and with respect to
any and all of the foregoing: (i) all registrations and applications for any of the foregoing
including, but not limited to, the registrations and applications required to be listed in Schedule
5.2(II) under the heading “Trademarks"(as such schedule may be amended or supplemented from time to
time), (ii) all extensions or renewals of any of the foregoing, (iii) all of the goodwill of the
business connected with the use of and symbolized by the foregoing, (iv) the right to sue for past,
present and future infringement or dilution of any of the foregoing or for any injury to goodwill
of the foregoing, (v) all Proceeds of the foregoing, including, without limitation, license fees,
royalties, income, payments, claims, damages, and proceeds of suit, and (vi) all other rights of
any kind accruing thereunder or pertaining thereto throughout the world.




          “Trade Secret Licenses” shall mean any and all agreements (whether or not in writing) providing for
the granting of any right in or to Trade Secrets (whether such Grantor is licensee or licensor
thereunder) including, without limitation, each agreement required to be listed in Schedule 5.2(II)
under the heading “Trade Secret Licenses” (as such schedule may be amended or supplemented from
time to time).




          “Trade Secrets” shall mean all trade secrets and all other confidential or proprietary information
and know-how whether or not such Trade Secret has been reduced to a writing or other tangible form,
including all documents and things embodying, incorporating, or referring in any way to such Trade
Secret, including but not limited to: (i) the right to sue or otherwise recover for past, present
and future misappropriation or other violation thereof, (ii) all Proceeds of the foregoing,
including, without limitation, license fees, royalties, income, payments, claims, damages, and
proceeds of suit now or hereafter due and/or payable with respect thereto; and (iii) all other
rights of any kind accruing thereunder or pertaining thereto throughout the world.




          “UCC” shall mean the Uniform Commercial Code as in effect from time to time in the State of New
York; provided, however, that in the event that, by reason of mandatory provisions of law, any or
all of the perfection or priority of, or remedies with respect to, any Collateral is governed by
the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of New
York, the term “UCC” shall mean the Uniform Commercial Code as enacted and in effect in such other
jurisdiction solely for purposes of the provisions hereof relating to such perfection, priority or
remedies.




          “United States” shall mean the United States of America.




     1.2 Definitions; Interpretation.






6









 








          (a) In this Agreement, the following capitalized terms shall have the meaning given to them in the
UCC (and, if defined in more than one Article of the UCC, shall have the meaning given in Article 9
thereof): Account, Account Debtor, As-Extracted Collateral, Bank, Certificated Security, Chattel
Paper, Consignee, Consignment, Consignor, Commercial Tort Claims, Commodity Account, Commodity
Contract, Deposit Account, Document, Entitlement Order, Equipment, Electronic Chattel Paper, Farm
Products, Fixtures, General Intangibles, Goods, Health-Care-Insurance Receivable, Instrument,
Inventory, Letter of Credit Right, Manufactured Home, Money, Payment Intangible, Proceeds, Record,
Securities Account, Securities Intermediary, Security Certificate, Security Entitlement, Supporting
Obligations, Tangible Chattel Paper and Uncertificated Security.




          (b) All other capitalized terms used herein (including the preamble and recitals hereto) and not
otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement. The
incorporation by reference of terms defined in the Credit Agreement shall survive any termination
of the Credit Agreement until this agreement is terminated as provided in Section 11 hereof. Any of
the terms defined herein may, unless the context otherwise requires, be used in the singular or the
plural, depending on the reference. References herein to any Section, Appendix, Schedule or Exhibit
shall be to a Section, an Appendix, a Schedule or an Exhibit, as the case may be, hereof unless
otherwise specifically provided. The use herein of the word “include” or “including”, when
following any general statement, term or matter, shall not be construed to limit such statement,
term or matter to the specific items or matters set forth immediately following such word or to
similar items or matters, whether or not non-limiting language (such as “without limitation” or
“but not limited to” or words of similar import) is used with reference thereto, but rather shall
be deemed to refer to all other items or matters that fall within the broadest possible scope of
such general statement, term or matter. The terms lease and license shall include sub-lease and
sub-license, as applicable. If any conflict or inconsistency exists between this Agreement and the
Credit Agreement, the Credit Agreement shall govern. All references herein to provisions of the UCC
shall include all successor provisions under any subsequent version or amendment to any Article of
the UCC.




SECTION 2. GRANT OF SECURITY.




     2.1 Grant of Security. Each Grantor hereby grants to the Administrative Agent a security interest
in and continuing lien on all of such Grantor’s right, title and interest in, to and under all
personal property of such Grantor including, but not limited to the following, in each case whether
now owned or existing or hereafter acquired, created or arising and wherever located (all of which
being hereinafter collectively referred to as the “Collateral”):



          (a) Accounts;




          (b) As-Extracted Collateral;




          (c) Chattel Paper;




          (d) Documents;




          (e) General Intangibles (including, for the avoidance of doubt, each Material Contract);






          (f) Goods (including, without limitation, Equipment and Inventory (which, for the avoidance of
doubt, shall include coal));







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          (g) Instruments;




          (h) Insurance;




          (i) Intellectual Property;




          (j) Investment Related Property (including, without limitation, Deposit Accounts);





          (k) Letter of Credit Rights;




          (l) Money;




          (m) Receivables and Receivable Records;




          (n) Commercial Tort Claims now or hereafter described on Schedule 5.2;




          (o) to the extent not otherwise included above, all other personal property of any kind and all
Collateral Records, Collateral Support and Supporting Obligations relating to any of the foregoing;
and




          (p) to the extent not otherwise included above, all Proceeds, products, accessions, rents and
profits of or in respect of any of the foregoing.




     2.2 Certain Limited Exclusions. (a) Notwithstanding anything herein to the contrary, in no event
shall the Collateral include or the security interest granted under Section 2.1 hereof attach to
(i) any fixture, As-Extracted Collateral, lease, license, contract or agreement to which any
Grantor is a party, and any of its rights or interest thereunder, if and to the extent that a
security interest is prohibited by (A) any law, rule or regulation applicable to such Grantor, or
(B) a term, provision or clause of any such lease, license, contract, property right or agreement
to which any Grantor is a party (unless such law, rule, regulation, term, provision or condition
would be rendered ineffective with respect to the creation of the security interest hereunder
pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or
provisions) of any relevant jurisdiction or any other applicable law (including the Bankruptcy Code
of the United States) or principles of equity); provided however that the Collateral shall include
(and such security interest shall attach) immediately at such time as the contractual or legal
prohibition shall no longer be applicable and to the extent severable, shall attach immediately to
any portion of such fixture, As-Extracted Collateral, lease, license, contract or agreement not
subject to the prohibitions specified in (A) or (B) above; provided further that the exclusions
referred to in clause (i) of this Section 2.2(a) shall not include any Proceeds of any such lease,
license, contract or agreement; (ii) any of the outstanding capital stock of a CFC in excess of 66%
of the voting power of all classes of capital stock of such CFC entitled to vote; (iii) any
intent-to-use application for trademark or service mark registration filed pursuant to Section 1(b)
of the Lanham Act, 15 U.S.C. §1051, prior to the filing under Section 1(c) or Section 1(d) of the
Lanham Act of a “Statement of Use” or an “Amendment to Allege Use” with respect thereto, solely to
the extent, if any, that, and solely during the period, if any, in which, the grant of a security
interest therein prior to such filing would impair the validity or enforceability of any
registration that issues from such intent-to-use trademark or service mark application under
applicable federal law; or (iv) Equipment owned by any Grantor on the date hereof or hereafter
acquired that is subject to a Lien securing a purchase money obligation or Capital Lease Obligation
permitted to be incurred pursuant to the provisions of the Credit Agreement if the






8









 







contract or other agreement in which such Lien is granted (or the documentation providing for such
money obligation or Capital Lease Obligation validly prohibits the creation of any other Lien in
such Equipment.




          (b) Notwithstanding the foregoing, the creation (other than by this Agreement) or perfection of
pledges of or security interests in, or the obtaining of title insurance with respect to,
particular assets shall not be required if, and for so long as, in the reasonable judgment of the
Administrative Agent, the cost of creating or perfecting such pledges or security interests in such
assets or obtaining title insurance in respect of such assets shall be excessive in view of the
benefits to be obtained by the Secured Parties therefrom; provided that it is hereby
acknowledged that no Grantor shall be required to take steps to perfect the security interest
granted hereunder by indicating such security interest on the certificate of title for any motor
vehicle or other asset that is covered by a certificate of title.




SECTION 3. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE.




     3.1 Security for Obligations. This Agreement secures, and the Collateral is collateral security
for, the prompt and complete payment or performance in full when due, whether at stated maturity,
by required prepayment, declaration, acceleration, demand or otherwise (including the payment of
amounts that would become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code of the United States, 11 U.S.C. §362(a) (and any successor provision thereof)),
of all Obligations with respect to every Grantor (the “Secured Obligations”).



     3.2 Continuing Liability Under Collateral. Notwithstanding anything herein to the contrary, (i)
each Grantor shall remain liable for all obligations under the Collateral and nothing contained
herein is intended or shall be a delegation of duties to the Administrative Agent or any Secured
Party, (ii) each Grantor shall remain liable under each of the agreements included in the
Collateral, including, without limitation, any agreements relating to Pledged Partnership Interests
or Pledged LLC Interests, to perform all of the obligations undertaken by it thereunder all in
accordance with and pursuant to the terms and provisions thereof and neither the Administrative
Agent nor any Secured Party shall have any obligation or liability under any of such agreements by
reason of or arising out of this Agreement or any other document related thereto nor shall the
Administrative Agent nor any Secured Party have any obligation to make any inquiry as to the nature
or sufficiency of any payment received by it or have any obligation to take any action to collect
or enforce any rights under any agreement included in the Collateral, including, without
limitation, any agreements relating to Pledged Partnership Interests or Pledged LLC Interests, and
(iii) the exercise by the Administrative Agent of any of its rights hereunder shall not release any
Grantor from any of its duties or obligations under the contracts and agreements included in the
Collateral.



SECTION 4. CERTAIN PERFECTION REQUIREMENTS




     4.1 Delivery Requirements.



          (a) With respect to any Certificated Securities included in the Collateral, each Grantor shall
deliver to the Administrative Agent the Security Certificates evidencing such Certificated
Securities duly indorsed by an effective indorsement (within the meaning of Section 8-107 of the
UCC), or accompanied by share transfer powers or other instruments of transfer duly endorsed by
such an effective endorsement, in each case, to the Administrative Agent or in blank. In addition,
each Grantor shall cause any certificates evidencing any Pledged Equity Interests,





9









 







including, without limitation, any Pledged Partnership Interests or Pledged LLC Interests, to be
similarly delivered to the Administrative Agent regardless of whether such Pledged Equity Interests
constitute Certificated Securities.




          (b) With respect to any Instruments or Tangible Chattel Paper included in the Collateral, each
Grantor shall deliver to the Administrative Agent all such Instruments or Tangible Chattel Paper to
the Administrative Agent duly indorsed in blank.




     4.2 Control Requirements.



          (a) With respect to any Deposit Accounts having a value in excess of $100,000, Securities Accounts
having a value in excess of $100,000, Security Entitlements, Commodity Accounts having a value in
excess of $100,000 and Commodity Contracts included in the Collateral, each Grantor shall ensure
that the Administrative Agent has Control thereof; provided, however, that such Control requirement
shall not apply to any such Deposit Accounts specially and exclusively used for payroll, payroll
taxes and other employee wage and benefit payments to or for the benefit of a Grantor’s salaried
employees or to any such accounts, Security Entitlements or Commodity Accounts having a value at
all times not in excess of $100,000. With respect to any Securities Accounts or Securities
Entitlements having a value in excess of $100,000, such Control shall be accomplished by the
Grantor causing the Securities Intermediary maintaining such Securities Account or Security
Entitlement to enter into an agreement substantially in the form of Exhibit C hereto (or such other
agreement in form and substance reasonably satisfactory to the Administrative Agent) pursuant to
which the Securities Intermediary shall agree to comply with the Administrative Agent’s Entitlement
Orders without further consent by such Grantor. With respect to any Deposit Account having a value
in excess of $100,000, each Grantor shall cause the depositary institution maintaining such account
to enter into an agreement in form and substance reasonably satisfactory to the Administrative
Agent, pursuant to which the Bank shall agree to comply with the Administrative Agent’s
instructions with respect to disposition of funds in the Deposit Account without further consent by
such Grantor. With respect to any Commodity Accounts having a value in excess of $100,000 or
Commodity Contracts having a value in excess of $100,000, each Grantor shall cause the
Administrative Agent to have Control thereof in a manner reasonably acceptable to the
Administrative Agent.




          (b) With respect to any Uncertificated Security included in the Collateral (other than any
Uncertificated Securities credited to a Securities Account), each Grantor shall cause the issuer of
such Uncertificated Security to either (i) register the Administrative Agent as the registered
owner thereof on the books and records of the issuer or (ii) execute an agreement substantially in
the form of Exhibit B hereto (or such other agreement in form and substance reasonably satisfactory
to the Administrative Agent), pursuant to which such issuer agrees to comply with the
Administrative Agent’s instructions with respect to such Uncertificated Security without further
consent by such Grantor.




          (c) With respect to any Letter of Credit Rights having a value in excess of $100,000 included in
the Collateral (other than any Letter of Credit Rights constituting a Supporting Obligation for any
Collateral in which the Administrative Agent has a valid and perfected security interest), Grantor
shall ensure that Administrative Agent has Control thereof by obtaining the written consent of each
issuer of each related letter of credit to the assignment of the proceeds of such letter of credit
to the Administrative Agent.




     4.3 Intellectual Property Recording Requirements.




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          (a) In the case of any Collateral (whether now owned or hereafter acquired or created by any
Grantor) consisting of U.S. patents and patent applications, such Grantor shall execute and deliver
to the Administrative Agent a Patent Security Agreement in substantially the form of Exhibit G
hereto (or a supplement thereto) covering all such patents and patent applications in appropriate
form for recordation with the U.S. Patent and Trademark Office with respect to the security
interest of the Administrative Agent.




          (b) In the case of any Collateral (whether now owned or hereafter acquired or created by any
Grantor) consisting of registered U.S. Trademarks and applications therefor, such Grantor shall
execute and deliver to the Administrative Agent a Trademark Security Agreement in substantially the
form of Exhibit E hereto (or a supplement thereto) covering such registered U.S. Trademarks and
applications therefor in appropriate form for recordation with the U.S. Patent and Trademark Office
with respect to the security interest of the Administrative Agent.




          (c) In the case of any Collateral (whether now owned or hereafter acquired or created by any
Grantor) consisting of registered U.S. Copyrights and Copyright Licenses in respect of registered
U.S. Copyrights for which any Grantor is the exclusive licensee, such Grantor shall execute and
deliver to the Administrative Agent a Copyright Security Agreement in substantially the form of
Exhibit F hereto (or a supplement thereto) covering such Copyrights and Copyright Licenses is in
appropriate form for recordation with the U.S. Copyright Office with respect to the security
interest of the Administrative Agent.




     4.4 Other Actions. Each Grantor consents to the grant by, each other Grantor of a Lien in all
Investment Related Property to the Administrative Agent and without limiting the generality of the
foregoing, consents to the transfer of any Pledged Partnership Interest and any Pledged LLC
Interest to the Administrative Agent or its designee following an Event of Default and to the
substitution of the Administrative Agent or its designee as a partner in any partnership or as a
member in any limited liability company with all the rights and powers related thereto.



SECTION 5. REPRESENTATIONS AND WARRANTIES.



Each Grantor hereby represents and warrants, on the Closing Date and upon the date of each Credit
Extension, that:




     5.1 Grantor Information & Status.



          (a) Schedule 5.1(A) & (B) (as such schedule may be amended or supplemented from time to time) sets
forth under the appropriate headings: (1) the full legal name of such Grantor, (2) all trade names
or other names under which such Grantor currently conducts business, (3) the type of organization
of such Grantor, (4) the jurisdiction of organization of such Grantor, (5) its organizational
identification number, if any, and (6) the jurisdiction where the chief executive office or its
sole place of business (or the principal residence if such Grantor is a natural person) is located.




          (b) except as provided on Schedule 5.1(C), it has not changed its name, jurisdiction of
organization, chief executive office or sole place of business (or principal residence if such
Grantor is a natural person) or its corporate structure in any way (e.g., by merger, consolidation,
change in corporate form or otherwise) and has not done business under any other name, in each
case, within the past five (5) years;





11









 








          (c) it has not within the last five (5) years become bound (whether as a result of merger or
otherwise) as debtor under a security agreement entered into by another Person, which has not
heretofore been terminated; and




          (d) no Grantor is a “transmitting utility” (as defined in Section 9-102(a)(80) of the UCC).




     5.2 Collateral Identification, Special Collateral.



          (a) Schedule 5.2 (as such schedule may be amended or supplemented from time to time) sets forth
under the appropriate headings all of such Grantor’s: (1) Pledged Equity Interests, (2) Pledged
Debt, (3) Securities Accounts other than any Securities Accounts holding assets with a market value
of less than $100,000 individually, (4) Deposit Accounts other than any Deposit Accounts holding
assets with a market value of less than $100,000 individually, (5) Commodity Contracts having a
value in excess of $100,000 and Commodity Accounts having a value in excess of $100,000, (6)
material United States registrations of Patents, Trademarks, and Copyrights owned by each Grantor,
(7) material exclusive Patent Licenses, Trademark Licenses, Trade Secret Licenses and Copyright
Licenses, (8) Commercial Tort Claims having a value in excess of $100,000, (9) Letter of Credit
Right for letters of credit the value of which exceed $100,000, (10) the name and address of any
warehouseman, bailee or other third party in possession of any Inventory, Equipment and other
tangible personal property; and (11) Material Contracts;




          (b) none of the Collateral constitutes, or is the Proceeds of, (1) Farm Products, (2) Manufactured
Homes, (3) Health-Care-Insurance Receivables; (4) timber to be cut, or (5) aircraft, aircraft
engines, satellites, ships or railroad rolling stock. No material portion of the collateral
consists of motor vehicles or other goods subject to a certificate of title statute of any
jurisdiction; and




          (c) all information supplied by any Grantor with respect to any of the Collateral (in each case
taken as a whole with respect to any particular Collateral) is accurate and complete in all
material respects.




     5.3 Ownership of Collateral and Absence of Other Liens.



          (a) it owns the Collateral purported to be owned by it or otherwise has the rights it purports to
have in each item of Collateral free and clear of any and all Liens, rights or claims of all other
Persons, including, without limitation, liens arising as a result of such Grantor becoming bound
(as a result of merger or otherwise) as debtor under a security agreement entered into by another
Person other than any Liens permitted by Section 7.01 of the Credit Agreement; and




          (b) other than any financing statements filed in favor of the Administrative Agent, no effective
financing statement, fixture filing or other instrument similar in effect under any applicable law
covering all or any part of the Collateral is on file in any filing or recording office except for
(x) financing statements for which duly authorized proper termination statements have been
delivered to the Administrative Agent for filing and (y) financing statements filed in connection
with Liens permitted by Section 7.01 of the Credit Agreement.




     5.4 Status of Security Interest.




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          (a) upon the filing of financing statements naming each Grantor as “debtor” and the Administrative
Agent as “secured party” and describing the Collateral in the filing offices set forth opposite
such Grantor’s name on Schedule 5.4 hereof (as such schedule may be amended or supplemented from
time to time), the security interest of the Administrative Agent in all Collateral that can be
perfected by the filing of a financing statement under the Uniform Commercial Code as in effect in
any jurisdiction will constitute a valid, perfected, first priority Liens subject to any Liens
permitted by Section 7.01 of the Credit Agreement with respect to Collateral. Each agreement
purporting to give the Administrative Agent Control over any Collateral is effective to establish
the Administrative Agent’s Control of the Collateral subject thereto; and




          (b) to the extent perfection or priority of the security interest therein is not subject to Article
9 of the UCC, upon recordation of the security interests granted hereunder in patents and patent
applications registered Trademarks and Trademark applications, registered Copyrights and exclusive
Copyright Licenses for registered works owned by (or for such Copyright Licenses granted to) any
Grantor in the United States Patent and Trademark Office and the United States Copyright Office,
the security interests granted to the Administrative Agent hereunder shall constitute valid,
perfected, first priority Liens (subject, in the case of priority only, to Liens permitted by
Section 7.01 of the Credit Agreement).




     5.5 Goods & Receivables.



          (a) except as set forth on Schedule 5.5 (as such schedule may be amended or supplemented from time
to time), none of the Account Debtors in respect of any Receivable is the government of the United
States, any agency or instrumentality thereof, any state or municipality or any foreign sovereign;




          (b) [Reserved]; and




          (c) other than any Inventory or Equipment in transit, all of the Equipment and Inventory included
in the Collateral is located only at the locations specified in Schedule 5.5 (as such schedule may
be amended or supplemented from time to time).




     5.6 Pledged Equity Interests, Investment Related Property.



          (a) it is the record and beneficial owner of the Pledged Equity Interests free of all Liens, rights
or claims of other Persons and there are no outstanding warrants, options or other rights to
purchase, or shareholder, voting trust or similar agreements outstanding with respect to, or
property that is convertible into, or that requires the issuance or sale of, any Pledged Equity
Interests; and




          (b) the Pledged Partnership Interests and the Pledged LLC Interests (i) are not dealt in or traded
on securities exchanges or in securities markets, (ii) are not “investment company securities” (as
defined in Section 8-103(b) of the Uniform Commercial Code) and (iii) do not provide, in the
related membership agreement or partnership agreement, as applicable, certificates, if any,
representing such Pledged Partnership Interests or Pledged LLC Interests or otherwise, that they
are securities governed by the Uniform Commercial Code of any jurisdiction.




     5.7 Intellectual Property.






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          (a) it is the sole and exclusive owner of the entire right, title, and interest in and to all
Intellectual Property listed on Schedule 5.2(II) (as such schedule may be amended or supplemented
from time to time), and except to the extent that it would not cause a Material Adverse Effect,
owns or has the valid right to use and, where Grantor does so, sublicense others to use, all other
Intellectual Property used in or necessary to conduct its business, free and clear of all Liens,
except for, in the case of priority only, Liens permitted by Section 7.01 of the Credit Agreement
(as each may be amended or supplemented from time to time);




          (b) except to the extent any such occurrence could not reasonably be expected to cause a Material
Adverse Effect, all Intellectual Property owned by Grantor is subsisting and has not been adjudged
invalid or unenforceable, in whole or in part, nor, in the case of issued Patents, is any of such
Intellectual Property the subject of a reexamination proceeding, and each Grantor has performed all
acts and has paid all renewal, maintenance, and other fees and taxes required to maintain each and
every of its registrations and applications of Copyrights, Patents and Trademarks in full force and
effect;




          (c) to the best of such Grantor’s Knowledge, all Intellectual Property owned by such Grantor is
valid and enforceable; no holding, decision, ruling, or judgment has been rendered in any action or
proceeding before any court or administrative authority challenging the validity, enforceability or
scope of, such Grantor’s right to register, or such Grantor’s rights to own or use, any
Intellectual Property and no such action or proceeding is pending or, to the best of such Grantor’s
knowledge, threatened in writing against Grantor (except, in each case, for routine Office Actions
or similar proceedings in the U.S. Patent and Trademark Office or U.S. Copyright office or similar
administrative authorities);




          (d) all registrations and applications for Copyrights, Patents and Trademarks owned by each Grantor
are standing in the name of each Grantor, and none of the material Trademarks, Patents, Copyrights
or Trade Secrets owned by each Grantor has been exclusively licensed by any Grantor to any
Affiliate or third party, except as disclosed in Schedule 5.2 (II) (as each may be amended or
supplemented from time to time), and all exclusive Copyright Licenses for registered copyrightable
works to which Grantor is the licensee have been properly recorded in the U.S. Copyright Office;




          (e) except to the extent that the failure to do so could not reasonably be expected to cause a
Material Adverse Effect, each Grantor has been using appropriate statutory notice of registration
in connection with its use of registered Trademarks, proper marking practices in connection with
the use of Patents, and appropriate notice of copyright in connection with the publication of
Copyrights, in each case, consistent with industry standards;




          (f) each Grantor has taken commercially reasonable steps to protect the confidentiality of its
material Trade Secrets in accordance with industry standards;




          (g) each Grantor uses reasonable standards of quality in the manufacture, distribution, and sale of
all products sold and in the provision of all services rendered under or in connection with all
Trademarks of such Grantor and has taken reasonable action to ensure that all licensees of the
Trademarks owned by such Grantor use such reasonable standards of quality;




          (h) to the knowledge of each Grantor, the conduct of such Grantor’s business does not infringe
upon, misappropriate, dilute or otherwise violate any Intellectual Property right of any other
Person; no claim has been made, is pending or, to the knowledge of each Grantor, is







14









 







threatened in writing against Grantor, alleging that the use of any Intellectual Property owned or
used by such Grantor infringes upon, dilutes, misappropriates or otherwise violates the
Intellectual Property of any other Person, and no demand that such Grantor enter into a license or
co-existence agreement or become a defendant in Intellectual Property litigation has been made in
writing against such Grantor but not resolved




          (i) the best of each Grantor’s knowledge, no other Person is infringing upon, misappropriating,
diluting or otherwise violating any rights in any Intellectual Property owned by such Grantor; and;




          (j) no settlement or consents, covenants not to sue, co-existence agreements, non-assertion
assurances, or releases have been entered into by such Grantor in a manner that could materially
adversely affect such Grantor’s rights to own, license or use any Material Intellectual Property.




SECTION 6. COVENANTS AND AGREEMENTS.



Each Grantor hereby covenants and agrees that:




     6.1 Grantor Information & Status.



          (a) Without limiting any prohibitions or restrictions on mergers or other transactions as permitted
by in the Credit Agreement, it shall not change such Grantor’s name, identity, corporate structure
(e.g. by merger, consolidation, change in corporate form or otherwise), sole place of business (or
principal residence if such Grantor is a natural person), chief executive office, type of
organization or jurisdiction of organization or establish any trade names unless it shall have (a)
notified the Administrative Agent in writing at least thirty (30) days prior to any such change or
establishment, identifying such new proposed name, identity, corporate structure, sole place of
business (or principal residence if such Grantor is a natural person), chief executive office,
jurisdiction of organization or trade name and providing such other information in connection
therewith as the Administrative Agent may reasonably request and (b) taken all actions necessary or
advisable to maintain the continuous validity, perfection and the same or better priority of the
Administrative Agent’s security interest in the Collateral granted or intended to be granted and
agreed to hereby.




     6.2 Collateral Identification; Special Collateral.



          (a) in the event that it hereafter acquires any Collateral of a type described in Section 5.2(b)
hereof, it shall promptly notify there Administrative Agent thereof in writing and take such
actions and execute such documents and make such filings all at Grantor’s expense as the
Administrative Agent may reasonably request in order to ensure that the Administrative Agent has a
valid, perfected, first priority security interest in such Collateral, subject to any Liens
permitted by Section 7.01 of the Credit Agreement.




          (b) in the event that it hereafter acquires or has any Commercial Tort Claim the value of exceeds
$100,000 it shall deliver to the Administrative Agent a completed Pledge Supplement, substantially
in the form of Exhibit A attached hereto, together with all Supplements to Schedules thereto,
identifying such new Commercial Tort Claims.




     6.3 Ownership of Collateral and Absence of Other Liens.






15









 








          (a) except for the security interest created by this Agreement, it shall not create or suffer to
exist any Lien upon or with respect to any of the Collateral, other than Liens permitted by Section
7.01 of the Credit Agreement, and such Grantor shall defend the Collateral against all Persons at
any time claiming any interest therein;




          (b) upon such Grantor or any officer of such Grantor obtaining knowledge thereof, it shall promptly
notify the Administrative Agent in writing of any event that may have a Material Adverse Effect on
the value of the Collateral, the ability of any Grantor or the Administrative Agent to dispose of
the Collateral, or the rights and remedies of the Administrative Agent in relation thereto,
including, without limitation, the levy of any legal process against any material portion of the
Collateral; and




          (c) it shall not sell, transfer or assign (by operation of law or otherwise) or exclusively license
to another Person any Collateral except as otherwise permitted by the Credit Agreement.




     6.4 Status of Security Interest.



          (a) Subject to the limitations set forth in subsection (b) of this Section 6.4, each Grantor shall
maintain the security interest of the Administrative Agent hereunder in all Collateral as valid,
perfected, first priority Liens (subject to Liens permitted by Section 7.01 of the Credit
Agreement).




          (b) Notwithstanding the foregoing, no Grantor shall be required to take any action to perfect any
Collateral that can only be perfected by (i) Control or (ii) filings with registrars of motor
vehicles or similar governmental authorities with respect to goods covered by a certificate of
title, in each case except as and to the extent specified in Section 4 hereof.




     6.5 Goods & Receivables.



          (a) it shall not deliver any Document evidencing any Equipment and Inventory to any Person other
than the issuer of such Document to claim the Goods evidenced therefor or the Administrative Agent;




          (b) if any Equipment or Inventory with a value of $500,000 or more is in possession or control of
any warehouseman, bailee or other third party (other than a Consignee under a Consignment for which
such Grantor is the Consignor), each Grantor shall join with the Administrative Agent in notifying
the third party of the Administrative Agent’s security interest and using its commercially
reasonable efforts to obtain the consent of such third party to permit the Administrative Agent to
have access to Equipment or Inventory for purposes of inspecting such Collateral or, following an
Event of Default, to remove same from such premises if the Administrative Agent so elects; and with
respect to any Goods subject to a Consignment for which such Grantor is the Consignor, Grantor
shall file appropriate financing statements against the Consignee and take such other action as may
be necessary to ensure that the Grantor has a first priority perfected security interest in such
Goods;




          (c) [Reserved];




          (d) following and during the continuation of an Event of Default and notice to the appropriate
Grantor, the Administrative Agent shall have the right at any time to notify, or require any
Grantor to notify, any Account Debtor of the Administrative Agent’s security interest






16









 







in the Receivables and any Supporting Obligation and, in addition, the Administrative Agent may:
(1) direct the Account Debtors under any Receivables to make payment of all amounts due or to
become due to such Grantor thereunder directly to the Administrative Agent; (2) notify, or require
any Grantor to notify, each Person maintaining a lockbox or similar arrangement to which Account
Debtors under any Receivables have been directed to make payment to remit all amounts representing
collections on checks and other payment items from time to time sent to or deposited in such
lockbox or other arrangement directly to the Administrative Agent; and (3) enforce, at the expense
of such Grantor, collection of any such Receivables and to adjust, settle or compromise the amount
or payment thereof, in the same manner and to the same extent as such Grantor might have done. If
the Administrative Agent notifies any Grantor that it has elected to collect the Receivables in
accordance with the preceding sentence, any payments of Receivables received by such Grantor shall
be forthwith (and in any event within two (2) Business Days) deposited by such Grantor in the exact
form received, duly indorsed by such Grantor to the Administrative Agent if required, in the
Collateral Account maintained under the sole dominion and control of the Administrative Agent, and
until so turned over, all amounts and proceeds (including checks and other instruments) received by
such Grantor in respect of the Receivables, any Supporting Obligation or Collateral Support shall
be received in trust for the benefit of the Administrative Agent hereunder and shall be segregated
from other funds of such Grantor and such Grantor shall not adjust, settle or compromise the amount
or payment of any Receivable, or release wholly or partly any Account Debtor or obligor thereof, or
allow any credit or discount thereon.




     6.6 Pledged Equity Interests, Investment Related Property.



          (a) Except as provided in the next sentence, in the event such Grantor receives any dividends,
interest or distributions on any Pledged Equity Interest or other Investment Related Property, upon
the merger, consolidation, liquidation or dissolution of any issuer of any Pledged Equity Interest
or Investment Related Property, then (a) such dividends, interest or distributions and securities
or other property shall be included in the definition of Collateral without further action and (b)
such Grantor shall immediately take all steps, if any, necessary or advisable to ensure the
validity, perfection, priority and, if applicable, control of the Administrative Agent over such
Investment Related Property (including, without limitation, delivery thereof to the Administrative
Agent) and pending any such action such Grantor shall be deemed to hold such dividends, interest,
distributions, securities or other property in trust for the benefit of the Administrative Agent
and shall segregate such dividends, distributions, Securities or other property from all other
property of such Grantor. Notwithstanding the foregoing, so long as no Event of Default shall have
occurred and be continuing, the Administrative Agent authorizes each Grantor to retain all ordinary
cash dividends and distributions paid in the normal course of the business of the issuer and
consistent with the past practice of the issuer and all scheduled payments of interest.




          (b) Voting .





          (i) So long as no Event of Default shall have occurred and be continuing:




	 	(1)	 	each Grantor shall be entitled to exercise or refrain from exercising any and all voting and
other consensual rights pertaining to the Investment Related Property or any part thereof for
any purpose not inconsistent with the terms of this Agreement or the Credit Agreement;
provided, no Grantor shall exercise or refrain from exercising any such right if such action
could reasonably be




17









 






	 	 	 	expected to have a material adverse effect on the value of the Investment Related Property or any
part thereof; and






          (ii) Upon the occurrence and during the continuation of an Event of Default and upon two (2)
Business Days prior written notice from the Administrative Agent to such Grantor of the
Administrative Agent’s intention to exercise such rights:




	 	(1)	 	all rights of each Grantor to exercise or refrain from exercising the voting and other
consensual rights which it would otherwise be entitled to exercise pursuant hereto shall cease
and all such rights shall thereupon become vested in the Administrative Agent who shall
thereupon have the sole right to exercise such voting and other consensual rights; and
	 
	 	(2)	 	in order to permit the Administrative Agent to exercise the voting and other consensual
rights which it may be entitled to exercise pursuant hereto and to receive all dividends and
other distributions which it may be entitled to receive hereunder: (1) each Grantor shall
promptly execute and deliver (or cause to be executed and delivered) to the Administrative
Agent all necessary proxies, dividend payment orders and other instruments as the
Administrative Agent may from time to time reasonably request and (2) each Grantor
acknowledges that the Administrative Agent may utilize the power of attorney set forth in
Section 8.1.





          (c) except as expressly permitted by the Credit Agreement, without the prior written consent of the
Administrative Agent, it shall not vote to enable or take any other action to: (a) amend or
terminate any partnership agreement, limited liability company agreement, certificate of
incorporation, by-laws or other organizational documents in any way that materially changes the
rights of such Grantor with respect to any Investment Related Property or adversely affects the
validity, perfection or priority of the Administrative Agent’s security interest, (b) permit any
issuer of any Pledged Equity Interest to issue any additional stock, partnership interests, limited
liability company interests or other equity interests of any nature or to issue securities
convertible into or granting the right of purchase or exchange for any stock or other equity
interest of any nature of such issuer, (c) other than as permitted under the Credit Agreement,
permit any issuer of any Pledged Equity Interest to dispose of all or a material portion of their
assets, or (d) waive any default under or breach of any terms of organizational document relating
to the issuer of any Pledged Equity Interest or the terms of any Pledged Debt;



          (d) except as expressly permitted by the Credit Agreement, without the prior written consent of the
Administrative Agent, it shall not permit any issuer of any Pledged Equity Interest to merge or
consolidate unless (i) such issuer creates a security interest that is perfected by a filed
financing statement (that is not effective solely under section 9-508 of the UCC) in collateral in
which such new debtor has or acquires rights, (ii) all the outstanding capital stock or other
equity interests of the surviving or resulting corporation, limited liability company, partnership
or other entity is, upon such merger or consolidation, pledged hereunder and no cash, securities or
other property is distributed in respect of the outstanding equity interests of any other
constituent Grantor; provided that if the surviving or resulting Grantors upon any such merger or
consolidation involving an issuer which is a CFC, then such Grantor shall only be required to
pledge equity interests in accordance with Section 2.2 and (iii) Grantor promptly complies with the
delivery and control requirements of Section 4 hereof; and



          (e) without the prior express written consent of the Administrative Agent, it will not agree to any
election by any partnership or limited liability company to treat the Pledged



18









 







Partnership Interests or Pledged LLC Interests, as applicable, as securities governed by the
Uniform Commercial Code of any jurisdiction an in any event will promptly notify the Administrative
Agent in writing if the representation set forth in Section 5.6(b) hereof becomes untrue for any
reason and, in such event, take such action as the Administrative Agent may reasonably request in
order to establish the Administrative Agent’s “control” (within the meaning of Section 8-106 of the
Uniform Commercial Code) over such Pledged Partnership Interests or Pledged LLC Interests.



     6.7 Intellectual Property.



          (a) it shall not do any act or omit to do any act whereby any of the Material Intellectual Property
may lapse, or become abandoned, dedicated to the public, forfeited, or unenforceable, or which
would materially adversely affect the validity, grant, or enforceability of the security interest
granted therein;



          (b) it shall not, with respect to any Trademarks owned by such Grantor included in the Material
Intellectual Property, cease the use of any of such Trademarks or fail to maintain the level of the
quality of products sold and services rendered under any of such Trademark at a level at least
substantially consistent with the quality of such products and services as of the date hereof, and
each Grantor shall take reasonable steps necessary to insure that licensees of such Trademarks use
such consistent standards of quality;



          (c) it shall, within thirty (30) days of being granted an exclusive license to any registered
Copyrightable work which is material to the business of Grantor, record such license, in the United
States Copyright Office;



          (d) it shall promptly notify the Administrative Agent if it knows that any item of Material
Intellectual Property that Grantor owns may become (a) abandoned or dedicated to the public or
placed in the public domain, (b) invalid or unenforceable, (c) subject to any material adverse
determination or development regarding such Grantor’s ownership, registration or use or the
validity or enforceability of such item of Intellectual Property (including the institution of, or
any such determination or development in, any action or proceeding in the United States Patent and
Trademark Office, the United States Copyright Office, any state registry, any foreign counterpart
of the foregoing, or any court) or (d) the subject of the imminent exercise of or any written
notice of an intent to exercise any reversion or termination rights;



          (e) it shall take all reasonable steps, including in any proceeding before the United States Patent
and Trademark Office, the United States Copyright Office, any state registry or any foreign
counterpart of the foregoing, to pursue any application and maintain any registration of each
Trademark, Patent, and Copyright that constitutes Material Intellectual Property owned by any
Grantor, including, but not limited to, those items on Schedule 5.2 (II) (as each may be amended or
supplemented from time to time);



          (f) in the event that any Material Intellectual Property owned by any Grantor is infringed,
misappropriated, or diluted by a third party, such Grantor shall promptly take all reasonable
actions to stop such infringement, misappropriation, or dilution and protect its rights in such
Intellectual Property including, but not limited to, if Grantor determines litigation is
appropriate in its reasonable business judgment, the initiation of a suit for injunctive relief and
to recover damages;



19









 





          (g) it shall take reasonable steps, consistent with industry standards, to protect the secrecy of
all material Trade Secrets, including, without limitation, entering into confidentiality agreements
with employees and consultants and labeling and restricting access to secret information and
documents



          (h) except to the extent that the failure to do so could not reasonably be expected to cause a
Material Adverse Effect, it shall use proper statutory notice in connection with its use of any of
the Patents, Trademarks and Copyrights that constitute Material Intellectual Property, in each
case, consistent with industry standards; and



          (i) it shall continue to collect, at its own expense, all material amounts due or to become due to
such Grantor in respect of the Intellectual Property or any portion thereof.



     6.8 [Reserved].



     6.9 As-Extracted Collateral. If a Grantor shall acquire any interest in any active mine portal or
any preparation plant or any As-Extracted Collateral then, in each case, unless such mine portal
site or preparation plant is included on Schedule 6.9 hereto, such Grantor shall (i) provide notice
thereof to the Administrative Agent within 30 days of such acquisition, together with a supplement
to Schedule 6.9 reflecting such acquisition, (ii) deliver to the Administrative Agent a fully
completed financing statement in appropriate form for filing covering such As-Extracted Collateral
(which financing statements shall include the name of the record owner of the real estate if other
than the Grantor and real estate descriptions sufficient to enable the Administrative Agent to
record the financing statements in the appropriate real property records) and (iii) reimburse the
Administrative Agent for all related filing fees and any recording or stamp taxes due in connection
with such filings.



SECTION 7. ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES; ADDITIONAL GRANTORS.




     7.1 [Reserved].



     7.2 Further Assurances.



          (a) Each Grantor agrees that from time to time, at the expense of such Grantor, that it shall
promptly execute and deliver all further instruments and documents, and take all further action,
that may be necessary or desirable, or that the Administrative Agent may reasonably request, in
order to perfect and maintain the validity, effectiveness and priority of any security interest
granted hereby or to enable the Administrative Agent to exercise and enforce its rights and
remedies hereunder with respect to any Collateral. Without limiting the generality of the
foregoing, each Grantor shall:




          (i) at the Administrative Agent’s request, appear in and defend any action or proceeding that may
affect such Grantor’s title to or the Administrative Agent’s security interest in all or any part
of the Collateral; and




          (ii) furnish the Administrative Agent with such information regarding the Collateral, including,
without limitation, the location thereof, as the Administrative Agent may reasonably request from
time to time.




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          (b) Each Grantor hereby authorizes the Administrative Agent to file a Record or Records,
including, without limitation, financing or continuation statements, intellectual property security
agreements and amendments to any of the foregoing, in any jurisdictions and with any filing offices
as the Administrative Agent may determine, in its sole discretion, are necessary or advisable to
perfect or otherwise protect the security interest granted to the Administrative Agent herein. Such
financing statements may describe the Collateral in the same manner as described herein or may
contain an indication or description of collateral that describes such property in any other manner
as the Administrative Agent may determine, in its sole discretion, is necessary, advisable or
prudent to ensure the perfection of the security interest in the Collateral granted to the
Administrative Agent herein, including, without limitation, describing such property as “all
assets, whether now owned or hereafter acquired” or words of similar effect.




          (c) Each Grantor hereby authorizes the Administrative Agent to modify this Agreement after
obtaining such Grantor’s signature to such modification by amending Schedule 5.2 (as such schedule
may be amended or supplemented as provided in this Agreement) to include reference to any right,
title or interest in any existing Intellectual Property or any Intellectual Property acquired or
developed by any Grantor after the execution hereof or to delete any reference to any right, title
or interest in any Intellectual Property in which any Grantor no longer has or claims any right,
title or interest.




          (d) Notwithstanding anything to the contrary in this Agreement, no Grantor shall be obligated to
update any schedule except (i) concurrently with the delivery of the Borrower’s financial
statements in accordance with Section 6.01 of the Credit Agreement or (ii) promptly upon the
request of the Administrative Agent during an Event of Default, and no default shall result from
any failure to update a schedule other than in accordance with this Section 7.2(d).




     7.3 Additional Grantors. From time to time subsequent to the date hereof, additional Persons may
become parties hereto as additional Grantors (each, an “Additional Grantor”), by executing a Pledge
Supplement. Upon delivery of any such Pledge Supplement to the Administrative Agent, notice of
which is hereby waived by Grantors, each Additional Grantor shall be a Grantor and shall be as
fully a party hereto as if Additional Grantor were an original signatory hereto. Each Grantor
expressly agrees that its obligations arising hereunder shall not be affected or diminished by the
addition or release of any other Grantor hereunder, nor by any election of Administrative Agent not
to cause any Subsidiary of Borrower to become an Additional Grantor hereunder. This Agreement shall
be fully effective as to any Grantor that is or becomes a party hereto regardless of whether any
other Person becomes or fails to become or ceases to be a Grantor hereunder.



SECTION 8. ADMINISTRATIVE AGENT APPOINTED ATTORNEY-IN-FACT.




     8.1 Power of Attorney. Each Grantor hereby irrevocably appoints the Administrative Agent (such
appointment being coupled with an interest) as such Grantor’s attorney-in-fact, with full authority
in the place and stead of such Grantor and in the name of such Grantor, the Administrative Agent or
otherwise, from time to time in the Administrative Agent’s discretion to take any action and to
execute any instrument that the Administrative Agent may deem reasonably necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation, the following:



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          (a) upon the occurrence and during the continuance of any Event of Default and, after notice to the
appropriate Grantor, to obtain and adjust insurance required to be maintained by such Grantor or
paid to the Administrative Agent pursuant to the Credit Agreement;




          (b) upon the occurrence and during the continuance of any Event of Default and, after notice to the
appropriate Grantor, to ask for, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of any of the
Collateral;




          (c) upon the occurrence and during the continuance of any Event of Default and, after notice to the
appropriate Grantor, to receive, endorse and collect any drafts or other instruments, documents and
chattel paper in connection with clause (b) above;




          (d) upon the occurrence and during the continuance of any Event of Default and, after notice to the
appropriate Grantor, to file any claims or take any action or institute any proceedings that the
Administrative Agent may deem necessary or desirable for the collection of any of the Collateral or
otherwise to enforce the rights of the Administrative Agent with respect to any of the Collateral;




          (e) to prepare and file any UCC financing statements against such Grantor as debtor;




          (f) to prepare, sign, and file for recordation in any intellectual property registry, appropriate
evidence of the lien and security interest granted herein in the Intellectual Property in the name
of such Grantor as debtor;




          (g) to take or cause to be taken all actions necessary to perform or comply or cause performance or
compliance with the terms of this Agreement, including, without limitation, access to pay or
discharge taxes or Liens (other than Liens permitted by Section 7.01 of the Credit Agreement)
levied or placed upon or threatened against the Collateral, the legality or validity thereof and
the amounts necessary to discharge the same to be determined by the Administrative Agent in its
sole discretion, any such payments made by the Administrative Agent to become obligations of such
Grantor to the Administrative Agent, due and payable immediately without demand; and




          (h) upon the occurrence and during the continuance of any Event of Default and after notice to the
appropriate Grantor generally to sell, transfer, lease, license, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral as fully and completely as though the
Administrative Agent were the absolute owner thereof for all purposes, and to do, at the
Administrative Agent’s option and such Grantor’s expense, at any time or from time to time, all
acts and things that the Administrative Agent deems reasonably necessary to protect, preserve or
realize upon the Collateral and the Administrative Agent’s security interest therein in order to
effect the intent of this Agreement, all as fully and effectively as such Grantor might do.




     8.2 No Duty on the Part of Administrative Agent or Secured Parties. The powers conferred on the
Administrative Agent hereunder are solely to protect the interests of the Secured Parties in the
Collateral and shall not impose any duty upon the Administrative Agent or any Secured Party to
exercise any such powers. The Administrative Agent and the Secured Parties shall be accountable
only for amounts that they actually receive as a result of the exercise of such powers, and neither
they nor any of their officers, directors, employees or agents shall be



22









 




responsible to any Grantor for any act or failure to act hereunder, except for their own gross
negligence or willful misconduct.




SECTION 9. REMEDIES.




     9.1 Generally.



          (a) If any Event of Default shall have occurred and be continuing, the Administrative Agent may
exercise in respect of the Collateral, in addition to all other rights and remedies provided for
herein or otherwise available to it at law or in equity, all the rights and remedies of the
Administrative Agent on default under the UCC (whether or not the UCC applies to the affected
Collateral) to collect, enforce or satisfy any Secured Obligations then owing, whether by
acceleration or otherwise, and also may pursue any of the following separately, successively or
simultaneously:





          (i) require any Grantor to, and each Grantor hereby agrees that it shall at its expense and
promptly upon request of the Administrative Agent forthwith, assemble all or part of the Collateral
as directed by the Administrative Agent and make it available to the Administrative Agent at a
place to be designated by the Administrative Agent that is reasonably convenient to both parties;




          (ii) enter onto the property where any Collateral is located and take possession thereof with or
without judicial process;




          (iii) prior to the disposition of the Collateral, store, process, repair or recondition the
Collateral or otherwise prepare the Collateral for disposition in any manner to the extent the
Administrative Agent deems appropriate; and




          (iv) without notice except as specified below or under the UCC, sell, assign, lease, license (on an
exclusive or nonexclusive basis) or otherwise dispose of the Collateral or any part thereof in one
or more parcels at public or private sale, at any of the Administrative Agent’s offices or
elsewhere, for cash, on credit or for future delivery, at such time or times and at such price or
prices and upon such other terms as the Administrative Agent may deem commercially reasonable.



          (b) The Administrative Agent or any Secured Party may be the purchaser of any or all of the
Collateral at any public or private (to the extent to the portion of the Collateral being privately
sold is of a kind that is customarily sold on a recognized market or the subject of widely
distributed standard price quotations) sale in accordance with the UCC and the Administrative
Agent, as administrative agent for and representative of the Secured Parties, shall be entitled,
for the purpose of bidding and making settlement or payment of the purchase price for all or any
portion of the Collateral sold at any such sale made in accordance with the UCC, to use and apply
any of the Secured Obligations as a credit on account of the purchase price for any Collateral
payable by the Administrative Agent at such sale. Each purchaser at any such sale shall hold the
property sold absolutely free from any claim or right on the part of any Grantor, and each Grantor
hereby waives (to the extent permitted by applicable law) all rights of redemption, stay and/or
appraisal which it now has or may at any time in the future have under any rule of law or statute
now existing or hereafter enacted. Each Grantor agrees that, to the extent notice of sale shall be
required by law, at least ten (10) days notice to such Grantor of the time and place of any public
sale or the time after which any private sale is to be made shall constitute reasonable
notification. The Administrative Agent shall not be obligated to make any




23









 







sale of Collateral regardless of notice of sale having been given. The Administrative Agent may
adjourn any public or private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and place to which it was
so adjourned. Each Grantor agrees that it would not be commercially unreasonable for the
Administrative Agent to dispose of the Collateral or any portion thereof by using Internet sites
that provide for the auction of assets of the types included in the Collateral or that have the
reasonable capability of doing so, or that match buyers and sellers of assets. Each Grantor hereby
waives any claims against the Administrative Agent arising by reason of the fact that the price at
which any Collateral may have been sold at such a private sale was less than the price which might
have been obtained at a public sale, even if the Administrative Agent accepts the first offer
received and does not offer such Collateral to more than one offeree. If the proceeds of any sale
or other disposition of the Collateral are insufficient to pay all the Secured Obligations,
Grantors shall be liable for the deficiency and the fees of any attorneys employed by the
Administrative Agent to collect such deficiency. Each Grantor further agrees that a breach of any
of the covenants contained in this Section will cause irreparable injury to the Administrative
Agent, that the Administrative Agent has no adequate remedy at law in respect of such breach and,
as a consequence, that each and every covenant contained in this Section shall be specifically
enforceable against such Grantor, and such Grantor hereby waives and agrees not to assert any
defenses against an action for specific performance of such covenants except for a defense that no
default has occurred giving rise to the Secured Obligations becoming due and payable prior to their
stated maturities. Nothing in this Section shall in any way limit the rights of the Administrative
Agent hereunder.




          (c) The Administrative Agent may sell the Collateral without giving any warranties as to the
Collateral. The Administrative Agent may specifically disclaim or modify any warranties of title or
the like. This procedure will not be considered to adversely affect the commercial reasonableness
of any sale of the Collateral.




          (d) The Administrative Agent shall have no obligation to marshal any of the Collateral.




     9.2 Application of Proceeds. Except as expressly provided elsewhere in this Agreement, all proceeds
received by the Administrative Agent in respect of any sale, any collection from, or other
realization upon all or any part of the Collateral shall be applied in full or in part by the
Administrative Agent against, the Secured Obligations in the following order of priority:
first, to the payment of all costs and expenses of such sale, collection or other
realization, including reasonable compensation to the Administrative Agent and its agents and
counsel, and all other expenses, liabilities and advances made or incurred by the Administrative
Agent in connection therewith, and all amounts for which the Administrative Agent is entitled to
indemnification hereunder (in its capacity as the Administrative Agent and not as a Lender) and all
advances made by the Administrative Agent hereunder for the account of the applicable Grantor, and
to the payment of all costs and expenses paid or incurred by the Administrative Agent in connection
with the exercise of any right or remedy hereunder or under the Credit Agreement, all in accordance
with the terms hereof or thereof; second, to the extent of any excess of such proceeds, to
the payment of all other Secured Obligations for the ratable benefit of the Lenders, the Hedge
Banks and the Cash Management Banks; and third, to the extent of any excess of such
proceeds, to the payment to or upon the order of such Grantor or to whosoever may be lawfully
entitled to receive the same or as a court of competent jurisdiction may direct.



     9.3 Sales on Credit. If Administrative Agent sells any of the Collateral upon credit, Grantor will
be credited only with payments actually made by purchaser and received by



24









 




Administrative Agent and applied to indebtedness of the purchaser. In the event the purchaser fails
to pay for the Collateral, Administrative Agent may resell the Collateral and Grantor shall be
credited with proceeds of the sale.




     9.4 Investment Related Property. Each Grantor recognizes that, by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws, the Administrative Agent may
be compelled, with respect to any sale of all or any part of the Investment Related Property
conducted without prior registration or qualification of such Investment Related Property under the
Securities Act and/or such state securities laws, to limit purchasers to those who will agree,
among other things, to acquire the Investment Related Property for their own account, for
investment and not with a view to the distribution or resale thereof. Each Grantor acknowledges
that any such private sale may be at prices and on terms less favorable than those obtainable
through a public sale without such restrictions (including a public offering made pursuant to a
registration statement under the Securities Act) and, notwithstanding such circumstances, each
Grantor agrees that any such private sale shall be deemed to have been made in a commercially
reasonable manner and that the Administrative Agent shall have no obligation to engage in public
sales and no obligation to delay the sale of any Investment Related Property for the period of time
necessary to permit the issuer thereof to register it for a form of public sale requiring
registration under the Securities Act or under applicable state securities laws, even if such
issuer would, or should, agree to so register it. If the Administrative Agent determines to
exercise its right to sell any or all of the Investment Related Property, upon written request,
each Grantor shall and shall cause each issuer of any Pledged Stock to be sold hereunder, each
partnership and each limited liability company from time to time to furnish to the Administrative
Agent all such information as the Administrative Agent may request in order to determine the number
and nature of interest, shares or other instruments included in the Investment Related Property
which may be sold by the Administrative Agent in exempt transactions under the Securities Act and
the rules and regulations of the Securities and Exchange Commission thereunder, as the same are
from time to time in effect.



     9.5 Grant of Intellectual Property License



     Solely for the purpose of enabling the Administrative Agent, solely during the continuance of an
Event of Default, to exercise rights and remedies under Section 8 and 9 hereof at
such time as the Administrative Agent shall be lawfully entitled to exercise such rights and
remedies, and for no other purpose, each Grantor hereby grants to the Administrative Agent, a
non-exclusive license (exercisable without payment of royalty or other compensation to such
Grantor), subject, in the case of Trademarks, to sufficient quality control provisions and
inspection rights in favor of such Grantor to avoid the risk of invalidation of said Trademarks, to
use, license or sublicense any of the Intellectual Property now owned or hereafter acquired or
created by such Grantor, and included in the Collateral. Such license shall include, to the extent
permissible under all applicable licenses, access to all media in which any above-licensed items
may be recorded or stored and to all computer programs used for the compilation or printout hereof.



     9.6 [Reserved].



     9.7 Cash Proceeds; Deposit Accounts. (a) In the event that the Loans have been accelerated, or
prior to an acceleration, upon the request of the Administrative Agent if an Event of Default shall
have occurred and be continuing, in addition to the rights of the Administrative Agent specified in
Section 6.5 with respect to payments of Receivables, all proceeds of any Collateral received by any
Grantor consisting of cash, checks and other near-cash items



25









 




(collectively, “Cash Proceeds”) shall be held by such Grantor in trust for the Administrative
Agent, segregated from other funds of such Grantor, and shall, forthwith upon receipt by such
Grantor, be turned over to the Administrative Agent in the exact form received by such Grantor
(duly indorsed by such Grantor to the Administrative Agent, if required) and held by the
Administrative Agent in the Collateral Account. Any Cash Proceeds received by the Administrative
Agent (whether from a Grantor or otherwise) may, in the sole discretion of the Administrative
Agent, (A) be held by the Administrative Agent for the ratable benefit of the Secured Parties, as
collateral security for the Secured Obligations (whether matured or unmatured) and/or (B) then or
at any time thereafter may be applied by the Administrative Agent against the Secured Obligations
then due and owing.




     (b) If any Event of Default shall have occurred and be continuing, the Administrative Agent may
apply the balance from any Deposit Account or instruct the bank at which any Deposit Account is
maintained to pay the balance of any Deposit Account to or for the benefit of the Administrative
Agent to be applied against the Secured Obligations then due and owing.



SECTION 10. ADMINISTRATIVE AGENT.




     The Administrative Agent has been appointed to act as Administrative Agent hereunder by Lenders
and, by their acceptance of the benefits hereof, the other Secured Parties. The Administrative
Agent shall be obligated, and shall have the right hereunder, to make demands, to give notices, to
exercise or refrain from exercising any rights, and to take or refrain from taking any action
(including, without limitation, the release or substitution of Collateral), solely in accordance
with this Agreement and the Credit Agreement; provided, the Administrative Agent shall, after
payment in full of all Obligations under the Credit Agreement and the other Loan Documents,
exercise, or refrain from exercising, any remedies provided for herein in accordance with the
instructions of the holders (the “Majority Holders”) of a majority of the aggregate “settlement
amount” as defined in the Secured Hedge Agreements (or, with respect to any Secured Hedge Agreement
that has been terminated in accordance with its terms, the amount then due and payable (exclusive
of expenses and similar payments but including any early termination payments then due) under such
Secured Hedge Agreement) under all Secured Hedge Agreements. For purposes of the foregoing
sentence, settlement amount for any hedge that has not been terminated shall be the settlement
amount as of the last Business Day of the month preceding any date of determination and shall be
calculated by the appropriate swap counterparties and reported to the Administrative Agent upon
request; provided any Secured Hedge Agreement with a settlement amount that is a negative number
shall be disregarded for purposes of determining the Majority Holders. In furtherance of the
foregoing provisions of this Section, each Secured Party, by its acceptance of the benefits hereof,
agrees that it shall have no right individually to realize upon any of the Collateral hereunder, it
being understood and agreed by such Secured Party that all rights and remedies hereunder may be
exercised solely by the Administrative Agent for the benefit of Secured Parties in accordance with
the terms of this Section. The provisions of the Credit Agreement relating to the Administrative
Agent including, without limitation, the provisions relating to resignation or removal of the
Administrative Agent and the powers and duties and immunities of the Administrative Agent are
incorporated herein by this reference and shall survive any termination of the Credit Agreement.



SECTION 11. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS.




     This Agreement shall create a continuing security interest in the Collateral and shall remain in
full force and effect until the payment in full of all Secured Obligations, the cancellation or
termination of the Commitments and the cancellation, expiration, posting of



26









 




backstop letters of credit or cash collateralization of all outstanding Letters of Credit
satisfactory to the applicable L/C Issuer, be binding upon each Grantor, its successors and
assigns, and inure, together with the rights and remedies of the Administrative Agent hereunder, to
the benefit of the Administrative Agent and its successors, transferees and assigns. Without
limiting the generality of the foregoing, but subject to the terms of the Credit Agreement, any
Lender may assign or otherwise transfer any Loans held by it to any other Person, and such other
Person shall thereupon become vested with all the benefits in respect thereof granted to Lenders
herein or otherwise. Upon the payment in full of all Secured Obligations (other than contingent
indemnification obligations not then due), the cancellation or termination of the Commitments and
the cancellation, expiration, posting of backstop letters of credit or cash collateralization of
all outstanding Letters of Credit satisfactory to the applicable L/C Issuer, the security interest
granted hereby shall automatically terminate hereunder and of record and all rights to the
Collateral shall revert to Grantors. Upon any such termination the Administrative Agent shall, at
Grantors’ expense, execute and deliver to Grantors or otherwise authorize the filing of such
documents as Grantors shall reasonably request, including financing statement amendments to
evidence such termination. Upon any disposition of property permitted by the Credit Agreement, the
Liens granted herein shall be deemed to be automatically released and such property shall
automatically revert to the applicable Grantor with no further action on the part of any Person.
The Administrative Agent shall, at Grantor’s expense, execute and deliver or otherwise authorize
the filing of such documents as Grantors shall reasonably request, in form and substance reasonably
satisfactory to the Administrative Agent, including mortgage releases and financing statement
amendments to evidence such release.




SECTION 12. STANDARD OF CARE; ADMINISTRATIVE AGENT MAY PERFORM.




     The powers conferred on the Administrative Agent hereunder are solely to protect its interest in
the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the
exercise of reasonable care in the custody of any Collateral in its possession and the accounting
for moneys actually received by it hereunder, the Administrative Agent shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights against prior parties or
any other rights pertaining to any Collateral. The Administrative Agent shall be deemed to have
exercised reasonable care in the custody and preservation of Collateral in its possession if such
Collateral is accorded treatment substantially equal to that which the Administrative Agent accords
its own property. Neither the Administrative Agent nor any of its directors, officers, employees or
agents shall be liable for failure to demand, collect or realize upon all or any part of the
Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of any Grantor or otherwise. If any Grantor fails to
perform any agreement contained herein, the Administrative Agent may itself perform, or cause
performance of, such agreement, and the expenses of the Administrative Agent incurred in connection
therewith shall be payable by each Grantor under Section 10.04 of the Credit Agreement.



SECTION 13. MISCELLANEOUS




     Any notice required or permitted to be given under this Agreement shall be given in accordance with
Section 10.02 of the Credit Agreement. No failure or delay on the part of the Administrative Agent
in the exercise of any power, right or privilege hereunder or under any other Loan Document shall
impair such power, right or privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other power, right or privilege. All rights and
remedies existing under this Agreement and the other Loan Documents



27









 




are cumulative to, and not exclusive of, any rights or remedies otherwise available. In case any
provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations,
or of such provision or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby. All covenants hereunder shall be given independent effect so that if a particular
action or condition is not permitted by any of such covenants, the fact that it would be permitted
by an exception to, or would otherwise be within the limitations of, another covenant shall not
avoid the occurrence of a Default or an Event of Default if such action is taken or condition
exists. This Agreement shall be binding upon and inure to the benefit of the Administrative Agent
and Grantors and their respective successors and assigns. No Grantor shall, without the prior
written consent of the Administrative Agent given in accordance with the Credit Agreement, assign
any right, duty or obligation hereunder. This Agreement and the other Loan Documents embody the
entire agreement and understanding between Grantors and the Administrative Agent and supersede all
prior agreements and understandings between such parties relating to the subject matter hereof and
thereof. Accordingly, the Loan Documents may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties. There are no unwritten oral
agreements between the parties. This Agreement may be executed in one or more counterparts and by
different parties hereto in separate counterparts, each of which when so executed and delivered
shall be deemed an original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to the same document.




     THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND ALL CLAIMS AND
CONTROVERSIES ARISING OUT OF THE SUBJECT MATTER HEREOF WHETHER SOUNDING IN CONTRACT LAW, TORT LAW
OR OTHERWISE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PROVISIONS THAT WOULD RESULT IN THE
APPLICATION OF ANY OTHER LAW (OTHER THAN ANY MANDATORY PROVISIONS OF THE UCC RELATING TO THE LAW
GOVERNING PERFECTION AND THE EFFECT OF PERFECTION OF THE SECURITY INTEREST).



     THE PROVISIONS OF THE CREDIT AGREEMENT UNDER THE HEADINGS “SUBMISSION TO JURISDICTION”, “WAIVER OF
VENUE”, “SERVICE OF PROCESS” AND “WAIVER OF JURY TRIAL” ARE INCORPORATED HEREIN BY THIS REFERENCE
AND SUCH INCORPORATION SHALL SURVIVE ANY TERMINATION OF THE CREDIT AGREEMENT.



28









 





          IN WITNESS WHEREOF, each Grantor and the Administrative Agent have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as of the date first
written above.




	 	 	 	 	 
	 	PATRIOT COAL CORPORATION,






as Grantor

 	 
	 	By:  	/s/ Mark
N. Schroeder
	 
	 	 	Name:  	Mark N. Schroeder	 
	 	 	Title:  	Senior Vice President & Chief Financial
Officer	 
	 	Grantors:


AFFINITY MINING COMPANY

APPALACHIA MINE SERVICES, LLC

BEAVER DAM COAL COMPANY, LLC

BLACK STALLION COAL COMPANY, LLC

BLACK WALNUT COAL COMPANY

BLUEGRASS MINE SERVICES, LLC

CENTRAL STATES COAL RESERVES OF

KENTUCKY, LLC

CHARLES COAL COMPANY, LLC

CLEATON COAL COMPANY COAL PROPERTIES, LLC

COAL RESERVE HOLDING LIMITED

LIABILITY COMPANY NO. 2

COLONY BAY COAL COMPANY

COOK MOUNTAIN COAL COMPANY, LLC

DIXON MINING COMPANY, LLC

DODGE HILL HOLDING JV, LLC

DODGE HILL OF KENTUCKY, LLC

DODGE HILL MINING COMPANY, LLC

EASTERN ASSOCIATED COAL, LLC

EASTERN COAL COMPANY, LLC

EASTERN ROYALTY, LLC

FORT ENERGY, LLC

GRAND EAGLE MINING, INC.

HCR HOLDINGS, LLC

HIGHLAND MINING COMPANY, LLC

HILLSIDE MINING COMPANY

INDIAN HILL COMPANY

INTERIOR HOLDINGS, LLC

JARRELL’S BRANCH COAL COMPANY

LOGAN FORK COAL COMPANY

MARTINKA COAL COMPANY, LLC

MIDWEST COAL RESOURCES II, LLC 	 
	 



[Patriot Security Agreement]




 









 








	 	 	 	 	 
	 	MOUNTAIN VIEW COAL COMPANY, LLC

NORTH PAGE COAL CORP.

OHIO COUNTY COAL COMPANY, LLC

PATRIOT COAL COMPANY, L.P.

PATRIOT COAL SALES LLC

PATRIOT LEASING COMPANY LLC

PATRIOT MIDWEST HOLDINGS, LLC

PEABODY COAL COMPANY, LLC

PINE RIDGE COAL COMPANY, LLC

POND CREEK LAND RESOURCES, LLC

RIVERS EDGE MINING, INC.

SENTRY MINING, LLC

SNOWBERRY LAND COMPANY

STERLING SMOKELESS COAL COMPANY, LLC

UNION COUNTY COAL CO., LLC

YANKEETOWN DOCK, LLC,

as Grantors


Executing this Agreement as Vice-President and Assistant Treasurer of each of
the foregoing persons on behalf of and so as to bind the persons named above
under the caption “Grantors”

 	 
	 	By:  	/s/ Robert L. Mead	 
	 	 	Robert L. Mead 	 
	 	 	Vice-President and Assistant Treasurer 	 
	 



[Patriot Security Agreement]




 









 








	 	 	 	 	 
	 	BANK OF AMERICA, N.A.,

as Administrative Agent

 	 
	 	By:  	/s/ Todd
Mac Neill	 
	 	 	Name:  	Todd
Mac Neill	 
	 	 	Title:  	Vice
President	 



[Patriot Security Agreement]