Exhibit 10.5


 


EXECUTION COPY


 


AMENDED
AND RESTATED PLEDGE AND SECURITY AGREEMENT


 


THIS AMENDED AND RESTATED PLEDGE AND SECURITY
AGREEMENT (this “Security Agreement”) is entered into as of October 15, 2007 by
and among United Stationers Supply Co., an Illinois corporation (the “Borrower”),  United Stationers Inc., a Delaware
corporation (the “Parent”), and the other Subsidiaries of the Parent listed on
the signature page hereto (together with the Borrower and the Parent,
collectively, the “Initial Grantors,” and together with any additional Domestic
Subsidiaries, whether now existing or hereafter formed which become parties to
this Security Agreement by executing a Supplement hereto in substantially the
form of Annex I, the “Grantors”), and JPMorgan Chase Bank, N.A., in its
capacity as collateral agent (the “Collateral Agent”) for the Secured Parties.


 


PRELIMINARY STATEMENTS


 


WHEREAS, the Collateral Agent has entered into that
certain Intercreditor Agreement, dated as of October 15, 2007, by and among the
Collateral Agent and certain lenders identified and defined therein in
connection with certain extensions of credit and financial accommodations to
the Borrower (as the same may have been or may be amended, restated,
supplemented or otherwise modified from time to time, the “Intercreditor
Agreement”);


 


WHEREAS, the Bank Credit Agreement and the Note
Agreement and the Eligible Additional Senior Secured Documents (if in effect),
among other things, evidence the Borrower’s outstanding obligations under the
Bank Credit Agreement and the Note Agreement and the Eligible Additional Senior
Secured Documents and provide, subject to the terms and conditions of the Bank
Credit Agreement and the Note Agreement and the Eligible Additional Senior
Secured Documents, for the making of advances, loans and other financial
accommodations by certain of the Lenders to or for the benefit of the Borrower;


 


WHEREAS, the Parent owns all of the issued and
outstanding capital stock of the Borrower and the Borrower owns, directly or
indirectly, all or a majority of the issued and outstanding capital stock and
other equity interests of each Grantor (other than the Parent or the Borrower);
and such Grantors shall derive benefits, both direct and indirect, by the
continued effectiveness of the Bank Credit Agreement and the Note Agreement
and, if in effect, any Eligible Additional Senior Secured Documents;


 


WHEREAS, certain of the Grantors have entered into
certain guarantees (the “Guarantees”) pursuant to which they have guaranteed,
without limitation and with full recourse, the payment when due of the
Obligations;


 


WHEREAS, each Grantor has granted a security interest
in and lien upon its assets pursuant to that certain Pledge and Security
Agreement, dated as of March 21, 2003, by and among the Borrower, the Parent,
the Initial Grantors parties thereto and JPMorgan Chase Bank, N.A. (successor
by merger to Bank One, NA, a national banking association having its principal
office in Chicago, Illinois), as administrative agent (as amended, restated or
otherwise modified as of the date hereof, the “Existing Security Agreement”) to
secure the Secured Obligations


 

















 


under (and as defined in) the Bank Credit Agreement
and the parties hereto intend (i) to amend and restate such Existing Security
Agreement pursuant to the terms hereof and (ii) that this Security Agreement
not constitute a novation thereof;


 


WHEREAS, it is a condition precedent to the continued
effectiveness of the Bank Credit Agreement and the Note Agreement, and, if in
effect, any Eligible Additional Senior Secured Documents, that each Grantor
agree to amend and restate the Existing Security Agreement to re-evidence the
grant of a security interest in and lien upon its assets to secure the Secured
Obligations under the Bank Credit Agreement and to grant a security interest
and lien upon its assets to secure the Secured Obligations under the Note
Agreement, and, if in effect, any Eligible Additional Senior Secured Document;


 


WHEREAS, the Lenders have required as a condition to
the continued effectiveness of the Bank Credit Agreement and Note Agreement,
and, if in effect, any Eligible Additional Senior Secured Document, that each
Grantor execute and deliver this Security Agreement;


 


ACCORDINGLY, the Grantors and the Collateral Agent, on
behalf of the Secured Parties, hereby agree as follows:


 


ARTICLE I


 


DEFINITIONS


 


1.1.                              Terms Defined in Intercreditor
Agreement. All capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms in the
Intercreditor Agreement or, to the extent not defined therein, as defined in
the Bank Credit Agreement.


 


1.2.                              Terms Defined in New York
Uniform Commercial Code. Terms defined in the New York UCC which are not otherwise
defined in this Security Agreement are used herein as defined in the New York
UCC.


 


1.3.                              Definitions of Certain Terms
Used Herein. As used in this Security Agreement, in addition
to the terms defined in the Preliminary Statement, the following terms shall
have the following meanings:


 


“Accounts” shall have the meaning set forth in Article
9 of the New York UCC or in the PPSA, as applicable.


 


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


 


“Chattel Paper” shall have the meaning set forth in
Article 9 of the New York UCC or in the PPSA, as applicable.


 


“Collateral” means all Accounts, Chattel Paper,
Commercial Tort Claims, Documents, Equipment, Fixtures, General Intangibles,
Instruments, Inventory, Investment Property, Pledged Deposits, Pledged Stock
and Other Collateral, wherever located, in which any Grantor now has or
hereafter acquires any right or interest, and the proceeds (including Stock
Rights), insurance


 


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proceeds and products thereof, together with all books
and records, customer lists, credit files, computer files, programs, printouts
and other computer materials and records related thereto.


 


“Commercial Tort Claims” means those certain currently
existing commercial tort claims of any Grantor, including each commercial tort
claim specifically described in Exhibit “E”.


 


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


 


“Customer Advance Notes” shall mean customer advance
notes not prohibited under the Bank Credit Agreement and the Note Agreement,
and, if in effect, any Eligible Additional Senior Secured Documents.


 


“Default” means an event described in Section 5.1.


 


“Deposit Accounts” shall have the meaning set forth in
Article 9 of the New York UCC.


 


“Documents” shall have the meaning set forth in
Article 9 of the New York UCC.


 


“Equipment” shall have the meaning set forth in
Article 9 of the New York UCC or in the PPSA, as applicable.


 


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


 


“Fixtures” shall have the meaning set forth in Article
9 of the New York UCC.


 


“General Intangibles” shall have the meaning set forth
in Article 9 of the New York UCC or the meaning of “intangibles” as set forth
in the PPSA, as applicable.


 


“Instruments” shall have the meaning set forth in
Article 9 of the New York UCC or in the PPSA, as applicable.


 


“Inventory” shall have the meaning set forth in
Article 9 of the New York UCC or in the PPSA, as applicable.


 


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


 


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


 


“Other Collateral” means any property of the Grantors,
other than real estate, not included within the defined terms Accounts, Chattel
Paper, Commercial Tort Claims, Documents, Equipment, Fixtures, General
Intangibles, Instruments, Inventory, Investment Property and Pledged Deposits,
including, without limitation, all cash on hand, letter-of-credit rights,
letters of credit, Stock Rights and Deposit Accounts or other deposits (general
or special, time or demand, provisional or final) with any bank or other
financial institution, it being


 


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intended that the Collateral include all property of
the Grantors other than real estate (subject to the limitations set forth in
Article II).


 


“Paid in Full” means (i) the payment in full in cash
of the Secured Obligations (other than contingent indemnity obligations), (ii)
the termination of all Commitments under the Bank Credit Agreement and (iii)
the termination and/or cash collateralization of all Facility LCs, in each
case, in accordance with the Bank Credit Agreement. The term “Payment in Full”
shall have a correlative meaning.


 


“Pledged Deposits” means all time deposits of money
(other than Deposit Accounts and Instruments), whether or not evidenced by
certificates, which a Grantor may from time to time designate as pledged to the
Collateral Agent or to any Secured Parties as security for any Secured
Obligation, and all rights to receive interest on said deposits.


 


“Pledged Stock” means, with respect to any Grantor,
the shares of common and preferred stock (or other ownership interest) of each
issuer identified in Exhibit “C” under the name of such Grantor and all other
shares of capital stock (or other ownership interest) of whatever class of each
such issuer, now or hereafter owned by such Grantor, and all certificates
evidencing the same, and shall include, without limitation, all of the capital
stock of the Parent’s Domestic Subsidiaries owned by such Grantor and the
requisite percentage of the capital stock of all Material Foreign Subsidiaries
required to be pledged pursuant to the Bank Credit Agreement and the Note
Agreement, and, if in effect, any Eligible Additional Senior Secured Documents,
and owned by such Grantor.


 


“PPSA” shall mean the Personal
Property Security Act in effect from time to time in the Province of
Ontario or such similar legislation in effect in any other Province of Canada,
as applicable, as amended or supplemented from time to time.


 


“Receivables” means the Accounts, Chattel Paper,
Documents, Investment Property, Instruments or Pledged Deposits, and any other
rights or claims to receive money which are General Intangibles or which are
otherwise included as Collateral.


 


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


 


“Secured Obligations” means the “Obligations” under
and as defined in the Intercreditor Agreement.


 


“Security” has the meaning set forth in Article 8 of
the New York UCC or in the PPSA, as applicable.


 


“Stock Rights” means any securities, dividends or
other distributions and any other right or property which any Grantor shall
receive or shall become entitled to receive for any reason whatsoever with
respect to, in substitution for or in exchange for any securities or other ownership
interests in a corporation, partnership, joint venture or limited liability
company constituting Collateral and any securities, any right to receive
securities and any right to receive earnings, in which any Grantor now has or
hereafter acquires any right, issued by an issuer of such securities.


 


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


 


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


 


ARTICLE II


 


GRANT OF SECURITY INTEREST


 


Each of the Grantors hereby pledges, assigns and
grants to the Collateral Agent, on behalf of and for the ratable benefit of the
Secured Parties, a security interest in all of such Grantor’s right, title and
interest, whether now owned or hereafter acquired, in and to the Collateral to
secure the prompt and complete payment and performance of the Secured
Obligations.


 


Notwithstanding the foregoing, the Collateral shall
not include (i) (a) any Accounts, General Intangibles, Chattel Paper,
Instruments, Documents or Investment Property which constitute Receivables
subject to any Receivables Purchase Facility permitted under the Credit
Agreement, the Note Agreement, and, if in effect, any Eligible Additional
Senior Secured Documents, and (b) any Deposit Accounts maintained in accordance
with the requirements of the applicable Receivables Purchase Facility into
which collections and other amounts related to those items described in clause
(i)(a) are deposited (collectively, the “Securitization Collateral”), (ii) any
Property to the extent that such grant of a security interest is prohibited by
any applicable law or governmental authority, requires a consent not obtained
of any governmental authority pursuant to any applicable law or is prohibited
by, or constitutes a breach or default under or results in the termination of
or requires any consent not obtained under, any contract, license, agreement,
instrument or other document evidencing or giving rise to such property or, in
the case of any investment property, any applicable shareholder or similar
agreement, except to the extent that such applicable law or the term in such
contract, license, agreement, instrument or other document or shareholder or
similar agreement providing for such prohibition, breach, default or
termination or requiring such consent is ineffective under applicable law,
(iii) with respect to any shares of stock or other ownership interests in any
first-tier Foreign Subsidiary, the excess over 65% of all of the voting shares
of stock or equity interests in such Foreign Subsidiary, (iv) any stock or
other ownership interests of any Subsidiary of any first-tier Foreign
Subsidiary and (v) any shares of the Parent’s capital stock that have been
repurchased by the Parent and held in treasury. The Collateral Agent’s security
interest in any item constituting Securitization Collateral shall be released
upon the sale, contribution or transfer thereof under the terms of the
applicable Receivables Purchase Facility. Each of the Grantors acknowledges,
for the purposes of the PPSA, that (i) value has been given, (ii) it has rights
in the Collateral (other than after-acquired Collateral), (iii) it has not
agreed to postpone the time of attachment of the security interest in the
Collateral and (iv) it has received a duplicate copy of this Security
Agreement.


 


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ARTICLE III


 


REPRESENTATIONS AND WARRANTIES


 


Each of the Initial Grantors represents and warrants
to the Collateral Agent and the Secured Parties, and each Grantor that becomes
a party to this Security Agreement pursuant to the execution of a Security
Agreement Supplement in substantially the form of Annex I represents and
warrants (after giving effect to supplements to each of the Exhibits hereto
with respect to such subsequent Grantor as attached to such Security Agreement
Supplement), that:


 


3.1.                              Title, Authorization, Validity
and Enforceability. Such Grantor has good and valid rights in
or the power to transfer the Collateral owned by it and title to the Collateral
with respect to which it has purported to grant a security interest hereunder,
free and clear of all Liens except for Liens permitted under Section 4.1.3, and
has full corporate, limited liability company or partnership, as applicable,
power and authority to grant to the Collateral Agent the security interest in
such Collateral pursuant hereto. The execution and delivery by such Grantor of
this Security Agreement has been duly authorized by proper corporate, limited
liability company or partnership, as applicable, proceedings, and this Security
Agreement constitutes a legal, valid and binding obligation of such Grantor and
creates a security interest which is enforceable against such Grantor in all
Collateral it now owns or hereafter acquires, except as enforceability may be
limited by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization or
similar laws relating to or affecting the enforcement of creditors’ rights
generally, (ii) general equitable principles (whether considered in a
proceeding in equity or at law), and (iii) requirements of reasonableness, good
faith and fair dealing. Financing statements have been filed in the appropriate
offices against such Grantor in the locations listed on Exhibit “D”, and the
Collateral Agent has a fully perfected first priority security interest in the
Collateral owned by such Grantor in which a security interest may be perfected
by filing under the applicable Uniform Commercial Code or PPSA, as applicable,
subject to Liens permitted under the Bank Credit Agreement and the Note
Agreement, and, if in effect, any Eligible Additional Senior Secured Documents,
provided that nothing herein shall be deemed to constitute an agreement to
subordinate any of the Liens of the Collateral Agent under the Lender Documents
to any Liens otherwise permitted under the Bank Credit Agreement and the Note
Agreement, and, if in effect, any Eligible Additional Senior Secured Documents
(other than Permitted Priority Liens).


 


3.2.                              Conflicting Laws and Contracts.
Neither the execution and delivery by such Grantor of this Security Agreement,
the creation and perfection of the security interest in the Collateral granted
hereunder, nor compliance with the terms and provisions hereof will violate (i)
any applicable law, rule, regulation, order, writ, judgment, injunction, decree
or award binding on such Grantor, or (ii) such Grantor’s charter, articles or
by-laws (or similar constitutive documents), or (iii) the provisions of any
indenture, material instrument or material agreement to which such Grantor is a
party or is subject, or by which it, or its Property is bound or affected, or
conflict with or constitute a default thereunder, or result in or require the
creation or imposition of any Lien in, of or on the property of such Grantor
pursuant to the terms of any such indenture, material instrument or material
agreement (other than any Lien of the Collateral Agent on behalf of the Secured
Parties).


 


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3.3.                              Type and Jurisdiction of
Organization. As of the date of the compliance certificate
most recently delivered to the Collateral Agent pursuant to Section 6.1.3 of
the Bank Credit Agreement in connection with the most recent annual financial
statements of the Parent delivered pursuant to Section 6.1.1 of the Bank Credit
Agreement  (such date being the “Reference
Date”), the Borrower is a corporation organized under the laws of the State of
Illinois; each of United Stationers Technology Services LLC and United
Stationers Financial Services LLC is a limited liability company organized
under the laws of the State of Illinois; the Parent is a corporation organized
under the laws of the State of Delaware; and Lagasse, Inc. is a corporation
organized under the laws of the State of Louisiana, in each case, except to the
extent (x) such Person has been merged with or into any other Person in a
transaction not prohibited by the Bank Credit Agreement and the Note Agreement,
and, if in effect, any Eligible Additional Senior Secured Documents, or (y)
such Person has complied with the requirements of Section 4.1.4 or (z) as to
Persons other than the Company or the Parent, such Person has been sold or
otherwise disposed of in a transaction permitted by the Lender Documents, and
in each case, this representation shall be deemed amended to make reference to
the correct Person, type of entity and/or jurisdiction, as applicable.


 


3.4.                              Principal Location.
As of the Reference Date, such Grantor’s mailing address and the location of
its place of business (if it has only one) or its chief executive office (if it
has more than one place of business), is disclosed in Exhibit “A”; such Grantor
has no other places of business except those set forth in Exhibit “A”.


 


3.5.                              Property Locations.
As of the Reference Date, the Inventory, Equipment and Fixtures of each Grantor
are located solely at the locations of such Grantor described in Exhibit “A”,
except for such Inventory, Equipment or Fixtures which (i) are out for repair,
(ii) have been sold or otherwise disposed of in accordance with the terms of
the Bank Credit Agreement and the Note Agreement, and, if in effect, any
Eligible Additional Senior Secured Documents, (iii) are in transit to a place
described in Exhibit “A” or (iv) when taken together, have a net book value in
the aggregate of $10,000,000 or less. All of said locations are owned by such
Grantor except for locations (i) which are leased by such Grantor as lessee and
designated in Part B of Exhibit “A” and (ii) at which Inventory or Equipment is
held in a public warehouse or is otherwise held by a bailee or on consignment
by such Grantor as designated in Part C of Exhibit “A”.


 


3.6.                              No Other Names.
Except as set forth on Exhibit “A”, during the three year period prior to the
date of this Security Agreement and from the date of this Security Agreement
through and including the Reference Date, such Grantor has not conducted
business under any name except the name in which it has executed this Security
Agreement, which is the exact name as it appears in such Grantor’s
organizational documents, as amended, as filed with such Grantor’s jurisdiction
of organization as of the date of this Security Agreement.


 


3.7.                              Accounts and Chattel Paper.
The names of the obligors, amounts owing, due dates and other information with
respect to the Accounts and Chattel Paper owned by such Grantor are correctly
stated, in all material respects, in all records of such Grantor relating
thereto and in all invoices and reports with respect thereto furnished to the
Collateral Agent by such Grantor from time to time. As of the time when each
Account or each item of Chattel Paper arises, such Grantor shall be deemed to
have represented and warranted that such Account or


 


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Chattel Paper, as
the case may be, and all records relating thereto, is genuine and in all
material respects what it purports to be.


 


3.8.                              Filing Requirements.
As of the Reference Date, none of the Equipment owned by such Grantor is
covered by any certificate of title required to be delivered pursuant to
Section 4.3.2, except for the vehicles described in Part A of Exhibit “B”. As
of the Reference Date, none of the Collateral owned by such Grantor is of a
type for which security interests or liens may be perfected by filing under any
federal statute except for (i) the vehicles described in Part B of Exhibit “B”
and (ii) patents, trademarks and copyrights held by such Grantor and described
in Part C of Exhibit “B”.


 


3.9.                              No Financing Statements.
No financing statement describing all or any portion of the Collateral which
has not lapsed or been terminated naming such Grantor as debtor has been filed
in any jurisdiction except financing statements (i) naming the Collateral Agent
on behalf of the Secured Parties as the secured party and (ii) in respect of
Liens permitted by the Bank Credit Agreement and the Note Agreement, and, if in
effect, any Eligible Additional Senior Secured Documents; provided, that
nothing herein shall be deemed to constitute an agreement to subordinate any of
the Liens of the Collateral Agent under the Lender Documents to any Liens
otherwise permitted under the Bank Credit Agreement and the Note Agreement,
and, if in effect, any Eligible Additional Senior Secured Indebtedness (other
than Permitted Priority Liens).


 


3.10.                        Federal Employer Identification
Number; State Organization Number. Such Grantor’s Federal
employer identification number is, and if such Grantor is a registered
organization, such Grantor’s State organization number is set forth on Exhibit “A”.


 


3.11.                        Pledged Securities and Other
Investment Property. As of the Reference Date, Exhibit “C”
sets forth a complete and accurate list of the Pledged Stock, and to the extent
the same has a value in excess of $5,000,000 individually or $10,000,000 in the
aggregate, Instruments, Securities and other Investment Property (to the extent
the same do not constitute Cash Equivalent Investments or Customer Advance
Notes) delivered to the Collateral Agent. Each Grantor is the direct and
beneficial owner of each Instrument, Security and other type of Investment
Property listed on Exhibit “C” as being owned by it, free and clear of any
Liens, except for the security interest granted to the Collateral Agent for the
benefit of the Secured Parties hereunder. Each Grantor further represents and
warrants that (i) all Pledged Stock which are shares of stock in a corporation
or ownership interests in a partnership or limited liability company have been
(to the extent such concepts are relevant with respect to such Pledged Stock)
duly and validly issued, are fully paid and non-assessable and constitute, as
of the Reference Date, the percentage of the issued and outstanding shares of
stock (or other equity interests) of the respective issuers thereof indicated
on Exhibit “C” hereto and (ii) with respect to any certificates delivered to
the Collateral Agent representing an ownership interest in a partnership or
limited liability company, either such certificates are Securities as defined
in Article 8 of the Uniform Commercial Code of the applicable jurisdiction or
in the PPSA, as applicable, as a result of actions by the issuer or otherwise,
or, if such certificates are not Securities, such Grantor has so informed the
Collateral Agent so that the Collateral Agent may take steps to perfect its
security interest therein as a General Intangible.


 


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ARTICLE IV


 


COVENANTS


 


From the date of this Security Agreement and
thereafter until this Security Agreement is terminated in accordance with
Section 8.14, each of the Initial Grantors agrees, and from and after the
effective date of any Security Agreement Supplement applicable to any Grantor
(and after giving effect to supplements to each of the Exhibits hereto with
respect to such subsequent Grantor as attached to such Security Agreement
Supplement) and thereafter until this Security Agreement is terminated in
accordance with Section 8.14 each such subsequent Grantor agrees:


 


4.1.                              General.


 


4.1.1  Compliance with Bank Credit Agreement and the Note
Agreement and any Eligible Additional Senior Secured Documents. Each of
the Grantors covenants that (i) so long as any Lender has any Commitment
outstanding under the Bank Credit Agreement or any amount payable to it under
the Bank Credit Agreement or any other Secured Obligations under the Bank
Credit Agreement (other than contingent indemnity obligations) shall remain
unpaid, it will, and, if necessary, will enable the Borrower and the Parent to,
fully comply with those covenants and agreements of the Borrower and the Parent
applicable to such Grantor set forth in the Bank Credit Agreement and (ii) so
long as any Lender has any amount payable to it under the Note Agreement or any
other Secured Obligations under the Note Agreement (other than contingent
indemnity obligations) shall remain unpaid, it will, and, if necessary, will
enable the Borrower and the Parent to, fully comply with those covenants and
agreements of the Borrower and the Parent applicable to such Grantor set forth
in the Note Agreement and (iii) so long as any Lender has any amount payable to
it under any Eligible Additional Senior Secured Documents or any other Secured
Obligations under any Eligible Additional Senior Secured Documents (other than
contingent indemnity obligations) shall remain unpaid, it will, and if
necessary, will enable the Borrower and the Parent to, fully comply with those
covenants and agreements of the Borrower and the Parent applicable to such
Grantor set forth in such Eligible Additional Senior Secured Documents.


 


4.1.2  Financing Statements and Other Actions; Defense of Title.
Each Grantor hereby authorizes the Collateral Agent to file, and if requested
will execute and deliver to the Collateral Agent, all financing statements
describing the Collateral owned by such Grantor and other documents and take
such other actions as may from time to time reasonably be requested by the
Collateral Agent in order to maintain a first perfected security interest in
and, if applicable, Control of, the Collateral owned by such Grantor, subject
to Liens permitted under the Bank Credit Agreement and the Note Agreement, and,
if in effect, any Eligible Additional Senior Secured Documents, provided that
nothing herein shall be deemed to constitute an agreement to subordinate any of
the Liens of the Collateral Agent under the Lender Documents to any Liens
otherwise permitted under the Bank Credit Agreement and the Note Agreement,
and, if in effect, any Eligible Additional Senior Secured Indebtedness (other
than Permitted Priority Liens). 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


 


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any other manner as the Collateral Agent may
determine, in its sole discretion, is necessary, advisable or prudent to ensure
that the perfection of the security interest in the Collateral granted to the
Collateral Agent herein. Each Grantor will take any and all actions necessary
to defend title to the Collateral owned by such Grantor against all persons and
to defend the security interest of the Collateral Agent in such Collateral and
the priority thereof against any Lien not expressly permitted hereunder. During
the continuance of a Default the Borrower shall, upon the request of the
Collateral Agent, provide a written summary of each property on which any
Fixtures are located by any Grantor, including the legal description, county
and street address of such property, together with the name and address of the
record owner of each such property.


 


4.1.3  Liens. No Grantor will create, incur,
or suffer to exist any Lien on the Collateral owned by such Grantor except
Liens permitted pursuant to the Bank Credit Agreement and the Note Agreement,
and, if in effect, any Eligible Additional Senior Secured Documents, provided
that nothing herein shall be deemed to constitute an agreement to subordinate
any of the Liens of the Collateral Agent under the Lender Documents to any
Liens otherwise permitted under the Bank Credit Agreement and the Note
Agreement, and, if in effect, any Eligible Additional Senior Secured
Indebtedness (other than Permitted Priority Liens).


 


4.1.4  Change in Corporate Existence, Type or Jurisdiction of
Organization, Location, Name. Each Grantor will, except to
the extent permitted under the Bank Credit Agreement and the Note Agreement,
and, if in effect, any applicable Eligible Additional Senior Secured Document:


 


(i)                                     preserve
its existence and corporate structure as in effect on the date of this Security
Agreement;


 


(ii)                                  not
change its jurisdiction of organization;


 


(iii)                               not
maintain its place of business (if it has only one) or its chief executive
office (if it has more than one place of business) at a location other than a
location specified on Exhibit “A;” and


 


(iv)                              not
(a) have any Inventory, Equipment or Fixtures or proceeds or products thereof
at a location other than a location specified in Exhibit “A”, except for such
Inventory, Equipment or Fixtures which (W) are out for repair, (X) have been
sold or otherwise disposed of in accordance with the terms of the Bank Credit
Agreement and the Note Agreement, and, if in effect, any applicable Eligible
Additional Senior Secured Document, (Y) are in transit to a place described in
Exhibit “A” or (Z) when taken together, have an aggregate net book value of
$10,000,000 or less, (b) change its name or taxpayer identification number or
(c) change its mailing address,


 


unless, in each such case, such Grantor shall have
given the Collateral Agent not less than 15 Business Days’ (or such shorter
time as to which the Collateral Agent and the Grantor shall agree) prior
written notice of such event or occurrence and the Collateral Agent


 


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shall have either (x) determined that such event or
occurrence will not adversely affect the validity, perfection or priority of
the Collateral Agent’s security interest in the Collateral, or (y) taken such
steps (with the cooperation of such Grantor to the extent necessary or
advisable) as are necessary or advisable to properly maintain the validity,
perfection and priority of the Collateral Agent’s security interest in the
Collateral owned by such Grantor.


 


4.1.5  Other Financing Statements. No Grantor
will suffer to exist, or sign or authorize the signing on its behalf or the
filing of any financing statement naming it as debtor covering all or any
portion of the Collateral owned by such Grantor, except any financing statement
(i) authorized under Section 4.1.2 or (ii) filed to perfect a Lien permitted by
the Bank Credit Agreement and the Note Agreement, and, if in effect, any
applicable Eligible Additional Senior Secured Document; provided, that
nothing herein shall be deemed to constitute an agreement to subordinate any of
the Liens of the Collateral Agent under the Lender Documents to any Liens
otherwise permitted under the Bank Credit Agreement and the Note Agreement,
and, if in effect, any applicable Eligible Additional Senior Secured Document
(other than Permitted Priority Liens).


 


4.2.                              Receivables.


 


4.2.1  Collection of Receivables. Except as
otherwise provided in this Security Agreement, each Grantor will collect and
enforce, at such Grantor’s sole expense and in its ordinary course of business,
all amounts due or hereafter due to such Grantor under the Receivables owned by
such Grantor.


 


4.2.2  Delivery of Invoices. Each Grantor
will deliver to the Collateral Agent promptly upon its request after the
occurrence and during the continuance of a Default duplicate invoices with
respect to each Account owned by such Grantor and otherwise constituting
Collateral hereunder bearing such language of assignment as the Collateral
Agent shall specify.


 


4.2.3  Disclosure of Receivables.
Upon the reasonable request of the Collateral Agent, each Grantor shall deliver
to the Collateral Agent copies of any periodic reports prepared with respect to
Receivables in connection with any Receivables Purchase Facility.


 


4.3.                              Inventory and Equipment.


 


4.3.1  Bailment Agreements, Etc. With respect
to each location (other than properties owned or leased by such Grantor) at
which Inventory (other than catalogs) and/or Equipment with a net book value in
excess of $10,000,000 is located, each Grantor shall deliver bailment
agreements, warehouse receipts, financing statements or other documents
reasonably satisfactory to the Collateral Agent to protect the Collateral Agent’s
and the Secured Parties’ security interest in such Inventory and/or Equipment.


 


4.3.2  Titled Vehicles. Upon the occurrence
and during the continuance of a Default, each Grantor will give the Collateral
Agent notice of its acquisition of any vehicle covered by a certificate of
title the net book value of which, when taken together


 


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with all other vehicles covered by a certificate of
title owned by any Grantor, exceeds $10,000,000 in the aggregate, and deliver
to the Collateral Agent, upon request, the original of any vehicle title
certificate and do all things necessary to have the Lien of the Collateral
Agent noted on any such certificate to eliminate such excess.


 


4.4.                              Instruments, Securities,
Chattel Paper, Documents and Pledged Deposits. Each Grantor
will (i) deliver to the Collateral Agent immediately upon execution of this
Security Agreement the originals of all Pledged Stock, and, to the extent the
same has a value in excess of $5,000,000 individually or $10,000,000 in the
aggregate, originals of all Chattel Paper, Securities and Instruments
constituting Collateral (if any then exist and other than those constituting
Cash Equivalent Investments or Customer Advance Notes), (ii) hold in trust for
the Collateral Agent upon receipt and immediately thereafter deliver to the
Collateral Agent any Pledged Stock, and, to the extent the same has a value in
excess of $5,000,000 individually or $10,000,000 in the aggregate, originals of
Chattel Paper, Securities and Instruments constituting Collateral (other than
those constituting Cash Equivalent Investments or Customer Advance Notes),
(iii) upon the designation of any Pledged Deposits (as set forth in the
definition thereof), deliver to the Collateral Agent such Pledged Deposits
which are evidenced by certificates included in the Collateral endorsed in
blank, marked with such legends and assigned as the Collateral Agent shall
specify, and (iv) upon the Collateral Agent’s request, after the occurrence and
during the continuance of a Default, deliver to the Collateral Agent (and
thereafter hold in trust for the Collateral Agent upon receipt and immediately
deliver to the Collateral Agent) any Document evidencing or constituting
Collateral. No Grantor shall permit any Person other than such Grantor or the
Collateral Agent to maintain possession of any Customer Advance Note.


 


4.5.                              Uncertificated Securities and
Certain Other Investment Property. Each Grantor will permit
the Collateral Agent (i) from time to time to cause each Subsidiary of the
Parent that is an issuer (and, if held with a securities intermediary, such
securities intermediary) of uncertificated securities or other types of
Investment Property not represented by certificates which are Collateral owned
by such Grantor, and (ii) after the occurrence and during the continuance of a
Default to cause the appropriate other issuers (and, if held with a securities
intermediary, such securities intermediary) of any other uncertificated
securities or other types of Investment Property not represented by
certificates which are Collateral owned by such Grantor, in each case, to mark
their books and records with the numbers and face amounts of all such
uncertificated securities or other types of Investment Property not represented
by certificates and all rollovers and replacements therefor to reflect the Lien
of the Collateral Agent granted pursuant to this Security Agreement. Each
Grantor will use all commercially reasonable efforts, (i) at all times with
respect to each Subsidiary of the Parent that is an issuer of Investment
Property constituting Collateral owned by such Grantor held with a financial
intermediary, and (ii) after the occurrence and during the continuance of a
Default with respect to all other Investment Property constituting Collateral
owned by such Grantor held with a financial intermediary, to cause such
financial intermediary to enter into a control agreement with the Collateral
Agent in form and substance reasonably satisfactory to the Collateral Agent.


 


4.6.                              Stock and Other Ownership
Interests.


 


4.6.1  Changes in Capital Structure of Issuers.
No Grantor will (i) permit or suffer any issuer of Pledged Stock owned by such
Grantor to dissolve, liquidate, retire any of its


 


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capital stock or other Instruments, Securities or
other Investment Property evidencing ownership, reduce its capital or merge or
consolidate with any other entity, or (ii) vote any of the Instruments,
Securities or other Investment Property in favor of any of the foregoing,
except to the extent not prohibited under the Bank Credit Agreement and the
Note Agreement, and, if in effect, any Eligible Additional Senior Secured Documents.


 


4.6.2  Issuance of Additional Securities. No
Grantor will permit or suffer (i) any issuer of Pledged Stock that is a
Guarantor to issue any such securities or other ownership interests, any right
to receive the same or any right to receive earnings, except to such Grantor or
(ii) any issuer of Pledged Stock that is not a Guarantor to issue any such
securities or other ownership interests, any right to receive the same or any
right to receive earnings unless such issuance is made or offered to each
holder of such securities based on their proportionate holdings thereof.


 


4.6.3  Registration of Pledged Securities and other Investment
Property. Each Grantor will permit any registerable
Collateral owned by such Grantor to be registered in the name of the Collateral
Agent or its nominee at any time at the option of the Requisite Lenders
following the occurrence and during the continuance of a Default and without
any further consent of such Grantor.


 


4.6.4  Exercise of Rights in Pledged Securities and other
Investment Property. Each Grantor will permit the Collateral
Agent or its nominee at any time during the continuance of a Default, without
notice, to exercise or refrain from exercising any and all voting and other
consensual rights pertaining to the Collateral owned by such Grantor or any
part thereof, and to receive all dividends and interest in respect of such
Collateral.


 


4.7.                              Deposit Accounts.
Each Grantor will upon the Collateral Agent’s request during the continuance of
a Default, (i) cause each bank or other financial institution in which it
maintains (a) a Deposit Account which is Collateral to enter into a control
agreement with the Collateral Agent, in form and substance reasonably
satisfactory to the Collateral Agent in order to give the Collateral Agent
Control of such Deposit Account or (b) other deposits (general or special, time
or demand, provisional or final) to be notified of the security interest
granted to the Collateral Agent hereunder and cause each such bank or other
financial institution to acknowledge such notification in writing and/or (ii)
deliver to each such bank or other financial institution a letter, in form and
substance acceptable to the Collateral Agent, transferring ownership of such
Deposit Account to the Collateral Agent or transferring dominion and control
over each such other deposit to the Collateral Agent until such time as no
Default exists. In the case of deposits maintained with Banks, the terms of
such letter shall be subject to the provisions of the Bank Credit Agreement and
the Note Agreement, and, if in effect, any Eligible Additional Senior Secured
Documents, regarding setoffs. The provisions of this Section shall not apply to
(x) a deposit account for which the Collateral Agent or any other Bank is the
depositary bank and is in automatic control thereof and (y) any deposit
accounts specially and exclusively used for payroll, payroll taxes and other
employee wage and benefit payments to or for the benefit of any Grantor’s
employees or any other trust accounts.


 


4.8.                              Letter-of-Credit Rights.
Each Grantor will, upon the Collateral Agent’s request, use commercially
reasonable efforts to cause each issuer of a letter of credit that constitutes


 


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Collateral (other
than letters of credit that constitute Supporting Obligations in respect of Collateral)
having a face value in excess of $5,000,000, to consent to the assignment of
proceeds of the letter of credit in order to give the Collateral Agent Control
of the letter-of-credit rights to such letter of credit.


 


4.9.                              Intellectual
Property.
If, after the date of this Security Agreement, any Grantor obtains rights to
any  federally registered patent,
trademark or copyright, or applies for or seeks federal registration of any new
patentable invention, trademark or copyright, in addition to the patents,
trademarks and copyrights described in Part C of Exhibit “B”, which are all of
such Grantor’s federally registered patents, trademarks and copyrights as of
the date of this Security Agreement, then such Grantor shall, on an annual
basis or, after the occurrence and during the continuance of a Default, upon
the request of the Collateral Agent, give the Collateral Agent notice thereof. Each
Grantor agrees promptly upon request by the Collateral Agent to execute and
deliver to the Collateral Agent any supplement to this Security Agreement or
any other document reasonably requested by the Collateral Agent to evidence
such security interest in a form appropriate for recording in the applicable
federal office. Each Grantor also hereby authorizes the Collateral Agent to
modify this Security Agreement unilaterally by amending Part C of Exhibit “B”
to include any future patents, trademarks and/or copyrights of which the
Collateral Agent receives notification from such Grantor pursuant hereto.


 


4.10.                        Commercial
Tort Claims.
If, after the date hereof, any Grantor identifies the existence of a commercial
tort claim belonging to such Grantor in respect of which such Grantor shall
have filed a suit, and having, individually or together with all other such
commercial tort claims, in such Grantor’s reasonable business judgment a value
in excess of $10,000,000, that has arisen in the course of such Grantor’s
business in addition to the commercial tort claims described in Exhibit “E”,
which are all of such Grantor’s commercial tort claims as of the date of this
Security Agreement, then such Grantor shall give the Collateral Agent prompt
notice thereof, but in any event not less frequently than quarterly. Each
Grantor agrees promptly upon request by the Collateral Agent to execute and
deliver to the Collateral Agent any supplement to this Security Agreement or
any other document reasonably requested by the Collateral Agent to evidence the
grant of a security interest therein in favor of the Collateral Agent.


 


ARTICLE V


 


DEFAULT


 


5.1.                              Default.
The occurrence of any “Actionable Default” under, and as defined in, the
Intercreditor Agreement shall constitute a Default hereunder.


 


5.2.                              Acceleration and Remedies.
In accordance with the terms of the Intercreditor Agreement, the Collateral
Agent may, with the concurrence or at the direction of the Requisite Lenders,
exercise any or all of the following rights and remedies:


 


5.2.1  Those rights and remedies provided in this
Security Agreement, the Bank Credit Agreement, the Note Agreement, any Eligible
Additional Senior Secured Documents, or any other Lender Document, provided that
this Section 5.2.1 shall not be


 


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understood to limit any rights or remedies available
to the Collateral Agent and the Secured Parties prior to a Default.


 


5.2.2  Those rights and remedies available to a
secured party under the New York UCC or the PPSA, as applicable (whether or not
the New York UCC or the PPSA applies to the affected Collateral) or under any
other applicable law (including, without limitation, any law governing the
exercise of a bank’s right of setoff or bankers’ lien) when a debtor is in
default under a security agreement.


 


5.2.3  Without notice except as specifically
provided in Section 8.1 or elsewhere herein, sell, lease, assign, grant an
option or options to purchase or otherwise dispose of the Collateral or any
part thereof in one or more parcels at public or private sale, for cash, on
credit or for future delivery, and upon such other terms as the Collateral
Agent may deem commercially reasonable.


 


5.2.4  Appoint by instrument in writing a receiver
(which term as used in this Security Agreement includes a receiver and manager)
or agent of all or any part of the Collateral and remove or replace from time
to time any such receiver or agent.


 


5.2.5  Institute proceedings in any court of
competent jurisdiction for the appointment of a receiver of all or any part of
the Collateral.


 


5.2.6  Borrow for the purposes of carrying on the
business of the Grantor or for the maintenance, preservation or protection of
the Collateral and grant a security interest in the Collateral, whether or not
in priority to the security interest granted herein, to secure repayment.


 


The
Collateral Agent, on behalf of the Secured Parties, may comply with any
applicable state, Canadian provincial or federal law requirements in connection
with a disposition of the Collateral, and such compliance will not be
considered to adversely affect the commercial reasonableness of any sale of the
Collateral.


 


If,
after the Bank Credit Agreement and the Note Agreement, and, if in effect, any
Eligible Additional Senior Secured Documents, has terminated by its respective
terms and all of the Obligations have been paid in full, there remain Rate
Management Obligations outstanding, the Requisite Lenders may exercise the
remedies provided in this Section 5.2 upon the occurrence of any event which
would allow or require the termination or acceleration of any Rate Management
Obligations pursuant to the terms of the agreement governing any Rate
Management Transaction.


 


5.3.                              Grantors’ Obligations Upon
Default. Upon the request of the Collateral Agent during the
continuance of a Default, each Grantor will:


 


5.3.1  Assembly of Collateral. Assemble and
make available to the Collateral Agent the Collateral and all records relating
thereto at any place or places specified by the Collateral Agent which is
reasonably convenient to both parties.


 


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5.3.2  Secured Party Access. Permit the
Collateral Agent, to the extent such Grantor has the authority to do so, by the
Collateral Agent’s representatives and agents, to enter any premises where all
or any part of the Collateral, or the books and records relating thereto, or
both, are located, to take possession of all or any part of the Collateral and
to remove all or any part of the Collateral.


 


5.4.                              License. The
Collateral Agent is hereby granted a license or other right to use, following
the occurrence and during the continuance of a Default, without charge, each
Grantor’s labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks, service marks, customer lists and advertising
matter, or any property of a similar nature, as it pertains to the Collateral,
in completing production of, advertising for sale, and selling any Collateral,
and, following the occurrence and during the continuance of a Default, such
Grantor’s rights under all licenses and all franchise agreements shall inure to
the Collateral Agent’s benefit. In addition, each Grantor hereby irrevocably
agrees that the Collateral Agent may, following the occurrence and during the
continuance of a Default, sell any of such Grantor’s Inventory directly to any
person, including without limitation persons who have previously purchased such
Grantor’s Inventory from such Grantor and in connection with any such sale or
other enforcement of the Collateral Agent’s rights under this Security
Agreement, may sell Inventory which bears any trademark owned by or licensed to
such Grantor and any Inventory that is covered by any copyright owned by or
licensed to such Grantor and the Collateral Agent may finish any work in
process and affix any trademark owned by or licensed to such Grantor and sell
such Inventory as provided herein.


 


5.5.                              Receiver’s
Powers.


 


(a)                                  Any
receiver appointed by the Collateral Agent shall be vested with the rights and
remedies which could have been exercised by the Collateral Agent in respect of
each Grantor or the Collateral and such other powers and discretions as are
granted in the instrument of appointment and any supplemental instruments. The
identity of the receiver, its replacement and its remuneration shall be within
the sole and unfettered discretion of the Collateral Agent or any other Secured
Parties.


 


(b)                                 Any
receiver appointed by the Collateral Agent shall act as agent for the
Collateral Agent or any other Secured Parties for the purposes of taking
possession of the Collateral, but otherwise and for all other purposes (except
as provided below), as agent for each Grantor. The receiver may sell, lease, or
otherwise dispose of Collateral as agent for each Grantor or as agent for the
Collateral Agent as the Collateral Agent may determine in its discretion. Each
Grantor agrees to ratify and confirm all actions of the receiver acting as
agent for each Grantor, and to release and indemnify the receiver in respect of
all such actions.


 


(c)                                  The
Collateral Agent, in appointing or refraining from appointing any receiver,
shall not incur liability to the receiver, each Grantor or otherwise and shall
not be responsible for any misconduct or negligence of the receiver.


 


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ARTICLE VI


 


WAIVERS, AMENDMENTS AND REMEDIES


 


Each of the Secured Parties agrees that, except to the
extent provided in Section 5.2, this Security Agreement may be enforced only by
the actions of the Collateral Agent for the benefit of the Secured Parties, and
that no other Secured Party shall have any right individually to seek to
enforce or to enforce this Security Agreement or to realize upon the security
to be granted hereby (other than the right of setoff provided for in the Lender
Documents). No delay or omission of the Collateral Agent to exercise any right
or remedy granted under this Security Agreement shall impair such right or
remedy or be construed to be a waiver of any Default or an acquiescence
therein, and any single or partial exercise of any such right or remedy shall
not preclude any other or further exercise thereof or the exercise of any other
right or remedy. No waiver, amendment or other variation of the terms,
conditions or provisions of this Security Agreement whatsoever shall be valid
unless in writing signed by the Collateral Agent with the concurrence or at the
direction of the Requisite Lenders and each Grantor, and then only to the
extent in such writing specifically set forth, provided that the addition of
any Domestic Subsidiary as a Grantor hereunder by execution of a Security Agreement
Supplement in the form of Annex I (with such modifications as shall be
acceptable to the Collateral Agent) shall not require receipt of any consent
from or execution of any documentation by any other Grantor party hereto. All
rights and remedies contained in this Security Agreement or by law afforded
shall be cumulative and all shall be available to the Collateral Agent until
the non-contingent Secured Obligations have been paid in full.


 


ARTICLE VII


 


PROCEEDS; COLLECTION OF
RECEIVABLES


 


7.1.                              Lockboxes. Upon
request of the Collateral Agent after the occurrence and during the continuance
of a Default, each Grantor shall execute and deliver to the Collateral Agent
irrevocable lockbox agreements in the form provided by or otherwise acceptable
to the Collateral Agent, which agreements shall be accompanied by an
acknowledgment by the bank where the lockbox is located of the Lien of the
Collateral Agent granted hereunder and of irrevocable instructions to wire all
amounts collected therein to a special collateral account at the Collateral
Agent.


 


7.2.                              Collection of Receivables.
The Collateral Agent may at any time after the occurrence and during the
continuance of a Default, by giving each Grantor written notice, elect to
require that the Receivables which are Collateral be paid directly to the
Collateral Agent for the benefit of the Secured Parties. In such event, each
Grantor shall, and shall permit the Collateral Agent to, promptly notify the
account debtors or obligors under the Receivables owned by such Grantor of the
Collateral Agent’s interest therein and direct such account debtors or obligors
to make payment of all amounts then or thereafter due under such Receivables
directly to the Collateral Agent. Upon receipt of any such notice from the
Collateral Agent, each Grantor shall thereafter hold in trust for the
Collateral Agent, on behalf of the Secured Parties, all amounts and proceeds
received by it with respect to the Receivables which are Collateral and Other
Collateral and immediately and at all times thereafter deliver to the
Collateral Agent all


 


17





















 


such amounts and
proceeds in the same form as so received, whether by cash, check, draft or
otherwise, with any necessary endorsements. The Collateral Agent shall hold and
apply funds so received as provided by the terms of Sections 7.3 and 7.4.


 


7.3.                              Special Collateral Account.
The Collateral Agent may require all cash proceeds of the Collateral to be
deposited in a special non-interest bearing cash collateral account with the
Collateral Agent and held there as security for the Secured Obligations. No
Grantor shall have any control whatsoever over said cash collateral account. If
no Default is continuing, the Collateral Agent shall from time to time deposit
the collected balances in said cash collateral account into the applicable
Grantor’s general operating account with the Collateral Agent. If any Default
has occurred and is continuing, the Collateral Agent may (and shall, at the
direction of the Requisite Lenders), from time to time, apply the collected
balances in said cash collateral account to the payment of the Secured
Obligations whether or not the Secured Obligations shall then be due.


 


7.4.                              Application of Proceeds.
The proceeds of the Collateral shall be applied by the Collateral Agent to
payment of the Secured Obligations in accordance with the terms of Section 9 of
the Intercreditor Agreement.


 


ARTICLE VIII


 


GENERAL PROVISIONS


 


8.1.                              Notice of Disposition of
Collateral; Condition of Collateral. Each Grantor hereby
waives notice of the time and place of any public sale or the time after which
any private sale or other disposition of all or any part of the Collateral may
be made. To the extent such notice may not be waived under applicable law, any
notice made shall be deemed reasonable if sent to the Borrower, addressed as
set forth in Article IX, at least ten days prior to (i) the date of any such
public sale or (ii) the time after which any such private sale or other
disposition may be made. The Collateral Agent shall have no obligation to
clean-up or otherwise prepare the Collateral for sale. The Collateral Agent
agrees to distribute any proceeds of the sale of the Collateral in accordance
with the terms and conditions of the Intercreditor Agreement, and each Grantor
shall remain liable for any deficiency following the sale of the Collateral.


 


8.2.                              Compromises and Collection of
Collateral. Each Grantor and the Collateral Agent recognize
that setoffs, counterclaims, defenses and other claims may be asserted by
obligors with respect to certain of the Receivables, that certain of the
Receivables may be or become uncollectible in whole or in part and that the
expense and probability of success in litigating a disputed Receivable may
exceed the amount that reasonably may be expected to be recovered with respect
to a Receivable. In view of the foregoing, each Grantor agrees that the
Collateral Agent may at any time and from time to time, if a Default has
occurred and is continuing, compromise with the obligor on any Receivable,
accept in full payment of any Receivable such amount as the Collateral Agent in
its sole discretion shall determine or abandon any Receivable, and any such
action by the Collateral Agent shall be commercially reasonable so long as the
Collateral Agent acts in good faith based on information known to it at the
time it takes any such action.


 


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8.3.                              Secured Party Performance of
Grantor’s Obligations. Without having any obligation to do so,
the Collateral Agent may perform or pay any obligation which any Grantor has
agreed to perform or pay in this Security Agreement and such Grantor shall
reimburse the Collateral Agent for any reasonable amounts paid by the
Collateral Agent pursuant to this Section 8.3. Each Grantor’s obligation to
reimburse the Collateral Agent pursuant to the preceding sentence shall be a
Secured Obligation payable on demand.


 


8.4.                              Authorization for Secured Party
to Take Certain Action. Each Grantor irrevocably authorizes
the Collateral Agent at any time and from time to time in the sole discretion
of the Collateral Agent and appoints the Collateral Agent as its attorney in
fact (i) to execute on behalf of such Grantor as debtor and to file financing
statements necessary or desirable in the Collateral Agent’s sole discretion to
perfect and to maintain the perfection and priority of the Collateral Agent’s
security interest in the Collateral, (ii) to indorse and collect any cash
proceeds of the Collateral, (iii) to file a carbon, photographic or other
reproduction of this Security Agreement or any financing statement with respect
to the Collateral as a financing statement and to file any other financing
statement or amendment of a financing statement (which does not add new collateral
or add a debtor) in such offices as the Collateral Agent in its sole discretion
deems necessary or desirable to perfect and to maintain the perfection and
priority of the Collateral Agent’s security interest in the Collateral, (iv) to
contact and enter into one or more agreements with the issuers of
uncertificated securities which are Collateral owned by such Grantor and which
are Securities or with financial intermediaries holding other Investment
Property as may be necessary or advisable to give the Collateral Agent Control
over such Securities or other Investment Property, (v) to enforce payment of
the Instruments, Accounts and Receivables which are Collateral in the name of
the Collateral Agent or such Grantor, (vi) to apply the proceeds of any
Collateral received by the Collateral Agent to the Secured Obligations as
provided in Article VII and (vii) to discharge past due taxes, assessments,
charges, fees or Liens on the Collateral (except for such Liens as are
specifically permitted hereunder or under any other Lender Document), and each
Grantor agrees to reimburse the Collateral Agent on demand for any reasonable
payment made or any reasonable expense incurred by the Collateral Agent in
connection therewith, provided that this authorization shall not relieve any
Grantor of any of its obligations under this Security Agreement, under the Bank
Credit Agreement or under the Note Agreement, or, if in effect, any Eligible
Additional Senior Secured Documents. Notwithstanding the foregoing, such powers
of attorney granted with respect to clause (ii) and clauses (iv) through (vii)
above shall be exercisable by the Collateral Agent only after the occurrence
and during the continuance of a Default.


 


8.5.                              Specific Performance of Certain
Covenants. Each Grantor acknowledges and agrees that a breach
of any of the covenants contained in Sections 4.4, 5.3, or 8.7 or in Article
VII will cause irreparable injury to the Collateral Agent and the Secured
Parties, that the Collateral Agent and Secured Parties have no adequate remedy
at law in respect of such breaches and therefore agrees, without limiting the
right of the Collateral Agent or the Secured Parties to seek and obtain
specific performance of other obligations of the Grantors contained in this
Security Agreement, that the covenants of the Grantors contained in the
Sections referred to in this Section 8.5 shall be specifically enforceable
against the Grantors.


 


8.6.                              Use and Possession of Certain
Premises. Upon the occurrence and during the continuance of a
Default, the Collateral Agent shall be entitled to occupy and use any premises


 


19





















 


owned or leased by
the Grantors where any of the Collateral or any records relating to the
Collateral are located until the non-contingent Secured Obligations are paid or
the Collateral is removed therefrom, whichever first occurs, without any
obligation to pay any Grantor for such use and occupancy.


 


8.7.                              Dispositions Not Authorized.
No Grantor is authorized to sell or otherwise dispose of the Collateral except
as set forth in the Bank Credit Agreement and the Note Agreement, and, if in
effect, any Eligible Additional Senior Secured Documents, and notwithstanding
any course of dealing between any Grantor and the Collateral Agent or other
conduct of the Collateral Agent, no authorization to sell or otherwise dispose
of the Collateral (except as set forth in the Bank Credit Agreement and the
Note Agreement, and, if in effect, any Eligible Additional Senior Secured
Documents) shall be binding upon the Collateral Agent or the Secured Parties
unless such authorization is in writing signed by the Collateral Agent with the
consent or at the direction of the Requisite Lenders.


 


8.8.                              Benefit of Agreement.
The terms and provisions of this Security Agreement shall be binding upon and
inure to the benefit of the Grantors, the Collateral Agent and the Secured
Parties and their respective successors and permitted assigns (including all
persons who become bound as a debtor to this Security Agreement), except that
the Grantors shall not have the right to assign their rights or delegate their
obligations under this Security Agreement or any interest herein (other than
pursuant to a transaction not prohibited by the Bank Credit Agreement and the
Note Agreement, and, if in effect, any applicable Eligible Additional Senior
Secured Documents), without the prior written consent of the Collateral Agent.


 


8.9.                              Survival of Representations.
All representations and warranties of the Grantors contained in this Security
Agreement shall survive the execution and delivery of this Security Agreement.


 


8.10.                        Taxes and Expenses.
The Grantors shall reimburse the Collateral Agent for any and all reasonable
out-of-pocket expenses, costs and charges (including but not limited to
reasonable outside attorneys’, auditors’ and accountants’ fees and receiver’s
or agent’s remuneration) paid or incurred by the Collateral Agent in connection
with the preparation, execution, delivery, administration, collection and
enforcement of this Security Agreement and in the audit, analysis,
administration, collection, preservation or sale of the Collateral (including,
to the extent permitted by the Bank Credit Agreement and the Note Agreement,
and, if in effect, any applicable Eligible Additional Senior Secured Document,
the expenses and charges associated with any periodic or special audit of the
Collateral). Any and all costs and expenses incurred by the Grantors in the
performance of actions required pursuant to the terms hereof shall be borne
solely by the Grantors.


 


8.11.                        Consent.
Each Grantor hereby consents to the holding of any Pledged Stock by the
Collateral Agent for and on behalf of each and every one of the Secured
Parties. The Collateral Agent hereby acknowledges having received, as of the
date hereof, evidence in writing of the security by the Grantor on the Pledged
Stock and the share certificates in respect thereof.


 


8.12.                        Currency.
All references in this Security Agreement to dollars, unless otherwise
specifically indicated, are expressed in currency of the United States of
America.


 


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8.13.                        Headings. The
title of and section headings in this Security Agreement are for convenience of
reference only, and shall not govern the interpretation of any of the terms and
provisions of this Security Agreement.


 


8.14.                        Termination. This
Security Agreement shall continue in effect (notwithstanding the fact that from
time to time there may be no Secured Obligations outstanding) until terminated
in accordance with Section 20 of the Intercreditor Agreement. Notwithstanding
the foregoing, the security interests granted hereunder (and any Grantor’s
obligations hereunder) shall be released in accordance with the provisions of
Section 19 of the Intercreditor Agreement.


 


8.15.                        Entire Agreement.
This Security Agreement embodies the entire agreement and understanding between
the Grantors and the Collateral Agent relating to the Collateral and supersedes
all prior agreements and understandings between the Grantors and the Collateral
Agent relating to the Collateral.


 


8.16.                        CHOICE OF LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK (INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAWS OF THE STATE OF
NEW YORK, BUT OTHERWISE WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES) BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.


 


8.17.                        Indemnity. Each
Grantor hereby agrees, jointly with the other Grantors and severally, to indemnify
the Collateral Agent and the Secured Parties, and their respective successors,
permitted assigns, agents and employees, from and against any and all
liabilities, damages, penalties, suits, costs, and expenses of any kind and
nature  (including, without limitation,
all expenses of litigation or preparation therefor whether or not the
Collateral Agent or any Secured Parties is a party thereto) imposed on,
incurred by or asserted against the Collateral Agent or the Secured Parties, or
their respective successors, assigns, agents and employees, in any way relating
to or arising out of this Security Agreement, or the manufacture, purchase,
acceptance, rejection, ownership, delivery, lease, possession, use, operation,
condition, sale, return or other disposition of any Collateral (including,
without limitation, latent and other defects, whether or not discoverable by
the Collateral Agent or the Secured Parties or any Grantor, and any claim for
patent, trademark or copyright infringement), except to the extent the same are
caused by the gross negligence or willful misconduct of such Person or solely
by reason of the Collateral Agent’s breach of the express terms of this
Agreement.


 


8.18.                        Subordination
of Intercompany Indebtedness. Each Grantor agrees that any and all claims
of such Grantor against any other Grantor (each an “Obligor”) with respect to
any “Intercompany Indebtedness” (as hereinafter defined), any endorser, obligor
or any other guarantor of all or any part of the Secured Obligations, or
against any of its properties shall be subordinate and subject in right of
payment to the prior Payment in Full of all Secured Obligations (other than
contingent indemnity obligations). Notwithstanding any right of any Grantor to
ask, demand, sue for, take or receive any payment from any Obligor, all rights,
liens and security interests of such Grantor, whether now or hereafter arising
and howsoever existing, in any assets of any other Obligor shall be and are
subordinated to the rights of the Secured Parties and the Collateral Agent in
those assets. No Grantor shall have any right to possession of


 


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any such asset or
to foreclose upon any such asset, whether by judicial action or otherwise,
unless and until all of the Secured Obligations (other than contingent
indemnity obligations) shall have been Paid in Full. If all or any part of the
assets of any Obligor, or the proceeds thereof, are subject to any
distribution, division or application to the creditors of such Obligor, whether
partial or complete, voluntary or involuntary, and whether by reason of
liquidation, bankruptcy, arrangement, receivership, assignment for the benefit
of creditors or any other action or proceeding, or if the business of any such
Obligor is dissolved or if substantially all of the assets of any such Obligor
are sold, then, and in any such event (such events (other than any such events
not prohibited by the Bank Credit Agreement and the Note Agreement, and, if in
effect, any Eligible Additional Senior Secured Documents) being herein referred
to as an “Insolvency Event”), any payment or distribution of any kind or
character, either in cash, securities or other property, which shall be payable
or deliverable upon or with respect to any indebtedness of any Obligor to any
Grantor (“Intercompany Indebtedness”) shall be paid or delivered directly to
the Collateral Agent for application on any of the Secured Obligations, due or
to become due, until such Secured Obligations (other than contingent indemnity
obligations) shall have first been Paid in Full. Should any payment,
distribution, security or instrument or proceeds thereof be received by the
applicable Grantor upon or with respect to the Intercompany Indebtedness after
any Insolvency Event and prior to the satisfaction of all of the Secured
Obligations (other than contingent indemnity obligations) and the termination
or expiration of all Commitments of the Banks and Letters of Credit issued
pursuant to the Bank Credit Agreement, such Grantor shall receive and hold the
same in trust, as trustee, for the benefit of the Secured Parties and shall
forthwith deliver the same to the Collateral Agent, for the benefit of the
Secured Parties, in precisely the form received (except for the endorsement or
assignment of the Grantor where necessary), for application to any of the
Secured Obligations, due or not due, and, until so delivered, the same shall be
held in trust by the Grantor as the property of the Secured Parties. If any
such Grantor fails to make any such endorsement or assignment to the Collateral
Agent, the Collateral Agent or any of its officers or employees is irrevocably
authorized to make the same. Each Grantor agrees that until the Secured
Obligations (other than the contingent indemnity obligations) have been Paid in
Full, no Grantor will assign or transfer to any Person (other than the
Collateral Agent or the Borrower or another Grantor) any claim any such Grantor
has or may have against any Obligor.


 


ARTICLE IX


 


NOTICES


 


9.1.                              Sending Notices.
Any notice required or permitted to be given under this Security Agreement
shall be sent (and deemed received) in the manner and to the addresses set
forth in Section 31 of the Intercreditor Agreement; and any such notice
delivered to the Borrower shall be deemed to have been delivered to all of the
Grantors.


 


9.2.                              Change in Address for Notices.
Each of the Grantors, the Collateral Agent and the Lenders may change the
address for service of notice upon it by a notice in writing to the other
parties.


 


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ARTICLE X


 


THE COLLATERAL AGENT


 


JPMorgan Chase Bank, N.A. has been appointed
Collateral Agent for the Secured Parties hereunder pursuant to the
Intercreditor Agreement. It is expressly understood and agreed by the parties
to this Security Agreement that any authority conferred upon the Collateral
Agent hereunder is subject to the terms of the delegation of authority made by
the Secured Parties to the Collateral Agent pursuant to the Intercreditor
Agreement, and that the Collateral Agent has agreed to act (and any successor
Collateral Agent shall act) as such hereunder only on the express conditions
contained in such Intercreditor Agreement. Any successor Collateral Agent
appointed pursuant to the Intercreditor Agreement shall be entitled to all the
rights, interests and benefits of the Collateral Agent hereunder.


 


ARTICLE XI


 


EXHIBITS


 


The Grantors may from time to time update the Exhibits
to this Security Agreement in writing such that any representations and warranties
made hereunder as of a particular Reference Date shall be made in reference to
the Exhibits to this Security Agreement as in effect on such Reference Date. Notwithstanding
the foregoing, to the extent any action or inaction resulting in a change to
the information contained in  any Exhibit
to this Security Agreement independently required compliance with any other
provision of the Security Agreement (or the Bank Credit Agreement or the Note
Agreement, or, if in effect, any Eligible Additional Senior Secured Documents),
then the updating of the relevant Exhibit shall not relieve, waive or excuse
the independent Default arising from such Grantor’s non-compliance with any
such provision pertaining to the underlying action or inaction.


 


23

















 


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


	
  UNITED STATIONERS INC.

  	
  UNITED STATIONERS TECHNOLOGY

  SERVICES LLC

  
	
   

  	
   

  
	
  By:

  	
  /s/ Brian S. Cooper

  	
   

  	
   

  
	
  Name: Brian S. Cooper

  	
  By:

  	
  /s/ Brian S. Cooper

  	
   

  
	
  Title: Senior Vice President and Treasurer

  	
  Name: Brian S. Cooper

  
	
   

  	
  Title: Vice President and Treasurer

  
	
   

  	
   

  
	
  LAGASSE, INC.

  	
  UNITED STATIONERS SUPPLY CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Brian S. Cooper

  	
   

  	
  By:

  	
  /s/ Brian S. Cooper

  	
   

  
	
  Name: Brian S. Cooper

  	
  Name: Brian S. Cooper

  
	
  Title: Vice President and Treasurer

  	
  Title: Senior Vice President, Treasurer and

  Assistant Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
  UNITED STATIONERS FINANCIAL

  SERVICES LLC

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Brian S. Cooper

  	
   

  	
   

  
	
  Name: Brian S. Cooper

  	
   

  
	
  Title: Vice President and Treasurer

  	
   

  
	
   

  	
   

  
	
  JPMORGAN CHASE BANK, N.A., as

  Collateral Agent

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Sabir A. Hashmy

  	
   

  	
   

  
	
  Name:Sabir A. Hashmy

  	
   

  
	
  Title:Vice President

  	
   

  



 


SIGNATURE PAGE TO AMENDED
AND RESTATED PLEDGE AND SECURITY AGREEMENT


 

















 


	
  STATE OF ILLINOIS

  	
   

  	
  )

  
	
   

  	
   

  	
  ) SS

  
	
  COUNTY OF COOK

  	
   

  	
  )

  



 


The foregoing instrument
was acknowledged before me this       day of                ,
2007.


 


	
   

  	
   

  	
  /s/ Cheryl Cromer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notary
  Public

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  My commission expires:

  



 


1

















 


ANNEX I


 


to


 


SUBSIDIARY


 


SECURITY AGREEMENT


 


Reference is hereby made to the Amended and Restated
Pledge and Security Agreement (the “Agreement”), dated as of October 15, 2007,
made by each of United Stationers Supply Co., an Illinois corporation (the “Borrower”),  United Stationers Inc., a Delaware
corporation (the “Parent”), and the other Subsidiaries of the Parent listed on
the signature pages thereto (together with the Borrower and the Parent,
collectively, the “Grantors”) (each an “Initial Grantor”, and together with any
additional Domestic Subsidiaries, including the undersigned, which become
parties thereto by executing a Supplement in substantially the form hereof, the
“Grantors”), in favor of JPMorgan Chase Bank, N.A., as collateral agent (the “Collateral
Agent”). Capitalized terms used herein and not defined herein shall have the
meanings given to them in the Agreement. By its execution below, the
undersigned, [NAME OF NEW GRANTOR], a [                                                   ]
[corporation/limited liability company] agrees to become, and does hereby
become, a Grantor under the Agreement and agrees to be bound by such Agreement
as if originally a party thereto. By its execution below, the undersigned
represents and warrants as to itself that all of the representations and
warranties contained in the Agreement are true and correct in all respects as
of the date hereof. [NAME OF NEW GRANTOR] represents and warrants that the
supplements to the Exhibits to the Agreement attached hereto are true and
correct in all respects and such supplements set forth all information required
to be scheduled under the Agreement. [NAME OF NEW GRANTOR] shall take all steps
necessary to perfect, in favor of the Collateral Agent, a first-priority
security interest in and lien against [NAME OF NEW GRANTOR]’s Collateral,
including, without limitation, delivering all certificated Securities to the
Collateral Agent, and taking all steps necessary to properly perfect the
Collateral Agent’s interest in any uncertificated equity or membership
interests.


 


IN WITNESS WHEREOF, [NAME OF NEW GRANTOR], a [                                    ]
[corporation/limited liability company] has executed and delivered this Annex I
counterpart to the Agreement as of this                       
day of                      ,
      .


 


 


	
   

  	
  [NAME OF NEW GRANTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
					



 


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