Exhibit 10.22


 


AMENDED AND RESTATED DOMESTIC SECURITY AGREEMENT


 


AMENDED AND RESTATED DOMESTIC SECURITY AGREEMENT dated as of November
21, 2005 (as it may be amended, restated, supplemented or modified from time to
time, this “Agreement”), among the entities listed on the signature page
hereof (collectively referred to as the “Grantors” and individually as a
“Grantor”) and GENERAL ELECTRIC CAPITAL CORPORATION, as Collateral Agent
(in such capacity, the “Collateral Agent”) for the Secured Parties (as
defined herein).


 


W  I  T  N  E  S
S  E  T  H:


 


WHEREAS, the
Parent Borrower and the Domestic Subsidiary Borrowers (as defined in the Prior
Credit Agreement described below) are parties to that certain Credit Agreement
dated as of February 17, 2004 (as amended, restated, supplemented or otherwise
modified from time to time prior to the date hereof, the “Prior Credit
Agreement”) among Parent Borrower, Uniplast Industries Co., a Nova Scotia
corporation (the “Canadian Subsidiary Borrower”), certain Domestic
Subsidiary Borrowers party thereto, the Lenders party thereto (the “Prior
Lenders”), Credit Suisse First Boston, acting through its Cayman Islands
Branch, as Administrative Agent and Documentation Agent (the “Prior
Administrative Agent”), Deutsche Bank Trust Company Americas, as Collateral
Agent (the “Prior Collateral Agent”), General Electric Capital
Corporation, as Co-Collateral Agent, and JPMorgan Chase Bank, as Syndication
Agent; and


 


WHEREAS, the
Grantors and the Prior Administrative Agent are parties to that certain Domestic
Security Agreement dated as of February 17, 2004 (as amended, restated,
supplemented or otherwise modified from time to time prior to the date hereof,
the “Prior Security Agreement”), pursuant to which each Grantor granted
to the Collateral Agent a security interest in the Collateral (as defined in
the Prior Security Agreement) to secure the prompt and complete payment and
performance when due (whether at stated maturity by acceleration or otherwise)
of the Obligations; and


 


WHEREAS, the
Prior Collateral Agent and the trustees for the holders of the Senior Secured
Discount Notes and the Existing Senior Secured Notes entered into an
Intercreditor Agreement dated as of February 17, 2004  (as amended, restated, supplemented or
otherwise modified from time to time, the “Intercreditor Agreement”),
which confirms the relative priority of the security interests of the Secured
Parties, the holders of the Senior Secured Discount Notes and the holders of
the Existing Senior Secured Notes in the Collateral; and


 


WHEREAS, prior
to the execution of this Agreement, the Prior Collateral Agent resigned as “Collateral
Agent” under the Prior Credit Agreement, the Security Documents (as defined in
the Prior Credit Agreement) and the other Loan Documents (as defined in the
Prior Credit Agreement) and the Collateral Agent succeeded the Prior Collateral
Agent as the “Collateral Agent” thereunder, all pursuant to that certain
Consent and Amendment dated as of March 8, 2004 by and among the Prior
Administrative Agent, the Prior Collateral Agent, the Collateral Agent,
Deutsche Bank Trust Company Americas, as replaced Issuing Bank, LaSalle
Business Credit, LLC, as replacement Issuing Bank, the Borrowers and the Prior
Lenders; and


 

















 


WHEREAS, the
parties wish to amend and restate the Prior Credit Agreement in the form of
that certain Amended and Restated Credit Agreement dated as of even date
herewith (as amended, restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among the Parent Borrower, the Canadian
Subsidiary Borrower, the Domestic Subsidiary Borrowers party thereto, the
Lenders party thereto, Morgan Stanley Senior Funding, Inc., as Domestic B
Agent, the Collateral Agent and General Electric Capital Corporation, as
Domestic A Agent and Administrative Agent; and


 


WHEREAS, in
connection with the amendment and restatement of the Prior Credit Agreement,
the parties hereto desire to amend and restate the Prior Security Agreement in
its entirety as set forth herein; and


 


WHEREAS, the
Lenders have agreed to make Loans to the Borrowers, and the Issuing Bank has
agreed to issue Letters of Credit for the account of the Parent Borrower, in an
amount up to $140,000,000, pursuant to, and upon the terms and subject to the
conditions specified in, the Credit Agreement; and


 


WHEREAS,
pursuant to the Amended and Restated Guarantee Agreement dated as of even date
herewith (as amended, restated supplemented or otherwise modified from time to
time, the “Guarantee Agreement”), certain of the Grantors have agreed to
guarantee, among other things, all the obligations of the Borrowers under the
Credit Agreement; and


 


WHEREAS, the
obligations of the Lenders to make Loans and of the Issuing Bank to issue
Letters of Credit under the Credit Agreement are conditioned upon, among other
things, the execution and delivery by the Grantors of an agreement in the form
hereof to secure (a) the due and punctual payment by the Borrowers of
(i) the principal of and premium, if any, and interest (including interest
accruing during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or allowable in such
proceeding) on the Loans, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment, or otherwise,
(ii) each payment required to be made by the Borrowers under the Credit
Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral and (iii) all other monetary
obligations, including fees, costs, expenses and indemnities, whether primary,
secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of each Loan Party to the Secured Parties under
the Credit Agreement and the other Loan Documents, (b) the due and
punctual performance of all covenants, agreements, obligations and liabilities
of each Loan Party under or pursuant to the Credit Agreement and the other Loan
Documents, (c) the due and punctual payment and performance of all
obligations of each Loan Party, monetary or otherwise, under each Swap
Agreement that (i) is effective on the Effective Date with a counterparty
that is a Lender (or an Affiliate of a Lender) as of the Effective Date or
(ii) is entered into after the Effective Date with any counterparty that is
a Lender (or an Affiliate thereof) at the time such Swap Agreement is entered
into and (d) the due and punctual payment and performance of all monetary
obligations of each Loan Party in respect of overdrafts and related liabilities
owed to any of the Lenders (or any Affiliates thereof) or Wachovia Bank,
National Association (or any Affiliates thereof) arising from treasury,
depositary and cash


 


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management services or in
connection with any automated clearinghouse transfers of funds (all the
monetary and other obligations described in the preceding clauses (a)
through (d) being collectively called the “Obligations”); and


 


ACCORDINGLY,
each of the Grantors and the Collateral Agent, on behalf of itself and each
Secured Party (and each of their respective successors or assigns), hereby
agree to amend and restate the Prior Security Agreement in its entirety as
follows:


 


ARTICLE I



Definitions


 


SECTION
1.01.      Definition
of Terms Used Herein. Unless the context otherwise requires, all
capitalized terms used but not defined herein shall have the meanings set forth
in the Credit Agreement and all terms defined in the Uniform Commercial Code
from time to time in effect in the State of New York (the “NY UCC”)
and not defined herein shall have the meaning specified in Article 9 of
the NY UCC.


 


SECTION
1.02.      Definition
of Certain Terms Used Herein.  As
used herein, the following terms shall have the following meanings:


 


“Account
Debtor” shall mean any Person who is or who may become obligated to any
Grantor under, with respect to or on account of an Account.


 


“Accounts
Receivable” shall mean all Accounts and all right, title and interest in
any returned goods, together with all rights, titles, securities and guarantees
with respect thereto, including any rights to stoppage in transit, replevin,
reclamation and resales, and all related security interests, liens and pledges,
whether voluntary or involuntary, in each case whether now existing or owned or
hereafter arising or acquired.


 


 “Cash Concentration Account” shall
mean, with respect to any Grantor, the cash concentration account maintained by
such Grantor with the Collateral Agent, to which such Grantor will cause to be
transferred, on each Business Day, amounts deposited in the Collection Deposit
Accounts on such Business Day, as provided in Section 5.01.


 


“Collateral”
shall have the meaning assigned to such term in Section 2.


 


“Collateral
Proceeds Account” shall mean an account maintained by and in the name of
the Administrative Agent, for purposes of this Agreement and the Credit
Agreement.


 


“Collection
Deposit Accounts” shall mean the respective collection accounts maintained
by the Collection Deposit Banks pursuant to the Collection Deposit Letter
Agreements and into which the Grantors will deposit or cause to be deposited
all Daily Receipts, as provided in Section 5.01.


 


“Collection
Deposit Bank” shall mean, at any time, any financial institution then
serving as a “Collection Deposit Bank” as provided in Section 5.01.


 


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“Collection
Deposit Letter Agreement” shall mean an agreement among the applicable
Grantor, a Collection Deposit Bank and the Collateral Agent, in form and
substance reasonably satisfactory to the Collateral Agent, pursuant to which
such Collection Deposit Bank shall maintain one or more Collection Deposit
Accounts, as such Collection Deposit Letter Agreement may be amended, modified
or supplemented from time to time.


 


“Commodity
Account” shall mean an account maintained by a Commodity Intermediary in
which a Commodity Contract is carried out for a Commodity Customer.


 


“Commodity
Contract” shall mean a commodity futures contract, an option on a commodity
futures contract, a commodity option or any other contract that, in each case,
is (a) traded on or subject to the rules of a board of trade that has been
designated as a contract market for such a contract pursuant to the federal
commodities laws or (b) traded on a foreign commodity board of trade, exchange
or market, and is carried on the books of a Commodity Intermediary for a
Commodity Customer.


 


“Commodity
Customer” shall mean a Person for whom a Commodity Intermediary carries a
Commodity Contract on its books.


 


“Commodity
Intermediary” shall mean (a) a Person who is registered as a futures
commission merchant under the federal commodities laws or (b) a Person who in
the ordinary course of its business provides clearance or settlement services
for a board of trade that has been designated as a contract market pursuant to
federal commodities laws.


 


“Consumer
Goods” shall mean goods that are used or bought for use primarily for
personal, family or household purposes.


 


“Copyright
License”  shall mean any written
agreement, now or hereafter in effect, granting any right to any third party
under any Copyright now or hereafter owned by any Grantor or which such Grantor
otherwise has the right to license, or granting any right to such Grantor under
any Copyright now or hereafter owned by any third party, and all rights of such
Grantor under any such agreement.


 


“Copyrights”
shall mean all of the following now owned or hereafter acquired by any
Person:  (a) all copyright rights in
any work subject to the copyright laws of the United States or Canada, whether
as author, assignee, transferee or otherwise, and (b) all registrations
and applications for registration of any such copyright in the United States or
Canada, including registrations, recordings, supplemental registrations and
pending applications for registration in the United States Copyright Office or
any similar office in Canada, including those listed on Schedule II.


 


“Credit
Agreement” shall have the meaning assigned to such term in the preliminary
statement of this Agreement.


 


“Credit
Card Payments” shall mean all payments received or receivable by or on
behalf of any Grantor in respect of sales of Inventory paid for by credit card
charges, including payments from financial institutions that process credit
card transactions for any of the Grantors.


 


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“Daily
Receipts” shall mean all amounts received by the Grantors, whether in the
form of cash, checks, any moneys received or receivable in respect of charges
made by means of credit cards, and other negotiable instruments, in each case
as a result of the sale of Inventory or in respect of Accounts Receivable.


 


“Documents”
shall mean all instruments, files, records, ledger sheets and documents
covering or relating to any of the Collateral.


 


“Entitlement
Holder” shall mean a Person identified in the records of a Security
Intermediary as the Person having a Security Entitlement against the Security
Intermediary.  If a Person acquires a
Security Entitlement by virtue of Section 8-501(b)(2) or (3) of the Uniform
Commercial Code, such Person is the Entitlement Holder.


 


“Equipment”
shall mean all equipment, furniture and furnishings, including tools, parts and
supplies of every kind and description, and all improvements, accessions or
appurtenances thereto, that are now or hereafter owned by any Grantor.


 


“Exigent
Circumstances” shall mean (a) a fraud has been committed by any Loan Party
in connection with the Obligations, including any withholding of collections of
accounts receivable or other proceeds of Collateral in violation of the terms
of the Loan Documents, or (b) an event or circumstance that, in the
commercially reasonable judgment of any Agent is reasonably likely to cause a
material and imminent diminution in the value of the Collateral or materially
and imminently threatens the ability of such Agent to realize upon all or any
material portion of the Collateral


 


“Farm
Products” shall mean goods, other than standing timber, with respect to
which the debtor is engaged in a farming operation and which are: (a) crops
grown, growing or to be grown, including: (i) crops produced on trees, vines
and bushes; and (ii) aquatic goods produced in aquacultural operations; (b)
livestock, born or unborn, including aquatic goods produced in aquacultural
operations; (c) supplies used or produced in a farming operation; and (d)
products of crops or livestock in their unmanufactured states.


 


“Financial
Asset” shall mean (a) a Security, (b) an obligation of a Person or a share,
participation or other interest in a Person or in property or an enterprise of
a Person,  which is, or is of a type,
dealt with in or traded on financial markets, or which is recognized in any
area in which it is issued or dealt in as a medium for investment or (c) any
property that is held by a Security Intermediary for another Person in a
Securities Account if the Security Intermediary has expressly agreed with the
other Person that the property is to be treated as a Financial Asset under
Article 8 of the Uniform Commercial Code. 
As the context requires, the term Financial Asset shall mean either the
interest itself or the means by which a Person’s claim to it is evidenced,
including a certificated or uncertificated Security, a certificate representing
a Security or a Security Entitlement.


 


“General
Funds Account” shall mean an account maintained by the Parent Borrower, to
which the Administrative Agent will, subject to the terms and conditions set
forth herein, cause to be transferred certain amounts on deposit in the
Collateral Proceeds Account.


 


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“General
Intangibles” shall mean all “general intangibles” as such term is defined
in the NY UCC, and in any event, with respect to any Grantor, all choses
in action and causes of action and all other assignable intangible personal
property of any Grantor of every kind and nature (other than Accounts
Receivable) now owned or hereafter acquired by any Grantor, including corporate
or other business records, indemnification claims, contract rights (including
rights under leases, whether entered into as lessor or lessee, [Swap
Agreements] and other agreements but excluding contract rights in contracts
which contain an enforceable prohibition on assignment or the granting of a
security interest), Intellectual Property, goodwill, registrations, franchises,
tax refund claims and any letter of credit, guarantee, claim, security interest
or other security held by or granted to any Grantor to secure payment by an
Account Debtor of any of the Accounts Receivable.


 


“Goods”
shall mean all “goods” as such term is defined in Article 9 of the
NY UCC


 


“Intellectual
Property” shall mean all intellectual and similar property of any Grantor
of every kind and nature now owned or hereafter acquired by any Grantor,
including inventions, designs, Patents, Copyrights, Licenses, Trademarks, trade
secrets, confidential or proprietary technical and business information,
know-how, show-how or other data or information, software and databases and all
embodiments or fixations thereof and related documentation and registrations,
and all additions, improvements and accessions to, and books and records
describing or used in connection with, any of the foregoing.


 


“Inventory”
shall mean all goods of any Grantor, whether now owned or hereafter acquired,
held for sale or lease, or furnished or to be furnished by any Grantor under
contracts of service, or consumed in any Grantor’s business, including raw
materials, intermediates, work in process, packaging materials, finished goods,
semi-finished inventory, scrap inventory, manufacturing supplies and spare
parts, and all such goods that have been returned to or repossessed by or on
behalf of any Grantor.


 


“Investment
Property” shall mean all Securities (whether certificated or
uncertificated), Security Entitlements, Securities Accounts, Commodity
Contracts and Commodity Accounts of any Grantor,  whether now owned or hereafter acquired by
any Grantor.


 


“License”
shall mean any Patent License, Trademark License, Copyright License or other
franchise agreement, license or sublicense to which any Grantor is a party,
including those listed on Schedule III.


 


“Lien
Enforcement Action” means (a) any action by any Agent or Lender to
foreclose on the Lien of such Person in any of the Collateral or exercise any
right of repossession, levy, attachment, setoff or liquidation against such
Collateral, (b) any action by any Agent or Lender to take possession of, sell
or otherwise realize (judicially or non-judicially) upon any of the Collateral
(including by setoff or notification of account debtors, but excluding any
Ordinary Course Collections), or (c) the commencement by any Agent or Lender of
any legal proceedings against or with respect to any of the Collateral to
facilitate the actions described in (a) and (b) above.


 


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“Obligations”
shall have the meaning assigned to such term in the preliminary statement of
this Agreement.


 


“Patent
License” shall mean any written agreement, now or hereafter in effect,
granting to any third party any right to make, use or sell any invention on
which a Patent, now or hereafter owned by any Grantor or which any Grantor
otherwise has the right to license, is in existence, or granting to any Grantor
any right to make, use or sell any invention on which a Patent, now or
hereafter owned by any third party, is in existence, and all rights of any
Grantor under any such agreement.


 


“Patents”
shall mean all of the following now owned or hereafter acquired by any
Person:  (a) all letters patent of
the United States or Canada, all registrations and recordings thereof, and all
applications for letters patent of the United States or Canada, including
registrations, recordings and pending applications in the United States Patent
and Trademark Office or any similar office in Canada, including those listed on
Schedule IV, and (b) all reissues, continuations, divisions,
continuations-in-part, renewals or extensions thereof, and the inventions
disclosed or claimed therein, including the right to make, use and/or sell the
inventions disclosed or claimed therein.


 


“Perfection
Certificate” shall mean a certificate substantially in the form of Annex 1
(or any other form approved by the Collateral Agent), completed and
supplemented with the schedules and attachments contemplated thereby, and duly
executed by a Financial Officer and the chief legal officer of the Parent
Borrower.


 


“Proceeds”
shall mean all “proceeds” as such term is defined in Article 9 of the
NY UCC and, in any event, shall include with respect to any Grantor any consideration
received from the sale, exchange, license, lease or other disposition of any
asset or property that constitutes Collateral, any value received as a
consequence of the possession of any Collateral and any payment received from
any insurer or other person or entity as a result of the destruction, loss,
theft, damage or other involuntary conversion of whatever nature of any asset
or property which constitutes Collateral, and shall include, (a) any claim
of any Grantor against any third party for (and the right to sue and recover
for and the rights to damages or profits due or accrued arising out of or in
connection with) (i) past, present or future infringement of any Patent
now or hereafter owned by any Grantor, or licensed under a Patent License, (ii) past,
present or future infringement or dilution of any Trademark now or hereafter
owned by any Grantor or licensed under a Trademark License or injury to the
goodwill associated with or symbolized by any Trademark now or hereafter owned
by any Grantor, (iii) past, present or future breach of any License and
(iv) past, present or future infringement of any Copyright now or
hereafter owned by any Grantor or licensed under a Copyright License and
(b) any and all other amounts from time to time paid or payable under or
in connection with any of the Collateral.


 


“Secured
Parties” shall mean (a) the Lenders, (b) the Administrative
Agent, (c) the Collateral Agent and each of the other Agents, (d) the
Issuing Bank, (e) each counterparty to a Swap Agreement with a Loan Party
the obligations under which constitute Obligations, (f) the beneficiaries
of each indemnification obligation undertaken by any Grantor under any Loan
Document, (g) each lender in respect of overdrafts and related liabilities
owed to any of the


 


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Lenders (or any Affiliates
thereof) and arising from treasury, depositary and cash management services or
in connection with any automated clearinghouse transfers of funds,
(h) Wachovia Bank, National Association (or any Affiliates thereof) in
respect of overdrafts and related liabilities owed to Wachovia Bank, National
Association (or any Affiliates thereof) and arising from treasury, depositary
and cash management services or in connection with any automated clearinghouse
transfers of funds and (i) the permitted successors and assigns of each of
the foregoing.


 


“Securities”
shall mean any obligations of an issuer or any shares, participations or other
interests in an issuer or in property or an enterprise of an issuer which (a)
are represented by a certificate representing a security in bearer or
registered form, or the transfer of which may be registered upon books
maintained for that purpose by or on behalf of the issuer, (b) are one of a
class or series or by its terms is divisible into a class or series of shares,
participations, interests or obligations and (c)(i) are, or are of a type,
dealt with or traded on securities exchanges or securities markets or (ii) are
a medium for investment and by their terms expressly provide that they are a
security governed by Article 8 of the Uniform Commercial Code.


 


“Securities
Account” shall mean an account to which a Financial Asset  is or may be credited in accordance with an
agreement under which the Person  maintaining
the account undertakes to treat the Person for whom the account is maintained
as entitled to exercise rights that comprise the Financial Asset.


 


“Security
Entitlements” shall mean the rights and property interests of an
Entitlement Holder with respect to a Financial Asset.


 


“Security
Interest” shall have the meaning assigned to such term in Section 2.01.


 


“Security
Intermediary” shall mean (a) a clearing corporation or (b) a
Person, including a bank or broker, that in the ordinary course of its business
maintains securities accounts for others and is acting in that capacity.


 


“Senior
Collateral Agent” shall have the meaning assigned to such term in the
Intercreditor Agreement.


 


“Trademark
License” shall mean any written agreement, now or hereafter in effect,
granting to any third party any right to use any Trademark now or hereafter
owned by any Grantor or which any Grantor otherwise has the right to license,
or granting to any Grantor any right to use any Trademark now or hereafter
owned by any third party, and all rights of any Grantor under any such
agreement.


 


“Trademarks”
shall mean all of the following now owned or hereafter acquired by any
Person:  (a) all trademarks, service
marks, trade names, corporate names, company names, business names, fictitious
business names, trade styles, trade dress, logos, other source or business
identifiers, designs and general intangibles of like nature, now existing or
hereafter adopted or acquired, all registrations and recordings thereof, and
all registration and recording applications filed in connection therewith,
including registrations and registration applications in the United States
Patent and Trademark Office, any State of the United States, Canada or any
Province of Canada, and all extensions or renewals thereof, including those
listed on Schedule V, 


 


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(b) all goodwill
associated therewith or symbolized thereby and (c) all other assets,
rights and interests that uniquely reflect or embody such goodwill.


 


SECTION
1.03.      Rules
of Interpretation.  The rules of
interpretation specified in Section 1.03 of the Credit Agreement
shall be applicable to this Agreement.


 


ARTICLE II



Security Interest


 


SECTION
2.01.      Security
Interest.


 


(a)           Each Grantor hereby bargains, sells,
conveys, assigns, sets over, mortgages, pledges, hypothecates and transfers to
the Collateral Agent, and hereby grants to the Collateral Agent, for the
ratable benefit of the Secured Parties, a security interest (the “Security
Interest”) in all of the following property now owned or hereafter acquired
by such Grantor or in which such Grantor now has or at any time in future may
acquire any right, title or interest (collectively, the “Collateral”),
as collateral security for the prompt and complete payment and performance when
due (whether at the stated maturity, by acceleration or otherwise) of the
Obligations:


 


(i)            all Accounts
Receivable;


 


(ii)           all Chattel Paper;


 


(iii)          all Deposit
Accounts;


 


(iv)          all Documents;


 


(v)           all Equipment;


 


(vi)          all General
Intangibles;


 


(vii)         all Instruments;


 


(viii)        all Inventory;


 


(ix)           all cash and cash
accounts;


 


(x)            all Investment
Property;


 


(xi)           all books and
records pertaining to the Collateral;


 


(xii)          all Fixtures;


 


(xiii)         all Letter-of-credit
rights;


 


(xiv)        all commercial tort
claims listed on Schedule VI;


 


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(xv)         all Goods (other than
Consumer Goods and Farm Products); and


 


(xvi)        to the extent not
otherwise included, all Proceeds and products of any and all of the foregoing, provided,
however, that Collateral shall not include with respect to any Grantor,
any item of property to the extent the grant by such Grantor of a security
interest pursuant to this Agreement in such Grantor’s right, title and interest
in such item of property is prohibited by an applicable enforceable contractual
obligation (including but not limited to a Capital Lease Obligation) or
requirement of law or would give any other Person the enforceable right to
terminate its obligations with respect to such item of property and provided,
further, that the limitation in the foregoing proviso shall not affect, limit,
restrict or impair the grant by any Grantor of a security interest pursuant to
this Agreement in any money or other amounts due or to become due under any
Account, contract, agreement or General Intangible.


 


(b)           Each Grantor hereby irrevocably
authorizes the Collateral Agent, in
accordance with, and to the extent consistent with, the Intercreditor
Agreement, at any time and from time to time to file in any relevant
jurisdiction any initial financing statements with respect to the Collateral or
any part thereof and amendments thereto that indicate the Collateral as all
assets of such Grantor, or words of similar effect, or as being of an equal or
lesser scope or with greater detail, and that contain the information required
by Article 9 of the Uniform Commercial Code of each applicable jurisdiction for
the filing of any financing statement or amendment, including whether such
Grantor is an organization, the type of organization and any organizational
identification number issued to such Grantor. 
Each Grantor agrees to provide such information to the Collateral Agent
promptly upon request.


 


Each Grantor
also ratifies its authorization for the Collateral Agent to file in any
relevant jurisdiction any initial financing statements or amendments thereto if
filed prior to the date hereof.


 


The Collateral
Agent is further authorized to file with the United States Patent and Trademark
Office or United States Copyright Office (or any successor office or any
similar office in Canada) such documents as may be necessary or advisable for
the purpose of perfecting, confirming, continuing, enforcing or protecting the
Security Interest granted by each Grantor, without the signature of any Grantor
(but, prior to the occurrence of any Event of Default or Default, the
Collateral Agent shall provide notice of such filing to such Grantor), and
naming any Grantor or the Grantors as debtors and the Collateral Agent as
secured party.


 


SECTION
2.02.      No
Assumption of Liability.  The
Security Interest is granted as security only and shall not subject the
Collateral Agent or any other Secured Party to, or in any way alter or modify,
any obligation or liability of any Grantor with respect to or arising out of
the Collateral.


 


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ARTICLE III



Representations and Warranties


 


The Grantors
jointly and severally represent and warrant to the Collateral Agent and the
Secured Parties that:


 


SECTION 3.01.      Title and Authority.  Each Grantor has good and valid rights in and
title to the Collateral with respect to which it has purported to grant a
Security Interest hereunder and has full power and authority to grant to the
Collateral Agent the Security Interest in such Collateral pursuant hereto and
to execute, deliver and perform its obligations in accordance with the terms of
this Agreement, without the consent or approval of any other Person other than
any consent or approval which has been obtained or the failure of which to
obtain could not reasonably be expected to have a Material Adverse Effect.


 


SECTION 3.02.      Filings.


 


(a)           The Perfection Certificate has been
duly prepared, completed and executed and the information set forth therein is
correct and complete.  Uniform Commercial
Code financing statements, as applicable, or other appropriate filings,
recordings or registrations containing a description of the Collateral have
been delivered to the Collateral Agent for filing in each governmental,
municipal or other office specified in Schedule 6 to the Perfection
Certificate, which are all the filings, recordings and registrations (other
than filings, recordings and registrations required to be made in the United
States Patent and Trademark Office and the United States Copyright Office (or
any similar office in Canada) in order to perfect the Security Interest in
Collateral consisting of United States (or Canadian) Patents,
United States Trademarks and United States Copyrights) that are
necessary to publish notice of and protect the validity of and to establish a
legal, valid and perfected security interest in favor of the Collateral Agent
(for the ratable benefit of the Secured Parties) in respect of all Collateral
in which the Security Interest may be perfected by filing, recording or
registration in the United States (or any political subdivision thereof), and
no further or subsequent filing, refiling, recording, rerecording, registration
or reregistration is necessary in any such jurisdiction, except as provided
under applicable law with respect to the filing of continuation statements and
such filings, recordings and registrations as may be necessary to perfect the
Security Interest as a result of any event described in Section 5.03 of
the Credit Agreement.


 


(b)           Each Grantor represents and warrants
that fully executed security agreements in the form hereof (or a fully executed
short-form agreement in form and substance reasonably satisfactory to the
Collateral Agent) and containing a description of all Collateral consisting of
Intellectual Property shall have been received and recorded (i) on or before
the date of execution of this Agreement with respect to United States Patents,
United States registered Trademarks (and Trademarks for which United States
registration applications are pending) and United States registered
Copyrights owned by the Grantors prior to November 21, 2005 by the United
States Patent and Trademark Office and the United States Copyright Office and
(ii) within 10 days of the after the execution of this Agreement with respect
to United States Patents, United States registered Trademarks (and Trademarks
for which United States registration applications are pending) and
United States registered Copyrights by the United States Patent and
Trademark


 


11

















 


Office and the United States Copyright Office
acquired by the Grantors after November 21, 2005, in each case pursuant to 35
U.S.C. § 261, 15 U.S.C. § 1060 or 17 U.S.C. § 205 and the
regulations thereunder (or in any similar office in Canada within the time
period prescribed by applicable law and regulations), as applicable, to protect
the validity of and to establish a legal, valid and perfected security interest
in favor of the Collateral Agent (for the ratable benefit of the Secured
Parties) in respect of all Collateral consisting of Patents, Trademarks and
Copyrights in which a security interest may be perfected by filing, recording
or registration in the United States or Canada (or any political subdivision of
either) and no further or subsequent filing, refiling, recording, rerecording,
registration or reregistration is necessary (other than such actions as are
necessary to perfect the Security Interest with respect to any Collateral
consisting of Patents, Trademarks and Copyrights (or registration or
application for registration thereof) acquired or developed after the date
hereof).


 


SECTION
3.03.      Validity
of Security Interest.  The Security
Interest constitutes (a) a legal and valid security interest in all the
Collateral securing the payment and performance of the Obligations,
(b) subject to the filings described in Section 3.02, a
perfected security interest in all Collateral in which a security interest may
be perfected by filing, recording or registering a financing statement or
analogous document in the United States or Canada (or any political subdivision
of either) pursuant to the Uniform Commercial Code or other applicable law in
such jurisdictions and (c) a security interest that shall be perfected in all
Collateral in which a security interest may be perfected in the
United States Patent and Trademark Office and the United States
Copyright Office upon the receipt and recording of this Agreement with the
United States Patent and Trademark Office and the United States Copyright
Office, as applicable, within the period provided in Section 3.02(b)
pursuant to 35 U.S.C. § 261, 15 U.S.C. § 1060 or 17 U.S.C. § 205
and otherwise as may be required pursuant to the laws of any other necessary
jurisdiction.  The Security Interest is
and shall be prior to any other Lien on any of the Collateral, other than Liens
expressly permitted to be prior to the Security Interest pursuant to Section 6.03
of the Credit Agreement.


 


SECTION
3.04.      Absence
of Other Liens.  The Collateral is
owned by the Grantors free and clear of any Lien, except for Liens expressly
permitted pursuant to Section 6.03 of the Credit Agreement.  No Grantor has filed or consented to the
filing of (a) any financing statement or analogous document under the Uniform
Commercial Code or any other applicable laws covering any Collateral,
(b) any assignment in which any Grantor assigns any Collateral or any
security agreement or similar instrument covering any Collateral in the United
States Patent and Trademark Office or the United States Copyright Office or
(c) any assignment in which any Grantor assigns any Collateral or any
security agreement or similar instrument covering any Collateral with any
foreign governmental, municipal or other office, which financing statement or
analogous document is still in effect, except, in each case, for Liens
expressly permitted pursuant to Section 6.03 of the Credit Agreement.


 


ARTICLE IV



Covenants


 


SECTION 4.01.      Records.  Each Grantor
agrees to maintain, at its own cost and expense, such complete and accurate
records with respect to the Collateral owned by it as is


 


12

















 


consistent with its current practices and in
accordance with such prudent and standard practices used in industries that are
the same as or similar to those in which such Grantor is engaged, but in any
event to include complete accounting records indicating all payments and
proceeds received with respect to any part of the Collateral, and, at such time
or times as the Collateral Agent may reasonably request, promptly to prepare
and deliver to the Collateral Agent a duly certified schedule or schedules in
form and detail reasonably satisfactory to the Collateral Agent showing the
identity, amount and location of any and all Collateral.


 


SECTION 4.02.      Protection of Security.  Each Grantor shall, at its own cost and
expense, take any and all actions necessary to defend title to the Collateral
against all persons and to defend the Security Interest of the Collateral Agent
in the Collateral and the priority thereof against any Lien not expressly
permitted pursuant to Section 6.03 of the Credit Agreement.


 


SECTION 4.03.      Further Assurances.  Each Grantor agrees, at its own expense, to
execute, acknowledge, deliver and cause to be duly filed all such further
instruments and documents and take all such actions as the Collateral Agent, in
accordance with, and to the extent consistent with, the terms of the
Intercreditor Agreement, may from
time to time reasonably request to better assure, preserve, protect and perfect
the Security Interest and the rights and remedies created hereby, including the
payment of any fees and taxes required in connection with the execution and
delivery of this Agreement, the granting of the Security Interest and the
filing of any financing statements or other documents in connection herewith or
therewith.  If any amount payable under
or in connection with any of the Collateral shall be or become evidenced by any
promissory note or other instrument, such note or instrument shall be
immediately pledged and delivered to the Collateral Agent, duly endorsed in a
manner satisfactory to the Collateral Agent.


 


Without
limiting the generality of the foregoing, each Grantor hereby authorizes the
Collateral Agent, with prompt notice thereof to the Grantors, to supplement
this Agreement by supplementing Schedule II, III, IV
or V or adding additional schedules hereto to specifically identify any
registered asset or item that may constitute Copyrights, Patents or Trademarks;
provided, however, that any Grantor shall have the right,
exercisable within 30 days after it has been notified by the Collateral
Agent of the specific identification of such Collateral, to advise the Collateral
Agent in writing of any inaccuracy of the representations and warranties made
by such Grantor hereunder with respect to such Collateral.  Each Grantor agrees that it will use its best
efforts to take such action as shall be necessary in order that all
representations and warranties hereunder shall be true and correct with respect
to such Collateral within 30 days after the date it has been notified by the
Collateral Agent of the specific identification of such Collateral.


 


SECTION 4.04.      Inspection and Verification.  Subject to the limitations set forth in
Section 5.09 of the Credit Agreement, any Agent  and such Persons as such Agent may reasonably
designate shall have the right, at the Grantors’ own cost and expense, to
inspect the Collateral, all records related thereto (and to make extracts and
copies from such records) and the premises upon which any of the Collateral is
located, to discuss the Grantors’ affairs with the officers of the Grantors and
their independent accountants and to verify under reasonable procedures the
validity, amount, quality, quantity, value, condition and status of, or any
other


 


13

















 


matter relating to, the Collateral,
including, in the case of Accounts or Collateral in the possession of any third
party, by contacting Account Debtors or the third person possessing such
Collateral for the purpose of making such a verification.  The Agents shall have the absolute right to
share any information it gains from such inspection or verification with any
Secured Party (it being understood that any such information shall be deemed to
be “Information” subject to the provisions of Section 10.12 of the Credit
Agreement).


 


SECTION 4.05.      Taxes; Encumbrances.  In accordance with, and to the extent
consistent with, the terms of the Intercreditor Agreement, at its option, the
Collateral Agent may discharge past due taxes, assessments, charges, fees,
Liens, security interests or other encumbrances at any time levied or placed on
the Collateral and not permitted pursuant to Section 6.03 of the Credit
Agreement, and may pay for the maintenance and preservation of the Collateral
to the extent any Grantor fails to do so as required by the Credit Agreement or
this Agreement, and each Grantor jointly and severally agrees to reimburse the
Collateral Agent on demand for any payment made or any expense incurred by the
Collateral Agent pursuant to the foregoing authorization; provided, however,
that nothing in this Section 4.05 shall be interpreted as excusing
any Grantor from the performance of, or imposing any obligation on the
Collateral Agent or any Secured Party to cure or perform, any covenants or
other promises of any Grantor with respect to taxes, assessments, charges,
fees, Liens, security interests or other encumbrances and maintenance as set
forth herein or in the other Loan Documents.


 


SECTION 4.06.      Assignment of Security Interest.  If at any time any Grantor shall take a
security interest in any property of an Account Debtor or any other Person to secure
payment and performance of an Account, such Grantor shall promptly assign such
security interest to the Collateral Agent. 
Such assignment need not be filed of public record unless necessary to
continue the perfected status of the security interest against creditors of and
transferees from the Account Debtor or other Person granting the security
interest.


 


SECTION 4.07.      Continuing Obligations of the Grantors.  Each Grantor shall remain liable to observe
and perform all the conditions and obligations to be observed and performed by
it under each contract, agreement or instrument relating to the Collateral, all
in accordance with the terms and conditions thereof, and each Grantor jointly
and severally agrees to indemnify and hold harmless the Collateral Agent and
the Secured Parties from and against any and all liability for such
performance.


 


SECTION 4.08.      Use and Disposition of Collateral.  None of the Grantors shall make or permit to
be made an assignment, pledge or hypothecation of the Collateral or shall grant
any other Lien in respect of the Collateral, except as expressly permitted by
Section 6.03 of the Credit Agreement. 
Unless and (in accordance with, and to the extent consistent with, the
terms of the Intercreditor Agreement) until the Collateral Agent shall notify
the Grantors that (i) an Event of Default shall have occurred and be
continuing and (ii) during the continuance thereof the Grantors shall not
sell, convey, lease, assign, transfer or otherwise dispose of any Collateral (which
notice may be given by telephone if promptly confirmed in writing), the
Grantors may use and dispose of the Collateral in any lawful manner not
inconsistent with the provisions of this Agreement, the Credit Agreement or any
other Loan Document.  Without limiting the
generality of the foregoing, each Grantor agrees that it shall not permit any
Inventory to be in the possession or control of any warehouseman, bailee, agent
or processor at any time,


 


14

















 


other than Inventory that is in transit by
any means, unless such warehouseman, bailee, agent or processor shall have been
notified of the Security Interest and each Grantor shall use its best efforts
to obtain a written agreement in form and substance reasonably satisfactory to
the Collateral Agent to hold the Inventory subject to the Security Interest and
the instructions of the Collateral Agent and to waive and release any Lien held
by it with respect to such Inventory, whether arising by operation of law or
otherwise.


 


SECTION 4.09.      Limitation on Modification of Accounts.  None
of the Grantors will, without the Collateral Agent’s prior written consent,
grant any extension of the time of payment of any of the Accounts Receivable,
compromise, compound or settle the same for less than the full amount thereof,
release, wholly or partly, any Person liable for the payment thereof or allow
any credit or discount whatsoever thereon, other than extensions, credits,
discounts, compromises or settlements granted or made in the ordinary course of
business and consistent with its current practices and in accordance with such
prudent and standard practices used in industries that are the same as or
similar to those in which such Grantor is engaged.


 


SECTION 4.10.      Insurance.  The Grantors, at their own expense, shall
maintain or cause to be maintained insurance covering physical loss or damage
to the Inventory and Equipment in accordance with Section 5.07 of the
Credit Agreement.  Subject to the
Intercreditor Agreement, each Grantor irrevocably makes, constitutes and
appoints the Collateral Agent (and all officers, employees or agents designated
by the Collateral Agent) as such Grantor’s true and lawful agent (and
attorney-in-fact) for the purpose, during the continuance of an Event of Default,
of making, settling and adjusting claims in respect of Collateral under
policies of insurance, endorsing the name of such Grantor on any check, draft,
instrument or other item of payment for the proceeds of such policies of
insurance and for making all determinations and decisions with respect
thereto.  Subject to the Intercreditor
Agreement, in the event that any Grantor at any time or times shall fail to
obtain or maintain any of the policies of insurance required hereby or to pay
any premium in whole or part relating thereto, the Collateral Agent may,
without waiving or releasing any obligation or liability of the Grantors
hereunder or any Event of Default, in its sole discretion, obtain and maintain
such policies of insurance and pay such premium and take any other actions with
respect thereto as the Collateral Agent deems reasonably advisable.  Subject to the Intercreditor Agreement, all
sums disbursed by the Collateral Agent in connection with this Section 4.10,
including reasonable attorneys’ fees, court costs, expenses and other charges
relating thereto, shall be payable, upon demand, by the Grantors to the
Collateral Agent  and shall be additional
Obligations secured hereby.


 


SECTION 4.11.      Legend.  Each Grantor shall legend, in form and manner
reasonably satisfactory to the Collateral Agent, its Accounts Receivable and
its books, records and documents evidencing or pertaining thereto with an
appropriate reference to the fact that such Accounts Receivable have been
assigned to the Collateral Agent for the benefit of the Secured Parties and
that the Collateral Agent has a security interest therein.


 


SECTION 4.12.      Covenants Regarding Patent, Trademark
and Copyright Collateral.


 


(a)           Each Grantor agrees that it will not,
nor will it permit any of its licensees to, do any act, or omit to do any act,
whereby any Patent which is material to the conduct of such


 


15

















 


Grantor’s business may become invalidated or
dedicated to the public, and agrees, to the extent practicable, that it shall
continue to mark any products covered by a Patent with the relevant patent
number as necessary and sufficient to establish and preserve its maximum rights
under applicable patent laws.


 


(b)           Each Grantor (either itself or through
its licensees or its sublicensees) will, for each Trademark material to the
conduct of such Grantor’s business, (i) maintain such Trademark in full
force free from any claim of abandonment or invalidity for non-use,
(ii) maintain the quality of products and services offered under such
Trademark, (iii) display such Trademark with notice of Federal or foreign
registration to the extent necessary and sufficient to establish and preserve
its maximum rights under applicable law and (iv) not knowingly use or knowingly
permit the use of such Trademark in violation of any third party rights.


 


(c)           Each Grantor (either itself or
through licensees) will, for each work covered by a material Copyright,
continue to publish, reproduce, display, adopt and distribute the work with
appropriate copyright notice as necessary and sufficient to establish and
preserve its maximum rights under applicable copyright laws.


 


(d)           Each Grantor shall notify the
Collateral Agent promptly if it knows that any Patent, Trademark or Copyright
material to the conduct of its business may become abandoned, lost or dedicated
to the public, or of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office or United States
Copyright Office or any similar office in Canada) regarding such Grantor’s
ownership of any Patent, Trademark or Copyright, its right to register the
same, or to keep and maintain the same.


 


(e)           In no event shall any Grantor, either
itself or through any agent, employee, licensee or designee, file an
application for any Patent, Trademark or Copyright (or for the registration of
any Trademark or Copyright) with the United States Patent and Trademark Office,
United States Copyright Office or any office or agency in any political
subdivision of the United States or any similar office in Canada, unless
it (i) in the case of any Patent or Trademark, promptly informs the Collateral
Agent and (ii) in the case of any Copyright, gives five (5) Business Days prior
written notice thereof to the Collateral Agent, and, in accordance with, and to
the extent consistent with, the terms of the Intercreditor Agreement, upon
request of the Collateral Agent, executes and delivers any and all agreements,
instruments, documents and papers as the Collateral Agent may request to
evidence the Collateral Agent’s security interest in such Patent, Trademark or
Copyright, and, in accordance with, and to the extent consistent with, the
terms of the Intercreditor Agreement, each Grantor hereby appoints the
Collateral Agent as its attorney-in-fact to execute and file such writings for
the foregoing purposes (and, prior to the occurrence of any Event of Default or
Default, such Grantor shall be notified of such filing), all acts of such
attorney being hereby ratified and confirmed; such power, being coupled with an
interest, is irrevocable.


 


(f)            Each Grantor will take all necessary
steps that are consistent with the practice in any proceeding before the United
States Patent and Trademark Office, United States Copyright Office or any
office or agency in any political subdivision of the United States or any


 


16

















 


similar office in Canada, to maintain and pursue
each material application relating to the Patents, Trademarks and/or Copyrights
(and to obtain the relevant grant or registration) and to maintain each issued
Patent and each registration of the Trademarks and Copyrights that is material
to the conduct of any Grantor’s business, including timely filings of
applications for renewal, affidavits of use, affidavits of incontestability and
payment of maintenance fees, and, if consistent with good business judgment, to
initiate opposition, interference and cancelation proceedings against third
parties.


 


(g)           In the event that any Grantor has
reason to believe that any Collateral consisting of a Patent, Trademark or
Copyright material to the conduct of any Grantor’s business has been or is
about to be infringed, misappropriated or diluted by a third party, such
Grantor promptly shall notify the Collateral Agent and shall, if consistent
with good business judgment, promptly sue for infringement, misappropriation or
dilution and to recover any and all damages for such infringement,
misappropriation or dilution, and take such other actions as are appropriate
under the circumstances to protect such Collateral.


 


(h)           Upon and during the continuance of an
Event of Default, each Grantor shall use its reasonable best efforts to obtain
all requisite consents or approvals by the licensor of each Copyright License,
Patent License or Trademark License to effect the assignment of all of such
Grantor’s right, title and interest thereunder to the Collateral Agent or their
designees for the benefit of the Secured Parties in accordance with the
Intercreditor Agreement.


 


SECTION 4.13.      Deposit Accounts.  Each Grantor will, on or before the Effective
Date, enter into control agreements in form and substance reasonably
satisfactory to the Collateral Agent with each depository bank (other than the
Collateral Agent) with which it maintains any deposit accounts (other than,
prior to the 2004 Notes First Lien Transition Date, the Notes Collateral
Account (each as defined in the Intercreditor Agreement)) and thereafter shall
cause all cash held by such Grantor (other than, prior to the 2004 Notes First
Lien Transition Date, cash held by such Grantor in a Notes Collateral Account
in accordance with the terms of the 2004 Indenture (as in effect on the date
hereof) to be maintained in such accounts.


 


SECTION 4.14.      Commercial Tort Claims.  If any Grantor shall at any time hold or
acquire a commercial tort claim in an amount reasonably estimated to exceed
$1,000,000, the Grantor shall promptly notify the Collateral Agent thereof in a
writing signed by such Grantor including a summary description of such claim
and grant to the Collateral Agent in such writing a security interest therein
and in the proceeds thereof, all upon the terms of this Agreement, with such
writing to be in form and substance reasonably satisfactory to the Collateral
Agent.


 


SECTION 4.15.      Electronic Chattel Paper and
Transferable Records.  If any Grantor
at any time holds or acquires an interest in any electronic chattel paper or any
“transferable record,” as that term is defined in Section 201 of the Federal
Electronic Signatures in Global and National Commerce Act, or in Section 16 of
the Uniform Electronic Transactions Act as in effect in any relevant
jurisdiction, in an amount exceeding $1,000,000 such Grantor shall promptly
notify the Collateral Agent thereof and, at the request of the Collateral
Agent, shall take such action as the Collateral Agent  may reasonably request to vest in the Collateral
Agent control under NY UCC Section 9-105 of such electronic chattel paper or
control under Section 201 of the Federal Electronic Signatures in Global and
National Commerce Act or, as the


 


17

















 


case may be, Section 16 of the Uniform Electronic
Transactions Act, as so in effect in such jurisdiction, of such transferable
record.  The Collateral Agent agrees with
such Grantor that the Collateral Agent will arrange, pursuant to procedures
reasonably satisfactory to the Collateral Agent and so long as such procedures
will not result in the Collateral Agent’s loss of control, for the Grantor to
make alterations to the electronic chattel paper or transferable record
permitted under NY UCC Section 9-105 or, as the case may be, Section 201 of the
Federal Electronic Signatures in Global and National Commerce Act or Section 16
of the Uniform Electronic Transactions Act for a party in control to allow
without loss of control, unless an Event of Default has occurred and is
continuing or would occur after taking into account any action by such Grantor
with respect to such electronic chattel paper or transferable record.


 


SECTION 4.16.      Letter-of-Credit Rights.  If any Grantor is at any time a beneficiary
under a letter of credit now or hereafter issued in favor of such Grantor in an
amount exceeding $1,000,000, such Grantor shall promptly notify the Collateral
Agent thereof and, at the request and option of the Collateral Agent, such
Grantor shall, pursuant to an agreement in form and substance reasonably satisfactory
to the Collateral Agent, either (i) arrange for the issuer and any confirmer of
such letter of credit to consent to an assignment to the Collateral Agent of
the proceeds of any drawing under the letter of credit or (ii) arrange for the
Collateral Agent to become the transferee beneficiary of the letter of credit,
with the Collateral Agent agreeing, in each case, that the proceeds of any
drawing under the letter of credit are to be paid to the applicable Grantor
unless an Event of Default has occurred or is continuing.


 


ARTICLE V



Collections


 


SECTION 5.01.      Cash Management Accounts.   (a) 
Each Grantor will establish and maintain, on or before the Effective
Date, (i) one Cash Concentration Account and (ii) one or more
Collection Deposit Accounts, in the case of this clause (ii), with the
Collateral Agent or with any financial institution selected by such Grantor
that (A) is reasonably satisfactory to the Collateral Agent and
(B) enters into a Collection Deposit Letter Agreement with respect to the
Collection Deposit Accounts of such Grantor with such financial
institution.  Each financial institution
with which a Collection Deposit Account is maintained is referred to herein as
a “Collection Deposit Bank”.


 


 (b)          Each Grantor, commencing on the Effective
Date, will deposit on each Business Day all Daily Receipts into either
(i) a Collection Deposit Account or (ii) a Cash Concentration
Account.  Each Grantor shall use all
reasonable efforts to prevent any funds that are not Daily Receipts from being
deposited into, or otherwise commingled with, the funds held in the Collection
Deposit Accounts or the Cash Concentration Accounts.


 


(c)           On each Business Day, all collected
funds on deposit in each Collection Deposit Account will be transferred to the
applicable Cash Concentration Account to the extent provided in the applicable
Collection Deposit Letter Agreement.


 


(d)           On each Business Day, all collected
funds on deposit in the Cash Concentration Accounts will be transferred to the
Collateral Proceeds Account to be applied by


 


18

















 


the Administrative Agent, on behalf of the
Borrowers, to prepay Revolving Loans, Swingline Loans and Protective Advances
in the manner provided in Section 2.10 of the Credit Agreement, until all
outstanding Swingline Loans and Revolving Borrowings have been repaid, and
thereafter to be transferred to the General Funds Account, subject to paragraph
(f) below.


 


 (e)          No Grantor shall have any control over,
or any right or power to withdraw any funds on deposit in, any Collection
Deposit Account or Cash Concentration Account; provided, however,
that any Grantor may instruct any Collection Deposit Bank to withdraw funds
from its Collection Deposit Account to honor ACH instructions of such Grantor
to transfer funds to the Cash Concentration Account.  The Parent Borrower may at any time withdraw
any funds contained in the General Funds Account for use, subject to the
provisions of the Credit Agreement, for general corporate purposes.


 


(f)            Upon the occurrence and during the
continuance of an Event of Default, any funds held in the Collection Deposit
Accounts, the Cash Concentration Accounts or the Collateral Proceeds Account
may be applied as provided in Section 2.17(b) of the Credit Agreement so
long as an Event of Default is continuing. 
The Collateral Agent will not be required to transfer any funds from the
Collateral Proceeds Account to the General Funds Account until all Events of
Default are cured or waived.


 


(g)           All payments by any Grantor into any
Collection Deposit Account or Cash Concentration Account pursuant to this Article V,
whether in the form of cash, checks, notes, drafts, bills of exchange, money
orders or otherwise, shall be deposited in the relevant Collection Deposit
Account or Cash Concentration Account in precisely the form in which received
(but with any endorsements of such Grantor necessary for deposit or
collection), and until they are so deposited such payments shall be held in
trust by such Grantor for and as the property of the Collateral Agent.


 


SECTION 5.02.      Collections.   (a) 
Each Grantor agrees promptly to notify and direct each Account Debtor
and every other Person obligated to make payments with respect to the Accounts
Receivable or Inventory to make all such payments directly to a Collection
Deposit Account or the applicable Cash Concentration Account (subject to the
proviso in the following sentence).  Each
Grantor shall use all reasonable efforts to cause each Account Debtor and every
other Person identified in the preceding sentence to make all payments with
respect to the Accounts Receivable or Inventory either directly to a Collection
Deposit Account or a Cash Concentration Account; provided that Credit
Card Payments shall be made directly to the Cash Concentration Account.


 


(b)           In the event that a Grantor directly
receives any Daily Receipts, notwithstanding the arrangements for payment
directly into the Collection Deposit Accounts pursuant to Section 5.02,
such remittances shall be held for the benefit of the Collateral Agent and the
Secured Parties and shall be segregated from other funds of such Grantor,
subject to the Security Interest granted hereby, and such Grantor shall cause
such remittances and payments to be deposited into a Collection Deposit Account
or a Cash Concentration Account, as applicable, as soon as practicable after
such Grantor’s receipt thereof.


 


19

















 


(c)           Without the prior written consent of
the Collateral Agent, no Grantor shall, under any circumstances whatsoever,
change the general instructions given to Account Debtors and other Persons
obligated to make payments with respect to the Accounts Receivable or Inventory
regarding the deposit of payments with respect to the Accounts Receivable or
Inventory in a Collection Deposit Account or a Cash Concentration Account, as
applicable.  Each Grantor shall, and the
Collateral Agent hereby authorizes each Grantor to, enforce and collect all
amounts owing with respect to the Accounts Receivable or Inventory for the
benefit and on behalf of the Collateral Agent and the other Secured Parties; provided,
however, that such privilege may at the option of the Collateral Agent
be terminated upon the occurrence and during the continuance of an Event of
Default.


 


ARTICLE VI



Power of Attorney


 


Each Grantor
irrevocably makes, constitutes and appoints the Collateral Agent (and all
officers, employees or agents designated by the Collateral Agent ) as such
Grantor’s true and lawful agent and attorney-in-fact, and in such capacity the
Collateral Agent shall have the right, with power of substitution for each
Grantor and in each Grantor’s name or otherwise, for the use and benefit of the
Collateral Agent and the Secured Parties, upon the occurrence and during the
continuance of an Event of Default (a) to receive, endorse, assign and/or
deliver any and all notes, acceptances, checks, drafts, money orders or other
evidences of payment relating to the Collateral or any part thereof;
(b) to demand, collect, receive payment of, give receipt for and give
discharges and releases of all or any of the Collateral; (c) to sign the
name of any Grantor on any invoice or bill of lading relating to any of the
Collateral; (d) to send verifications of Accounts Receivable to any
Account Debtor; (e) to commence and prosecute any and all suits, actions
or proceedings at law or in equity in any court of competent jurisdiction to
collect or otherwise realize on all or any of the Collateral or to enforce any
rights in respect of any Collateral; (f) to settle, compromise, compound,
adjust or defend any actions, suits or proceedings relating to all or any of
the Collateral; (g) to notify, or to require any Grantor to notify,
Account Debtors to make payment directly to the Collateral Agent; and (h) to
use, sell, assign, transfer, pledge, make any agreement with respect to or
otherwise deal with all or any of the Collateral, and to do all other acts and
things necessary to carry out the purposes of this Agreement, as fully and
completely as though the Collateral Agent were the absolute owner of the
Collateral for all purposes; provided, however, that nothing
herein contained shall be construed as requiring or obligating the Collateral
Agent or any Secured Party to make any commitment or to make any inquiry as to
the nature or sufficiency of any payment received by the Collateral Agent or
any Secured Party, or to present or file any claim or notice, or to take any
action with respect to the Collateral or any part thereof or the moneys due or
to become due in respect thereof or any property covered thereby, and no action
taken or omitted to be taken by the Collateral Agent or any Secured Party with
respect to the Collateral or any part thereof shall give rise to any defense,
counterclaim or offset in favor of any Grantor or (unless such action is the
result of gross negligence or willful misconduct) to any claim or action
against the Collateral Agent or any Secured Party.  It is understood and agreed that the appointment
of the Collateral Agent as the agent and attorney-in-fact of the Grantors for
the purposes set forth above is coupled with an interest and is
irrevocable.  The provisions of this
Section shall in no event relieve any Grantor of any of its obligations
hereunder or under any other Loan Document with


 


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respect to the Collateral or
any part thereof or impose any obligation on the Collateral Agent or any
Secured Party to proceed in any particular manner with respect to the
Collateral or any part thereof, or in any way limit the exercise by the
Collateral Agent or any Secured Party of any other or further right which it
may have on the date of this Agreement or hereafter, whether hereunder, under
any other Loan Document, by law or otherwise.


 


Notwithstanding
anything in this Article VI to the contrary, the Collateral Agent agrees
that it will not exercise any rights under the power of attorney provided for
in this Article VI unless it does so in accordance with, and to the
extent consistent with, the Intercreditor Agreement.


 


ARTICLE VII



Remedies


 


SECTION 7.01.      Remedies upon Default.  In accordance with, and to the extent
consistent with, the terms of the Intercreditor Agreement, upon the occurrence
and during the continuance of an Event of Default, each Grantor agrees to
deliver each item of Collateral to the Collateral Agent on demand, and it is
agreed that the Collateral Agent shall have the right to take any of or all the
following actions at the same or different times:  (a) with respect to any Collateral
consisting of Intellectual Property, on demand, to cause the Security Interest
to become an assignment, transfer and conveyance of any of or all such
Collateral by the applicable Grantors to the Collateral Agent, or to license or
sublicense, whether general, special or otherwise, and whether on an exclusive
or non-exclusive basis, any such Collateral throughout the world on such terms
and conditions and in such manner as the Collateral Agent shall determine
(other than in violation of any then-existing licensing or contractual
arrangements to the extent that waivers cannot be obtained), and (b) with
or without legal process and with or without prior notice or demand for
performance, to take possession of the Collateral and without liability for trespass
to enter any premises where the Collateral may be located for the purpose of
taking possession of or removing the Collateral and, generally, to exercise any
and all rights afforded to a secured party under the Uniform Commercial Code or
other applicable law.  Without limiting
the generality of the foregoing, in accordance with, and to the extent
consistent with, the terms of the Intercreditor Agreement, each Grantor agrees
that the Collateral Agent shall have the right, subject to the mandatory requirements
of applicable law, to sell or otherwise dispose of all or any part of the
Collateral, at public or private sale or at any broker’s board or on any
securities exchange, for cash, upon credit or for future delivery as the
Collateral Agent shall deem appropriate. 
The Collateral Agent shall be authorized at any such sale (if it deems
it advisable to do so) to restrict the prospective bidders or purchasers to
persons who will represent and agree that they are purchasing the Collateral
for their own account for investment and not with a view to the distribution or
sale thereof, and upon consummation of any such sale the Collateral Agent shall
have the right to assign, transfer and deliver to the purchaser or purchasers
thereof the Collateral so sold.  Each
such 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 law) all rights of redemption, stay and
appraisal which such Grantor now has or may at any time in the future have
under any rule of law or statute now existing or hereafter enacted.


 


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The Collateral
Agent shall give the Grantors 10 days’ prior written notice (which each
Grantor agrees is reasonable notice within the meaning of Section 9-611 of
the NY UCC or its equivalent in other jurisdictions) of the Collateral Agent’s
intention to make any sale of Collateral. 
Such notice, in the case of a public sale, shall state the time and
place for such sale and, in the case of a sale at a broker’s board or on a
securities exchange, shall state the board or exchange at which such sale is to
be made and the day on which the Collateral, or portion thereof, will first be
offered for sale at such board or exchange. 
Any such public sale shall be held at such time or times within ordinary
business hours and at such place or places as the Collateral Agent may fix and
state in the notice (if any) of such sale. 
At any such sale, the Collateral, or portion thereof, to be sold may be
sold in one lot as an entirety or in separate parcels, as the Collateral Agent
may (in its sole and absolute discretion) determine.  The Collateral Agent shall not be obligated
to make any sale of any Collateral if it shall determine not to do so,
regardless of the fact that notice of sale of such Collateral shall have been
given.  The Collateral Agent may, without
notice or publication, adjourn any public or private sale or cause the same to
be adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned.  In
case any sale of all or any part of the Collateral is made on credit or for
future delivery, the Collateral so sold may be retained by the Collateral Agent
until the sale price is paid by the purchaser or purchasers thereof, but the
Collateral Agent shall not incur any liability in case any such purchaser or
purchasers shall fail to take up and pay for the Collateral so sold and, in
case of any such failure, such Collateral may be sold again upon like
notice.  At any public (or, to the extent
permitted by law, private) sale made pursuant to this Section, any Secured
Party may bid for or purchase, free (to the extent permitted by law) from any
right of redemption, stay, valuation or appraisal on the part of any Grantor
(all said rights being also hereby waived and released to the extent permitted
by law), the Collateral or any part thereof offered for sale and may make
payment on account thereof by using any claim then due and payable to such
Secured Party from any Grantor as a credit against the purchase price, and such
Secured Party may, upon compliance with the terms of sale, hold, retain and
dispose of such property without further accountability to any Grantor
therefor.  For purposes hereof, a written
agreement to purchase the Collateral or any portion thereof shall be treated as
a sale thereof; the Collateral Agent shall be free to carry out such sale
pursuant to such agreement and no Grantor shall be entitled to the return of
the Collateral or any portion thereof subject thereto, notwithstanding the fact
that after the Collateral Agent shall have entered into such an agreement all
Events of Default shall have been remedied and the Obligations paid in
full.  As an alternative to exercising
the power of sale herein conferred upon it, in accordance with, and to the
extent consistent with, the terms of the Intercreditor Agreement, the
Collateral Agent may proceed by a suit or suits at law or in equity to
foreclose this Agreement and to sell the Collateral or any portion thereof
pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver.


 


SECTION 7.02.      Standstill and Enforcement Rights of
the Domestic B Agent and the Domestic B Lenders.  Notwithstanding any rights or remedies
available to the Secured Parties, under any of the Loan Documents, applicable
law or otherwise, prior to the Maturity Date, the Domestic B Agent and the
Domestic B Lenders shall not exercise any Lien Enforcement Action with respect
to any Collateral or exercise any remedies with respect thereto (including, by
setoff or notification of account debtors) or commence any legal proceedings
against or with respect to any Collateral to facilitate a Lien Enforcement
Action; provided, that


 


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(i) if the Domestic B Agent determines in its
commercially reasonable judgment that Exigent Circumstances exist with respect
to the Obligations owing to the Domestic B Lenders or the Collateral, the
Domestic B Agent may instruct the Collateral Agent to take any action to
enforce its Liens on the Collateral, or (ii) absent the existence of any
Exigent Circumstances, upon the occurrence of an Event of Default under the
Credit Agreement (A) the Domestic B Agent may instruct the Administrative  Agent to accelerate (to the extent not
already due) all indebtedness of the Borrowers thereunder and (B) commencing
120 days after the receipt by the Administrative Agent of the demand to so
accelerate (or the earlier acceleration of the Loans), the Domestic B Agent may
instruct the Collateral Agent to take any action to enforce its Liens on the
Collateral, but in any such case, the Domestic B Agent may only make such
demand to the Collateral Agent if the Collateral Agent is not itself diligently
pursuing in good faith the exercise of its enforcement rights or remedies against,
or diligently in good faith attempting to vacate any stay or enforcement of its
Liens on such Collateral.  Nothing
contained in this Section 7.02 shall restrict the Domestic B Agent from
engaging consultants and performing audits, examinations, and appraisals of the
Collateral in advance of taking any Lien Enforcement Action.


 


SECTION 7.03.      Grant of License to Use Intellectual
Property.  In accordance with, and to
the extent consistent with, the terms of the Intercreditor Agreement, for the
purpose of enabling the Collateral Agent to exercise rights and remedies under
this Article at such time as the Collateral Agent shall be lawfully entitled to
exercise such rights and remedies, each Grantor hereby grants to the Collateral
Agent an irrevocable, non-exclusive license (exercisable without payment of
royalty or other compensation to the Grantors) to the extent that such license
does not violate any then existing licensing arrangements (to the extent that
waivers cannot be obtained) to use, license or sub-license any of the
Collateral consisting of Intellectual Property now owned or hereafter acquired
by such Grantor, and wherever the same may be located, and including in such
license reasonable access to all media in which any of the licensed items may
be recorded or stored and to all computer software and programs used for the
compilation or printout thereof and sufficient rights of quality control in
favor of Grantor to avoid the invalidation of the Trademarks subject to the
license.  The use of such license by the
Collateral Agent shall be exercised, at the option of the Collateral Agent,
upon the occurrence and during the continuation of an Event of Default; provided
that any license, sub-license or other transaction entered into by the
Collateral Agent in accordance herewith shall be binding upon the Grantors
notwithstanding any subsequent cure of an Event of Default.


 


ARTICLE VIII



Miscellaneous


 


SECTION 8.01.      Notices.  All communications and notices hereunder
shall (except as otherwise expressly permitted herein) be in writing and given
as provided in Section 10.01 of the Credit Agreement.  All communications and notices hereunder to
any Grantor shall be given to it at its address or telecopy number set forth on
Schedule I, with a copy to the Parent Borrower.


 


SECTION 8.02.      Security Interest Absolute.  All rights of the Collateral Agent hereunder,
the Security Interest and all obligations of the Grantors hereunder shall be
absolute and unconditional irrespective of (a) any lack of validity or
enforceability of the Credit 


 


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Agreement, any other Loan Document, any
agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time,
manner or place of payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any
departure from the Credit Agreement, any other Loan Document or any other
agreement or instrument, (c) any exchange, release or non-perfection of
any Lien on other collateral, or any release or amendment or waiver of or
consent under or departure from any guarantee, securing or guaranteeing all or
any of the Obligations, or (d) any other circumstance that might otherwise
constitute a defense available to, or a discharge of, any Grantor in respect of
the Obligations or this Agreement.


 


SECTION 8.03.      Survival of Agreement.  All covenants, agreements, representations
and warranties made by any Grantor herein and in the certificates or other
instruments prepared or delivered in connection with or pursuant to this
Agreement shall be considered to have been relied upon by the Secured Parties
and shall survive the making by the Lenders of the Loans, and the execution and
delivery to the Lenders of any notes evidencing such Loans, regardless of any
investigation made by the Lenders or on their behalf, and shall continue in
full force and effect until this Agreement shall terminate.


 


SECTION 8.04.      Binding Effect; Several Agreement.  This Agreement shall become effective as to
any Grantor when a counterpart hereof executed on behalf of such Grantor shall
have been delivered to the Collateral Agent and a counterpart hereof shall have
been executed on behalf of the Collateral Agent, and thereafter shall be
binding upon such Grantor and the Collateral Agent and their respective
successors and assigns, and shall inure to the benefit of such Grantor, the
Collateral Agent and the other Secured Parties and their respective successors
and assigns, except that no Grantor shall have the right to assign or transfer
its rights or obligations hereunder or any interest herein or in the Collateral
(and any such assignment or transfer shall be void) except as expressly
contemplated by this Agreement or the Credit Agreement.  This Agreement shall be construed as a
separate agreement with respect to each Grantor and may be amended, modified,
supplemented, waived or released with respect to any Grantor without the
approval of any other Grantor and without affecting the obligations of any
other Grantor hereunder.


 


SECTION 8.05.      Successors and Assigns.  Whenever in this Agreement any of the parties
hereto is referred to, such reference shall be deemed to include the successors
and assigns of such party; and all covenants, promises and agreements by or on
behalf of any Grantor or the Collateral Agent that are contained in this
Agreement shall bind and inure to the benefit of their respective successors
and assigns.


 


SECTION 8.06.      Collateral Agent’s Expenses;
Indemnification.  In accordance with,
and to the extent consistent with, the terms of the Intercreditor
Agreement,  (a)  each Grantor jointly and severally agrees to
pay upon demand to the Collateral Agent the amount of any and all reasonable
expenses, including the reasonable fees, disbursements and other charges of its
counsel and of any experts or agents, which the Collateral Agent may incur in
connection with (i) the administration of this Agreement, (ii) the
custody or preservation of, or the sale of, collection from or other
realization upon any of the Collateral, (iii) the exercise, enforcement or
protection of any of the rights of the Collateral Agent hereunder or
(iv) the failure of any Grantor to perform or observe any of the
provisions hereof.


 


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(b)           Without limitation of its
indemnification obligations under the other Loan Documents, each Grantor
jointly and severally agrees to indemnify the Collateral Agent and the other
Indemnitees against, and hold each of them harmless from, any and all losses,
claims, damages, liabilities and related expenses, including reasonable fees,
disbursements and other charges of counsel, incurred by or asserted against any
of them arising out of, in any way connected with, or as a result of, the
execution, delivery or performance of this Agreement or any claim, litigation,
investigation or proceeding relating hereto or to the Collateral, whether or
not any Indemnitee is a party thereto; provided that such indemnity
shall not, as to any Indemnitee, be available to the extent that such losses,
claims, damages, liabilities or related expenses have resulted from the gross
negligence or willful misconduct of such Indemnitee.


 


(c)           Any such amounts payable as provided
hereunder shall be additional Obligations secured hereby and by the other
Security Documents.  The provisions of
this Section 8.06 shall remain operative and in full force and
effect regardless of the termination of this Agreement or any other Loan
Document, the consummation of the transactions contemplated hereby, the repayment
of any of the Loans, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of the Collateral Agent or any Lender.  All amounts due under this Section 8.06
shall be payable on written demand therefor.


 


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


 


SECTION 8.08.      Waivers; Amendment.   (a) 
No failure or delay of the Collateral Agent in exercising any power or
right hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power.  The rights and remedies of the Collateral
Agent hereunder and of the Collateral Agent, the Issuing Bank, the
Administrative Agent, the other Agents and the Lenders under the other Loan
Documents are cumulative and are not exclusive of any rights or remedies that
they would otherwise have.  No waiver of
any provisions of this Agreement or any other Loan Document or consent to any
departure by any Grantor therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) below, and then such waiver or
consent shall be effective only in the specific instance and for the purpose
for which given.  No notice to or demand
on any Grantor in any case shall entitle such Grantor or any other Grantor to
any other or further notice or demand in similar or other circumstances.


 


(b)           Neither this Agreement nor any
provision hereof may be waived, amended or modified except (i) pursuant to
an agreement or agreements in writing entered into by the Collateral Agent and
the Grantor or Grantors with respect to which such waiver, amendment or
modification is to apply, subject to (A) any consent required in accordance
with Section 10.02 of the Credit Agreement and (B) to the limitations in
the Intercreditor Agreement or (ii) as provided in the Intercreditor
Agreement.


 


SECTION 8.09.      WAIVER
OF JURY TRIAL.  EACH PARTY
HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE


 


25

















 


LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS.  EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT
IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.09.


 


SECTION 8.10.      Severability.  In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction).  The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.


 


SECTION 8.11.      Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract (subject to Section 8.04),
and shall become effective as provided in Section 8.04.  Delivery of an executed signature page to
this Agreement by facsimile transmission or other electronic transmission shall
be effective as delivery of a manually executed counterpart hereof.


 


SECTION 8.12.      Headings.  Article and Section headings used herein are
for the purpose of reference only, are not part of this Agreement and are not
to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.


 


SECTION 8.13.      Jurisdiction; Consent to Service of
Process.   (a)  Each Grantor hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court or Federal court of the United States
of America sitting in New York City, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Agreement or the
other Loan Documents, or for recognition or enforcement of any judgment, and
each of the parties hereto hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such
Federal court.  Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. 
Nothing in this Agreement shall affect any right that the Collateral
Agent, the Administrative Agent, the Issuing Bank or any Lender may otherwise
have to bring any action or proceeding relating to this Agreement or the other
Loan Documents against any Grantor or its properties in the courts of any
jurisdiction.


 


26

















 


(b)           Each Grantor hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
the other Loan Documents in any New York State court or Federal court of the
United States of America sitting in New York City.  Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.


 


(c)           Each party to this Agreement
irrevocably consents to service of process in the manner provided for notices
in Section 8.01.  Nothing in
this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.


 


SECTION 8.14.      Termination.   (a) 
This Agreement and the Security Interest shall continue in effect
(notwithstanding the fact that from time to time there may be no Obligations
outstanding) until (i) the Credit Agreement has terminated pursuant to its
express terms and (ii) all of the Obligations (other than contingent
obligations for which no claim has been made) have been indefeasibly paid and
performed in full (or with respect to any outstanding Letters of Credit, a cash
deposit has been delivered to the Administrative Agent as required by the
Credit Agreement) and no commitments of the Agents or the Lenders which would
give rise to any Obligations are outstanding. 
Upon payment in full in cash of the outstanding Obligations and the expiration
or termination of the Commitments, the security interest granted hereby shall
terminate and all rights to the Collateral shall revert to the Grantors or any
other Person entitled thereto.  Upon such
termination, the Administrative Agent will authorize the filing of appropriate
UCC termination statements to terminate such security interests and shall, at
the expense of the Grantors, execute and deliver to such Grantor such documents
as such Grantor shall reasonably request to evidence the termination of such
security interests or the release of such Collateral, as applicable.


 


(b)           A Grantor shall automatically be
released from its obligations hereunder and the Security Interest in the
Collateral of such Grantor shall be automatically released in the event that
all the capital stock of such Grantor shall be sold, transferred or otherwise
disposed of to a Person that is not an Affiliate of the Parent Borrower in
accordance with the terms of the Credit Agreement; provided that the
Required Lenders shall have consented to such sale, transfer or other
disposition (to the extent required by the Credit Agreement) and the terms of
such consent did not provide otherwise.


 


(c)           Upon any sale or other transfer by
any Grantor of any Collateral that is permitted under the Credit Agreement, provided
that the Required Lenders shall have consented to such transaction (to the
extent required by the Credit Agreement) and the terms of such consent did not
provide otherwise, or upon the effectiveness of any written consent to the
release of the security interest granted hereby in any Collateral pursuant to
Section 10.02 of the Credit Agreement, the security interest in such Collateral
shall be automatically released.


 


(d)           If any of the 2004 Notes First Lien
Collateral (as defined in the Intercreditor Agreement) shall become subject to
the release provisions set forth in Section 5.1(c) of the Intercreditor
Agreement, such Collateral shall be automatically released from the Security
Interest to the extent provided in Section 5.1(c) of the Intercreditor
Agreement.


 


27

















 


(e)           In connection with any termination or
release pursuant to paragraph (a), (b), (c) or (d) above, the Collateral Agent
shall execute and deliver to the Grantors, at the Grantors’ expense, all UCC
termination statements and similar documents which the Grantor shall reasonably
request to evidence such termination or release.  Any execution and delivery of termination
statements or release documents pursuant to this Section 8.14 shall
be without recourse to or warranty by the Collateral Agent.


 


SECTION 8.15.      Additional Grantors.  Upon execution and delivery by the Collateral
Agent and a Subsidiary of an instrument in the form of Annex 2, such
Subsidiary shall become a Grantor hereunder with the same force and effect as
if originally named as a Grantor herein. 
The execution and delivery of any such instrument shall not require the
consent of any Grantor hereunder.  The
rights and obligations of each Grantor hereunder shall remain in full force and
effect notwithstanding the addition of any new Grantor as a party to this
Agreement.


 


SECTION
8.16.      Subject
to Intercreditor Agreement.   
Notwithstanding anything herein to the contrary, the Lien and security
interest granted to the Collateral Agent pursuant to this Agreement and the
exercise of any right or remedy by the Collateral Agent hereunder are subject
to the provisions of the Intercreditor Agreement.  In the event of any conflict between the
terms of the Intercreditor Agreement and this Agreement, the terms of the
Intercreditor Agreement shall govern.


 


SECTION
8.17.      2004
Indenture.  The Collateral Agent
acknowledges and agrees, on behalf of itself and the Secured Parties, that, any
provision of this Agreement to the contrary notwithstanding, until the 2004
Notes First Lien Transition Date (as defined in the Intercreditor Agreement),
the Grantors shall not be required to act or refrain from acting with respect
to any 2004 Notes First Lien Collateral on which the 2004 Trustee (as defined
in the Intercreditor Agreement) has a Lien superior in priority to the
Collateral Agent’s Lien thereon in any manner that would result in a default
under the terms and provisions of the 2004 Indenture (as defined in the
Intercreditor Agreement).


 


SECTION
8.18.  Reaffirmation of Grantor
Obligations.  This Agreement
constitutes an amendment and restatement of the Prior Security Agreement.  Each of the parties hereto acknowledges and
agrees that the Obligations represent, among other things, the amendment,
restatement, renewal, extension, consolidation and modification of the
obligations of Grantors under the Prior Security Agreement.  Each of the parties hereto further
acknowledges and agrees that this Agreement supercedes and replaces the Prior
Security Agreement but does not extinguish the obligations thereunder and that
by entering into and performing its obligations hereunder, this transaction
shall not constitute a novation.  Each of
the parties hereto further acknowledges and agrees that the security interest
granted to the Prior Administrative Agent for the benefit of itself and the
parties entitled to the benefit of the Prior Security Agreement (including,
without limitation, each Lender, the Issuing Bank or any Agent party to the
Prior Credit Agreement, and their respective successors and assigns) shall
remain outstanding and in full force and effect in accordance with the terms
hereof and the other Loan Documents and shall continue to secure the
Obligations without interruption or impairment of any kind and all such security
interests are hereby ratified, confirmed and continued.


 


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IN WITNESS
WHEREOF, the parties hereto have duly executed this Agreement as of the day and
year first above written.


 


	
  GRANTORS:

  	
  PLIANT CORPORATION

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
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  PLIANT CORPORATION INTERNATIONAL

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
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  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  PLIANT FILM PRODUCTS OF MEXICO, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  PLIANT PACKAGING OF CANADA, LLC

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  PLIANT SOLUTIONS CORPORATION

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


AMENDED AND RESTATED DOMESTIC
SECURITY AGREEMENT

















 


	
   

  	
  UNIPLAST HOLDINGS, INC.

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  UNIPLAST U.S., INC.

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  COLLATERAL AGENT:

  	
  GENERAL ELECTRIC CAPITAL CORPORATION, as
  Collateral Agent

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  



 

















 


Schedule I to
the


Amended and Restated Domestic Security Agreement


 


GRANTORS


 


	
  Name

  	
   

  	
  Address

  
	
  Pliant Corporation

  	
   

  	
  1475 Woodfield Road, Suite 700

  Schaumburg, Illinois 60173

  
	
  Pliant Solutions Corporation

  	
   

  	
  1475 Woodfield Road, Suite 700

  Schaumburg, Illinois 60173

  
	
  Pliant Corporation International

  	
   

  	
  1475 Woodfield Road, Suite 700

  Schaumburg, Illinois 60173

  
	
  Pliant Film Products of Mexico, Inc.

  	
   

  	
  1475 Woodfield Road, Suite 700

  Schaumburg, Illinois 60173

  
	
  Pliant Packaging of Canada, LLC

  	
   

  	
  1475 Woodfield Road, Suite 700

  Schaumburg, Illinois 60173

  
	
  Uniplast Holdings, Inc.

  	
   

  	
  1475 Woodfield Road, Suite 700

  Schaumburg, Illinois 60173

  
	
  Uniplast U.S., Inc.

  	
   

  	
  1475 Woodfield Road, Suite 700

  Schaumburg, Illinois 60173

  



 

















 


Schedule II to
the


Amended and
Restated Domestic Security Agreement


 


COPYRIGHTS


 


[see attached]


 

















 


Schedule III
to the


Amended and Restated Domestic Security Agreement


 


LICENSES


 


[see attached]


 

















 


Schedule IV to
the


Amended and Restated Domestic Security Agreement


 


PATENTS


 


[see attached]


 

















 


Schedule V to
the


Amended and Restated Domestic Security Agreement


 


TRADEMARKS


 


[see attached]


 

















 


Schedule VI to
the


Amended and Restated Domestic Security
Agreement


 


COMMERCIAL TORT CLAIMS


 


[see attached]


 

















 


Annex I


To the Amended and Restated Domestic Security
Agreement


 


[Form Of]


PERFECTION CERTIFICATE


 


Reference is
made to the Amended and Restated Credit Agreement dated as of November 21, 2005
(as amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among Pliant Corporation, a Utah corporation (the “Parent
Borrower”), the subsidiaries of the Parent Borrower party thereto as
domestic subsidiary borrowers,  Uniplast
Industries Co., a Nova Scotia company, 
the lenders from time to time party thereto (the “Lenders”),
Morgan Stanley Senior Funding, Inc., as Domestic B Agent, and General Electric
Capital Corporation, as Domestic A Agent and Administrative Agent Collateral
Agent.  Capitalized terms used but not
defined herein have the meanings assigned in the Credit Agreement.


 


The
undersigned, a Financial Officer and a Legal Officer, respectively, of the
Parent Borrower, hereby certify to the Collateral Agent and each other Secured
Party as follows:


 


SECTION 1.           Names. 
(a)  Set forth below is (i) the
exact legal name of each Grantor, as such name appears in its document of
formation, (ii) each other legal name each Grantor has had in the past five
years and (iii) the date of the relevant change:


 


	
  Legal Name

  	
   

  	
  Former Name

  	
   

  	
  Date of Change

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 


(b)           Except as set forth in Schedule 1
hereto, no Grantor has changed its identity or corporate structure in any way
within the past five years. Changes in identity or corporate structure would
include mergers, consolidations and acquisitions, as well as any change in the
form, nature or jurisdiction of corporate organization.  If any such change has occurred, include in Schedule
1 the information required by Sections 1 and 2 of this certificate
as to each acquiree or constituent party to a merger or consolidation.


 


(c)           Set forth below is a list of all
other names (including trade names or similar appellations) used by each
Grantor or any of its divisions or other business units in connection with the
conduct of its business or the ownership of its properties at any time during
the past five years:


 


	
  Legal Name

  	
   

  	
  Other Name

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 

















 


(d)           Set forth below is (i) the
organizational identification number, if any, issued by the jurisdiction of
formation of each Grantor that is a registered organization and (ii) the
Federal Taxpayer Identification Number of each Grantor:


 




	
  Legal Name

  	
   

  	
  Organizational No.

  	
   

  	
  Federal Taxpayer No.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  






 


SECTION 2.           Locations.  (a) 
Set forth below opposite the name of each Grantor that is a registered
organization is the jurisdiction of formation of such Grantor:


 




	
  Legal Name

  	
   

  	
  Jurisdiction of Formation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  






 


(b)           Set forth below opposite the name of
each Grantor is the address and county of the chief executive office of such
Grantor:


 




	
  Legal Name

  	
   

  	
  Address of Chief Executive Office

  	
   

  	
  County

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  






 


(c)           Set forth below opposite the name of
each Grantor is the address and county of all locations where such Grantor
maintains any books or records relating to any Accounts Receivable and/or
General Intangibles (with each location at which chattel paper, if any, is kept
being indicated by an “*”):


 




	
  Legal Name

  	
   

  	
  Address of Accounts Receivable

  and/or General Intangibles

  	
   

  	
  County

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  






 


(d)           Set forth below opposite the name of
each Grantor is the address and county of all locations where such Grantor
maintains any Inventory, Equipment and/or other Collateral not identified
above:


 




	
  Legal Name

  	
   

  	
  Address of Inventory,

  Equipment and/or Other Collateral

  	
   

  	
  Zip Code

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  






 

















 


(e)           Set forth below opposite the name of
each Grantor is the address and county of all the places of business of such
Grantor not identified in paragraph (a), (b), (c) or (d) above:


 




	
  Legal Name

  	
   

  	
  Other Business Addresses

  	
   

  	
  Zip Code

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  






 


(f)            Set forth below opposite the name of
each Grantor are the names, addresses and counties of all Persons other than
such Grantor that have possession of any of the Collateral of such Grantor
(with each such Person that holds such Collateral subject to a Lien (including,
but not limited to, warehousemen’s, mechanics’ and other statutory liens)
indicated by an “*”):


 




	
  Legal Name

  	
   

  	
  Other Collateral Addresses

  	
   

  	
  Zip Code

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  






 


SECTION
3.           Unusual
Transactions.  All Accounts have been
originated by the Grantors and all Inventory has been acquired by the Grantors
in the ordinary course of business.


 


SECTION
4.           File
Search Reports.  File search reports have been obtained from
each Uniform Commercial Code filing office identified with respect to such Grantor
in Section 2 hereof, and such search reports reflect no liens against
any of the Collateral other than those permitted under the Credit Agreement.


 


SECTION
5.           UCC
Filings.  UCC financing statements in substantially the
form of Schedule 5 hereto have been prepared for filing in the UCC
filing office and, in the case of fixture filings, the applicable County
recorder’s office, in each jurisdiction identified with respect to such Grantor
in Section 2 and Section 10, as applicable, hereof.


 


SECTION 6.           Schedule
of Filings.  Attached hereto as Schedule 6 is a true
and correct list, with respect to the filings described in Section 5
above, of each filing and the UCC filing office or, in the case of fixture
filings, the applicable County recorder’s office, in which such filing is to be
made.


 


SECTION
7.           Stock
Ownership and Other Equity Interests.  Attached hereto as Schedule 7 is a
true and correct list of all the Equity Interests of each Grantor and the
record and beneficial owners of such Equity Interests.  Also set forth on Schedule 7 is each
equity


 

















 


investment of the Parent Borrower and each
Grantor that represents 50% or less of the equity of the entity in which such
investment was made.


 


SECTION
8.           Debt
Instruments.  Attached hereto as Schedule
8 is a true and correct list of all instruments, including any promissory
notes, and other evidence of indebtedness held by each Grantor that are
required to be pledged under the Domestic Security Agreement, including all
intercompany notes between the Parent Borrower and any other Grantor or between
any Grantor and any other Grantor.


 


SECTION
9.           Advances.  Attached hereto as Schedule 9 is (a) a
true and correct list of all advances made by the Parent Borrower to any
Subsidiary of the Parent Borrower (other than those identified on Schedule 8),
which advances will be on and after the date hereof evidenced by one or more
intercompany notes pledged to the Collateral Agent under the Amended and
Restated Domestic Security Agreement and (b) a true and correct list of all
unpaid intercompany transfers of goods sold and delivered by or to the Parent
Borrower or any Subsidiary of the Parent Borrower.


 


SECTION
10.         Mortgage
Filings.  Attached hereto as Schedule
10 is a true and correct list, with respect to each Mortgaged Property, of
(a) the exact name of the Person that owns such property as such name appears
in its certificate of incorporation or other organizational document, (b) if
different from the name identified pursuant to clause (a), the exact name of the
current record owner of such property reflected in the records of the filing
office for such property identified pursuant to the following clause and (c)
the filing office in which a Mortgage with respect to such property must be
filed or recorded in order for the Collateral Agent to obtain a perfected
security interest therein.


 


SECTION
11.         Intellectual
Property.  Attached hereto as Schedule
11(A) in proper form for filing with the United States Patent and Trademark
Office or the Canadian Intellectual Property Office, as applicable, is a is a
true and correct list of each Grantor’s Patents, Patent Licenses, Trademarks
and Trademark Licenses, including the name of the registered owner,
registration number and expiration date of each Patent, Patent License,
Trademark and Trademark License owned by any Grantor.  Attached hereto as Schedule 11(B) in
proper form for filing with the United States Copyright Office or the Canadian
Intellectual Property Office, as applicable, is a true and correct list of each
Grantor’s Copyrights and Copyright Licenses, including the name of the
registered owner, registration number and expiration date of each Copyright or
Copyright License owned by any Grantor.


 


SECTION
12.         Commercial
Tort Claims.  Attached hereto as Schedule
12 is a true and correct list of commercial tort claims in excess of
$250,000 held by any Grantor, including a brief description thereof.


 


SECTION
13.         Deposit
Accounts.  Attached hereto as Schedule 13 is a
true and correct list of deposit accounts maintained by each Grantor, including
the name and address of the depositary institution, the type of account, and
the account number.


 


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


 

















 


IN WITNESS
WHEREOF, the undersigned have duly executed this certificate on this 21st day
of November, 2005.


 


	
   

  	
  PLIANT
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 

















 


Annex 2 to the


Amended and Restated Domestic Security Agreement


 


SUPPLEMENT NO.     dated as of           ,
20       , to the Amended and Restated
Domestic Security Agreement (as amended, restated, supplemented or otherwise
modified from time to time, the “Domestic Security Agreement”) dated as
of November 21, 2005, among by each of the parties listed on the signature
pages thereto and those additional entities that thereafter become parties
thereto (each a “Grantor” and collectively, the “Grantors”) and
GENERAL ELECTRIC CAPITAL CORPORATION, as Collateral Agent (in such capacity,
the “Collateral Agent”) for the Secured Parties (as defined herein).


 


A.    Reference is made to (a) the
Amended and Restated Credit Agreement dated as of November 21, 2005 (as
amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among the Parent Borrower, the domestic subsidiary borrowers
party thereto, Uniplast Industries Co., the lenders from time to time party
thereto (the “Lenders”), Morgan Stanley Senior Funding, Inc., as
Domestic B Agent, General Electric Capital Corporation, as Domestic A Agent and
Administrative Agent, and the Collateral Agent, and (b) the Amended and
Restated Guarantee Agreement dated as of November 21, 2005 (as amended,
supplemented or otherwise modified from time to time, the “Guarantee
Agreement”), among the Parent Borrower, the other Grantors and the
Administrative Agent.


 


B.            Capitalized terms used herein and
not otherwise defined herein shall have the meanings assigned to such terms in
the Domestic Security Agreement and the Credit Agreement.


 


C.            The Grantors have entered into the
Domestic Security Agreement in order to induce the Lenders to make Loans and
the Issuing Bank to issue Letters of Credit. 
Section 8.15 of the Domestic Security Agreement provides that
additional Subsidiaries of the Parent Borrower may become Grantors under the
Domestic Security Agreement by execution and delivery of an instrument in the
form of this Supplement.  The undersigned
Subsidiary (the “New Grantor”) is executing this Supplement in
accordance with the requirements of the Credit Agreement to become a Grantor
under the Domestic Security Agreement in order to induce the Lenders to make
additional Loans and the Issuing Bank to issue additional Letters of Credit and
as consideration for Loans previously made and Letters of Credit previously
issued.


 


Accordingly,
the Collateral Agent and the New Grantor agree as follows:


 


SECTION
1.  In accordance with Section 8.15
of the Domestic Security Agreement, the New Grantor by its signature below
becomes a Grantor under the Domestic Security Agreement with the same force and
effect as if originally named therein as a Grantor and the New Grantor hereby
(a) agrees to all the terms and provisions of the Domestic Security Agreement
applicable to it as a Grantor thereunder and (b) represents and warrants
that the representations and warranties made by it as a Grantor thereunder are
true and correct on and as of the date hereof. 
In furtherance of the foregoing, the New Grantor, as security for the
payment and performance in full of the Obligations (as defined in the Domestic
Security Agreement), does hereby create and grant to the Collateral Agent, its
successors and assigns, for the benefit of the Secured Parties, their
successors and assigns, a security interest in and lien on all of the New
Grantor’s right, title and interest in and to the Collateral (as defined in the
Domestic Security Agreement) of the New Grantor.  Each reference to a “Grantor” in the Domestic
Security


 

















 


Agreement shall be deemed to
include the New Grantor. The Domestic Security Agreement is hereby incorporated
herein by reference.


 


SECTION
2.  The New Grantor represents and
warrants to the Collateral Agent and the other Secured Parties that this
Supplement has been duly authorized, executed and delivered by it and
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms.


 


SECTION
3.  This Supplement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Supplement shall become effective when
the Collateral Agent shall have received counterparts of this Supplement that,
when taken together, bear the signatures of the New Grantor and the Collateral
Agent.  Delivery of an executed signature
page to this Supplement by facsimile transmission or other electronic
transmission shall be effective as delivery of a manually signed counterpart of
this Supplement.


 


SECTION 4.  The New Grantor hereby represents and
warrants that (a) set forth on Schedule I attached hereto is a
true and correct schedule of the location of any and all Collateral of the New
Grantor and (b) set forth under or above its signature hereto, is the true
and correct legal name of the New Subsidiary, its jurisdiction of formation,
its organizational identification number (if any) and the location of the chief
executive office of the New Grantor.


 


SECTION
5.  Except as expressly supplemented
hereby, the Domestic Security Agreement shall remain in full force and effect.


 


SECTION 6. 
THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.


 


SECTION
7.  In case any one or more of the
provisions contained in this Supplement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and in the Domestic Security Agreement
shall not in any way be affected or impaired thereby (it being understood that
the invalidity of a particular provision in a particular jurisdiction shall not
in and of itself affect the validity of such provision in any other
jurisdiction). The parties hereto shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.


 


SECTION
8.  All communications and notices
hereunder shall be in writing and given as provided in Section 10.01 of the
Credit Agreement. All communications and notices hereunder to the New Grantor
shall be given to it at the address set forth under its signature below.


 


SECTION
9.  The New Grantor agrees to reimburse
the Collateral Agent for its reasonable out-of-pocket expenses in connection
with this Supplement, including the reasonable fees, other charges and
disbursements of counsel for the Collateral Agent.


 


2

















 


IN WITNESS
WHEREOF, the New Grantor and the Collateral Agent have duly executed this
Supplement to the Domestic Security Agreement as of the day and year first
above written.


 


	
   

  	
  [Name Of New
  Grantor],

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  Organizational
  I.D.:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GENERAL ELECTRIC CAPITAL CORPORATION, as
  the Collateral Agent,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title: 
  Duly Authorized Signatory

  



 

















 


SCHEDULE I


to Supplement No.       to the


Domestic Security Agreement


 


LOCATION OF COLLATERAL


 




	
  Description

  	
   

  	
  Location