exv10w4







Exhibit 10.4




      




GUARANTEE AND COLLATERAL AGREEMENT




made by




NCI BUILDING SYSTEMS, INC.




and certain of its Subsidiaries,




in favor of




WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent and as Collateral Agent




Dated as of October 20, 2009




 






 









 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page
	SECTION 1 DEFINED TERMS
	 	 	2	 
	1.1 Definitions
	 	 	2	 
	1.2 Other Definitional Provisions
	 	 	9	 
	 
	 	 	 	 
	SECTION 2 GUARANTEE
	 	 	10	 
	2.1 Guarantee
	 	 	10	 
	2.2 Right of Contribution
	 	 	11	 
	2.3 No Subrogation
	 	 	11	 
	2.4 Amendments, etc. with respect to the Obligations
	 	 	11	 
	2.5 Guarantee Absolute and Unconditional
	 	 	12	 
	2.6 Reinstatement
	 	 	13	 
	2.7 Payments
	 	 	13	 
	 
	 	 	 	 
	SECTION 3 GRANT OF SECURITY INTEREST
	 	 	14	 
	3.1 Grant
	 	 	14	 
	3.2 Pledged Collateral
	 	 	15	 
	3.3 Certain Exceptions
	 	 	15	 
	3.4 Intercreditor Relations
	 	 	16	 
	 
	 	 	 	 
	SECTION 4 REPRESENTATIONS AND WARRANTIES
	 	 	17	 
	4.1 Representations and Warranties of Each Guarantor
	 	 	17	 
	4.2 Representations and Warranties of Each Grantor
	 	 	17	 
	4.3 Representations and Warranties of Each Pledgor
	 	 	20	 
	 
	 	 	 	 
	SECTION 5 COVENANTS
	 	 	21	 
	5.1 Covenants of Each Guarantor
	 	 	21	 
	5.2 Covenants of Each Grantor
	 	 	21	 
	5.3 Covenants of Each Pledgor
	 	 	27	 
	 
	 	 	 	 
	SECTION 6 REMEDIAL PROVISIONS
	 	 	29	 
	6.1 Certain Matters Relating to Accounts
	 	 	29	 
	6.2 Communications with Obligors; Grantors Remain Liable
	 	 	30	 
	6.3 Pledged Stock
	 	 	31	 
	6.4 Proceeds to be Turned Over to the Collateral Agent
	 	 	32	 
	6.5 Application of Proceeds
	 	 	33	 
	6.6 Code and Other Remedies
	 	 	33	 
	6.7 Registration Rights
	 	 	34	 
	6.8 Waiver; Deficiency
	 	 	35	 
	 
	 	 	 	 
	SECTION 7 THE COLLATERAL AGENT
	 	 	36	 
	7.1 Collateral Agent’s Appointment as Attorney-in-Fact, etc
	 	 	36	 
	7.2 Duty of Collateral Agent
	 	 	37	 
	7.3 Financing Statements
	 	 	38	 






 









 






	 	 	 	 	 
	 	 	Page
	7.4 Authority of Collateral Agent
	 	 	38	 
	7.5 Right of Inspection
	 	 	38	 
	 
	 	 	 	 
	SECTION 8 NON-LENDER SECURED PARTIES
	 	 	39	 
	8.1 Rights to Collateral
	 	 	39	 
	8.2 Appointment of Agent
	 	 	40	 
	8.3 Waiver of Claims
	 	 	40	 
	 
	 	 	 	 
	SECTION 9 MISCELLANEOUS
	 	 	40	 
	9.1 Amendments in Writing
	 	 	40	 
	9.2 Notices
	 	 	41	 
	9.3 No Waiver by Course of Conduct; Cumulative Remedies
	 	 	41	 
	9.4 Enforcement Expenses; Indemnification
	 	 	41	 
	9.5 Successors and Assigns
	 	 	42	 
	9.6 Set-Off
	 	 	42	 
	9.7 Counterparts
	 	 	42	 
	9.8 Severability
	 	 	42	 
	9.9 Section Headings
	 	 	43	 
	9.10 Integration
	 	 	43	 
	9.11 GOVERNING LAW
	 	 	43	 
	9.12 Submission to Jurisdiction; Waivers
	 	 	43	 
	9.13 Acknowledgments
	 	 	44	 
	9.14 WAIVER OF JURY TRIAL
	 	 	44	 
	9.15 Additional Grantors
	 	 	44	 
	9.16 Releases
	 	 	44	 
	9.17 Judgment
	 	 	45	 






	 	 	 
	SCHEDULES
	 
	 	 
	1

	 	Notice Addresses of Guarantors
	2

	 	Pledged Securities
	3

	 	Perfection Matters
	4

	 	Location of Jurisdiction of Organization
	5

	 	Intellectual Property
	6

	 	Contracts
	7

	 	Commercial Tort Claims
	 
	 	 
	ANNEXES
	 
	 	 
	1

	 	Assumption Agreement
	2

	 	Supplemental Agreement








ii









 








GUARANTEE AND COLLATERAL AGREEMENT




     GUARANTEE AND COLLATERAL
AGREEMENT, dated as of October 20, 2009, made by NCI BUILDING
SYSTEMS, INC. (the “Borrower”) and certain Subsidiaries of the Borrower in favor of
WACHOVIA BANK, NATIONAL ASSOCIATION, as collateral agent (in such capacity, the “Collateral
Agent”) and administrative agent (in such capacity, the “Administrative Agent”) for the
banks and other financial institutions (collectively, the “Lenders”; individually, a
“Lender”) from time to time parties to the Credit Agreement described below.



W I T N E S S E T H:




     WHEREAS, pursuant to that certain Amended and
Restated Credit Agreement, dated as of the date
hereof (as amended, amended and restated, waived, supplemented or otherwise modified from time to
time, together with any agreement extending the maturity of, or restructuring, refunding,
refinancing or increasing the Indebtedness under such agreement or successor agreements, the
“Credit Agreement”), among the Borrower, Wachovia Bank, National Association, as Collateral
Agent and Administrative Agent, and the other parties party thereto, the Lenders have severally
agreed to make extensions of credit to the Borrower upon the terms and subject to the conditions
set forth therein;



     WHEREAS, pursuant to that certain Loan and
Security Agreement, dated as of the date hereof (as
amended, amended and restated, waived, supplemented or otherwise modified from time to time,
together with any agreement extending the maturity of, or restructuring, refunding, refinancing or
increasing the Indebtedness under such agreement or successor agreements, the “ABL Credit
Agreement”), among NCI Group, Inc., a Nevada corporation and Robertson-CECO II Corporation, a
Delaware corporation, (collectively, the “ABL Borrowers”), the Borrower, the several banks
and other financial institutions from time to time parties thereto as lenders (as “Lenders” is
further defined in the ABL Credit Agreement, the “ABL Lenders”), Wells Fargo Foothill, LLC,
as administrative agent (in its specific capacity as Administrative Agent, the “ABL
Administrative Agent”) and collateral agent (in its specific capacity as Collateral Agent, the
“ABL Collateral Agent”) for the ABL Lenders thereunder, and the other parties party
thereto, the ABL Lenders have severally agreed to make extensions of credit to the ABL Borrowers
upon the terms and subject to the conditions set forth therein;



     WHEREAS, pursuant to the ABL Credit
Agreement, the Borrower and the ABL Borrowers have granted
a first priority Lien to the ABL Collateral Agent for the benefit of the holders of ABL Obligations
(as defined below) on the ABL Priority Collateral (as defined below) and a second priority Lien for
the benefit of the holders of the ABL Obligations on the Term Loan Priority Collateral (as defined
below);



     WHEREAS, the Borrower is a member of an
affiliated group of companies that includes the
Borrower, the Borrower’s Domestic Subsidiaries that are party hereto and any other Domestic
Subsidiary of the Borrower that becomes a party hereto from time to time after the date hereof (all
of the foregoing collectively, the “Grantors”);



 









 





     WHEREAS, the the Collateral Agent, the
Administrative Agent, the ABL Collateral Agent and the
ABL Administrative Agent and the control agent referred to therein have entered into an
Intercreditor Agreement, acknowledged by the Borrower and the Grantors, dated as of the date hereof
(as amended, amended and restated, waived, supplemented or otherwise modified from time to time
(subject to Section 9.1 hereof), the “Intercreditor Agreement”);



     WHEREAS, the Borrower and the other Grantors
are engaged in related businesses, and each such
Grantor will derive substantial benefit from the making of the extensions of credit under the
Credit Agreement and the ABL Credit Agreement; and



     WHEREAS, it is a condition to the obligation of the
Lenders to make their respective
extensions of credit under the Credit Agreement that the Grantors shall execute and deliver this
Agreement to the Collateral Agent for the benefit of the Secured Parties (as defined below).



     NOW, THEREFORE, in consideration of the
premises and to induce the Administrative Agent and
the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective
extensions of credit to the Borrower thereunder, each Grantor hereby agrees with the Administrative
Agent and the Collateral Agent, for the benefit of the Secured Parties, as follows:



SECTION 1 DEFINED TERMS




          1.1
Definitions. (a) Unless otherwise defined herein, terms defined in the Credit Agreement and used herein
shall have the meanings given to them in the Credit Agreement, and the following terms that are
defined in the Code (as in effect on the date hereof) are used herein as so defined: Chattel Paper,
Commercial Tort Claims, Deposit Accounts, Documents, Electronic Chattel Paper, Equipment, Farm
Products, Fixtures, Goods, Letter of Credit Rights, Money, Promissory Notes, Records and
Securities Account.




          (b) The
following terms shall have the following meanings:




     “ABL Administrative
Agent”: as defined in the recitals hereto.



     “ABL Borrowers”: as
defined in the recitals hereto.



     “ABL Collateral Agent”: as
defined in the recitals hereto.



     “ABL Credit Agreement”:
as defined in the recitals hereto.



     “ABL Lenders”: as defined
in the recitals hereto.



     “ABL Obligations”:
“Working Capital Obligations” as defined in the Intercreditor
Agreement.



     “ABL Priority Collateral”:
“Working Capital Priority Collateral” as defined in the
Intercreditor Agreement.



2 









 





     “Accounts”: all accounts (as
defined in the Code) of each Grantor, including, without
limitation, all Accounts Receivable of such Grantor.



     “Accounts Receivable”: any
right to payment for goods sold or leased or for services
rendered, which is not evidenced by an instrument (as defined in the Code) or Chattel Paper.



     “Additional Agent”: as
defined in the Intercreditor Agreement.



     “Additional Collateral
Documents”: as defined in the Intercreditor Agreement.



     “Additional Obligations”: as
defined in the Intercreditor Agreement.



     “Adjusted Net Worth”: of
any Guarantor at any time, shall mean the greater of (x) $0
and (y) the amount by which the fair saleable value of such Guarantor’s assets on the date of the
respective payment hereunder exceeds its debts and other liabilities (including contingent
liabilities, but without giving effect to any of its obligations under this Agreement or any other
Loan Document, the ABL Credit Agreement or any ABL Facility Document) on such date.



     “Administrative Agent”: as
defined in the preamble hereto.



     “Agreement”: this Guarantee
and Collateral Agreement, as the same may be amended,
restated, supplemented, waived or otherwise modified from time to time.



     “Applicable Law”: as
defined in Section 9.8 hereof.



     “Bank Products
Agreement”: any agreement pursuant to which a bank or other financial
institution agrees to provide treasury or cash management services (including, without limitation,
controlled disbursements, automated clearinghouse transactions, return items, netting, overdrafts
and interstate depository network services).



     “Bankruptcy Case”:
(i) The Borrower or any of its Subsidiaries commencing any case,
proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, conservatorship or relief of debtors,
seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B) seeking
appointment of a receiver, trustee, custodian, conservator or other similar official for it or for
all or any substantial part of its assets, or the Borrower or any of its Subsidiaries making a
general assignment for the benefit of its creditors; or (ii) there being commenced against the
Borrower or any of its Subsidiaries any case, proceeding or other action of a nature referred to in
clause (i) above which (A) results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a period of 60 days.



     “Borrower Obligations”: the
collective reference to all obligations and liabilities of
the Borrower in respect of the unpaid principal of and interest on (including, without limitation,
interest accruing after the maturity of the Loans and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding,
relating to the Borrower, whether or not a claim for post-filing or post-petition



3 









 







interest is allowed in such proceeding) the Loans, and all other obligations and liabilities
of the Borrower to the Secured Parties, whether direct or indirect, absolute or contingent, due or
to become due, or now existing or hereafter incurred, which may arise under, out of, or in
connection with, the Credit Agreement, the Loans, the other Loan Documents, any Interest Rate
Protection Agreement, Permitted Hedging Arrangement or Bank Products Agreement entered into with
any Person who was at the time of entry into such agreement a Lender or an Affiliate of any Lender,
any Guarantee of the Borrower or any of its Subsidiaries as to which any Secured Party is a
beneficiary, the provision of cash management services by any Lender or an Affiliate thereof to the
Borrower or any Subsidiary thereof, or any other document made, delivered or given in connection
therewith, in each case whether on account of principal, interest, reimbursement obligations,
amounts payable in connection with the provision of such cash management services or a termination
of any transaction entered into pursuant to any such Interest Rate Protection Agreement or
Permitted Hedging Arrangement, fees, indemnities, costs, expenses or otherwise (including, without
limitation, all reasonable fees, expenses and disbursements of counsel to the Administrative Agent
or any other Secured Party that are required to be paid by the Borrower pursuant to the terms of
the Credit Agreement or any other Loan Document).



     “Borrower”: as defined in
the preamble hereto.



     “Code”: the Uniform
Commercial Code as from time to time in effect in the State of
New York.



     “Collateral”: as defined in
Section 3; provided that, for purposes of Section
6.5, Section 8 and Section 9.16(b), “Collateral” shall have the meaning assigned to such term in
the Credit Agreement.



     “Collateral Account Bank”:
Wachovia Bank, National Association, an Affiliate thereof
or another bank which at all times is a Lender as selected by the relevant Grantor and consented to
in writing by the Collateral Agent (such consent not to be unreasonably withheld or delayed).



     “Collateral Agent”: as
defined in the preamble hereto.



     “Collateral Proceeds
Account”: a non-interest bearing cash collateral account
established and maintained by the relevant Grantor at an office of the Collateral Account Bank in
the name, and in the sole dominion and control of, the Collateral Agent for the benefit of the
Secured Parties.



     “Commercial Tort Action”:
any action, other than an action primarily seeking
declaratory or injunctive relief with respect to claims asserted or expected to be asserted by
Persons other than the Grantors, that is commenced by a Grantor in the courts of the United States
of America, any state or territory thereof or any political subdivision of any such state or
territory, in which any Grantor seeks damages arising out of torts committed against it that would
reasonably be expected to result in a damage award to it exceeding $2,000,000.



     “Contracts”: with respect to
any Grantor, all contracts, agreements, instruments and
indentures in any form and portions thereof (except for contracts listed on Schedule 6
hereto), to which such Grantor is a party or under which such Grantor or any property of such
Grantor is



4 









 







subject, as the same may from time to time be amended, supplemented, waived or
otherwise
modified, including, without limitation, (i) all rights of such Grantor to receive moneys due and
to become due to it thereunder or in connection therewith, (ii) all rights of such Grantor to
damages arising thereunder and (iii) all rights of such Grantor to perform and to exercise all
remedies thereunder.



     “Copyright Licenses”: with
respect to any Grantor, all United States written license
agreements of such Grantor providing for the grant by or to such Grantor of any right under any
United States copyright, other than agreements with any Person who is an Affiliate or a Subsidiary
of the Borrower or such Grantor, including, without limitation, any material license agreements
listed on Schedule 5 hereto, subject, in each case, to the terms of such license
agreements, and the right to prepare for sale, sell and advertise for sale, all Inventory now or
hereafter covered by such licenses.



     “Copyrights”: with respect
to any Grantor, all of such Grantor’s right, title and
interest in and to all United States copyrights, whether or not the underlying works of authorship
have been published or registered, all United States copyright registrations and copyright
applications, including, without limitation, any copyright registrations and copyright applications
listed on Schedule 5 hereto, and (i) all renewals thereof, (ii) all income, royalties,
damages and payments now and hereafter due and/or payable with respect thereto, including, without
limitation, payments under all licenses entered into in connection therewith, and damages and
payments for past or future infringements thereof and (iii) the right to sue or otherwise recover
for past, present and future infringements and misappropriations thereof.



     “Credit Agreement”: has the
meaning provided in the recitals hereto.



     “Excluded Assets”: as
defined in Section 3.3.



     “Foreign Intellectual
Property”: all non-U.S. Intellectual Property.



     “General Fund Account”:
the general fund account of the relevant Grantor established
at the same office of the Collateral Account Bank as the Collateral Proceeds Account.



     “General Intangibles”: all
“general intangibles” as that term is defined in Section
9-102(a)(42) of the Uniform Commercial Code in effect in the State of New York on the date hereof.



     “Grantor”: as defined in the
recitals hereto.



     “Guarantor Obligations”:
with respect to any Guarantor, the collective reference to
(i) the Obligations guaranteed by such Guarantor pursuant to Section 2 and (ii) all obligations and
liabilities of such Guarantor that may arise under or in connection with this Agreement or any
other Loan Document to which such Guarantor is a party, any Interest Rate Protection Agreement,
Permitted Hedging Arrangement or Bank Products Agreement entered into with any Person who was at
the time of entry into such agreement a Lender or an Affiliate of any Lender, any Guarantee of the
Borrower or any of its Subsidiaries as to which any Secured Party is a beneficiary, the provision
of cash management services by any Lender or an Affiliate thereof to the Borrower or any Subsidiary
thereof, or any other document made, delivered or given in



5 









 







connection therewith of such Guarantor, in each case whether on account of guarantee
obligations, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including,
without limitation, all fees and disbursements of counsel to the Administrative Agent or any other
Secured Party that are required to be paid by such Guarantor pursuant to the terms of this
Agreement or any other Loan Document).



     “Guarantors”: the collective
reference to each Grantor other than the Borrower.



     “Instruments”: has the
meaning specified in Article 9 of the Code, but excluding the
Pledged Securities.



     “Intellectual Property”: with
respect to any Grantor, the collective reference to
such Grantor’s Copyrights, Copyright Licenses, Patents, Patent Licenses, Trade Secrets, Trade
Secret Licenses, Trademarks and Trademark Licenses.



     “Intercreditor Agreement”:
as defined in the recitals hereto.



     “Intercompany Note”: with
respect to any Grantor, any promissory note in a principal
amount in excess of $2,000,000 evidencing loans made by such Grantor to the Borrower or any of its
Subsidiaries.



     “Inventory”: with respect to
any Grantor, all inventory (as defined in the Code) of
such Grantor.



     “Investment Property”: the
collective reference to (i) all “investment property” as
such term is defined in Section 9-102(a)(49) of the Uniform Commercial Code in effect in the State
of New York on the date hereof (other than any Capital Stock of any Foreign Subsidiary and other
than any Capital Stock excluded from the definition of “Pledged Stock”) and (ii) whether or not
constituting “investment property” as so defined, all Pledged Securities.



     “Issuers”: the collective
reference to the Persons identified on Schedule 2
as the issuers of Pledged Stock, together with any successors to such companies.



     “Lender”: as defined in the
preamble hereto.



     “Non-Lender Secured
Parties”: the collective reference to any person who, at the time
of entering into any Interest Rate Protection Agreement or Permitted Hedging Arrangement or Banks
Products Agreement secured hereby, was a Lender or an Affiliate of any Lender and their respective
successors and assigns.



     “Obligations”: (i) in
the case of the Borrower, its Borrower Obligations and (ii) in
the case of each Guarantor, its Guarantor Obligations.



     “Patent Licenses”: with
respect to any Grantor, all United States written license
agreements of such Grantor providing for the grant by or to such Grantor of any right under any
United States patent, patent application, or patentable invention other than agreements with any
Person who is an Affiliate or a Subsidiary of the Borrower or such Grantor, including, without
limitation, the material license agreements listed on Schedule 5 hereto, subject, in each
case, to



6 









 







the terms of such license agreements, and the right to prepare for sale, sell and advertise
for sale, all Inventory now or hereafter covered by such licenses.



     “Patents”: with respect to
any Grantor, all of such Grantor’s right, title and
interest in and to all United States patents, patent applications and patentable inventions and all
reissues and extensions thereof, including, without limitation, all patents and patent applications
identified in Schedule 5 hereto, and including, without limitation, (i) all inventions and
improvements described and claimed therein, (ii) the right to sue or otherwise recover for any and
all past, present and future infringements and misappropriations thereof, (iii) all income,
royalties, damages and other payments now and hereafter due and/or payable with respect thereto
(including, without limitation, payments under all licenses entered into in connection therewith,
and damages and payments for past, present or future infringements thereof), and (iv) all other
rights corresponding thereto in the United States and all reissues, divisions, continuations,
continuations-in-part, substitutes, renewals, and extensions thereof, all improvements thereon, and
all other rights of any kind whatsoever of such Grantor accruing thereunder or pertaining thereto.



     “Pledged Collateral”: as to
any Pledgor, the Pledged Securities now owned or at any
time hereafter acquired by such Pledgor, and any Proceeds thereof.



     “Pledged Notes”: with
respect to any Pledgor, all Intercompany Notes at any time
issued to, or held or owned by, such Pledgor.



     “Pledged Securities”: the
collective reference to the Pledged Notes and the Pledged
Stock.



     “Pledged Stock”: with
respect to any Pledgor, the shares of Capital Stock listed on
Schedule 2 as held by such Pledgor, together with any other shares, stock certificates,
options or rights of any nature whatsoever in respect of the Capital Stock of any Issuer that may
be issued or granted to, or held by, such Pledgor while this Agreement is in effect
(provided that in no event shall there be pledged, nor shall any Pledgor be required to
pledge, directly or indirectly, (i) more than 65% of any series of the outstanding Capital Stock of
any Foreign Subsidiary, (ii) any of the Capital Stock of a Subsidiary of a Foreign Subsidiary and
(iii) de minimis shares of a Foreign Subsidiary held by any Pledgor as a nominee or in a similar
capacity).



     “Pledgor”: the Borrower
(with respect to Pledged Stock of the entities listed on
Schedule 2 hereto under the name of the Borrower and all other Pledged Collateral of the
Borrower) and each other Grantor (with respect to Pledged Securities held by such Grantor and all
other Pledged Collateral of such Grantor).



     “Proceeds”: all
“proceeds” as such term is defined in Section 9-102(a)(64) of the
Uniform Commercial Code in effect in the State of New York on the date hereof and, in any event,
Proceeds of Pledged Securities shall include, without limitation, all dividends or other income
from the Pledged Securities, collections thereon or distributions or payments with respect thereto.



     “Restrictive Agreements”: as
defined in Section 3.3(a).



7 









 





     “Secured Bank Product
Agreement”: any Interest Rate Protection Agreement, Permitted
Hedging Arrangement or Bank Products Agreement entered into with any Person who was at the time of
entry into such agreement a Lender or an Affiliate of any Lender, or any agreement providing for
the provision of cash management services by any Lender or an Affiliate thereof to the Borrower or
any Subsidiary thereof, or any other document made, delivered or given in connection therewith of
such Guarantor.



     “Secured Parties”: the
collective reference to (i) the Administrative Agent, the
Collateral Agent and each Other Representative, (ii) the Lenders, (iii) with respect to any
Interest Rate Protection Agreement, Permitted Hedging Arrangement or Bank Products Agreement with
the Borrower or any of its Subsidiaries, any counterparty thereto that, at the time such agreement
or arrangement was entered into, was a Lender or an Affiliate of any Lender and (iv) their
respective successors and assigns and their permitted transferees and endorsees.



     “Security Collateral”: with
respect to any Grantor, means, collectively, the
Collateral (if any) and the Pledged Collateral (if any) of such Grantor.



     “Specified Asset”: as
defined in Section 4.2.2 hereof.



     “Term Loan Priority
Collateral”: as defined in the Intercreditor Agreement.



     “Trade Secret Licenses”:
with respect to any Grantor, all United States written
license agreements of such Grantor providing for the grant by or to such Grantor of any right under
any trade secrets, including, without limitation, know how, processes, formulae, compositions,
designs, and confidential business and technical information, and all rights of any kind whatsoever
accruing thereunder or pertaining thereto, other than agreements with any Person who is an
Affiliate or a Subsidiary of the Borrower or such Grantor, subject, in each case, to the terms of
such license agreements, and the right to prepare for sale, sell and advertise for sale, all
Inventory now or hereafter covered by such licenses.



     “Trade Secrets”: with
respect to any Grantor, all of such Grantor’s right, title and
interest in and to all United States trade secrets, including, without limitation, know-how,
processes, formulae, compositions, designs, and confidential business and technical information,
and all rights of any kind whatsoever accruing thereunder or pertaining thereto, including, without
limitation, (i) all income, royalties, damages and payments now and hereafter due and/or payable
with respect thereto, including, without limitation, payments under all licenses, non-disclosure
agreements and memoranda of understanding entered into in connection therewith, and damages and
payments for past or future misappropriations thereof, and (ii) the right to sue or otherwise
recover for past, present or future misappropriations thereof.



     “Trademark Licenses”: with
respect to any Grantor, all United States written license
agreements of such Grantor providing for the grant by or to such Grantor of any right under any
United States trademarks, service marks, trade names, trade dress or other indicia of trade origin
or business identifiers, other than agreements with any Person who is an Affiliate or a Subsidiary
of the Borrower or such Grantor, including, without limitation, the material license agreements
listed on Schedule 5 hereto, subject, in each case, to the terms of such license
agreements, and



8 









 







the right to prepare for sale, sell and advertise for sale, all Inventory now or hereafter
covered by such licenses.



     “Trademarks”: with respect
to any Grantor, all of such Grantor’s right, title and
interest in and to all United States trademarks, service marks, trade names, trade dress or other
indicia of trade origin or business identifiers, trademark and service mark registrations, and
applications for trademark or service mark registrations (except for “intent to use” applications
for trademark or service mark registrations filed pursuant to Section 1(b) of the Lanham Act, 15
U.S.C. § 1051, unless and until an Amendment to Allege Use or a Statement of Use under Sections
1(c) and 1(d) of said Act has been filed, it being understood and agreed that the carve out in this
parenthetical shall be applicable only if and for so long as a grant of a security interest in, or
the exercise of rights or remedies with respect to, such intent to use application would invalidate
or otherwise jeopardize Grantor’s rights therein), and any renewals thereof, including, without
limitation, each registration and application identified in Schedule 5 hereto, and
including, without limitation, (i) the right to sue or otherwise recover for any and all past,
present and future infringements or dilutions thereof, (ii) all income, royalties, damages and
other payments now and hereafter due and/or payable with respect thereto (including, without
limitation, payments under all licenses entered into in connection therewith, and damages and
payments for past or future infringements thereof), and (iii) all other rights corresponding
thereto in the United States and all other rights of any kind whatsoever of such Grantor accruing
thereunder or pertaining thereto in the United States, together in each case with the goodwill of
the business connected with the use of, and symbolized by, each such trademark, service mark, trade
name, trade dress or other indicia of trade origin or business identifiers.



     “Vehicles”: all cars, trucks,
trailers, construction and earth moving equipment and
other vehicles covered by a certificate of title law of any state and all tires and other
appurtenances to any of the foregoing.



          1.2 Other
Definitional Provisions. (a) The words “hereof”, “herein”, “hereto” and
“hereunder” and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any particular provision
of this Agreement, and Section, Schedule and Annex references are to this Agreement unless
otherwise specified.




          (b) The
meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms.




          (c) Where the context requires, terms relating to the
Collateral, Pledged Collateral or
Security Collateral, or any part thereof, when used in relation to a Grantor shall refer to such
Grantor’s Collateral, Pledged Collateral or Security Collateral or the relevant part thereof.




          (d) All
references in this Agreement to any of the property described in the definition of the
term “Collateral” or “Pledged Collateral”, or to any Proceeds thereof, shall be deemed to be
references thereto only to the extent the same constitute Collateral or Pledged Collateral,
respectively.




9 









 








SECTION 2 GUARANTEE




          2.1
Guarantee. (a) Each of the Guarantors hereby, jointly and severally, unconditionally and irrevocably,
guarantees, as primary obligor and not merely as surety, to the Administrative Agent, for the
benefit of the applicable Secured Parties, the prompt and complete payment and performance by the
Borrower when due and payable (whether at the stated maturity, by acceleration or otherwise) of the
Borrower Obligations of the Borrower owed to the applicable Secured Parties.




          (b) Anything herein or in any other Loan Document to the
contrary notwithstanding, the maximum
liability of each Guarantor hereunder and under the other Loan Documents shall in no event exceed
the amount that can be guaranteed by such Guarantor under applicable law, including applicable
federal and state laws relating to the insolvency of debtors; provided that, to the maximum
extent permitted under applicable law, it is the intent of the parties hereto that (x) the amount
of liability of any of the Guarantors or any guarantee in respect of Indebtedness represented by
the Senior Notes or Subordinated Indebtedness shall be reduced before the amount of the liability
of the respective Guarantor is reduced hereunder and (y) the rights of contribution of each
Guarantor provided in following Section 2.2 be included as an asset of the respective Guarantor in
determining the maximum liability of such Guarantor hereunder.




          (c) Each
Guarantor agrees that the Borrower Obligations guaranteed by it hereunder may at any
time and from time to time exceed the amount of the liability of such Guarantor hereunder without
impairing the guarantee contained in this Section 2 or affecting the rights and remedies of the
Administrative Agent or any other Secured Party hereunder.




          (d) The
guarantee contained in this Section 2 shall remain in full force and effect until the
earlier to occur of (i) the first date on which all the Loans, all other Borrower Obligations then
due and owing, and the obligations of each Guarantor under the guarantee contained in this Section
2 then due and owing shall have been satisfied by payment in full in cash, or (ii) as to any
Guarantor, the sale or other disposition of all of the Capital Stock of such Guarantor (to a Person
other than the Borrower or a Subsidiary of the Borrower) as permitted under the Credit Agreement.




          (e) No
payment made by the Borrower, any of the Guarantors, any other guarantor or any other
Person or received or collected by the Administrative Agent or any other Secured Party from the
Borrower, any of the Guarantors, any other guarantor or any other Person by virtue of any action or
proceeding or any set-off or appropriation or application at any time or from time to time in
reduction of or in payment of any of the Borrower Obligations shall be deemed to modify, reduce,
release or otherwise affect the liability of any Guarantor hereunder which shall, notwithstanding
any such payment (other than any payment made by such Guarantor in respect of the Borrower
Obligations or any payment received or collected from such Guarantor in respect of any of the
Borrower Obligations), remain liable for the Borrower Obligations of the Borrower guaranteed by it
hereunder up to the maximum liability of such Guarantor hereunder until the earlier to occur of (i)
the first date on which all the Loans, and all
other Borrower Obligations then due and owing, are paid in full in cash or (ii) the sale or
other




10 









 




disposition of all of the Capital Stock of such Guarantor (to a Person other than the
Borrower or a Subsidiary of the Borrower) as permitted under the Credit Agreement.




          2.2 Right
of Contribution. Each Guarantor hereby agrees that to the extent that a Guarantor shall have paid more than
its proportionate share (based, to the maximum extent permitted by law, on the respective Adjusted
Net Worths of the Guarantors on the date the respective payment is made) of any payment made
hereunder, such Guarantor shall be entitled to seek and receive contribution from and against any
other Guarantor hereunder that has not paid its proportionate share of such payment. Each
Guarantor’s right of contribution shall be subject to the terms and conditions of Section 2.3. The
provisions of this Section 2.2 shall in no respect limit the obligations and liabilities of any
Guarantor to the Administrative Agent and the other Secured Parties, and each Guarantor shall
remain liable to the Administrative Agent and the other Secured Parties for the full amount
guaranteed by such Guarantor hereunder.




          2.3 No
Subrogation. Notwithstanding any payment made by any Guarantor hereunder or any set-off or application
of funds of any Guarantor by the Collateral Agent or any other Secured Party, no Guarantor shall be
entitled to be subrogated to any of the rights of the Collateral Agent or any other Secured Party
against the Borrower or any other Guarantor or any collateral security or guarantee or right of
offset held by the Collateral Agent or any other Secured Party for the payment of the Borrower
Obligations, nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement
from the Borrower or any other Guarantor in respect of payments made by such Guarantor hereunder,
until all amounts owing to the Collateral Agent and the other Secured Parties by the Borrower on
account of the Borrower Obligations are paid in full in cash. If any amount shall be paid to any
Guarantor on account of such subrogation rights at any time when all of the Borrower Obligations
shall not have been paid in full in cash, such amount shall be held by such Guarantor in trust for
the Collateral Agent and the other Secured Parties, segregated from other funds of such Guarantor,
and shall, forthwith upon receipt by such Guarantor, be turned over to the Collateral Agent in the
exact form received by such Guarantor (duly indorsed by such Guarantor to the Collateral Agent, if
required), to be held as collateral security for all of the Borrower Obligations (whether matured
or unmatured) guaranteed by such Guarantor and/or then or at any time thereafter may be applied
against any Borrower Obligations, whether matured or unmatured, in such order as the Collateral
Agent may determine.




          2.4
Amendments, etc. with respect to the Obligations. To the maximum extent permitted by law, each Guarantor shall remain obligated
hereunder
notwithstanding that, without any reservation of rights against any Guarantor and without notice to
or further assent by any Guarantor, any demand for payment of any of the Borrower Obligations made
by the Collateral Agent, the Administrative Agent or any other Secured Party may be rescinded by
the Collateral Agent, the Administrative Agent or such other Secured Party and any of the Borrower
Obligations continued, and the Borrower
Obligations, or the liability of any other Person upon or for any part thereof, or any
collateral security or guarantee therefor or right of offset with respect thereto, may, from time
to time, in whole or in part, be renewed, extended, amended, waived, modified, accelerated,
compromised, subordinated, waived, surrendered or released by the Collateral Agent, the
Administrative Agent or any other Secured Party, and the Credit Agreement and the other Loan
Documents and any other documents executed and delivered in connection therewith may be amended,
waived, modified, supplemented or terminated, in whole




11 









 




or in part, as the Collateral Agent or the
Administrative Agent (or the Required Lenders under the Credit Agreement or the applicable
Lenders(s), as the case may be) may deem advisable from time to time, and any collateral security,
guarantee or right of offset at any time held by the Collateral Agent, the Administrative Agent or
any other Secured Party for the payment of any of the Borrower Obligations may be sold, exchanged,
waived, surrendered or released. None of the Collateral Agent, the Administrative Agent nor any
other Secured Party shall have any obligation to protect, secure, perfect or insure any Lien at any
time held by it as security for any of the Borrower Obligations or for the guarantee contained in
this Section 2 or any property subject thereto, except to the extent required by applicable law.




          2.5
Guarantee Absolute and Unconditional. Each Guarantor waives, to the maximum extent permitted by applicable law, any and all
notice of the creation, renewal, extension or accrual of any of the Borrower Obligations and notice
of or proof of reliance by the Collateral Agent, the Administrative Agent or any other Secured
Party upon the guarantee contained in this Section 2 or acceptance of the guarantee contained in
this Section 2; each of the Borrower Obligations, and any obligation contained therein, shall
conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended
or waived, in reliance upon the guarantee contained in this Section 2; and all dealings between the
Borrower and any of the Guarantors, on the one hand, and the Collateral Agent, the Administrative
Agent and the other Secured Parties, on the other hand, likewise shall be conclusively presumed to
have been had or consummated in reliance upon the guarantee contained in this Section 2. Each
Guarantor waives, to the maximum extent permitted by applicable law, diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon the Borrower or any of
the other Guarantors with respect to any of the Borrower Obligations. Each Guarantor understands
and agrees, to the extent permitted by law, that the guarantee contained in this Section 2 shall be
construed as a continuing, absolute and unconditional guarantee of payment and not of collection.
Each Guarantor hereby waives, to the maximum extent permitted by applicable law, any and all
defenses (other than any suit for breach of a contractual provision of any of the Loan Documents)
that it may have arising out of or in connection with any and all of the following: (a) the
validity or enforceability of the Credit Agreement or any other Loan Document, any of the Borrower
Obligations or any other collateral security therefor or guarantee or right of offset with respect
thereto at any time or from time to time held by the Collateral Agent, the Administrative Agent or
any other Secured Party, (b) any defense, set-off or counterclaim (other than a defense of payment
or performance) that may at any time be available to or be asserted by the Borrower against the
Collateral Agent, the Administrative Agent or any other Secured Party, (c) any change in the time,
place, manner or place of payment, amendment, or waiver or increase in any of the Obligations, (d)
any exchange, taking, or release of Security Collateral, (e) any change in the structure or
existence of the Borrower or any other Guarantor, (f) any application of Security Collateral to any
of the
Obligations, (g) any law, regulation or order of any jurisdiction, or any other event,
affecting any term of any Obligation or the rights of the Collateral Agent, the Administrative
Agent or any other Secured Party with respect thereto, including, without limitation: (i) the
application of any such law, regulation, decree or order, including any prior approval, which would
prevent the exchange of any currency (other than Dollars) for Dollars or the remittance of funds
outside of such jurisdiction or the unavailability of Dollars in any legal exchange market in such
jurisdiction in accordance with normal commercial practice, (ii) a declaration of banking
moratorium or any suspension of payments by banks in such jurisdiction or the imposition by such
jurisdiction or any Governmental Authority thereof of




12 









 




any moratorium on, the required rescheduling
or restructuring of, or required approval of payments on, any indebtedness in such jurisdiction,
(iii) any expropriation, confiscation, nationalization or requisition by such country or any
Governmental Authority that directly or indirectly deprives the Borrower of any assets or their
use, or of the ability to operate its business or a material part thereof, or (iv) any war (whether
or not declared), insurrection, revolution, hostile act, civil strife or similar events occurring
in such jurisdiction which has the same effect as the events described in clause (i), (ii) or (iii)
above (in each of the cases contemplated in clauses (i) through (iv) above, to the extent occurring
or existing on or at any time after the date of this Agreement), or (h) any other circumstance
whatsoever (other than payment in full in cash of the Borrower Obligations guaranteed by it
hereunder) (with or without notice to or knowledge of the Borrower or such Guarantor) that
constitutes, or might be construed to constitute, an equitable or legal discharge of the Borrower
for the Borrower Obligations, or of such Guarantor under the guarantee contained in this Section 2,
in bankruptcy or in any other instance. When making any demand hereunder or otherwise pursuing its
rights and remedies hereunder against any Guarantor, the Collateral Agent, the Administrative Agent
and any other Secured Party may, but shall be under no obligation to, make a similar demand on or
otherwise pursue such rights and remedies as it may have against the Borrower, any other Guarantor
or any other Person or against any collateral security or guarantee for the Borrower Obligations
guaranteed by such Guarantor hereunder or any right of offset with respect thereto, and any failure
by the Collateral Agent, the Administrative Agent or any other Secured Party to make any such
demand, to pursue such other rights or remedies or to collect any payments from the Borrower, any
other Guarantor or any other Person or to realize upon any such collateral security or guarantee or
to exercise any such right of offset, or any release of the Borrower, any other Guarantor or any
other Person or any such collateral security, guarantee or right of offset, shall not relieve any
Guarantor of any obligation or liability hereunder, and shall not impair or affect the rights and
remedies, whether express, implied or available as a matter of law, of the Collateral Agent, the
Administrative Agent or any other Secured Party against any Guarantor. For the purposes hereof
“demand” shall include the commencement and continuance of any legal proceedings.




          2.6
Reinstatement. The guarantee of any Guarantor contained in this Section 2 shall continue to be effective,
or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the
Borrower Obligations guaranteed by such Guarantor hereunder is rescinded or must otherwise be
restored or returned by the Collateral Agent, the Administrative Agent or any other Secured Party
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower or any
Guarantor, or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, the Borrower or any Guarantor or any
substantial part of its property, or otherwise, all as though such payments had not been made.




          2.7
Payments. Each Guarantor hereby guarantees that payments hereunder will be paid to the Administrative
Agent without set-off or counterclaim, in Dollars (or in the case of any amount required to be paid
in any other currency pursuant to the requirements of the Credit Agreement or other agreement
relating to the respective Obligations, such other currency), at the Administrative Agent’s office
specified in Section 10.2 of the Credit Agreement or such other address as may be designated in
writing by the Administrative Agent to such Guarantor from time to time in accordance with Section
10.2 of the Credit Agreement.




13 









 








SECTION 3 GRANT OF SECURITY INTEREST




          3.1
Grant. Each Grantor hereby grants, subject to existing licenses to use the
Copyrights, Patents, Trademarks and Trade Secrets granted by such Grantor in the ordinary course of
business, to the Collateral Agent, for the benefit of the Secured Parties, a security interest in
all of the Collateral of such Grantor, 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 of such Grantor, except as provided in Section 3.3. The term “Collateral”, as to any
Grantor, means the following property (wherever located) now owned or at any time hereafter
acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire
any right, title or interest, except as provided in Section 3.3:





     (a) all Accounts;




     (b) all Chattel Paper;




     (c) all Commercial Tort Claims
constituting Commercial Tort Actions described in
Schedule 7 (together with any Commercial Tort Actions subject to a further writing provided
in accordance with Section 5.2.12);




     (d) all Contracts;




     (e) all Deposit Accounts;




     (f) all Documents;




     (g) all Equipment (other than
Vehicles);




     (h) all Fixtures;




     (i) all General Intangibles;




     (j) all Instruments;




     (k) all Intellectual Property;




     (l) all Inventory;




     (m) all Investment Property;




     (n) all Letter of Credit Rights;




     (o) all Money (including all cash and
Cash Equivalents);




     (p) all books and Records
pertaining to any of the foregoing;




     (q) the Collateral Proceeds
Account; and



14 









 






     (r) to the extent not otherwise
included, all Proceeds and products of any and all of
the foregoing and all collateral security and guarantees given by any Person with respect to
any of the foregoing;


provided that, in the case of each Grantor, Collateral shall not include any
Pledged
Collateral, or any property or assets specifically excluded from Pledged Collateral (including any
Capital Stock of any Foreign Subsidiary in excess of 65% of any series of such stock).




          3.2
Pledged Collateral. Each Grantor that is a Pledgor hereby grants to the Collateral Agent, for the benefit of
the Secured Parties, a security interest in all of the Pledged Collateral of such Pledgor now owned
or at any time hereafter acquired by such Pledgor, and any Proceeds thereof, as collateral security
for the prompt and complete performance when due (whether at the stated maturity, by acceleration
or otherwise) of the Obligations of such Pledgor, except as provided in Section 3.3.




          3.3
Certain Exceptions. No security interest is or will be granted pursuant hereto in any right, title or interest
of any Grantor under or in (collectively, the “Excluded Assets”):




          (a) any
Instruments, Contracts, Chattel Paper, General Intangibles, Copyright Licenses, Patent
Licenses, Trademark Licenses, Trade Secret Licenses or other contracts or agreements with or issued
by Persons other than the Borrower, a Subsidiary of the Borrower or an Affiliate thereof,
(collectively, “Restrictive Agreements”) that would otherwise be included in the Security
Collateral (and such Restrictive Agreements shall not be deemed to constitute a part of the
Security Collateral) for so long as, and to the extent that, the granting of such a security
interest pursuant hereto would result in a breach, default or termination of such Restrictive
Agreements (in each case, except to the extent that, pursuant to the Code or other applicable law,
the granting of security interests therein can be made without resulting in a breach, default or
termination of such Restrictive Agreements);




          (b) any
Equipment or other property that would otherwise be included in the Security
Collateral (and such Equipment or other property shall not be deemed to constitute a part of the
Security Collateral) if such Equipment or other property is subject to a Lien described
in Section 7.3(n) or 7.3(y) of the Credit Agreement (but in each case only for so long as (i)
such Liens are in place and (ii) the granting of a Lien in such Equipment or other property would
breach or conflict with the agreement giving rise to such Liens);




          (c) any
property that would otherwise be included in the Security Collateral (and such
property shall not be deemed to constitute a part of the Security Collateral) if such property (x)
has been sold or otherwise transferred in connection with (i) a Sale and Leaseback Transaction the
proceeds of which are applied as, if and to the extent required in accordance with Section 3.4(c)
of the Credit Agreement or (ii) an Exempt Sale and Leaseback Transaction or (y) constitutes
Proceeds or products of any property that has been sold or otherwise transferred pursuant to such
Sale and Leaseback Transaction or Exempt Sale and Leaseback Transaction (other than any payments
received by such Grantor in payment for the sale or transfer of such property in such Sale and
Leaseback Transaction or Exempt Sale and Leaseback Transaction) ;




15 









 








          (d) Capital Stock which is specifically excluded from the
definition of Pledged Stock by
virtue of the proviso contained in the parenthetical to such definition;




          (e) Foreign Intellectual Property;




          (f) any
Money, cash, Cash Equivalents, checks, other negotiable instrument, funds and other
evidence of payment held in any Deposit Account of the Borrower or any of its Subsidiaries in the
nature of security deposit with respect to obligations for the benefit of the Borrower or any of
its Subsidiaries, which must be held for or returned to the applicable counterparty under
applicable law or pursuant to Contractual Obligations;




          (g) any
deposit account or other account containing collateral securing the obligations of any
Grantor with respect to the Existing Letters of Credit (as defined in the ABL Credit Agreement as
in effect on the date hereof), and any cash, Cash Equivalents or investment property in such
accounts;




          (h) without limiting clause 3.3(a) above, those assets over
which the granting of security
interests in such assets would be prohibited by contract permitted under the Credit Agreement and
set forth on Schedule 6, applicable law or regulation or the organizational documents of any
non-wholly owned Subsidiary (including permitted liens, leases and licenses), or to the extent that
such security interests would result in adverse tax or accounting consequences as reasonably
determined by the Borrower; or




          (i) those
assets as to which the applicable Grantor and the Collateral Agent shall mutually
and reasonably determine that the costs of obtaining such a security interest are excessive in
relation to the value of the security interest to be afforded thereby.




          3.4
Intercreditor Relations. Notwithstanding anything herein to the contrary, it is the understanding of the parties that
the Liens granted pursuant to Section 3.1 herein shall (x) with respect to all Security Collateral
other than Term Loan Priority Collateral, prior to the Discharge of Working Capital Obligations (as
defined in the Intercreditor Agreement), be subject and subordinate to the Liens granted to the ABL
Collateral Agent for the benefit of the holders of the ABL Obligations to
secure the ABL Obligations pursuant to the ABL Credit Agreement, as and to the extent provided
in the Intercreditor Agreement, and (y) with respect to all Security Collateral, prior to the
applicable Discharge of Additional Obligations (as defined in the Intercreditor Agreement), be pari
passu and equal in priority to the Liens granted to any Additional Agent for the benefit of the
holders of the applicable Additional Obligations to secure such Additional Obligations pursuant to
the applicable Additional Collateral Documents, as and to the extent provided in the Intercreditor
Agreement. The Collateral Agent acknowledges and agrees that the relative priority of such Liens
granted to the Collateral Agent, the ABL Collateral Agent and any




16 









 




Additional Agent may be
determined solely pursuant to the Intercreditor Agreement, and not by priority as a matter of law
or otherwise. Notwithstanding anything herein to the contrary, the Liens 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 and control as among the Collateral Agent, the
ABL Collateral Agent and any Additional Agent. Notwithstanding any other provision hereof, (x) for
so long as any ABL Obligations remain outstanding, any obligation hereunder to physically deliver
to the Collateral Agent any Security Collateral shall be satisfied by causing such Security
Collateral to be physically delivered to the ABL Collateral Agent to be held in accordance with the
Intercreditor Agreement and (y) for so long as any Additional Obligations remain outstanding, any
obligation hereunder to physically deliver to the Collateral Agent any Security Collateral shall be
satisfied by causing such Security Collateral to be physically delivered to any Additional Agent to
be held in accordance with the Intercreditor Agreement.




SECTION 4 REPRESENTATIONS AND WARRANTIES




          4.1
Representations and Warranties of Each Guarantor. To induce the Collateral Agent and the Lenders to enter into the Credit Agreement
and to
induce the Lenders to make their respective extensions of credit to the Borrower thereunder, each
Guarantor hereby represents and warrants to the Collateral Agent and each other Secured Party that
the representations and warranties set forth in Article IV of the Credit Agreement as they relate
to such Guarantor or to the Loan Documents to which such Guarantor is a party, each of which
representations and warranties is hereby incorporated herein by reference, are true and correct in
all material respects, and the Collateral Agent and each other Secured Party shall be entitled to
rely on each of such representations and warranties as if fully set forth herein; provided
that each reference in each such representation and warranty to the Borrower’s knowledge shall, for
the purposes of this Section 4.1, be deemed to be a reference to such Guarantor’s knowledge.




          4.2
Representations and Warranties of Each Grantor. To induce the Collateral Agent and the Lenders to enter into the Credit Agreement and
to
induce the Lenders to make their respective extensions of credit to the Borrower thereunder, each
Grantor hereby represents and warrants to the Collateral Agent and each other Secured Party that,
in each case after giving effect to the Transactions:




          4.2.1
Title; No Other Liens. Except for the security interests granted to the Collateral Agent for the benefit of the
Secured Parties pursuant to this Agreement and the other Liens permitted to exist on such Grantor’s
Collateral by the Credit Agreement (including, without limitation, Section 7.3 thereof), such
Grantor owns each item of such Grantor’s Collateral free and clear of any and all Liens. No
currently effective financing statement or other similar public notice with respect to all or any
part of such Grantor’s Collateral is on file or of record in any public office in the United States
of America, any state, territory or dependency thereof or the District of Columbia, except such as
have been filed in favor of the Collateral Agent for the benefit of the Secured Parties pursuant to
this Agreement or as are permitted by the Credit Agreement (including, without limitation, Section
7.3 thereof) or any other Loan Document or for which termination statements will be delivered on
the Closing Date.




          4.2.2
Perfected First Priority Liens. (a) This Agreement is effective to create, as collateral security for the Obligations of
such Grantor, valid and enforceable Liens on such Grantor’s Security Collateral in favor of the
Collateral Agent for the benefit of the Secured Parties, except as enforceability may be affected
by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditor’s




17 









 




rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.




          (b) Except with regard to (i) Liens (if any) on
Specified Assets and (ii) any rights in favor
of the United States government as required by law (if any), upon the completion of the Filings and
the delivery to and continuing possession by the Collateral Agent of all Instruments, Chattel Paper
and Documents a security interest in which is perfected by possession, and the obtaining and
maintenance of “control” (as described in the Code) by the Collateral Agent of all Deposit
Accounts, the Collateral Proceeds Account, Electronic Chattel Paper and Letter of Credit Rights a
security interest in which is perfected by “control” and in the case of Commercial Tort Actions
(other than such Commercial Tort Actions listed on Schedule 7 on the date of this Agreement) the
taking of the actions required by Section 5.2.12 herein, the Liens created pursuant to this
Agreement will constitute valid Liens on and (to the extent provided herein) perfected security
interests in such Grantor’s Security Collateral in favor of the Collateral Agent for the benefit of
the Secured Parties, and will be prior to all other Liens of all other Persons other than Permitted
Liens, and enforceable as such as against all other Persons other than Ordinary Course Transferees,
except to the extent that the recording of an assignment or other transfer of title to the
Collateral Agent or the recording of other applicable documents in the United States Patent and
Trademark Office or United States Copyright Office may be necessary for perfection or
enforceability, and except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally
and by general equitable principles (whether enforcement is sought by proceedings in equity or at
law) or by an implied covenant of good faith and fair dealing. As used in this Section 4.2.2(b),
the following terms shall have the following meanings:





     “Filings”:
the filing or recording of (i) the Financing Statements as set
forth in Schedule 3, (ii) this Agreement or a notice thereof with respect to
Intellectual Property as set forth in Schedule 3, and (iii) any filings after the
Closing Date in any other jurisdiction as may be necessary under any Requirement of Law.




     “Financing
Statements”: the financing statements delivered to the Collateral
Agent by such Grantor on the Closing Date for filing in the jurisdictions listed in
Schedule 4.




     “Ordinary Course
Transferees”: (i) with respect to goods only, buyers in the
ordinary course of business and lessees in the ordinary course of business to the extent
provided in Section 9-320(a) and 9-321 of the Uniform Commercial Code as in effect from time
to time in the relevant jurisdiction, (ii) with respect to general intangibles only,
licensees in the ordinary course of business to the extent provided in Section 9-321 of the
Uniform Commercial Code as in effect from time to time in the relevant jurisdiction and
(iii) any other Person who is entitled to take free of the Lien pursuant to the Uniform
Commercial Code as in effect from time to time in the relevant jurisdiction.




     “Permitted
Liens”: Liens permitted pursuant to the Credit Documents, including
without limitation those permitted to exist pursuant to Section 7.3 of the Credit Agreement.



18 









 






     “Specified
Assets”: the following property and assets of such Grantor:




     (1) Patents, Patent Licenses,
Trademarks and Trademark Licenses to the extent
that (a) Liens thereon cannot be perfected by the filing of financing statements
under the Uniform Commercial Code or by the filing and acceptance thereof in the
United States Patent and Trademark Office or (b) such Patents, Patent Licenses,
Trademarks and Trademark Licenses are not, individually or in the aggregate,
material to the business of the Borrower and its Subsidiaries taken as a whole;




     (2) Copyrights and Copyright
Licenses and Accounts or receivables arising
therefrom to the extent that the Uniform Commercial Code as in effect from time to
time in the relevant jurisdiction is not applicable to the creation or perfection of
Liens thereon or Liens thereon cannot be perfected by the filing and acceptance of
this Agreement or short form thereof in the United States Copyright Office;




     (3) Collateral for which the
perfection of Liens thereon requires filings in or
other actions under the laws of jurisdictions outside of the United States of
America, any State, territory or dependency thereof or the District of Columbia;




     (4) Contracts, Accounts or
receivables subject to the Assignment of Claims Act;




     (5) goods included in Collateral
received by any Person from any Grantor for
“sale or return” within the meaning of Section 2-326 of the Uniform
Commercial Code of the applicable jurisdiction, to the extent of claims of
creditors of such Person;




     (6) Fixtures; Money, cash and Cash
Equivalents;




     (7) Proceeds of Accounts,
receivables or Inventory which do not themselves
constitute Collateral or which have not been transferred to or deposited in the
Collateral Proceeds Account (if any) or to a Deposit Account of a Grantor subject
to the Collateral Agent’s control; and




     (8) uncertificated securities (to the
extent a security interest is not
perfected by the filing of a financing statements).



          4.2.3
Jurisdiction of Organization. On the date hereof, such Grantor’s jurisdiction of organization is specified on
Schedule 4.




          4.2.4
Farm Products. None of such Grantor’s Collateral constitutes, or is the Proceeds of, Farm Products.




          4.2.5
Accounts Receivable. The amounts represented by such Grantor to the Administrative Agent or the other Secured
Parties from time to time as owing by each account debtor or by all account debtors in respect of
such Grantor’s Accounts Receivable constituting




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Security Collateral will at such time be the
correct amount, in all material respects, actually owing by such account debtor or debtors
thereunder, except to the extent that appropriate reserves therefor have been established on the
books of such Grantor in accordance with GAAP. Unless otherwise indicated in writing to the
Administrative Agent, each Account Receivable of such Grantor arises out of a bona fide sale and
delivery of goods or rendition of services by such Grantor. Such Grantor has not given any account
debtor any deduction in respect of the amount due under any such Account, except in the ordinary
course of business or as such Grantor may otherwise advise the Administrative Agent in writing.




          4.2.6
Patents, Copyrights and Trademarks. Schedule 5 lists all material Trademarks, material Copyrights and material Patents,
in each case, registered in the United States Patent and Trademark Office or the United States
Copyright Office, as applicable, and owned by such Grantor in its own name as of the date hereof,
and all material Trademark Licenses, all material Copyright Licenses (other than licenses to
commercially available software) and all material Patent Licenses (including, without limitation,
material Trademark Licenses for registered Trademarks, material Copyright Licenses for registered
Copyrights and material Patent Licenses for issued Patents) owned by such Grantor in its own name
as of the date hereof.




          4.3
Representations and Warranties of Each Pledgor. To induce the Collateral Agent, the Administrative Agent and the Lenders to enter into
the
Credit Agreement and to induce the Lenders to make their respective extensions of credit to the
Borrower thereunder, each Pledgor hereby represents and warrants to the Collateral Agent and each
other Secured Party that:




          4.3.1 Except
as provided in Section 3.3, the shares of Pledged Stock pledged by such Pledgor
hereunder constitute (i) in the case of shares of a Domestic Subsidiary, all the issued and
outstanding shares of all classes of the Capital Stock of such Domestic Subsidiary owned by such
Pledgor and (ii) in the case of any Pledged Stock constituting Capital Stock of any Foreign
Subsidiary, such percentage (not more than 65%) as is specified on Schedule 2 of all the issued and
outstanding shares of all classes of the Capital Stock of each such Foreign Subsidiary owned by
such Pledgor.




          4.3.2 All the
shares of the Pledged Stock pledged by such Pledgor hereunder have been duly and
validly issued and are fully paid and nonassessable (or the equivalent, if any, under applicable
foreign law).




          4.3.3 Such
Pledgor is the record and beneficial owner of, and has good title to, the Pledged
Securities pledged by it hereunder, free of any and all Liens or options in favor of, or claims of,
any other Person, except the security interest created by this Agreement and Liens arising by
operation of law or permitted by the Credit Agreement (or described in the definition of “Permitted
Lien” in the Credit Agreement).




          4.3.4 Except
with respect to security interests in Pledged Securities (if any) constituting
Specified Assets, upon the delivery to the Collateral Agent of the certificates evidencing the
Pledged Securities held by such Pledgor together with executed undated stock powers or other
instruments of transfer, the security interest created in such Pledged Securities




20 









 




constituting
certificated securities by this Agreement, assuming the continuing possession of such Pledged
Securities by the Collateral Agent, will constitute a valid, perfected first priority (subject, in
terms of priority only, to the priority of the Liens of the ABL Collateral Agent and any Additional
Agent) security interest in such Pledged Securities to the extent provided in and governed by the
Code, enforceable in accordance with its terms against all creditors of such Pledgor and any
Persons purporting to purchase such Pledged Securities from such Pledgor, except as enforceability
may be affected by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors’ rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.




          4.3.5 Except
with respect to security interests in Pledged Securities (if any) constituting
Specified Assets, upon the obtaining and maintenance of “control” (as described in the Code) by the
Collateral Agent of all Pledged Securities that constitute uncertificated securities, the security
interest created by this Agreement in such Pledged Securities that constitute uncertificated
securities, will constitute a valid, perfected first priority (subject, in terms of priority only,
to the priority of the Liens of the ABL Collateral Agent or any Additional Agent) security interest
in such Pledged Securities constituting uncertificated securities,
enforceable in accordance with its terms against all creditors of such Pledgor and any persons
purporting to purchase such Pledged Securities from such Pledgor, to the extent provided in and
governed by the Code, except as enforceability may be affected by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting
creditors’ rights generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.




SECTION 5 COVENANTS




          5.1
Covenants of Each Guarantor. Each Guarantor covenants and agrees with the Collateral Agent and the other Secured Parties
that, from and after the date of this Agreement until the earlier to occur of (i) the date upon
which the Loans, and all other Obligations then due and owing, shall have been paid in full in cash
or (ii) as to any Guarantor, the date upon which all the Capital Stock of such Guarantor shall have
been sold or otherwise disposed of (to a Person other than the Borrower or a Subsidiary of the
Borrower) in accordance with the terms of the Credit Agreement, such Guarantor shall take, or shall
refrain from taking, as the case may be, each action that is necessary to be taken or not taken, as
the case may be, so that no Default or Event of Default is caused by the failure to take such
action or to refrain from taking such action by such Guarantor or any of its Subsidiaries.




          5.2
Covenants of Each Grantor. Each Grantor covenants and agrees with the Collateral Agent and the other Secured Parties
that, from and after the date of this Agreement until the earlier to occur of (i) the date upon
which the Loans, and all other Obligations then due and owing shall have been paid in full in cash
or (ii) as to any Grantor, the date upon which all the Capital Stock of such Grantor shall have
been sold or otherwise disposed of (to a Person other than the Borrower or a Subsidiary of the
Borrower) in accordance with the terms of the Credit Agreement:




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          5.2.1
Delivery of Instruments, Chattel Paper and Securities. If any amount payable
under or in connection with any of such Grantor’s Collateral shall be or become evidenced by any
Instrument or Chattel Paper, such Grantor shall (except as provided in the following sentence) be
entitled to retain possession of all Collateral of such Grantor evidenced by any Instrument or
Chattel Paper, and shall hold all such Collateral in trust for the Collateral Agent, for the
benefit of the Secured Parties. In the event that an Event of Default shall have occurred and be
continuing, upon the request of the Collateral Agent, such Instrument or Chattel Paper shall be
promptly delivered to the Collateral Agent, the ABL Collateral Agent or any Additional Agent, as
applicable, in accordance with the Intercreditor Agreement, duly indorsed in a manner satisfactory
to the Collateral Agent, the ABL Collateral Agent or any Additional Agent, as applicable, in
accordance with the Intercreditor Agreement, to be held as Collateral pursuant to this Agreement.
Such Grantor shall not permit any other Person (other than the ABL Collateral Agent or any
Additional Agent, as applicable, in accordance with the Intercreditor Agreement) to possess any
such Collateral at any time other than in connection with any sale or other disposition of such
Collateral in a transaction permitted by the Credit Agreement.




          5.2.2
Maintenance of Insurance. Such Grantor will maintain with financially sound and
reputable insurance companies insurance on, or self insure, all property material to the business
of the Borrower and its Subsidiaries, taken as a whole, in at least such amounts and against at
least such risks (but including in any event public liability, product liability and business
interruption) as are consistent with the past practices of the Borrower and its Subsidiaries and
otherwise as are usually insured against in the same general area by companies engaged in the same
or a similar business; furnish to the Collateral Agent, upon written request, information in
reasonable detail as to the insurance carried; and ensure that the Administrative Agent, for the
benefit of the Secured Parties, shall be named as additional insureds with respect to liability
policies and the Collateral Agent shall be named loss payee with respect to the casualty insurance
maintained by such Grantor with respect to such Grantor’s Collateral.




          5.2.3
Payment of Obligations. Such Grantor will pay and discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may be, all material
taxes, assessments and governmental charges or levies imposed upon such Grantor’s Collateral or in
respect of income or profits therefrom, as well as all material claims of any kind (including,
without limitation, material claims for labor, materials and supplies) against or with respect to
such Grantor’s Collateral (in each case in this Section 5.2.3 other than those relating to the
Mortgaged Properties), except where the amount or validity thereof is currently being contested in
good faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto
have been provided on the books of such Grantor, and except to the extent that failure to do so, in
the aggregate, would not reasonably be expected to have a Material Adverse Effect.




          5.2.4
Maintenance of Perfected Security Interest; Further Documentation. (a) Such
Grantor shall maintain the security interest created by this Agreement in such Grantor’s Collateral
as a security interest having at least the perfection and priority described in Section 4.2.2 of
this Agreement and shall defend such security interest against the claims and demands of all
Persons whomsoever.




22 









 








          (b) Such Grantor will furnish to the Collateral Agent from
time to time statements and
schedules further identifying and describing such Grantor’s Collateral and such other reports in
connection with such Grantor’s Collateral as the Collateral Agent may reasonably request in
writing, all in reasonable detail.




          (c) At
any time and from time to time, upon the written request of the Collateral Agent, and
at the sole expense of such Grantor, such Grantor will promptly and duly execute and deliver such
further instruments and documents and take such further actions as the Collateral Agent may
reasonably request for the purpose of obtaining or preserving the full benefits of this Agreement
and of the rights and powers herein granted by such Grantor, including, without limitation, the
filing of any financing or continuation statements under the Uniform Commercial Code (or other
similar laws) in effect in any United States jurisdiction with respect to the security interests
created hereby.




          5.2.5
Changes in Name, Jurisdiction of Organization, etc. Such Grantor will not,
except upon not less than 30 days’ prior written notice to the Collateral Agent, change its name or
jurisdiction of organization (whether by merger of otherwise); provided that, promptly
after receiving a written request therefor from the Collateral Agent, such Grantor shall
deliver to the Collateral Agent all additional financing statements and other documents reasonably
requested by the Collateral Agent to maintain the validity, perfection and priority of the security
interests as and to the extent provided for herein.




          5.2.6
Notices. Such Grantor will advise the Administrative Agent promptly, in
reasonable detail, of:




          (a) any
Lien (other than security interests created hereby or Liens permitted under the Credit
Agreement or Liens described in the definition of “Permitted Lien” in the Credit Agreement) on any
of such Grantor’s Collateral which would materially adversely affect the ability of the Collateral
Agent to exercise any of its remedies hereunder; and




          (b) the
occurrence of any other event which would reasonably be expected to have a material
adverse effect on the security interests created hereby.




          5.2.7
Pledged Stock. In the case of each Grantor that is an Issuer, such Issuer
agrees that (i) it will be bound by the terms of this Agreement relating to the Pledged Stock
issued by it and will comply with such terms insofar as such terms are applicable to it, (ii) it
will notify the Collateral Agent promptly in writing of the occurrence of any of the events
described in Section 5.3.1 with respect to the Pledged Stock issued by it and (iii) the terms of
Sections 6.3(c) and 6.7 shall apply to it, mutatis mutandis, with respect to all
actions that may be required of it pursuant to Section 6.3(c) or 6.7 with respect to the Pledged
Stock issued by it.




          5.2.8
Accounts Receivable. (a) With respect to Accounts Receivable constituting
Collateral, other than in the ordinary course of business or as permitted by the Loan Documents,
such Grantor will not (i) grant any extension of the time of payment of any of such Grantor’s
Accounts Receivable, (ii) compromise or settle any such Account Receivable for less than the full
amount thereof, (iii) release, wholly or partially, any Person liable for the payment of any
Account




23 









 




Receivable, (iv) allow any credit or discount whatsoever on any such Account
Receivable or
(v) amend, supplement or modify any Account Receivable unless such extensions, compromises,
settlements, releases, credits or discounts would not reasonably be expected to materially
adversely affect the value of the Accounts Receivable constituting Collateral taken as a whole.




          (b) Such Grantor will deliver to the Collateral Agent a copy
of each material demand, notice
or document received by it that questions or calls into doubt the validity or enforceability of
more than 10% of the aggregate amount of the then outstanding Accounts Receivable.




          5.2.9
Maintenance of Records. Such Grantor will keep and maintain at its own cost and
expense reasonably satisfactory and complete records of its Collateral, including, without
limitation, a record of all payments received and all credits granted with respect to such
Collateral, and shall mark such records to evidence this Agreement and the Liens and the security
interests created hereby.




          5.2.10
Acquisition of Intellectual Property. Within 90 days after the end of each
calendar year, such Grantor will notify the Collateral Agent of any acquisition by such Grantor
of (i) any registration of any material Copyright, Patent or Trademark or (ii) any exclusive
rights under a material Copyright License, Patent License or Trademark License constituting
Collateral, and shall take such actions as may be reasonably requested by the Collateral Agent (but
only to the extent such actions are within such Grantor’s control) to perfect the security interest
granted to the Collateral Agent and the other Secured Parties therein, to the extent provided
herein in respect of any Copyright, Patent or Trademark constituting Collateral on the date hereof,
by (x) the execution and delivery of an amendment or supplement to this Agreement (or amendments to
any such agreement previously executed or delivered by such Grantor) and/or (y) the making of
appropriate filings (I) of financing statements under the Uniform Commercial Code of any applicable
jurisdiction and/or (II) in the United States Patent and Trademark Office, or with respect to
Copyrights and Copyright Licenses, another applicable office).




          5.2.11
Protection of Trade Secrets. Such Grantor shall take all steps which it deems
commercially reasonable to preserve and protect the secrecy of all material Trade Secrets of such
Grantor.




          5.2.12
Commercial Tort Actions. All Commercial Tort Actions of each Grantor in
existence on the date of this Agreement, known to such Grantor after reasonable inquiry, are
described in Schedule 7 hereto. If any Grantor shall at any time after the date of this Agreement
acquire a Commercial Tort Action in an amount of $2,000,000, such Grantor shall promptly notify the
Collateral Agent thereof in a writing signed by such Grantor and describing the details thereof and
shall 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.




          5.2.13
Assignment of Letter of Credit Rights. In the case of any Letter-of-Credit
Rights of any Grantor in any letter of credit exceeding $2,000,000 in value acquired following the
Closing Date (other than any Letter of Credit Right constituting ABL Priority Collateral), such
Grantor shall use its commercially reasonable efforts to promptly obtain the consent of the




24 









 




issuer
thereof and any nominated person thereon to the assignment of the proceeds of the related letter of
credit in accordance with Section 5-114(c) of the UCC, pursuant to an agreement in form and
substance reasonably satisfactory to the Administrative Agent, in each case subject to the
Intercreditor Agreement.




          5.2.14
Securities Accounts and Uncertificated Investment Property. (a) Prior to the
Discharge of Working Capital Obligations (as defined in the Intercreditor Agreement), if such
Grantor enters into any agreement with any third party (other than any Agent (as defined in the
Intercreditor Agreement)) as required by the ABL Credit Agreement that gives the ABL Collateral
Agent control for purposes of perfection over any Collateral consisting of a Deposit Account, a
Securities Account or uncertificated securities (within the meaning of the UCC), such Grantor shall
use commercially reasonable efforts to ensure that the Collateral Agent is also given control
(either directly or pursuant to intercreditor or agency arrangements with the ABL Collateral Agent
or any Additional Agent) over such Collateral for purposes of perfection, all in accordance with
and subject to the Intercreditor Agreement. At such Grantor’s option such control shall terminate
(and any agreement purporting to grant such control shall at such Grantor’s option provide for such
termination) at such time as the Borrower or any of its Subsidiaries obtains an Other Revolving
Facility (as defined below).




          (b) After the Discharge of Working Capital Obligations but
only until an Other Revolving
Facility (as defined below) is obtained, if any ABL Deposit Account (as defined below) of such
Grantor shall have an average balance for any month in excess of $2,000,000, such Grantor shall,
unless such Grantor and the Collateral Agent otherwise agree, use commercially reasonable efforts
to put a Control Agreement (as defined below) into effect for such Deposit Account or Securities
Account reasonably promptly. If the aggregate average balance for any month of all ABL Deposit
Accounts shall exceed $10,000,000, the Grantors shall, unless the Grantors and the Collateral Agent
otherwise agree, use commercially reasonable efforts to reduce the aggregate average monthly
balances of all ABL Deposit Accounts to $10,000,000 or less reasonably promptly (which efforts may
include, without limitation, the transfer or redirection of funds or the entry into Control
Agreements, in each case at the Grantors’ option). An “ABL Deposit Account” means any Deposit
Account or Securities Account of a Grantor constituting Collateral (other than any Deposit Account
or Securities Account maintained with the Collateral Agent or any Additional Agent, as the case may
be) that (1) but for the Discharge of Working Capital Obligations, would have been required to be
subject to a control agreement in favor of the ABL Collateral Agent pursuant to the terms of the
ABL Credit Agreement as in effect immediately prior to the Discharge of Working Capital Obligations
and (2) over which the Collateral Agent does not exercise control for purposes of perfection in
accordance with the Intercreditor Agreement. A “Control Agreement” means an agreement that
purports to grant control over the applicable Deposit Account or Securities Account to the
Collateral Agent or any Additional Agent, as applicable. Any Control Agreement shall provide that
the Collateral Agent and any Additional Agent, as applicable, will not exercise control over such
Collateral unless an Event of Default has occurred and is continuing. Any Control Agreement shall
also contain terms reasonably satisfactory to the relevant Grantor providing for the termination of
such Control Agreement (and the Collateral Agent hereby agrees that all such Control Agreements,
and the obligations of the Grantors under this clause (b), shall terminate) at such time that the
Borrower or any of its Subsidiaries obtains an Other Revolving Facility (as defined below).




25 









 








          (c) After the Discharge of Working Capital Obligations, if the
Borrower or any of its
Subsidiaries obtains a revolving or working capital or other similar facility (whether or not
asset-based) the obligations under which are not (without limiting the definition thereof) ABL
Obligations (if designated by the Borrower as such, an “Other Revolving Facility”), prior
to the discharge of obligations thereunder, and if such Grantor enters into any agreement with any
third party (other than any lender under the Other Revolving Facility or agent thereof) as required
by the Other Revolving Facility that gives the lenders thereunder control for purposes of
perfection over any Collateral consisting of a Deposit Account or Securities Account that is not
otherwise subject to the control of the Collateral Agent or any Additional Agent, as applicable in
accordance with the Intercreditor Agreement, such Grantor shall use commercially reasonable efforts
to ensure that the Collateral Agent or an Additional Agent, as applicable and in accordance with
the Intercreditor Agreement, is also given control (either directly or pursuant to intercreditor or
agency arrangements with any Additional Agent, such lenders under the Other Revolving Facility or
any agent thereof) over such Deposit Account or Securities Account for purposes of perfection, on a
subordinated, second lien and/or junior priority basis if so requested by such Grantor.





               (d) As used in this
Section 5.2.14, “control” has the meaning specified in the UCC, it being
understood and agreed that any agreement granting control to the Collateral Agent or any Additional
Agent, as applicable, (1) may at the applicable Grantor’s option provide that the Collateral Agent
or such Additional Agent, as applicable, may exercise or be entitled to control (i) only after the
Discharge of Working Capital Obligations or discharge of obligations under an Other Revolving
Facility, as the case may be, (ii) only with the consent of the ABL Collateral Agent or the secured
party or parties under an Other Revolving Facility (or an agent thereof) as the case may be, (iii)
only after the ABL Collateral Agent has delivered written notice to the applicable bank or
securities intermediary, as the case may be, that the Collateral Agent may exercise or be entitled
to control, and such bank or securities intermediary, as the case may be, has acknowledged receipt
of such notice or (iv) subject to similar limitations and (2) shall otherwise, unless the Grantor
otherwise agrees (and except for provisions establishing lien priorities), be on terms and
conditions substantially similar to, or no more favorable to the Collateral Agent or Additional
Agent, as the case may be, than, the applicable control agreement in favor or the ABL Collateral
Agent or the secured party or parties under an Other Revolving Facility.




               (e) The Collateral Agent
hereby agrees that it will not exercise control over, nor deliver any
notice of control or entitlement order or instruction with respect to, any Deposit Account,
Securities Account or uncertificated securities unless an Event of Default has occurred and is
continuing.



     5.2.16 Protection of Trademarks. Except
as permitted by the Loan Documents or the
ABL Facility Documents, such Grantor agrees to take all steps which it deems commercially
reasonable to maintain the Trademark registrations and pursue the Trademark applications now or
hereafter listed on Schedule 5, except where such Grantor has reasonably determined that any of the
foregoing is not material to the business of such Grantor.



26 









 





          5.2.17
Quality Control. Subject to the Loan Documents and the ABL Facility
Documents, such Grantor shall take all steps which it deems commercially reasonable to exercise
quality control over any Inventory constituting Term Loan Priority Collateral bearing any of the
Trademarks, except where the failure to do so would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.




          5.2.18
Abandonment. Except as permitted by the Loan Documents or the ABL Facility
Documents, such Grantor shall not abandon any Trademark registration, issued Patent or Copyright
registration, or any pending Trademark, Patent or Copyright application, in each case now or
hereafter listed on Schedule 5, without the consent of the Collateral Agent.




          5.3
Covenants of Each Pledgor. Each Pledgor covenants and agrees with the Collateral
Agent and the other Secured Parties that, from and after the date of this Agreement until the
earlier to occur of (i) the Loans, and all other Obligations then due and owing shall have been
paid in full in cash or (ii) as to any Pledgor, all the Capital Stock of such Pledgor shall have
been sold or otherwise disposed of (to a Person other than the Borrower or a Subsidiary of the
Borrower) as permitted under the terms of the Credit Agreement:




          5.3.1
Additional Shares. If such Pledgor shall, as a result of its ownership of its
Pledged Stock, become entitled to receive or shall receive any stock certificate (including,
without limitation, any stock certificate representing a stock dividend or a distribution in
connection with any reclassification, increase or reduction of capital or any certificate issued in
connection with any reorganization), stock option or similar rights in respect of the Capital Stock
of any Issuer, whether in addition to, in substitution of, as a conversion of, or in exchange for,
any shares of the Pledged Stock, or otherwise in respect thereof, such Pledgor shall accept the
same as the agent of the Collateral Agent and the other Secured Parties, hold the same in trust for
the Collateral Agent and the other Secured Parties and deliver the same forthwith to the Collateral
Agent (who will hold the same on behalf of the Secured Parties), the ABL Collateral Agent or any
Additional Agent, as applicable, in accordance with the Intercreditor Agreement, in the exact form
received, duly indorsed by such Pledgor to the Collateral Agent, the ABL Collateral Agent or any
Additional Agent, as applicable, in accordance with the Intercreditor Agreement, if required,
together with an undated stock power covering such certificate duly executed in blank by such
Grantor, to be held by the Collateral Agent, the ABL Collateral Agent or any Additional Agent, as
applicable, in accordance with the Intercreditor Agreement, subject to the terms hereof, as
additional collateral security for the Obligations (subject to Section 3.3 and provided
that in no event shall there be pledged, nor shall any Pledgor be required to pledge, more than 65%
of any series of the outstanding Capital Stock of any Foreign Subsidiary pursuant to this
Agreement). Any sums paid upon or in respect of the Pledged Stock upon the liquidation or
dissolution of any Issuer (except any liquidation or dissolution of any Subsidiary of the Borrower
in accordance with the Credit Agreement) shall be paid over to the Collateral Agent, the ABL
Collateral Agent or any Additional Agent as applicable, in accordance with the Intercreditor
Agreement to be held hereunder by the Collateral Agent, the ABL Collateral Agent or any Additional
Agent, as applicable, in accordance with the Intercreditor Agreement subject to the terms hereof as
additional collateral security for the Obligations, and in case any distribution of capital shall
be made on or in respect of the Pledged Stock or any property shall be distributed upon or with
respect to the Pledged Stock pursuant to the recapitalization or reclassification of the capital of
any Issuer or pursuant to the reorganization thereof, the property




27 









 




so distributed shall, unless
otherwise subject to a perfected security interest in favor of the Collateral Agent, be delivered
to the Collateral Agent, the ABL Collateral Agent or any Additional Agent as applicable, in
accordance with the Intercreditor Agreement, to be held hereunder by the Collateral Agent, the ABL
Collateral Agent or any Additional Agent, as applicable, in accordance with the Intercreditor
Agreement subject to the terms hereof as additional collateral security for the Obligations, in
each case except as otherwise provided by the Intercreditor Agreement. If any sums of money or
property so paid or distributed in respect of the Pledged Stock shall be received by such Pledgor,
such Pledgor shall, until such money or property is paid or delivered to the Collateral Agent, the
ABL Collateral Agent or any Additional Agent, as applicable, in accordance with the Intercreditor
Agreement, hold such money or property in trust for the Secured Parties, segregated from other
funds of such Pledgor, as additional collateral security for the Obligations.




          5.3.2
Maintenance of Pledged Stock. Without the prior written consent of the
Collateral Agent, such Pledgor will not (except as permitted by the Credit Agreement) (i) vote to
enable, or take any other action to permit, any Issuer to issue any stock or other equity
securities of any nature or to issue any other securities convertible into, or granting the right
to purchase or exchange for, any stock or other equity securities of any nature of any Issuer, (ii)
sell, assign,
transfer, exchange, or otherwise dispose of, or grant any option with respect to, the Pledged
Securities or Proceeds thereof, (iii) create, incur or permit to exist any Lien or option in favor
of, or any material adverse claim of any Person with respect to, any of the Pledged Securities or
Proceeds thereof, or any interest therein, except for the security interests created by this
Agreement or Liens arising by operation of law or (iv) enter into any agreement or undertaking
restricting the right or ability of such Pledgor or the Collateral Agent to sell, assign or
transfer any of the Pledged Securities or Proceeds thereof. Each interest in any limited liability
company formed by a Grantor after the Closing Date that is a Wholly Owned Subsidiary of the Grantor
pledged hereunder shall be represented by a certificate, shall be a “security” within the meaning
of the Article 8 of the Code and shall be governed by Article 8 of the Code. The charter documents
of each such limited liability company shall include an express provision providing that each
interest in such entity “is a security governed by Article 8 of the Uniform Commercial Code in
effect in the State of New York on the date hereof”.




          5.3.3
Pledged Notes. Such Pledgor shall, on the date of this Agreement (or on such
later date upon which it becomes a party hereto pursuant to Section 9.15), deliver to the
Collateral Agent, the ABL Collateral Agent or any Additional Agent, as applicable, in accordance
with the Intercreditor Agreement, all Pledged Notes then held by such Pledgor (excluding any
Pledged Note the principal amount of which does not exceed $2,000,000), endorsed in blank or, at
the request of the Collateral Agent, endorsed to the Collateral Agent. Furthermore, within ten
Business Days after any Pledgor obtains a Pledged Note with a principal amount in excess of
$2,000,000, such Pledgor shall cause such Pledged Note to be delivered to the Collateral Agent, or
the ABL Collateral Agent or any Additional Agent, as applicable, in accordance with the
Intercreditor Agreement, endorsed in blank or, at the request of the Collateral Agent, endorsed to
the Collateral Agent, or the ABL Collateral Agent or any Additional Agent, as applicable, in
accordance with the Intercreditor Agreement.




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          5.3.4
Maintenance of Security Interest. Such Pledgor shall maintain the security
interest created by this Agreement in such Pledgor’s Pledged Collateral as a security interest
having at least the perfection and priority described in Section 4.3.4 or 4.3.5 of this Agreement,
as applicable, and shall defend such security interest against the claims and demands of all
Persons whomsoever. At any time and from time to time, upon the written request of the Collateral
Agent and at the sole expense of such Pledgor, such Pledgor will promptly and duly execute and
deliver such further instruments and documents and take such further actions as the Collateral
Agent may reasonably request for the purpose of obtaining or preserving the full benefits of this
Agreement and of the rights and powers herein granted by such Pledgor.




SECTION 6 REMEDIAL PROVISIONS




          6.1
Certain Matters Relating to Accounts. (a) At any time and from time to time
after the occurrence and during the continuance of an Event of Default, the Collateral Agent shall
have the right to make test verifications of the Accounts Receivable constituting Collateral in any
reasonable manner and through any reasonable medium that it reasonably considers advisable, and the
relevant Grantor shall furnish all such assistance and information as the Collateral Agent may
reasonably require in connection with such test verifications. At any time and from time to
time after the occurrence and during the continuance of an Event of Default, upon the
Collateral Agent’s reasonable request and at the expense of the relevant Grantor, such Grantor
shall cause independent public accountants or others reasonably satisfactory to the Collateral
Agent to furnish to the Collateral Agent reports showing reconciliations, aging and test
verifications of, and trial balances for, the Accounts Receivable constituting Collateral.




          (b) The
Collateral Agent hereby authorizes each Grantor to collect such Grantor’s Accounts
Receivable constituting Collateral and to the extent permitted by applicable law the Collateral
Agent may curtail or terminate said authority at any time after the occurrence and during the
continuance of an Event of Default specified in Section 8.1(f) of the Credit Agreement with respect
to any Grantor. If required by the Collateral Agent at any time after the occurrence and during
the continuance of an Event of Default specified in Section 8.1(f) of the Credit Agreement with
respect to any Grantor, to the extent permitted by applicable law, any Proceeds constituting
payments or other cash proceeds of Accounts Receivables constituting Collateral, when collected by
such Grantor, (i) shall be forthwith (and, in any event, within two Business Days of receipt by
such Grantor) deposited in, or otherwise transferred by such Grantor to, the Collateral Proceeds
Account, subject to withdrawal by the Collateral Agent for the account of the Secured Parties only
as provided in Section 6.5, and (ii) until so turned over, shall be held by such Grantor in trust
for the Collateral Agent and the other Secured Parties, segregated from other funds of such
Grantor. All Proceeds constituting collections or other cash proceeds of Accounts Receivable
constituting Collateral while held by the Collateral Account Bank (or by any Grantor in trust for
the benefit of the Collateral Agent and the other Secured Parties) shall continue to be collateral
security for all of the Obligations and shall not constitute payment thereof until applied as
hereinafter provided. At any time when an Event of Default specified in Section 8.1(f) of the
Credit Agreement has occurred and is continuing with respect to any Grantor, to the extent
permitted by applicable law, at the Collateral Agent’s election, each of the Collateral Agent and
the Administrative Agent may apply all or any part of the funds on deposit in the Collateral
Proceeds Account established by the relevant Grantor to the payment of




29 









 




the Obligations of such
Grantor then due and owing, such application to be made as set forth in Section 6.5 hereof. So
long as no Event of Default has occurred and is continuing, the funds on deposit in the Collateral
Proceeds Account shall be remitted as provided in Section 6.1(d) hereof.




          (c) At
any time and from time to time after the occurrence and during the continuance of an
Event of Default specified in Section 8.1(f) of the Credit Agreement with respect to any Grantor,
to the extent permitted by applicable law, at the Collateral Agent’s request, each Grantor shall
deliver to the Collateral Agent copies or, if required by the Collateral Agent for the enforcement
thereof or foreclosure thereon, originals of all documents held by such Grantor evidencing, and
relating to, the agreements and transactions which gave rise to such Grantor’s Accounts Receivable
constituting Collateral, including, without limitation, all statements relating to such Grantor’s
Accounts Receivable constituting Collateral and all orders, invoices and shipping receipts.




          (d) So
long as no Event of Default has occurred and is continuing, the Collateral Agent shall
instruct the Collateral Account Bank to promptly remit any funds on deposit in each Grantor’s
Collateral Proceeds Account to such Grantor’s General Fund Account or any other account designated
by such Grantor. In the event that an Event of Default has occurred and is continuing, the
Collateral Agent and the Grantors agree that the Collateral Agent,
at its option, may require that each Collateral Proceeds Account and the General Fund Account
of each Grantor be established at the Collateral Agent. Each Grantor shall have the right, at any
time and from time to time, to withdraw such of its own funds from its own General Fund Account,
and to maintain such balances in its General Fund Account, as it shall deem to be necessary or
desirable.




          6.2
Communications with Obligors; Grantors Remain Liable. (a) The Collateral Agent in its own name or in the name of others, may at
any time and from
time to time after the occurrence and during the continuance of an Event of Default specified in
Section 8.1(f) of the Credit Agreement with respect to any Grantor, to the extent permitted by
applicable law, communicate with obligors under the Accounts Receivable constituting Collateral and
parties to the Contracts (in each case, to the extent constituting Collateral) to verify with them
to the Collateral Agent’s satisfaction the existence, amount and terms of any Accounts Receivable
or Contracts.




          (b) Upon the request of the Collateral Agent at any time after
the occurrence and during the
continuance of an Event of Default specified in Section 8.1(f) of the Credit Agreement with respect
to any Grantor, to the extent permitted by applicable law, each Grantor shall notify obligors on
such Grantor’s Accounts Receivable and parties to such Grantor’s Contracts (in each case, to the
extent constituting Collateral) that such Accounts Receivable and such Contracts have been assigned
to the Collateral Agent, for the benefit of the Secured Parties, and that payments in respect
thereof shall be made directly to the Collateral Agent.




          (c) Anything herein to the contrary notwithstanding, each
Grantor shall remain liable under
each of such Grantor’s Accounts Receivable to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, all in accordance with the terms of any
agreement giving rise thereto. None of the Collateral Agent, the Administrative Agent or any other
Secured Party shall have any obligation or liability under any Account




30 









 




Receivable (or any agreement
giving rise thereto) by reason of or arising out of this Agreement or the receipt by the Collateral
Agent or any other Secured Party of any payment relating thereto, nor shall the Collateral Agent or
any other Secured Party be obligated in any manner to perform any of the obligations of any Grantor
under or pursuant to any Account Receivable (or any agreement giving rise thereto) to make any
payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or
as to the sufficiency of any performance by any party thereunder, to present or file any claim, to
take any action to enforce any performance or to collect the payment of any amounts that may have
been assigned to it or to which it may be entitled at any time or times.




          6.3
Pledged Stock. (a) Unless an Event of Default shall have occurred and be continuing and the Collateral Agent
shall have given notice to the relevant Pledgor of the Collateral Agent’s intent to exercise its
corresponding rights pursuant to Section 6.3(b), each Pledgor shall be permitted to receive all
cash dividends and distributions paid in respect of the Pledged Stock (subject to the last two
sentences of Section 5.3.1 of this Agreement) and all payments made in respect of the Pledged
Notes, to the extent permitted in the Credit Agreement, and to exercise all voting and
corporate rights with respect to the Pledged Stock; provided, however, that no
vote shall be cast or corporate right exercised or such other action taken (other than in
connection with a transaction expressly permitted by the Credit Agreement) which, in the Collateral
Agent’s reasonable judgment, would materially impair the Pledged Stock or the related rights or
remedies of the Secured Parties or which would be inconsistent with or result in any violation of
any provision of the Credit Agreement, this Agreement or any other Loan Document.




          (b) If an
Event of Default shall occur and be continuing and the Collateral Agent shall give
notice of its intent to exercise such rights to the relevant Pledgor or Pledgors, (i) the
Collateral Agent, the ABL Collateral Agent or any Additional Agent, as applicable, in accordance
with the Intercreditor Agreement, shall have the right to receive any and all cash dividends,
payments or other Proceeds paid in respect of the Pledged Stock and make application thereof to the
Obligations of the relevant Pledgor in such order as is provided in Section 6.5, and (ii) any or
all of the Pledged Stock shall be registered in the name of the Collateral Agent or its nominee or
the ABL Collateral Agent or any Additional Agent or the respective nominee thereof, and the
Collateral Agent or its nominee or the ABL Collateral Agent or any Additional Agent or the
respective nominee thereof, as applicable, in accordance with the Intercreditor Agreement, may
thereafter exercise (x) all voting, corporate and other rights pertaining to such Pledged Stock at
any meeting of shareholders of the relevant Issuer or Issuers or otherwise and (y) any and all
rights of conversion, exchange, subscription and any other rights, privileges or options pertaining
to such Pledged Stock as if it were the absolute owner thereof (including, without limitation, the
right to exchange at its discretion any and all of the Pledged Stock upon the merger,
consolidation, reorganization, recapitalization or other fundamental change in the corporate
structure of any Issuer, or upon the exercise by the relevant Pledgor or the Collateral Agent, the
ABL Collateral Agent or any Additional Agent, as applicable, in accordance with the Intercreditor
Agreement, of any right, privilege or option pertaining to such Pledged Stock, and in connection
therewith, the right to deposit and deliver any and all of the Pledged Stock with any committee,
depository, transfer agent, registrar or other designated agency upon such terms and conditions as
the Collateral Agent, the ABL Collateral Agent or any Additional Agent, as applicable, in
accordance with the Intercreditor Agreement, may reasonably determine), all




31 









 




without liability
(other than for its gross negligence or willful misconduct) except to account for property actually
received by it, but the Collateral Agent, the ABL Collateral Agent or any Additional Agent, as
applicable, in accordance with the Intercreditor Agreement, shall have no duty, to any Pledgor to
exercise any such right, privilege or option and shall not be responsible for any failure to do so
or delay in so doing, provided that the Collateral Agent, the ABL Collateral Agent or any
Additional Agent, as applicable, in accordance with the Intercreditor Agreement, shall not exercise
any voting or other consensual rights pertaining to the Pledged Stock in any way that would
constitute an exercise of the remedies described in Section 6.6 other than in accordance with
Section 6.6.




          (c) Each
Pledgor hereby authorizes and instructs each Issuer or maker of any Pledged
Securities pledged by such Pledgor hereunder to (i) comply with any instruction received by it from
the Collateral Agent in writing that (x) states that an Event of Default has occurred and is
continuing and (y) is otherwise in accordance with the terms of this Agreement, without any other
or further instructions from such Pledgor, and each Pledgor agrees that each Issuer or maker shall
be fully protected in so complying, and (ii) unless otherwise expressly
permitted hereby, pay any dividends or other payments with respect to the Pledged Securities
directly to the Collateral Agent.




          (d) Each party acknowledges that the shares of the entities
listed on the Schedule 2 attached
hereto are being transferred to and deposited with the Collateral Agent as collateral security for
the loans made by lenders pursuant to the Credit Agreement and the ABL Credit Agreement and that
this Section 6.3(d) is intended to be the certificate of exemption from New York stock transfer
taxes for the purposes of complying with Section 270.5(b) of the Tax Law of the State of New York.




          6.4
Proceeds to be Turned Over to the Collateral Agent. In addition to the rights of
the Collateral Agent and the other Secured Parties specified in Section 6.1 with respect to
payments of Accounts Receivable constituting Collateral, if an Event of Default shall occur and be
continuing, and the Collateral Agent shall have instructed any Grantor to do so, all Proceeds of
Security Collateral received by such Grantor consisting of cash, checks and other Cash Equivalent
items shall be held by such Grantor in trust for the Collateral Agent and the other Secured Parties
hereto, or the ABL Collateral Agent and the other Secured Parties (as defined in the ABL Credit
Agreement) or any Additional Agent and the other applicable Additional Secured Parties (as defined
in the Intercreditor Agreement), as applicable, in accordance with the Intercreditor Agreement,
segregated from other funds of such Grantor, and shall, forthwith upon receipt by such Grantor, be
turned over to the Collateral Agent, the ABL Collateral Agent or any Additional Agent, as
applicable, in accordance with the Intercreditor Agreement (or their respective agents appointed
for purposes of perfection), in the exact form received by such Grantor (duly indorsed by such
Grantor to the Collateral Agent, the ABL Collateral Agent or any Additional Agent, as applicable,
in accordance with the Intercreditor Agreement, if required). All Proceeds of Security Collateral
received by the Collateral Agent hereunder shall be held by the Collateral Agent in the relevant
Collateral Proceeds Account maintained under its sole dominion and control. All Proceeds of
Security Collateral while held by the Collateral Agent in such Collateral Proceeds Account (or by
the relevant Grantor in trust for the Collateral Agent and the other Secured Parties) shall
continue to be held as collateral security for all the




32 









 




Obligations of such Grantor and shall not
constitute payment thereof until applied as provided in Section 6.5.




          6.5
Application of Proceeds. It is agreed that if an Event of Default shall occur and
be continuing, subject to the Intercreditor Agreement, any and all Proceeds of the relevant
Grantor’s Security Collateral (as defined in the Credit Agreement) received by the Collateral Agent
(whether from the relevant Grantor or otherwise) shall be held by the Collateral Agent for the
benefit of the Secured Parties as collateral security for the Obligations of the relevant Grantor
(whether matured or unmatured), and/or then or at any time thereafter may, in the sole discretion
of the Collateral Agent, be applied by the Collateral Agent in accordance with the Intercreditor
Agreement, and thereafter against the Obligations of the relevant Grantor then due and owing as
follows (without duplication of any amounts applied in accordance with the Intercreditor
Agreement):





     FIRST, to the payment of all
Obligations consisting of all reasonable out-of-pocket
costs and expenses (including, without limitation, reasonable attorneys’ fees) of
the Administrative Agent and the Collateral Agent in connection with enforcing the
rights of the Lenders under the Loan Documents;




     SECOND, to the payment of all
Obligations consisting of any fees owed to the
Administrative Agent and the Collateral Agent;




     THIRD, to the payment of all
Obligations consisting of all reasonable out-of-pocket
costs and expenses (including, without limitation, reasonable attorneys’ fees of counsel to
the Administrative Agent and the Lenders) of each Lender in connection with enforcing its
rights under the Loan Documents;




     FOURTH, to the payment of all
Obligations consisting of accrued fees (other than any
referred to in clause “SECOND” above) and interest, including, with respect to Obligations
owed to any Non-Lender Secured Party, any fees, premiums and scheduled periodic payments
then due and owing to such Non-Lender Secured Party under any Secured Bank Product
Agreement;




     FIFTH, to the payment of all
Obligations consisting of outstanding principal,
including, with respect to Obligations owed to any Non-Lender Secured Party, any breakage,
termination or other payments then due and owing to such Non-Lender Secured Party under any
Secured Bank Product Agreement;




     SIXTH, to the payment of all other
Obligations then due and owing and not paid pursuant
to the Intercreditor Agreement or clauses “FIRST” through “FIFTH” above; and




     SEVENTH, thereafter in
accordance with the Intercreditor Agreement to the extent
applicable, and then to the relevant Grantor or its successors or assigns, or to whoever may
be lawfully entitled to receive the same.



          6.6 Code
and Other Remedies. If an Event of Default shall occur and be continuing,
the Collateral Agent, on behalf of the Secured Parties, may exercise, in addition to all other
rights and remedies granted to them in this Agreement and in any other instrument or




33 









 




agreement
securing, evidencing or relating to the Obligations to the extent permitted by applicable law, all
rights and remedies of a secured party under the Code or any other applicable law. Without
limiting the generality of the foregoing, to the extent permitted by applicable law, the Collateral
Agent, without demand of performance or other demand, presentment, protest, advertisement or notice
of any kind (except any notice required by law referred to below) to or upon any Grantor or any
other Person (all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances, forthwith collect, receive, appropriate and realize upon the
Security Collateral, or any part thereof, and/or may forthwith, subject to any existing reserved
rights or licenses, sell, lease, assign, give option or options to purchase, or otherwise dispose
of and deliver the Security Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker’s
board or office of the Collateral Agent or any other Secured Party or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit
or for future delivery without assumption of any credit risk. The Collateral Agent or any other
Secured Party shall have the right, to the extent permitted by law,
upon any such sale or sales, to purchase the whole or any part of the Security Collateral so
sold, free of any right or equity of redemption in such Grantor, which right or equity is hereby
waived and released. Each Grantor further agrees, at the Collateral Agent’s request, to assemble
the Security Collateral and make it available to the Collateral Agent at places which the
Collateral Agent shall reasonably select, whether at such Grantor’s premises or elsewhere. The
Collateral Agent shall apply the net proceeds of any action taken by it pursuant to this Section
6.6, after deducting all reasonable costs and expenses of every kind incurred in connection
therewith or incidental to the care or safekeeping of any of the Security Collateral or in any way
relating to the Security Collateral or the rights of the Collateral Agent and the other Secured
Parties hereunder, including, without limitation, reasonable attorneys’ fees and disbursements, to
the payment in whole or in part of the Obligations of the relevant Grantor then due and owing, in
the order of priority specified in Section 6.5 above, and only after such application and after the
payment by the Collateral Agent of any other amount required by any provision of law, including,
without limitation, Section 9-615(a)(3) of the Code, need the Collateral Agent account for the
surplus, if any, to such Grantor. To the extent permitted by applicable law, (i) such Grantor
waives all claims, damages and demands it may acquire against the Collateral Agent or any other
Secured Party arising out of the repossession, retention or sale of the Security Collateral, other
than any such claims, damages and demands that may arise from the gross negligence or willful
misconduct of any of the Collateral Agent or such other Secured Party, and (ii) if any notice of a
proposed sale or other disposition of Security Collateral shall be required by law, such notice
shall be deemed reasonable and proper if given at least 10 days before such sale or other
disposition.




          6.7
Registration Rights. (a) If the Collateral Agent shall determine to exercise its right to sell any or all of the
Pledged Stock pursuant to Section 6.6, and if in the reasonable opinion of the Collateral Agent it
is necessary or reasonably advisable to have the Pledged Stock, or that portion thereof to be sold,
registered under the provisions of the Securities Act, the relevant Pledgor will use its reasonable
best efforts to cause the Issuer thereof to (i) execute and deliver, and use its best efforts to
cause the directors and officers of such Issuer to execute and deliver, all such instruments and
documents, and do or cause to be done all such other acts as may be, in the reasonable opinion of
the Collateral Agent, necessary or advisable to register such Pledged Stock, or that portion
thereof to be sold, under the provisions of the Securities Act, (ii)




34 









 




use its reasonable best
efforts to cause the registration statement relating thereto to become effective and to remain
effective for a period of not more than one year from the date of the first public offering of such
Pledged Stock, or that portion thereof to be sold, and (iii) make all amendments thereto and/or to
the related prospectus which, in the reasonable opinion of the Collateral Agent, are necessary or
advisable, all in conformity with the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission applicable thereto. Such Pledgor agrees to
use its reasonable best efforts to cause such Issuer to comply with the provisions of the
securities or “Blue Sky” laws of any and all states and the District of Columbia that the
Collateral Agent shall reasonably designate and to make available to its security holders, as soon
as practicable, an earnings statement (which need not be audited) that will satisfy the provisions
of Section 11(a) of the Securities Act.




          (b) Such Pledgor recognizes that the Collateral Agent may
be unable to effect a public sale of
any or all such Pledged Stock, by reason of certain prohibitions contained in the Securities Act
and applicable state securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which will be obliged to agree, among
other things, to acquire such securities for their own account for investment and not with a view
to the distribution or resale thereof. Such Pledgor acknowledges and agrees that any such private
sale may result in prices and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, to the extent permitted by applicable law, agrees that any such
private sale shall be deemed to have been made in a commercially reasonable manner. The Collateral
Agent shall not be under any obligation to delay a sale of any of the Pledged Stock for the period
of time necessary to permit the Issuer thereof to register such securities for public sale under
the Securities Act, or under applicable state securities laws, even if such Issuer would agree to
do so.




          (c) Such
Pledgor agrees to use its reasonable best efforts to do or cause to be done all such
other acts as may be necessary to make such sale or sales of all or any portion of such Pledged
Stock pursuant to this Section 6.7 valid and binding and in compliance with any and all other
applicable Requirements of Law. Such Pledgor further agrees that a breach of any of the covenants
contained in this Section 6.7 will cause irreparable injury to the Collateral Agent and the
Lenders, that the Collateral Agent and the Lenders have no adequate remedy at law in respect of
such breach and, as a consequence, that each and every covenant contained in this Section 6.7 shall
be specifically enforceable against such Pledgor, and to the extent permitted by applicable law,
such Pledgor hereby waives and agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no Event of Default has occurred or is
continuing under the Credit Agreement.




          6.8
Waiver; Deficiency. Each Grantor shall remain liable for any deficiency if the
proceeds of any sale or other disposition of the Security Collateral are insufficient to pay in
full, the Loans and, to the extent then due and owing, all other Obligations of such Grantor and
the reasonable fees and disbursements of any attorneys employed by the Collateral Agent or any
other Secured Party to collect such deficiency.




35 









 








SECTION 7 THE COLLATERAL AGENT




          7.1
Collateral Agent’s Appointment as Attorney-in-Fact, etc. (a) Each Grantor hereby irrevocably constitutes and appoints the
Collateral Agent and any
authorized officer or agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and stead of such Grantor
and in the name of such Grantor or in its own name, for the purpose of carrying out the terms of
this Agreement, to take any and all appropriate action and to execute any and all documents and
instruments that may be reasonably necessary or desirable to accomplish the purposes of this
Agreement to the extent permitted by applicable law, provided that the Collateral Agent
agrees not to exercise such power except upon the occurrence and during the continuance of any
Event of Default. Without limiting the generality of the foregoing, at any time when an Event of
Default has occurred and is continuing (in each case to the extent permitted by applicable law),
(x) each Pledgor hereby gives the Collateral Agent the power and right, on behalf of such
Pledgor, without notice or assent by such Pledgor, to execute, in connection with any sale
provided for in Section 6.6(a) or 6.7, any indorsements, assessments or other instruments of
conveyance or transfer with respect to such Pledgor’s Pledged Collateral, and (y) each Grantor
hereby gives the Collateral Agent the power and right, on behalf of such Grantor, without notice to
or assent by such Grantor, to do any or all of the following:





     (i) in the name of such Grantor or its
own name, or otherwise, take possession of and
indorse and collect any checks, drafts, notes, acceptances or other instruments for the
payment of moneys due under any Account Receivable of such Grantor that constitutes Security
Collateral or with respect to any other Security Collateral of such Grantor and file any
claim or take any other action or institute any proceeding in any court of law or equity or
otherwise deemed appropriate by the Collateral Agent for the purpose of collecting any and
all such moneys due under any Account Receivable of such Grantor that constitutes Security
Collateral or with respect to any other Security Collateral of such Grantor whenever
payable;




     (ii) in the case of any Copyright,
Patent, or Trademark constituting Collateral of such
Grantor, execute and deliver any and all agreements, instruments, documents and papers as
the Collateral Agent may reasonably request to such Grantor to evidence the Collateral
Agent’s and the Lenders’ security interest in such Copyright, Patent, or Trademark and the
goodwill and general intangibles of such Grantor relating thereto or represented thereby;




     (iii) pay or discharge taxes and
Liens, other than Liens permitted under this Agreement
or the other Loan Documents, levied or placed on the Security Collateral of such Grantor,
effect any repairs or any insurance called for by the terms of this Agreement and pay all or
any part of the premiums therefor and the costs thereof; and




     (iv) (A) direct any party
liable for any payment under any of the Security Collateral
of such Grantor to make payment of any and all moneys due or to become due thereunder
directly to the Collateral Agent or as the Collateral Agent shall direct; (B) ask or demand
for, collect, receive payment of and receipt for, any and all moneys, claims and other
amounts due or to become due at any time in respect of or arising out of any



36 









 




Security
Collateral of such Grantor; (C) sign and indorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of the Security Collateral
of such Grantor; (D) commence and prosecute any suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect the Security Collateral of such
Grantor or any portion thereof and to enforce any other right in respect of any Security
Collateral of such Grantor; (E) defend any suit, action or proceeding brought against such
Grantor with respect to any Security Collateral of such Grantor; (F) settle, compromise or
adjust any such suit, action or proceeding described in clause (E) above and, in connection
therewith, to give such discharges or releases as the Collateral Agent may deem appropriate;
(G) subject to any existing reserved rights or licenses, assign any Copyright, Patent or
Trademark constituting Security Collateral of such Grantor (along with the goodwill of the
business to which any such Copyright, Patent or Trademark pertains), for such term or terms,
on such conditions, and in such
manner, as the Collateral Agent shall in its sole discretion determine; and (H)
generally, sell, transfer, pledge and make any agreement with respect to or otherwise deal
with any of the Security Collateral of such Grantor as fully and completely as though the
Collateral Agent were the absolute owner thereof for all purposes, and do, at the Collateral
Agent’s option and such Grantor’s expense, at any time, or from time to time, all acts and
things which the Collateral Agent deems necessary to protect, preserve or realize upon the
Security Collateral of such Grantor and the Collateral Agent’s and the other Secured
Parties’ security interests therein and to effect the intent of this Agreement, all as fully
and effectively as such Grantor might do.




          (b) The
reasonable expenses of the Collateral Agent incurred in connection with actions
undertaken as provided in this Section 7.1, together with interest thereon at a rate per annum
equal to the rate per annum at which interest would then be payable on past due ABR Loans, from the
date of payment by the Collateral Agent to the date reimbursed by the relevant Grantor, shall be
payable by such Grantor to the Collateral Agent on demand.




          (c) Each
Grantor hereby ratifies all that said attorney shall lawfully do or cause to be done
by virtue hereof. All powers, authorizations and agencies contained in this Agreement are coupled
with an interest and are irrevocable as to the relevant Grantor until this Agreement is terminated
as to such Grantor, and the security interests in the Security Collateral of such Grantor created
hereby are released.




          7.2 Duty
of Collateral Agent. The Collateral Agent’s sole duty with respect to the
custody, safekeeping and physical preservation of the Security Collateral in its possession, under
Section 9-207 of the Code or otherwise, shall be to deal with it in the same manner as the
Collateral Agent deals with similar property for its own account. None of the Collateral Agent or
any other Secured Party nor any of their respective officers, directors, employees or agents shall
be liable for failure to demand, collect or realize upon any of the Security Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose of any Security
Collateral upon the request of any Grantor or any other Person or, except as otherwise provided
herein, to take any other action whatsoever with regard to the Security Collateral or any part
thereof. The powers conferred on the Collateral Agent and the other Secured Parties hereunder are
solely to protect the Collateral Agent’s and the other Secured Parties’ interests in the Security




37 









 




Collateral and shall not impose any duty upon the Collateral Agent or any other Secured
Party to
exercise any such powers. The Collateral Agent and the other Secured Parties shall be accountable
only for amounts that they actually receive as a result of the exercise of such powers, and neither
they nor any of their officers, directors, employees or agents shall be responsible to any Grantor
for any act or failure to act hereunder, except as otherwise provided herein or for their own gross
negligence or willful misconduct.




          7.3
Financing Statements. Pursuant to any applicable law, each Grantor authorizes the
Collateral Agent to file or record financing statements and other filing or recording documents or
instruments with respect to such Grantor’s Security Collateral without the signature of such
Grantor in such form and in such filing offices as the Collateral Agent reasonably determines
appropriate to perfect the security interests of the Collateral Agent under this Agreement. Each
Grantor authorizes the Collateral Agent to use the collateral description “all personal property”
or “all assets” in any such financing statements. The Collateral Agent
agrees to use commercially reasonable efforts to notify the relevant Grantor of any financing
or continuation statement filed by it, provided that any failure to give such notice shall not
affect the validity or effectiveness of any such filing.




          7.4
Authority of Collateral Agent. Each Grantor acknowledges that the rights and
responsibilities of the Collateral Agent under this Agreement with respect to any action taken by
the Collateral Agent or the exercise or non-exercise by the Collateral Agent of any option, voting
right, request, judgment or other right or remedy provided for herein or resulting or arising out
of this Agreement or any amendment, supplement or other modification of this Agreement shall, as
between the Collateral Agent and the Secured Parties, be governed by the Credit Agreement and by
such other agreements with respect thereto as may exist from time to time among them, but, as
between the Collateral Agent and the Grantors, the Collateral Agent shall be conclusively presumed
to be acting as agent for the Secured Parties with full and valid authority so to act or refrain
from acting, and no Grantor shall be under any obligation, or entitlement, to make any inquiry
respecting such authority.




          7.5 Right
of Inspection. Upon reasonable written advance notice to any Grantor and as
often as may reasonably be desired, or at any time and from time to time after the occurrence and
during the continuation of an Event of Default, the Collateral Agent shall have reasonable access
during normal business hours to all the books, correspondence and records of such Grantor, and the
Collateral Agent and its representatives may examine the same, and to the extent reasonable take
extracts therefrom and make photocopies thereof, and such Grantor agrees to render to the
Collateral Agent at such Grantor’s reasonable cost and expense, such clerical and other assistance
as may be reasonably requested with regard thereto. The Collateral Agent and its representatives
shall also have the right, upon reasonable advance written notice to such Grantor subject to any
lease restrictions, to enter during normal business hours into and upon any premises owned, leased
or operated by such Grantor where any of such Grantor’s Inventory or Equipment is located for the
purpose of inspecting the same, observing its use or otherwise protecting its interests therein.




38 









 








SECTION 8 NON-LENDER SECURED PARTIES




          8.1 Rights
to Collateral (a)  The Non-Lender Secured Parties shall not have any right whatsoever to do any of the
following: (i) exercise any rights or remedies with respect to the Collateral (such term, as used
in this Section 8, having the meaning assigned to it in the Credit Agreement), including, without
limitation, the right to (A) enforce any Liens or sell or otherwise foreclose on any portion of the
Collateral, (B) request any action, institute any proceedings, exercise any voting rights, give any
instructions, make any election, notice account debtors or make collections with respect to all or
any portion of the Collateral or (C) release any Guarantor under this Agreement or release any
Collateral from the Liens of any Security Document or consent to or otherwise approve any such
release; (ii) demand, accept or obtain any Lien on any Collateral (except for Liens arising under,
and subject to the terms of, this Agreement); (iii) vote in any Bankruptcy Case or similar
proceeding in respect of the Borrower or any of its Subsidiaries (any such proceeding, for
purposes of this clause (a), a “Bankruptcy”) with respect to, or take any other actions
concerning the Collateral; (iv) receive any proceeds from any sale, transfer or other
disposition of any of the Collateral (except in accordance with this Agreement); (v) oppose
any sale, transfer or other disposition of the Collateral; (vi) object to any debtor-in-possession
financing in any Bankruptcy which is provided by one or more Lenders among others (including on a
priming basis under Section 364(d) of the Bankruptcy Code); (vii) object to the use of cash
collateral in respect of the Collateral in any Bankruptcy; or (viii) seek, or object to the Lenders
seeking on an equal and ratable basis, any adequate protection or relief from the automatic stay
with respect to the Collateral in any Bankruptcy.




          (b) Each Non-Lender Secured Party, by its acceptance of
the benefits of this Agreement and the
other Security Documents, agrees that in exercising rights and remedies with respect to the
Collateral, the Collateral Agent and the Lenders, with the consent of the Collateral Agent, may
enforce the provisions of the Security Documents and exercise remedies thereunder and under any
other Loan Documents (or refrain from enforcing rights and exercising remedies), all in such order
and in such manner as they may determine in the exercise of their sole business judgment. Such
exercise and enforcement shall include, without limitation, the rights to collect, sell, dispose of
or otherwise realize upon all or any part of the Collateral, to incur expenses in connection with
such collection, sale, disposition or other realization and to exercise all the rights and remedies
of a secured lender under the Uniform Commercial Code of any applicable jurisdiction. The
Non-Lender Secured Parties by their acceptance of the benefits of this Agreement and the other
Security Documents hereby agree not to contest or otherwise challenge any such collection, sale,
disposition or other realization of or upon all or any of the Collateral. Whether or not a
Bankruptcy Case has been commenced, the Non-Lender Secured Parties shall be deemed to have
consented to any sale or other disposition of any property, business or assets of the Borrower or
any of its Subsidiaries and the release of any or all of the Collateral from the Liens of any
Security Document in connection therewith.




          (c) Notwithstanding any provision of this Section 8.1,
the Non-Lender Secured Parties shall be
entitled to file any necessary responsive or defensive pleadings in opposition to any motion,
claim, adversary proceeding or other pleadings (A) in order to prevent any Person from seeking to
foreclose on the Collateral or supersede the Non-Lender Secured Parties’ claim thereto or (B) in
opposition to any motion, claim, adversary proceeding or other




39 









 




pleading made by any Person
objecting to or otherwise seeking the disallowance of the claims of the Non-Lender Secured Parties.




          (d) Each Non-Lender Secured Party, by its acceptance of
the benefit of this Agreement, agrees
that the Collateral Agent and the Lenders may deal with the Collateral, including any exchange,
taking or release of Collateral, may change or increase the amount of the Borrower Obligations
and/or the Guarantor Obligations, and may release any Guarantor from its Obligations hereunder, all
without any liability or obligation (except as may be otherwise expressly provided herein) to the
Non-Lender Secured Parties.




          8.2
Appointment of Agent. Each Non-Lender Secured Party, by its acceptance of the
benefits of this Agreement and the other Security Documents, shall be deemed irrevocably to make,
constitute and appoint the Collateral Agent, as agent under the Credit Agreement (and all officers,
employees or agents designated by the Collateral Agent) as such Person’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 the Non-Lender Secured Parties and in each such Person’s name
or otherwise, to effectuate any sale, transfer or other disposition of the Collateral. It is
understood and agreed that the appointment of the Collateral Agent as the agent and
attorney-in-fact of the Non-Lender Secured Parties for the purposes set forth herein is coupled
with an interest and is irrevocable. It is understood and agreed that the Collateral Agent has
appointed the Administrative Agent as its agent for purposes of perfecting certain of the security
interests created hereunder and for otherwise carrying out certain of its obligations hereunder.




          8.3
Waiver of Claims. To the maximum extent permitted by law, each Non-Lender Secured
Party waives any claim it might have against the Collateral Agent or the Lenders with respect to,
or arising out of, any action or failure to act or any error of judgment, negligence, or mistake or
oversight whatsoever on the part of the Collateral Agent or the Lenders or their respective
directors, officers, employees or agents with respect to any exercise of rights or remedies under
the Loan Documents or any transaction relating to the Collateral (including, without limitation,
any such exercise described in Section 8.1(b) above), except for any such action or failure to act
which constitutes willful misconduct or gross negligence of such Person. None of the Collateral
Agent or any Lender or any of their respective directors, officers, employees or agents shall be
liable for failure to demand, collect or realize upon any of the Collateral or for any delay in
doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the
request of the Borrower, any Subsidiary of the Borrower, any Non-Lender Secured Party or any other
Person or to take any other action or forbear from doing so whatsoever with regard to the
Collateral or any part thereof, except for any such action or failure to act which constitutes
willful misconduct or gross negligence of such Person.




SECTION 9 MISCELLANEOUS




          9.1
Amendments in Writing. None of the terms or provisions of this Agreement may be
waived, amended, supplemented or otherwise modified except by a written instrument executed by each
affected Grantor and the Collateral Agent, provided that (a) any provision of this Agreement
imposing obligations on any Grantor may be waived by the Collateral Agent in a written instrument
executed by the Collateral Agent and (b) notwithstanding anything to the contrary in Section 10.1
of the Credit Agreement, no such waiver and no such amendment or




40 









 




modification shall amend, modify
or waive the definition of “Secured Party” or Section 6.5 if such waiver, amendment, or
modification would adversely affect a Secured Party without the written consent of each such
affected Secured Party. For the avoidance of doubt, it is understood and agreed that any
amendment, amendment and restatement, waiver, supplement or other modification of or to the
Intercreditor Agreement that would have the effect, directly or indirectly, through any reference
herein to the Intercreditor Agreement or otherwise, of waiving, amending, supplementing or
otherwise modifying this Agreement, or any term or provision hereof, or any right or obligation of
any Grantor hereunder or in respect hereof, shall not be given such effect except pursuant to a
written instrument executed by each affected Grantor and the Collateral Agent in accordance with
this Section 9.1.




          9.2
Notices. All notices, requests and demands to or upon the Collateral Agent or any
Grantor hereunder shall be effected in the manner provided for in Section 10.2 of the Credit
Agreement; provided that any such notice, request or demand to or upon any Guarantor shall be
addressed to such Guarantor at its notice address set forth on Schedule 1, unless and until such
Guarantor shall change such address by notice to the Collateral Agent and the Administrative
Agent given in accordance with Section 10.2 of the Credit Agreement.




          9.3 No
Waiver by Course of Conduct; Cumulative Remedies. None of the Collateral Agent
or any other Secured Party shall by any act (except by a written instrument pursuant to Section
9.1), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default. No failure to exercise, nor
any delay in exercising, on the part of the Collateral Agent or any other Secured Party, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of
any right, power or privilege hereunder shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. A waiver by the Collateral Agent or any other
Secured Party of any right or remedy hereunder on any one occasion shall not be construed as a bar
to any right or remedy which the Collateral Agent or such other Secured Party would otherwise have
on any future occasion. The rights and remedies herein provided are cumulative, may be exercised
singly or concurrently and are not exclusive of any other rights or remedies provided by law.




          9.4
Enforcement Expenses; Indemnification. (a) Each Guarantor jointly and severally agrees to pay or reimburse each Secured Party
and the
Collateral Agent for all their respective reasonable costs and expenses incurred in collecting
against any Guarantor under the guarantee contained in Section 2 or otherwise enforcing or
preserving any rights under this Agreement against such Guarantor and the other Loan Documents to
which such Guarantor is a party, including, without limitation, the reasonable fees and
disbursements of counsel to the Secured Parties, the Collateral Agent and the Administrative Agent.




          (b) Each Grantor jointly and severally agrees to pay, and to
save the Collateral Agent, the
Administrative Agent and the other Secured Parties harmless from, (x) any and all liabilities with
respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other
similar taxes which may be payable or determined to be payable with respect to any of the Security
Collateral or in connection with any of the transactions contemplated by this Agreement and (y) any
and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect




41 









 




to the execution, delivery,
enforcement, performance and administration of this Agreement (collectively, the “indemnified
liabilities”), in each case to the extent the Borrower would be required to do so pursuant to
Section 10.5 of the Credit Agreement, and in any event excluding any taxes or other indemnified
liabilities arising from gross negligence or willful misconduct of the Collateral Agent, the
Administrative Agent or any other Secured Party.




          (c) The
agreements in this Section 9.4 shall survive repayment of the Obligations and all
other amounts payable under the Credit Agreement and the other Loan Documents.




          9.5
Successors and Assigns. This Agreement shall be binding upon and shall inure to
the benefit of the Grantors, the Collateral Agent and the Secured Parties and their respective
successors and assigns; provided that no Grantor may assign, transfer or delegate any
of its rights or obligations under this Agreement without the prior written consent of the
Collateral Agent.




          9.6
Set-Off. Each Guarantor hereby irrevocably authorizes each of the Administrative
Agent and the Collateral Agent and each other Secured Party at any time and from time to time
without notice to such Guarantor, any other Guarantor or the Borrower, any such notice being
expressly waived by each Guarantor and by the Borrower, to the extent permitted by applicable law,
upon the occurrence and during the continuance of an Event of Default under Section 8.1(f) of the
Credit Agreement with respect to any Guarantor so long as any amount remains unpaid after it
becomes due and payable by such Guarantor hereunder, to set-off and appropriate and apply against
any such amount any and all deposits (general or special, time or demand, provisional or final)
(other than the Collateral Proceeds Account), in any currency, and any other credits, indebtedness
or claims, in any currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by the Collateral Agent, the Administrative Agent
or such other Secured Party to or for the credit or the account of such Guarantor, or any part
thereof in such amounts as the Collateral Agent, the Administrative Agent or such other Secured
Party may elect. The Collateral Agent, the Administrative Agent and each other Secured Party shall
notify such Guarantor promptly of any such set-off and the application made by the Collateral
Agent, the Administrative Agent or such other Secured Party of the proceeds thereof; provided that
the failure to give such notice shall not affect the validity of such set-off and application. The
rights of the Collateral Agent, the Administrative Agent and each other Secured Party under this
Section 9.6 are in addition to other rights and remedies (including, without limitation, other
rights of set-off) which the Collateral Agent, the Administrative Agent or such other Secured Party
may have.




          9.7
Counterparts. This Agreement may be executed by one or more of the parties to
this Agreement on any number of separate counterparts, and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.




          9.8
Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction; provided that, with respect to any Pledged




42 









 




Stock issued by a Foreign Subsidiary, all rights, powers and remedies provided in this
Agreement
may be exercised only to the extent that they do not violate any provision of any law, rule or
regulation of any Governmental Authority applicable to any such Pledged Stock or affecting the
legality, validity or enforceability of any of the provisions of this Agreement against the Pledgor
(such laws, rules or regulations, “Applicable Law”) and are intended to be limited to the
extent necessary so that they will not render this Agreement invalid, unenforceable or not entitled
to be recorded, registered or filed under the provisions of any Applicable Law.




          9.9
Section Headings. The Section headings used in this Agreement are for convenience
of reference only and are not to affect the construction hereof or be taken into consideration in
the interpretation hereof.




          9.10
Integration. This Agreement and the other Loan Documents represent the entire
agreement of the Grantors, the Collateral Agent, the Administrative Agent and the other Secured
Parties with respect to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Grantors, the Collateral Agent, the Administrative Agent or
any other Secured Party relative to subject matter hereof not expressly set forth or referred to
herein or in the other Loan Documents.




          9.11
GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.




          9.12
Submission to Jurisdiction; Waivers. Each party hereto hereby irrevocably and
unconditionally:




          (a) submits for itself and its property in any legal action or
proceeding relating to this
Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement
of any judgment in respect thereof, to the non-exclusive general jurisdiction of the courts of the
State of New York, the courts of the United States of America for the Southern District of
New York, and appellate courts from any thereof;




          (b) consents that any such action or proceeding may be
brought in such courts and waives any
objection that it may now or hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;




          (c) agrees that service of process in any such action or
proceeding may be effected by mailing
a copy thereof by registered or certified mail (or any substantially similar form of mail), postage
prepaid, to such party at its address referred to in Section 9.2 or at such other address of which
the Collateral Agent and the Administrative Agent (in the case of any other party hereto) or the
Borrower (in the case of the Collateral Agent and the Administrative Agent) shall have been
notified pursuant thereto;




          (d) agrees that nothing herein shall affect the right to effect
service of process in any
other manner permitted by law or shall limit the right to sue in any other jurisdiction; and




43 









 








          (e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or
recover in any legal action or proceeding referred to in this Section any punitive damages.




          9.13
Acknowledgments. Each Guarantor hereby acknowledges that:




          (a) it
has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Loan Documents to which it is a party;




          (b) none
of the Collateral Agent, the Administrative Agent or any other Secured Party has any
fiduciary relationship with or duty to any Guarantor arising out of or in connection with this
Agreement or any of the other Loan Documents, and the relationship between the Guarantors, on the
one hand, and the Collateral Agent, the Administrative Agent and the other Secured Parties, on the
other hand, in connection herewith or therewith is solely that of debtor and creditor; and




          (c) no
joint venture is created hereby or by the other Loan Documents or otherwise exists by
virtue of the transactions contemplated hereby among the Secured Parties or among the Guarantors
and the Secured Parties.




          9.14
WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.




          9.15
Additional Grantors. Each new Subsidiary of the Borrower that is required to
become a party to this Agreement pursuant to Section 6.9 of the Credit Agreement shall become a
Grantor for all purposes of this Agreement upon execution and delivery by such Subsidiary of an
Assumption Agreement substantially in the form of Annex 1 hereto. Each existing Grantor that is
required to become a Pledgor with respect to Capital Stock of any new Subsidiary of the Borrower
pursuant to Section 6.9 of the Credit Agreement shall become a Pledgor with respect thereto upon
execution and delivery by such Grantor of a Supplemental Agreement substantially in the form of
Annex 2 hereto.




          9.16
Releases. (a) At such time as the Loans and the other Obligations (other than any Obligations owing
to a Non-Lender Secured Party in respect of the provision of cash management services) then due and
owing shall have been paid in full, all Security Collateral shall be released from the Liens
created hereby, and this Agreement and all obligations (other than those expressly stated to
survive such termination) of the Collateral Agent and each Grantor hereunder shall terminate, all
without delivery of any instrument or performance of any act by any party, and all rights to the
Security Collateral shall revert to the Grantors. At the request and sole expense of any Grantor
following any such termination, the Collateral Agent shall deliver to such Grantor any Security
Collateral held by the Collateral Agent hereunder, and the Collateral Agent and the Administrative
Agent shall execute and deliver to such Grantor such documents (including without limitation UCC
termination statements) as such Grantor shall reasonably request to evidence such termination.




44 









 








          (b) In
connection with any sale or other disposition of Security Collateral permitted by the
Credit Agreement (other than any sale or disposition to another Grantor), the Lien pursuant to this
Agreement on such sold or disposed of Security Collateral shall be automatically released. In
connection with the sale or other disposition of all of the Capital Stock of any Guarantor (other
than to the Borrower or a Subsidiary of the Borrower) or the sale or other disposition of Security
Collateral (other than a sale or disposition to another Grantor) permitted under the Credit
Agreement, the Collateral Agent shall, upon receipt from the
Borrower of a written request for the release of such Guarantor from its Guarantee or the
release of the Security Collateral subject to such sale or other disposition, identifying such
Guarantor or the relevant Security Collateral and the terms of the sale or other disposition in
reasonable detail, including the price thereof and any expenses in connection therewith, together
with a certification by the Borrower stating that such transaction is in compliance with the Credit
Agreement and the other Loan Documents, deliver to the Borrower or the relevant Grantor any of the
relevant Security Collateral held by the Collateral Agent hereunder and the Collateral Agent and
the Administrative Agent shall execute and deliver to the relevant Grantor (at the sole cost and
expense of such Grantor) all releases or other documents (including without limitation UCC
termination statements) necessary or reasonably desirable for the release of such Guarantee or the
Liens created hereby on such Security Collateral, as applicable, as such Grantor may reasonably
request.




          9.17
Judgment. (a) If for the purpose of obtaining judgment in any court it is
necessary to convert a sum due hereunder in one currency into another currency, the parties hereto
agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall
be that at which in accordance with normal banking procedures the Collateral Agent could purchase
the first currency with such other currency on the Business Day preceding the day on which final
judgment is given.




          (b) The
obligations of any Guarantor in respect of this Agreement to the Collateral Agent, for
the benefit of each holder of Secured Obligations, shall, notwithstanding any judgment in a
currency (the “judgment currency”) other than the currency in which the sum originally due
to such holder is denominated (the “original currency”), be discharged only to the extent
that on the Business Day following receipt by the Collateral Agent of any sum adjudged to be so due
in the judgment currency, the Collateral Agent may in accordance with normal banking procedures
purchase the original currency with the judgment currency; if the amount of the original currency
so purchased is less than the sum originally due to such holder in the original currency, such
Guarantor agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the
Collateral Agent for the benefit of such holder, against such loss, and if the amount of the
original currency so purchased exceeds the sum originally due to the Collateral Agent, the
Collateral Agent agrees to remit to the Borrower, such excess. This covenant shall survive the
termination of this Agreement and payment of the Obligations and all other amounts payable
hereunder.






45 









 





          IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be duly executed, all as
of the date first written above.




	 	 	 	 	 	 	 
	BORROWER:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	NCI BUILDING SYSTEMS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Todd R. Moore
 

	 	 
	 	 	Name: Todd R. Moore	 	 
	 	 	Title: EVP and General Counsel	 	 
	 
	 	 	 	 	 	 
	GUARANTORS:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	NCI GROUP, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Todd R. Moore
 

	 	 
	 	 	Name: Todd R. Moore	 	 
	 	 	Title: EVP and General Counsel	 	 
	 
	 	 	 	 	 	 
	 	 	ROBERTSON-CECO II CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Todd R. Moore
 

	 	 
	 	 	Name: Todd R. Moore	 	 
	 	 	Title: EVP and General Counsel	 	 
	 
	 	 	 	 	 	 
	 	 	STEELBUILDING.COM, INC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Todd R. Moore
 

	 	 
	 	 	Name: Todd R. Moore	 	 
	 	 	Title: EVP and General Counsel	 	 






	 	 	 	 	 
	Acknowledged and Agreed to as of

the date hereof by:	 	 
	 
	 	 	 	 
	WACHOVIA BANK,
NATIONAL ASSOCIATION, as 

Administrative Agent and Collateral Agent	 	 
	 
	 	 	 	 
	By:

	 	/s/ Jacob Petkovich
 

	 	 
	Name: Jacob Petkovich	 	 
	Title: Director	 	 







46 











 





Annex 1 to

Guarantee and Collateral Agreement




ASSUMPTION AGREEMENT




          ASSUMPTION AGREEMENT, dated as of                      ___, ___, made by                     
                    , a                      corporation (the “Additional Grantor”), in favor of Wachovia Bank, National
Association, as collateral agent and administrative agent (in such capacity, the “Collateral
Agent”) for the banks and other financial institutions (the “Lenders”) from time to
time parties to the Credit Agreement referred to below and the other Secured Parties (as defined
below). All capitalized terms not defined herein shall have the meaning ascribed to them in such
the Guarantee and Collateral Agreement referred to below, or if not defined therein, in the Credit
Agreement.



W
I

T
 N
 E
 S
 S
 E
 T
 H:




          WHEREAS, NCI Building Systems, Inc. (the “Borrower”), Wachovia Bank, National
Association, as administrative agent and collateral agent and the Lenders are parties to an Amended
and Restated Credit Agreement, dated as of [                    ] (as amended, supplemented, waived or
otherwise modified from time to time, the “Credit Agreement”);




          WHEREAS, in connection with the Credit Agreement, the Borrower and certain of its Subsidiaries
are, or are to become, parties to the Guarantee and Collateral Agreement, dated as of
[                    ] (as amended, supplemented, waived or otherwise modified from time to time, the
“Guarantee and Collateral Agreement”), in favor of the Collateral Agent, for the benefit of
the Secured Parties (as defined in the Guarantee and Collateral Agreement);




          WHEREAS, the Additional Grantor is a member of an affiliated group of companies that includes
the Borrower and each other Grantor; the proceeds of the extensions of credit under the Credit
Agreement will be used in part to enable the Borrower to make valuable transfers to one or more of
the other Grantors (including the Additional Grantor) in connection with the operation of their
respective businesses; and the Borrower and the other Grantors (including the Additional Grantor)
are engaged in related businesses, and each such Grantor (including the Additional Grantor) will
derive substantial direct and indirect benefit from the making of the extensions of credit under
the Credit Agreement;




          WHEREAS, the Credit Agreement requires the Additional Grantor to become a party to the
Guarantee and Collateral Agreement; and




          WHEREAS, the Additional Grantor has agreed to execute and deliver this Assumption Agreement in
order to become a party to the Guarantee and Collateral Agreement;




          NOW, THEREFORE, IT IS AGREED:




          1. Guarantee and Collateral Agreement. By executing and delivering this Assumption
Agreement, the Additional Grantor, as provided in Section 9.15 of the Guarantee and Collateral
Agreement, hereby becomes a party to the Guarantee and Collateral Agreement as a Grantor thereunder
with the same force and effect as if originally named therein as a Guarantor [, Grantor and Pledgor] [and Grantor] [and Pledgor]1
and, without limiting the generality of the






 




			
	1	 	Indicate the capacities in which the Additional Grantor is becoming a Grantor.





 









 




foregoing, hereby expressly assumes all obligations and liabilities of a
Guarantor [, Grantor and Pledgor] [and Grantor] [and Pledgor]2 thereunder. The
information set forth in Annex 1-A hereto is hereby added to the information set forth in Schedules
[                    ] to the Guarantee and Collateral Agreement, and such Schedules are hereby amended and
modified to include such information. The Additional Grantor hereby represents and warrants that
each of the representations and warranties of such Additional Grantor, in its capacities as a
Guarantor [, Grantor and Pledgor] [and Grantor] [and Pledgor],3 contained in Section 4
of the Guarantee and Collateral Agreement is true and correct in all material respects on and as
the date hereof (after giving effect to this Assumption Agreement) as if made on and as of such
date.




          2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK.






 




			
	2	 	Indicate the capacities in which the Additional Grantor
is becoming a Grantor.
	 
	3	 	Indicate the capacities in which the Additional Grantor
is becoming a Grantor.




 









 










          IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to be duly executed
and delivered as of the date first above written.




	 	 	 	 	 
	 

	 	 	 	[ADDITIONAL GRANTOR]
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:






Acknowledged and Agreed to as

of the date hereof by:




WACHOVIA BANK, NATIONAL ASSOCIATION,

as Collateral Agent and Administrative Agent




	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 






 









 





Annex 1-A to

Assumption Agreement




SUPPLEMENTAL AGREEMENT




          SUPPLEMENTAL AGREEMENT, dated as of                      ___, ___, made by                     , a
                     corporation (the “Additional Pledgor”), in favor of Wachovia Bank, National
Association, as collateral agent and administrative agent (in such capacity, the “Collateral
Agent”) for the banks and other financial institutions (the “Lenders”) from time to
time parties to the Credit Agreement referred to below and the other Secured Parties (as defined
below). All capitalized terms not defined herein shall have the meaning ascribed to them in the
Guarantee and Collateral Agreement referred to below, or if not defined therein, in the Credit
Agreement.




W
I

T
 N
 E
 S
 S
 E
 T
 H:




          WHEREAS, NCI Building Systems, Inc. (the “Borrower”), Wachovia Bank, National
Association, as administrative agent and collateral agent and the Lenders are parties to an Amended
and Restated Credit Agreement, dated as of [                    ] (as amended, supplemented, waived or
otherwise modified from time to time, the “Credit Agreement”);




          WHEREAS, in connection with the Credit Agreement, the Borrower and certain of its Subsidiaries
are, or are to become, parties to the Guarantee and Collateral Agreement, dated as of [                    ]
(as amended, supplemented, waived or otherwise modified from time to time, the “Guarantee and
Collateral Agreement”), in favor of the Collateral Agent, for the benefit of the Secured
Parties (as defined in the Guarantee and Collateral Agreement);




          WHEREAS, the Credit Agreement requires the Additional Pledgor to become a Pledgor under the
Guarantee and Collateral Agreement with respect to Capital Stock of certain new Subsidiaries of the
Borrower; and




          WHEREAS, the Additional Pledgor has agreed to execute and deliver this Supplemental Agreement
in order to become such a Pledgor under the Guarantee and Collateral Agreement;




          NOW, THEREFORE, IT IS AGREED:




          1. Guarantee and Collateral Agreement. By executing and delivering this Supplemental
Agreement, the Additional Pledgor, as provided in Section 9.15 of the Guarantee and Collateral
Agreement, hereby becomes a Pledgor under the Guarantee and Collateral Agreement with respect to
the shares of Capital Stock of the Subsidiary of the Borrower listed in Annex 1-A hereto, as a
Grantor thereunder. The information set forth in Annex 1-A hereto is hereby added to the
information set forth in Schedule 2 to the Guarantee and Collateral Agreement, and such Schedule 2
is hereby amended and modified to include such information.




          2. GOVERNING LAW. THIS SUPPLEMENTAL AGREEMENT AND RIGHTS AND OBLIGATIONS OF THE
PARTIES HERUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK.




 









 





          IN WITNESS WHEREOF, the undersigned has caused this Supplemental Agreement to be duly executed
and delivered as of the date first above written.




	 	 	 	 	 
	 

	 	 	 	[ADDITIONAL PLEDGOR]
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:






Acknowledged and Agreed to as

of the date hereof by:




WACHOVIA BANK, NATIONAL ASSOCIATION

as Collateral Agent and Administrative Agent




	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title: