exv10w11



 








EXECUTION COPY




EXHIBIT 10.11




US COLLATERAL AND GUARANTY AGREEMENT



dated as of November 28, 2001, as amended and restated



as of December 22, 2005,



among



Compass Minerals International, Inc.



(formerly known as SALT HOLDINGS CORPORATION),



COMPASS MINERALS GROUP, INC.,



each other Subsidiary of



COMPASS MINERALS INTERNATIONAL, INC.



listed on Schedule I hereto



and



JPMORGAN CHASE BANK, N.A.,



as Collateral Agent



 












 



3




Table of Contents




	 	 	 	 	 
	 	 	Page
	ARTICLE I
	 	 	 	 
	SECTION 1.01. Credit Agreement
	 	 	6	 
	SECTION 1.02. Other Defined Terms
	 	 	7	 
	ARTICLE II
	 	 	 	 
	SECTION 2.01. Guaranty
	 	 	11	 
	SECTION 2.02. Guaranty of Payment
	 	 	11	 
	SECTION 2.03. No Limitations, Etc.
	 	 	11	 
	SECTION 2.04. Reinstatement
	 	 	12	 
	SECTION 2.05. Agreement To Pay; Subrogation
	 	 	12	 
	SECTION 2.06. Information
	 	 	12	 
	ARTICLE III
	 	 	 	 
	SECTION 3.01. Pledge
	 	 	13	 
	SECTION 3.02. Delivery of the Pledged Collateral
	 	 	14	 
	SECTION 3.03. Representations, Warranties and Covenants
	 	 	14	 
	SECTION 3.04. Certification of Limited Liability Company and Limited Partnership
Interests
	 	 	15	 
	SECTION 3.05. Registration in Nominee Name; Denominations
	 	 	15	 
	SECTION 3.06. Voting Rights; Dividends and Interest, etc.
	 	 	16	 
	ARTICLE IV
	 	 	 	 
	SECTION 4.01. Security Interest
	 	 	17	 
	SECTION 4.02. Representations and Warranties
	 	 	19	 
	SECTION 4.03. Covenants
	 	 	21	 
	SECTION 4.04. Other Actions
	 	 	25	 
	SECTION 4.05. Covenants regarding Patent, Trademark and Copyright Collateral
	 	 	27	 
	SECTION 4.06. Lockbox System
	 	 	28	 
	SECTION 4.07. Collections
	 	 	29	 
	ARTICLE V
	 	 	 	 
	SECTION 5.01. Remedies upon Default
	 	 	30	 
	SECTION 5.02. Application of Proceeds
	 	 	32	 
	SECTION 5.03. Grant of License to Use Intellectual Property
	 	 	32	 
	SECTION 5.04. Securities Act, etc.
	 	 	33	 
	SECTION 5.05. Registration
	 	 	33	 
	ARTICLE VI
	 	 	 	 
	SECTION 6.01. Indemnity and Subrogation
	 	 	34	 
	SECTION 6.02. Contribution and Subrogation
	 	 	34	 
	SECTION 6.03. Subordination
	 	 	35	 
	ARTICLE VII
	 	 	 	 
	SECTION 7.01. Notices
	 	 	35	 
	SECTION 7.02. Security Interest Absolute
	 	 	35	 
	SECTION 7.03. Survival of Agreement
	 	 	35	 
	SECTION 7.04. Binding Effect; Several Agreement
	 	 	36	 
	SECTION 7.05. Successors and Assigns
	 	 	36	 
	SECTION 7.06. Collateral Agent’s Fees and Expenses; Indemnification
	 	 	36	 
	SECTION 7.07. Collateral Agent Appointed Attorney-in-Fact
	 	 	37	 
	SECTION 7.08. GOVERNING LAW
	 	 	38	 












 



4



	 	 	 	 	 
	 	 	Page       
	SECTION 7.09. Waivers; Amendment
	 	 	38	 
	SECTION 7.10. WAIVER OF JURY TRIAL
	 	 	38	 
	SECTION 7.11. Severability
	 	 	39	 
	SECTION 7.12. Counterparts
	 	 	39	 
	SECTION 7.13. Headings
	 	 	39	 
	SECTION 7.14. Jurisdiction; Consent to Service of Process
	 	 	39	 
	SECTION 7.15. Termination or Release
	 	 	40	 
	SECTION 7.16. Additional Subsidiaries
	 	 	40	 
	SECTION 7.17. Right of Setoff
	 	 	41	 












 



5


	 	 	 
	Exhibits
	 	 
	 
	 	 
	Schedules
	 	 
	 
	 	 
	Schedule I

	 	Subsidiary Parties
	Schedule II

	 	Capital Stock; Debt Securities
	Schedule III

	 	U.S. Copyrights; Licenses; Patents; Trademark/Trade Names
	Schedule IV

	 	Description of Commercial Tort Claims






	 	 	 
	Annexes
	 	 
	 
	 	 
	Annex I

	 	Supplement No. [l
] to the US Collateral and Guaranty Agreement
	Annex II

	 	Form of Perfection Certificate
	Annex III

	 	Form of Name Change Agreement












 



6



               US COLLATERAL AND GUARANTY AGREEMENT dated as of November 28, 2001,
as amended and restated as of December 22, 2005, among COMPASS MINERALS
INTERNATIONAL, INC., a Delaware corporation (“Holdings”), COMPASS
MINERALS GROUP, INC., a Delaware corporation (the “US Borrower”),
each other Subsidiary of Holdings listed on Schedule I hereto (each such
Subsidiary individually a “Subsidiary Party”) and JPMORGAN CHASE
BANK, N.A., a national banking association (“JPMCB”), as
collateral agent (in such capacity, the “Collateral Agent”) for
the Secured Parties (as defined below).



          Reference is made to the Credit Agreement dated as of November 28, 2001, as amended and
restated as of April 10, 2002, as further amended and restated as of December 22, 2005 (as further
amended, supplemented, waived or otherwise modified from time to time, the “Credit
Agreement”), among Holdings, the US Borrower, Sifto Canada Corp., a corporation continued and
amalgamated under the laws of the province of Nova Scotia, Canada (the “Canadian
Borrower”), Salt Union Limited, a company incorporated under the laws of England and Wales in
the United Kingdom (the “UK Borrower” and, together with the Canadian Borrower, the
“Foreign Borrowers”; the Foreign Borrowers together with the US Borrower, the
“Borrowers”), the lenders from time to time party thereto (the “Lenders”) and
JPMCB, as administrative agent for the Lenders (in such capacity, the “Administrative
Agent”). This US Collateral and Guaranty Agreement amends and restates in its entirety the US
Collateral and Guaranty Agreement dated as of November 28, 2001, among Holdings, the US Borrower,
the Subsidiaries of Holdings party thereto and JPMCB.




          The Lenders have agreed to extend credit to the Borrowers subject to the terms and conditions
set forth in the Credit Agreement. The obligations of the Lenders to extend such credit are
conditioned upon, among other things, the execution and delivery of this Agreement. Holdings and
the Subsidiary Parties other than the Borrowers are affiliates of the Borrowers and each Borrower
is an affiliate of each other Borrower. Holdings and the Subsidiary Parties other than the
Borrowers will derive substantial benefits from the extensions of credit to the Borrowers and each
of the Borrowers will derive substantial benefits from the extensions of credit to each of the
other Borrowers, in each case pursuant to the Credit Agreement. Holdings and each of the
Subsidiary Parties are willing to execute and deliver this Agreement in order to induce the Lenders
to extend such credit. Accordingly, the parties hereto agree as follows:




ARTICLE I



Definitions




          SECTION 1.01. Credit Agreement. (a) Capitalized terms used in this Agreement and
not otherwise defined herein have the meanings specified in the Credit Agreement. All terms
defined in the New York UCC (as defined herein) and not defined in this Agreement have the meanings
specified in the New York UCC.










 



7




          (b) The rules of construction specified in Section 1.03 and Section 10.06 of the Credit
Agreement also apply to this Agreement.




          SECTION 1.02. Other Defined Terms. As used in this Agreement, the following terms
have the meanings specified below:




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




          “Assigned Contracts” has the meaning assigned to such term in the US Collateral
Assignment.




          “Collateral” means Security Agreement Collateral and Pledged Collateral.




          “Collateral Agent” has the meaning assigned to such term in the preamble to this
Agreement.




          “Collection Deposit Account” means a lockbox account of a Grantor maintained for the
benefit of the Secured Parties with the Collateral Agent or with a Sub-Agent pursuant to a Lockbox
Agreement.




          “Concentration Account” means the cash collateral account established at the office of
JPMorgan Chase Bank, N.A. located at 270 Park Avenue, New York, NY 10017, in the name of the
Collateral Agent, for purposes of this Agreement.




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




          “Copyrights” means all of the following: (a) all copyright rights in any work subject
to the copyright laws of the United States or any other country, whether as author, assignee,
transferee or otherwise, and (b) all registrations and applications for registration of any such
copyright in the United States or any other country, including registrations, recordings,
supplemental registrations and pending applications for registration in the United States Copyright
Office, including those listed on Schedule III.




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




          “Credit Agreement Obligations” means any Obligations other than obligations described
in clauses (d) and (e) of the definition of the term “Obligations”.




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




          “Equity Interests” means shares of capital stock, partnership, joint venture, member
or limited liability or unlimited liability company interests, beneficial interests in
a trust or other equity ownership interests in a Person of whatever nature and rights,
warrants or options to acquire any of the foregoing.










 



8




          “Federal Securities Laws” has the meaning assigned to such term in Section 5.04.




          “Foreign Obligations” has the meaning assigned to such term in the Foreign Guaranty.




          “General Fund Account” means the general fund account established at the office of
JPMorgan Chase Bank, N.A. located at 270 Park Avenue, New York, NY 10017, in the name of the US
Borrower, for purposes of this Agreement.




          “General Intangibles” means all choses in action and causes of action and all other
intangible personal property of any Grantor of every kind and nature (other than Accounts) now
owned or hereafter acquired by such Grantor, including corporate or other business records,
indemnification claims, contract rights (including rights under leases, whether entered into as
lessor or lessee, Interest Rate Protection Agreements, other Swap Agreements and other agreements),
Intellectual Property, goodwill, registrations, franchises, tax refund claims and any letter of
credit, guaranty, claim, security interest or other security held by or granted to any Grantor to
secure payment by an Account Debtor of any of the Accounts.




          “Grantors” means Holdings, the US Borrower and the Subsidiary Parties.




          “Guarantors” means Holdings, the US Borrower and the Subsidiary Parties.




          “Indemnitee” has the meaning assigned to such term in Section 7.06(b).




          “Instrument” has the meaning assigned to such term in Article 9 of the New York UCC.




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




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




          “Lockbox Agreement” means any form approved by the Collateral Agent, among a Grantor,
the Collateral Agent and a Sub-Agent.




          “Lockbox System” has the meaning assigned to such term in Section 4.06(a).




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










 



9




          “Obligations” means (a) the due and punctual payment by each Borrower of (i) all
amounts due in respect of B/As and the principal of, premium (if any) and interest (including
interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans and B/As,
when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by any Borrower under the Credit Agreement in
respect of any Letter of Credit, when and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash collateral (including interest
accruing during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), and (iii) all other
monetary obligations of any Borrower to any of the Secured Parties under the Credit Agreement and
each of the other Credit Documents, including fees, costs, expenses and indemnities, whether
primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred
during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding), (b) the due and punctual
performance of all other obligations of each Borrower under or pursuant to the Credit Agreement and
each of the other Credit Documents, (c) the due and punctual payment and performance of all the
obligations of each other Credit Party under or pursuant to this Agreement and each of the other
Credit Documents, (d) the due and punctual payment and performance of all obligations of each
Credit Party under each Interest Rate Protection Agreement and each other Swap Agreement that (i)
is in effect on the Effective Date with a counterparty that is a Lender or an Affiliate of a Lender
as of the Effective Date or (ii) is entered into after the Effective Date with any counterparty
that is a Lender or an Affiliate of a Lender at the time such Interest Rate Protection Agreement or
other Swap Agreement, as applicable, is entered into and (e) the due and punctual payment and
performance of all monetary obligations and other liabilities of each Credit Party to any Lender or
Affiliate of a Lender in respect of overdrafts and related liabilities and obligations arising from
or in connection with treasury, depositary, cash management or purchase card account services or in
connection with any automated clearinghouse transfer of funds.




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




          “Patents” means all of the following: (a) all letters patent of the United States or
the equivalent thereof in any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or the equivalent thereof in any other
country, including registrations, recordings and pending applications in the United States Patent
and Trademark Office or any similar offices in any other country, including those listed on
Schedule III, and (b) all reissues, continuations, divisions, continuations-in-part, renewals or
extensions thereof, and the inventions disclosed or claimed therein, including the right to make, use and/or sell the inventions
disclosed or claimed therein.










 



10




          “Perfection Certificate” means a certificate substantially in the form of Annex II,
completed and supplemented with the schedules and attachments contemplated thereby, and duly
executed by the chief financial officer and the chief legal officer of the US Borrower.




          “Pledged Collateral” has the meaning assigned to such term in Section 3.01.




          “Pledged Debt Securities” has the meaning assigned to such term in Section 3.01.




          “Pledged Securities” means any promissory notes, stock certificates or other
securities now or hereafter included in the Pledged Collateral, including all certificates,
instruments or other documents representing or evidencing any Pledged Collateral.




          “Pledged Stock” has the meaning assigned to such term in Section 3.01.




          “Pledgors” means Holdings, the US Borrower and the Subsidiary Parties.




          “Secured Parties” means (a) the Lenders, (b) the Collateral Agent, (c) any Affiliate
of any Lender to which any obligations described in clause (e) of the definition of the term
“Obligations” is owed, (d) any Letter of Credit Issuer, (e) each counterparty to any Interest Rate
Protection Agreement or other Swap Agreement with a Credit Party that either (i) is in effect on
the Effective Date if such counterparty is a Lender or an Affiliate of a Lender as of the Effective
Date or (ii) is entered into after the Effective Date if such counterparty is a Lender or an
Affiliate of a Lender at the time such Interest Rate Protection Agreement or other Swap Agreement,
as applicable, is entered into, (f) the beneficiaries of each indemnification obligation undertaken
by any Credit Party under any Credit Document and (g) the successors and assigns of each of the
foregoing.




          “Security Agreement Collateral” has the meaning assigned to such term in Section 4.01.




          “Security Interest” has the meaning assigned to such term in Section 4.01.




          “Sub-Agent” means a financial institution that has delivered to the Collateral Agent
an executed Lockbox Agreement.




          “Subsidiary Parties” means (a) the Subsidiaries of Holdings identified on Schedule I
and (b) each other Subsidiary of Holdings that becomes a party to this Agreement as contemplated by
Section 7.16.




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




          “Trademarks” means all of the following: (a) all trademarks, service marks, trade
names, corporate names, company names, business names, fictitious










 



11



business names, trade styles,
trade dress, logos, other source or business identifiers, designs and general intangibles of like
nature, now existing or hereafter adopted or acquired, all registrations and recordings thereof,
and all registration and recording applications filed in connection therewith, including
registrations and registration applications in the United States Patent and Trademark Office or any
similar offices in any State of the United States or any other country or any political subdivision
thereof, and all extensions or renewals thereof, including those listed on Schedule III, (b) all
goodwill associated therewith or symbolized thereby and (c) all other assets, rights and interests
that uniquely reflect or embody such goodwill.




          “US Collateral Assignment” shall have the meaning assigned to such term in the Credit
Agreement.




ARTICLE II



Guaranty




          SECTION 2.01. Guaranty. Each Guarantor unconditionally guarantees, jointly with the
other Guarantors and severally, as a primary obligor and not merely as a surety, the due and
punctual payment and performance of the Obligations. Each of the Guarantors further agrees that
the Obligations may be extended or renewed, in whole or in part, without notice to or further
assent from it, and that it will remain bound upon its guaranty notwithstanding any extension or
renewal of any Obligation. Each of the Guarantors waives presentment to, demand of payment from
and protest to each of the Borrowers or any other Credit Party of any of the Obligations, and also
waives notice of acceptance of its guaranty and notice of protest for nonpayment.




          SECTION 2.02. Guaranty of Payment. Each of the Guarantors further agrees that its
guaranty hereunder constitutes a guaranty of payment when due and not of collection, and waives any
right to require that any resort be had by the Collateral Agent or any other Secured Party to any
security held for the payment of the Obligations or to any balance of any deposit account or credit
on the books of the Collateral Agent or any other Secured Party in favor of any Borrower or any
other Person.




          SECTION 2.03. No Limitations, Etc. (a) Except for termination of a Guarantor’s
obligations hereunder as expressly provided in Section 7.15, the obligations of each Guarantor
hereunder shall not be subject to any reduction, limitation, impairment or termination for any
reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not
be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever by reason
of the invalidity, illegality or unenforceability of the Obligations or otherwise. Without
limiting the generality of the foregoing, the obligations of each Guarantor hereunder shall not be
discharged or impaired or otherwise affected by (i) the failure of the Collateral Agent or any
other Secured Party to assert any claim or demand or to enforce any right or remedy under the
provisions of any Credit Document or otherwise; (ii) any rescission, waiver, amendment or
modification of, or any release from any of the terms or provisions of, any Credit Document or any other agreement, including with respect to
any other Guarantor under this Agreement; (iii) the release of any security held by the Collateral
Agent or any other Secured Party for the Obligations or any of them; (iv) any default, failure or
delay, wilful or otherwise, in the performance of the Obligations; or (v) any other act or omission
that










 



12



may or might in any manner or to any extent vary the risk of any Guarantor or otherwise
operate as a discharge of any Guarantor as a matter of law or equity (other than the indefeasible
payment in full in cash of all the Obligations). The taking and holding of security to the extent
permitted by the Credit Agreement for the payment and performance of this Agreement and the other
Obligations, the exchange, waiver or release of any or all such security (with or without
consideration), the enforcement or application of such security and direction of the order and
manner of any sale thereof in their sole discretion or the release or substitution of any one or
more other guarantors or obligors upon or in respect of the Obligations will not affect the
obligations of any Guarantor hereunder.




          (b) To the fullest extent permitted by applicable law, each Guarantor waives any defense
based on or arising out of any defense of any Borrower or any other Credit Party or the
unenforceability of the Obligations or any part thereof from any cause, or the cessation from any
cause of the liability of any Borrower or any other Credit Party, other than the indefeasible
payment in full in cash of all the Obligations. The Collateral Agent and the other Secured Parties
may, at their election, foreclose on any security held by one or more of them by one or more
judicial or nonjudicial sales, accept an assignment of any such security in lieu of foreclosure,
compromise or adjust any part of the Obligations, make any other accommodation with any Borrower or
any other Credit Party or exercise any other right or remedy available to them against any Borrower
or any other Credit Party, without affecting or impairing in any way the liability of any Guarantor
hereunder except to the extent the Obligations have been fully and indefeasibly paid in full in
cash. To the fullest extent permitted by applicable law, each Guarantor waives any defense arising
out of any such election even though such election operates, pursuant to applicable law, to impair
or to extinguish any right of reimbursement or subrogation or other right or remedy of such
Guarantor against any Borrower or any other Credit Party, as the case may be, or any security.




          SECTION 2.04. Reinstatement. Each of the Guarantors agrees that its guaranty
hereunder shall continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any Obligation is rescinded or must otherwise be restored by the
Collateral Agent or any other Secured Party upon the bankruptcy or reorganization of any Borrower,
any other Credit Party or otherwise.




          SECTION 2.05. Agreement To Pay; Subrogation. In furtherance of the foregoing and not
in limitation of any other right that the Collateral Agent or any other Secured Party has at law or
in equity against any Guarantor by virtue hereof, upon the failure of any Borrower or any other
Credit Party to pay any Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, each Guarantor hereby promises to and will
forthwith pay, or cause to be paid, to the Collateral Agent for distribution to the applicable
Secured Parties in cash the amount of such unpaid Obligation. Upon payment by any Guarantor of any
sums to the Collateral Agent as provided above, all rights of such Guarantor against any Borrower or any other Guarantor
arising as a result thereof by way of right of subrogation, contribution, reimbursement, indemnity
or otherwise shall in all respects be subject to Article VI.




          SECTION 2.06. Information. Each Guarantor assumes all responsibility for being and
keeping itself informed of each Borrower’s and each other Credit Party’s










 



13



financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Obligations and
the nature, scope and extent of the risks that such Guarantor assumes and incurs hereunder, and
agrees that none of the Collateral Agent or the other Secured Parties will have any duty to advise
such Guarantor of information known to it or any of them regarding such circumstances or risks.




ARTICLE III



Pledge of Securities




          SECTION 3.01. Pledge. As security for the payment or performance, as the case may
be, in full of the Obligations, each Pledgor hereby assigns and pledges to the Collateral Agent,
its successors and assigns, for the benefit of the Secured Parties, and hereby grants to the
Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, a security
interest in all of such Pledgor’s right, title and interest in, to and under (a) the shares of
capital stock and other Equity Interests owned by it and listed on Schedule II and any other Equity
Interests of the US Borrower or any Subsidiary of the US Borrower obtained in the future by such
Pledgor and the certificates representing all such Equity Interests (the “Pledged Stock”),
provided that the Pledged Stock shall not include (i) more than 65% of the issued and
outstanding voting Equity Interests of any Foreign Subsidiary to secure the Obligations other than
the Foreign Obligations and (ii) at the option of the Collateral Agent, the issued and outstanding
Equity Interests of any Foreign Subsidiary of the US Borrower if such Pledgor assigns and pledges
to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, and
grants to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties,
a security interest in all of such Pledgor’s right, title and interest to and under such Equity
Interests pursuant to a Foreign Pledge Agreement entered into with the Collateral Agent that is in
compliance with and is governed by the laws of the jurisdiction of organization of such Foreign
Subsidiary; (b)(i) the debt securities listed opposite the name of such Pledgor on Schedule II,
(ii) any debt securities in the future issued to such Pledgor and (iii) the promissory notes and
any other instruments evidencing such debt securities (the “Pledged Debt Securities”); (c)
all other property that may be delivered to and held by the Collateral Agent pursuant to the terms
hereof; (d) subject to Section 3.06, all payments of principal, premium (if any) or interest,
dividends, cash, instruments and other property from time to time received, receivable or otherwise
distributed in respect of, in exchange for or upon the conversion of, and all other Proceeds
received in respect of, the securities referred to in clauses (a), (b) and (c) above; (e) subject
to Section 3.06, all rights and privileges of such Pledgor with respect to the securities and other
property referred to in clauses (a), (b), (c) and (d) above; and (f) all Proceeds of any of the
foregoing (the items referred to in clauses (a) through (f) above being collectively referred to as
the “Pledged Collateral”).




          TO HAVE AND TO HOLD the Pledged Collateral, together with all right, title, interest, powers,
privileges and preferences pertaining or incidental thereto, unto the Collateral Agent, its
successors and assigns, for the benefit of the Secured Parties, forever; subject,
however, to the termination provisions of Section 7.15 and the other terms, covenants and
conditions hereinafter set forth (including in Section 3.06).










 



14




          SECTION 3.02. Delivery of the Pledged Collateral. (a) Each Pledgor agrees promptly
to deliver or cause to be delivered to the Collateral Agent any and all Pledged Securities that
have a value, individually, in excess of $2,000,000.




          (b) Each Pledgor will cause any Indebtedness in a principal amount, individually, in excess
of $2,000,000, for borrowed money owed to such Pledgor by any Person to be evidenced by a duly
executed promissory note that is pledged and delivered to the Collateral Agent pursuant to the
terms hereof, provided that no Pledgor shall be required pursuant to paragraph (a) of this
Section 3.02 or this paragraph (b) to cause any Indebtedness of Holdings or any Subsidiary of
Holdings for borrowed money to be evidenced by a promissory note, unless such Indebtedness remains
outstanding for more than five Business Days.




          (c) Upon delivery to the Collateral Agent, (i) any Pledged Securities shall be accompanied by
stock powers duly executed in blank or other instruments of transfer satisfactory to the Collateral
Agent and by such other instruments and documents as the Collateral Agent may reasonably request
and (ii) all other property comprising part of the Pledged Collateral shall be accompanied by
proper instruments of assignment duly executed by the applicable Pledgor and such other instruments
or documents as the Collateral Agent may reasonably request. Each delivery of Pledged Securities
shall be accompanied by a schedule describing the securities, which schedule shall be attached
hereto as Schedule II and made a part hereof; provided that failure to attach any such
schedule hereto shall not affect the validity of such pledge of such Pledged Securities. Each
schedule so delivered shall supplement any prior schedules so delivered.




          SECTION 3.03. Representations, Warranties and Covenants. The Pledgors jointly and
severally represent, warrant and covenant to and with the Collateral Agent, for the benefit of the
Secured Parties, that:





     (a) Schedule II correctly sets forth the percentage of the issued and outstanding
shares of each class of the Equity Interests of the issuer thereof represented by such
Pledged Stock;




     (b) the Pledged Stock and Pledged Debt Securities have been duly and validly
authorized and issued by the issuers thereof and (i) in the case of Pledged Stock, are
fully paid and nonassessable and (ii) in the case of Pledged Debt Securities, are legal,
valid and binding obligations of the issuers thereof;




     (c) except for the security interests granted hereunder, each of the Pledgors (i) is
and, subject to any transfers made in compliance with the Credit Agreement, will continue
to be the direct owner, beneficially and of record, of the Pledged Securities indicated on
Schedule II as owned by such Pledgor, (ii) holds the same free and clear of all Liens (other than Liens described in clauses (a) and (e) of
Section 7.03 of the Credit Agreement), (iii) will make no assignment, pledge, hypothecation
or transfer of, or create or permit to exist any security interest in or other Lien on, the
Pledged Collateral, other than Liens created by this Agreement and Liens described in
clauses (a) and (e) of Section 7.03 of the Credit Agreement, and transfers made in
compliance with the Credit Agreement, and (iv) subject to Sections 3.02 and 3.06, will
cause any and all Pledged Collateral,









 



15



whether for value paid by the Pledgor or otherwise,
to be forthwith deposited with the Collateral Agent and pledged or assigned hereunder;




     (d) except for restrictions and limitations imposed by the Credit Documents or
securities laws generally, the Pledged Collateral is and will continue to be freely
transferable and assignable, and none of the Pledged Collateral is or will be subject to
any option, right of first refusal, shareholders agreement, charter or by-law provisions or
contractual restriction of any nature that might prohibit, impair, delay or otherwise
affect the pledge of such Pledged Collateral hereunder, the sale or disposition thereof
pursuant hereto or the exercise by the Collateral Agent of rights and remedies hereunder;




     (e) each of the Pledgors (i) has the power and authority to pledge the Pledged
Collateral pledged by it hereunder in the manner hereby done or contemplated and (ii) will
defend its title or interest thereto or therein against any and all Liens (other than the
Lien created by this Agreement and Liens described in clauses (a) and (e) of Section 7.03
of the Credit Agreement), however arising, of all Persons whomsoever;




     (f) no consent or approval of any Governmental Authority, any securities exchange or
any other Person was or is necessary to the validity of the pledge effected hereby (other
than such as have been obtained and are in full force and effect);




     (g) by virtue of the execution and delivery by the Pledgors of this Agreement, when
any Pledged Securities are delivered to the Collateral Agent in accordance with this
Agreement, the Collateral Agent will obtain a legal, valid and perfected first-priority
lien upon and security interest in such Pledged Securities as security for the payment and
performance of the Obligations; and




     (h) the pledge effected hereby is effective to vest in the Collateral Agent, for the
benefit of the Secured Parties, the rights of the Collateral Agent in the Pledged
Collateral as set forth herein.



          SECTION 3.04. Certification of Limited Liability Company and Limited Partnership
Interests. Each interest in any limited liability company or limited partnership controlled by
any Grantor and pledged hereunder shall be represented by a certificate, shall be a “security”
within the meaning of Article 8 of the New York UCC and shall be governed by Article 8 of the New
York UCC.




          SECTION 3.05. Registration in Nominee Name; Denominations. The Collateral
Agent, on behalf of the Secured Parties, shall have the right (in its sole and absolute
discretion) to hold the Pledged Securities in its own name as pledgee, the name of its nominee (as
pledgee or as sub-agent) or the name of the applicable Pledgor, endorsed or assigned in blank or in
favor of the Collateral Agent. Each Pledgor will promptly give to the Collateral Agent copies of
any notices or other communications received by it with respect to Pledged Securities registered in
the name of such Pledgor. The Collateral Agent shall, at any time that an Event of Default has
occurred and is continuing, have the right to exchange the certificates representing Pledged
Securities for










 



16



certificates of smaller or larger denominations for any purpose consistent with this
Agreement.




          SECTION 3.06. Voting Rights; Dividends and Interest, etc. (a) Unless and until an
Event of Default shall have occurred and be continuing and the Collateral Agent shall have notified
the Pledgors that their rights under this Section are being suspended:





     (i) Each Pledgor shall be entitled to exercise any and all voting and/or other
consensual rights and powers inuring to an owner of Pledged Securities or any part thereof
for any purpose consistent with the terms of this Agreement, the Credit Agreement and the
other Credit Documents; provided that such rights and powers shall not be exercised
in any manner that could materially and adversely affect the rights inuring to a holder of
any Pledged Securities or the rights and remedies of any of the Collateral Agent or the
other Secured Parties under this Agreement, the Credit Agreement or any other Credit
Document, or the ability of the Secured Parties to exercise the same.




     (ii) The Collateral Agent shall execute and deliver to each Pledgor, or cause to be
executed and delivered to such Pledgor, all such proxies, powers of attorney and other
instruments as such Pledgor may reasonably request for the purpose of enabling such Pledgor
to exercise the voting and/or consensual rights and powers it is entitled to exercise
pursuant to subparagraph (i) above.




     (iii) Each Pledgor shall be entitled to receive and retain any and all dividends,
interest, principal and other distributions paid on or distributed in respect of the
Pledged Securities to the extent and only to the extent that such dividends, interest,
principal and other distributions are permitted by, and otherwise paid or distributed in
accordance with, the terms and conditions of the Credit Agreement, the other Credit
Documents and applicable laws; provided that any noncash dividends, interest,
principal or other distributions that would constitute Pledged Stock or Pledged Debt
Securities, whether resulting from a subdivision, combination or reclassification of the
outstanding Equity Interests of the issuer of any Pledged Securities or received in
exchange for Pledged Securities or any part thereof, or in redemption thereof, or as a
result of any merger, consolidation, acquisition or other exchange of assets to which such
issuer may be a party or otherwise, shall be and become part of the Pledged Collateral,
and, if received by any Pledgor, shall not be commingled by such Pledgor with any of its
other funds or property but shall be held separate and apart therefrom, shall be held in
trust for the benefit of the Collateral Agent and shall be forthwith delivered to the
Collateral Agent in the same form as so received (with any necessary endorsement).



          (b) Upon the occurrence and during the continuance of an Event of Default, after the
Collateral Agent shall have notified the Pledgors of the suspension of their rights under paragraph
(a)(iii) of this Section 3.06, then all rights of any Pledgor to dividends, interest, principal or
other distributions that such Pledgor is authorized to receive pursuant to paragraph (a)(iii) of
this Section 3.06 shall cease, and all such rights shall thereupon become vested in the Collateral
Agent, which shall have the sole and exclusive right and authority to receive and retain such
dividends, interest, principal or










 



17



other distributions. All dividends, interest, principal or other
distributions received by any Pledgor contrary to the provisions of this Section 3.06 shall be held
in trust for the benefit of the Collateral Agent, shall be segregated from other property or funds
of such Pledgor and shall be forthwith delivered to the Collateral Agent upon demand in the same
form as so received (with any necessary endorsement). Any and all money and other property paid
over to or received by the Collateral Agent pursuant to the provisions of this paragraph (b) shall
be retained by the Collateral Agent in an account to be established by the Collateral Agent upon
receipt of such money or other property and shall be applied in accordance with the provisions of
Section 5.02. After all Events of Default have been cured or waived and the US Borrower has
delivered to the Collateral Agent a certificate to that effect, the Collateral Agent shall, within
five Business Days after all such Events of Default have been cured or waived, repay to each
Pledgor (without interest) all dividends, interest, principal or other distributions that such
Pledgor would otherwise be permitted to retain pursuant to the terms of paragraph (a)(iii) of this
Section 3.06 and that remain in such account.




          (c) Upon the occurrence and during the continuance of an Event of Default, after the
Collateral Agent shall have notified the Pledgors of the suspension of their rights under paragraph
(a)(i) of this Section 3.06, all rights of any Pledgor to exercise the voting and consensual rights
and powers it is entitled to exercise pursuant to paragraph (a)(i) of this Section 3.06, and the
obligations of the Collateral Agent under paragraph (a)(ii) of this Section 3.06, shall cease, and
all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole
and exclusive right and authority to exercise such voting and consensual rights and powers;
provided that, unless otherwise directed by the Required Lenders, the Collateral Agent
shall have the right from time to time following and during the continuance of an Event of Default
to permit the Pledgors to exercise such rights.




          (d) Any notice given by the Collateral Agent to the Pledgors suspending their rights under
paragraph (a) of this Section 3.06 (i) may be given by telephone if confirmed in writing within two
Business Days, (ii) may be given to one or more of the Pledgors at the same or different times and
(iii) may suspend the rights of the Pledgors under paragraph (a)(i) or paragraph (a)(iii) in part
without suspending all such rights (as specified by the Collateral Agent in its sole and absolute
discretion) and without waiving or otherwise affecting the Collateral Agent’s rights to give
additional notices from time to time suspending other rights so long as an Event of Default has
occurred and is continuing.




ARTICLE IV



Security Interests in Personal Property




          SECTION 4.01. Security Interest. (a) As security for the payment or performance, as
the case may be, in full of the Obligations, each Grantor hereby assigns and pledges to, and grants
a continuing security interest in favor of, the Collateral Agent, its successors and assigns, for
the benefit of the Secured Parties, and hereby grants to the Collateral Agent, its successors and
assigns, for the benefit of the Secured Parties, a security interest (the “Security
Interest”) in all right, title or interest in or to any and all the following assets and
properties now owned or at any time hereafter acquired by such










 



18



Grantor or in which such Grantor now
has or at any time in the future may acquire any right, title or interest (collectively, the
“Security Agreement Collateral”):





     (i) all Accounts;




     (ii) all Chattel Paper;




     (iii) all Deposit Accounts;




     (iv) all Documents;




     (v) all Equipment;




     (vi) all General Intangibles;




     (vii) all Instruments;




     (viii) all Inventory;




     (ix) all Investment Property;




     (x) all Letter-of-credit rights;




     (xi) all Assigned Contracts;




     (xii) all books and records pertaining to the Security Agreement Collateral;




     (xiii) commercial tort claims described on Schedule IV;




     (xiv) all As-extracted collateral; and




     (xiv) 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, however, that notwithstanding any of the other provisions set forth
in this Article IV, this Agreement shall not constitute a grant of a security interest in any
Security Agreement Collateral that on the Effective Date is not material or that is acquired after
the Effective Date, in each case to the extent that such grant of a security interest is prohibited
by applicable law, requires a consent not obtained of any Governmental Authority pursuant to
applicable law, or is prohibited by, constitutes a breach or a default under, results in or would
permit the termination of, or requires any consent (other than of any Grantor) not obtained under, any contract, license, agreement,
instrument, indenture, permit or other document, in each case evidencing or giving rise to such
Security Agreement Collateral or, in the case of any Investment Property, Equity Interests in any
Joint Venture, or Pledged Debt Securities, any applicable shareholder or similar agreement, except
to the extent that such requirement of law or the term in such contract, license, agreement,
instrument, indenture, permit or other document or shareholder or similar agreement providing for
such prohibition, breach, default or termination or requiring such consent is ineffective under
applicable law; provided









 



19

further that the foregoing limitation shall not affect, limit,
restrict or impair the grant by such Grantor of a security interest pursuant to this Agreement in
any receivable or any money or other amounts due or to become due under any such contract, license,
agreement, instrument, indenture, permit or other document or in the Proceeds from the sale or
disposition of any such contract, license, agreement, instrument, indenture, permit or other
document.




          (b) Each Grantor hereby irrevocably authorizes the Collateral Agent at any time and from time
to time to file in any relevant jurisdiction any initial financing statements (including fixture
filings) and amendments thereto that contain the information required by Article 9 of the Uniform
Commercial Code of each applicable jurisdiction for the filing of any financing statement or
amendment, including (a) whether such Grantor is an organization, the type of organization and any
organizational identification number issued to such Grantor and (b) in the case of a financing
statement filed as a fixture filing or covering Security Agreement Collateral constituting minerals
or the like to be extracted or timber to be cut, a sufficient description of the real property to
which such Security Agreement Collateral relates. Each Grantor agrees to provide such information
to the Collateral Agent promptly upon request.




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




          (c) The Security Interest is granted as security only and shall not subject the Collateral
Agent or any other Secured Party to, or in any way alter or modify, any obligation or liability of
any Grantor with respect to or arising out of the Security Agreement Collateral.




          SECTION 4.02. Representations and Warranties. The Grantors jointly and severally
represent and warrant to the Collateral Agent and the Secured Parties that:





     (a) each Grantor has good and valid rights in and title to the Security Agreement
Collateral with respect to which it has purported to grant a Security Interest hereunder
and has full power and authority to grant to the Collateral Agent the Security Interest in
such Security Agreement Collateral pursuant hereto and to execute, deliver and perform its
obligations in accordance with the terms of this Agreement, without the consent or approval of any other Person other than any
consent or approval that has been obtained;




     (b)(i) the Perfection Certificate has been duly prepared, completed and executed and
the information set forth therein, including the exact legal name of such Grantor, is
correct and complete as of the Effective Date. Uniform Commercial Code financing
statements (including fixture filings, as applicable) that have been fully executed or
authenticated, as requested by the Collateral Agent, or other appropriate filings,
recordings or registrations containing a description of the Security Agreement Collateral
have been delivered to the









 



20



Collateral Agent for filing in each governmental, municipal or
other office specified in Schedule 6 to the Perfection Certificate, which are all the
filings, recordings and registrations (other than filings required to be made in the United
States Patent and Trademark Office and the United States Copyright Office in order to
perfect the Security Interest in Security Agreement Collateral consisting of United States
Patents, Trademarks and Copyrights) that are necessary to publish notice of and protect the
validity of and to establish a legal, valid and perfected security interest in favor of the
Collateral Agent (for the benefit of the Secured Parties) in respect of all Security
Agreement Collateral in which the Security Interest may be perfected by filing, recording
or registration in the United States (or any political subdivision thereof) and its
territories and possessions, and no further or subsequent filing, refiling, recording,
rerecording, registration or reregistration is necessary in any such jurisdiction, except
as provided under applicable law with respect to the filing of continuation statements; and
(ii) each Grantor represents and warrants that a fully executed agreement containing a
description of all Security Agreement Collateral consisting of Intellectual Property with
respect to United States Patents and United States registered Trademarks (and Trademarks
for which United States registration applications are pending) and United States registered
Copyrights has been delivered to the Collateral Agent for recording such Intellectual
Property by the United States Patent and Trademark Office and the United States Copyright
Office pursuant to 35 USC. § 261, 15 USC. § 1060 or 17 USC. § 205 and the regulations
thereunder, as applicable, and otherwise as may be required pursuant to the laws of any
other necessary jurisdiction and reasonably requested by the Collateral Agent, to protect
the validity of and to establish a legal, valid and perfected security interest in favor of
the Collateral Agent (for the benefit of the Secured Parties) in respect of all Security
Agreement Collateral consisting of such Intellectual Property in which a security interest
may be perfected by recording with the United States Patent and Trademark Office and the
United States Copyright Office and no further or subsequent filing, refiling, recording,
rerecording, registration or reregistration is necessary (other than such actions as are
necessary to perfect the Security Interest with respect to any Security Agreement
Collateral consisting of Patents, Trademarks and Copyrights (or registration or application
for registration thereof) acquired or developed after the date hereof);




     (c) the Security Interest constitutes (i) a legal and valid security interest in all
the Security Agreement Collateral securing the payment and performance of the Obligations,
(ii) subject to the filings described in Section 4.02(b), a perfected security interest in all Security Agreement Collateral in which a security interest
may be perfected by filing, recording or registering a financing statement or analogous
document in the United States (or any political subdivision thereof) and its territories
and possessions pursuant to the Uniform Commercial Code or other applicable law in such
jurisdictions and (iii) a security interest that shall be perfected in all Security
Agreement Collateral in which a security interest may be perfected upon the receipt and
recording of Schedule III to this Agreement with the United States Patent and Trademark
Office and the United States Copyright Office, as applicable, and otherwise as may be
required pursuant to the laws of any other necessary jurisdiction and reasonably requested
by the Collateral Agent.









 



21



The Security Interest is and shall be prior to any other Lien on
any of the Security Agreement Collateral, other than Liens expressly permitted to be prior
to the Security Interest pursuant to Section 7.03 of the Credit Agreement; and




     (d) the Security Agreement Collateral is owned by the Grantors free and clear of any
Lien, except for Liens expressly permitted pursuant to Section 7.03 of the Credit
Agreement. None of the Grantors has filed or consented to the filing of (i) any financing
statement or analogous document under the Uniform Commercial Code or any other applicable
laws covering any Security Agreement Collateral, (ii) any assignment in which any Grantor
assigns any Security Agreement Collateral or any security agreement or similar instrument
covering any Security Agreement Collateral with the United States Patent and Trademark
Office or the United States Copyright Office or (iii) any assignment in which any Grantor
assigns any Security Agreement Collateral or any security agreement or similar instrument
covering any Security Agreement Collateral with any foreign governmental, municipal or
other office, which financing statement or analogous document, assignment, security
agreement or similar instrument is still in effect, except, in each case, for Liens
expressly permitted pursuant to Section 7.03 of the Credit Agreement. None of the Grantors
hold any commercial tort claim except as indicated on the Perfection Certificate.



          SECTION 4.03. Covenants. (a) Each Grantor agrees promptly to notify the Collateral
Agent in writing of any change (i) in its corporate name (and in connection therewith agrees to
enter into a Name Change Agreement substantially in the form of Annex III), (ii) in the location of
its chief executive office, its principal place of business, any office in which it maintains books
or records relating to Security Agreement Collateral owned by it or any office or facility at which
Security Agreement Collateral owned by it is located (including the establishment of any such new
office or facility), (iii) in its identity or type of organization or corporate structure, (iv) in
its Federal Taxpayer Identification Number or organizational identification number or (v) in its
jurisdiction of organization. Each Grantor agrees promptly to provide the Collateral Agent with
certified organizational documents reflecting any of the changes described in the first sentence of
this paragraph. Each Grantor agrees not to effect or permit any change referred to in the first
sentence of this paragraph unless all filings have been made under the Uniform Commercial Code or
otherwise that are required in order for the Collateral Agent to continue at all times following
such change to have a valid, legal and perfected first priority security interest in all the
Security Agreement Collateral. Each Grantor agrees promptly to notify the Collateral Agent if any material portion of the Security Agreement Collateral owned or held by
such Grantor is damaged or destroyed.




          (b) Each Grantor agrees to maintain, at its own cost and expense, such complete and accurate
records with respect to the Security Agreement Collateral owned by it as is consistent with its
current practices and in accordance with reasonably prudent and standard practices used in
industries that are the same as or similar to those in which such Grantor is engaged, but in any
event to include complete accounting records indicating all payments and proceeds received with
respect to any part of the Security Agreement Collateral, and, upon the occurrence and during the
continuance of an Event of Default, at such time or times as the Collateral Agent may reasonably
request, promptly to prepare and deliver to the Collateral Agent a duly certified schedule or










 



22



schedules in form and detail satisfactory to the Collateral Agent showing the identity, amount and
location of any and all Security Agreement Collateral.




          (c) Each Grantor shall, at its own expense, take any and all actions necessary and reasonable
to defend title to the Security Agreement Collateral against all Persons and to defend the Security
Interest of the Collateral Agent in the Security Agreement Collateral and the priority thereof
against any Lien not expressly permitted pursuant to Section 7.03 of the Credit Agreement.




          (d) Each Grantor agrees, at its own expense, to execute, acknowledge, deliver and cause to be
duly filed all such further instruments and documents and take all such actions as the Collateral
Agent may from time to time request to better assure, preserve, protect and perfect the Security
Interest and the rights and remedies created hereby, including the payment of any fees and taxes
required in connection with the execution and delivery of this Agreement, the granting of the
Security Interest and the filing of any financing statements (including fixture filings) or other
documents in connection herewith or therewith. If any amount payable under or in connection with
any of the Security Agreement Collateral shall be or become evidenced by any promissory note or
other instrument, such note or instrument shall, to the extent required by Section 3.02, be
immediately pledged and delivered to the Collateral Agent, duly endorsed in a manner satisfactory
to the Collateral Agent.




          Without limiting the generality of the foregoing, upon the occurrence and during the
continuance of an Event of Default, each Grantor hereby authorizes the Collateral Agent, with
prompt notice thereof to the Grantors, to supplement this Agreement by supplementing Schedule III
or adding additional schedules hereto to specifically identify any asset or item that may
constitute Copyrights, Licenses, Patents or Trademarks; provided that any Grantor shall
have the right, exercisable within 10 days after it has been notified by the Collateral Agent of
the specific identification of such Security Agreement Collateral, to advise the Collateral Agent
in writing of any inaccuracy of the representations and warranties made by such Grantor hereunder
with respect to such Security Agreement Collateral. Each Grantor agrees that it will use its best
efforts to take such action as shall be necessary in order that all representations and warranties
hereunder shall be true and correct with respect to such Security Agreement Collateral within 30
days after the date it has been notified by the Collateral Agent of the specific identification of
such Security Agreement Collateral.




          (e) The Collateral Agent and such Persons as the Collateral Agent may reasonably designate
shall have the right during normal business hours and subject to Grantors’ reasonable procedures,
at the Grantors’ own cost and expense, to inspect the Security Agreement Collateral, all records
related thereto (and to make extracts and copies from such records) and the premises upon which any
of the Security Agreement Collateral is located, to discuss the Grantors’ affairs with the officers
of the Grantors and their independent accountants (but only in the presence of an officer of the US
Borrower, provided that officers of the US Borrower are made available at reasonable times
and locations) and to verify under reasonable procedures, in accordance with Section 6.02 of the
Credit Agreement, the validity, amount, quality, quantity, value, condition and status of, or any
other matter relating to, the Security Agreement Collateral, including, during the continuation of
a Default or an Event of Default, in the case of Accounts or Security Agreement Collateral in the
possession of any third person, by contacting Account










 



23



Debtors or the third person possessing such
Security Agreement Collateral for the purpose of making such a verification, provided that,
excluding any such inspections during the continuation of a Default or an Event of Default, the
Collateral Agent shall not conduct such inspections more often than two times during any calendar
year or such greater number as the US Borrower may agree to from time to time. Subject to Section
10.14 of the Credit Agreement, the Collateral Agent shall have the right to share any information
it gains from such inspection or verification with any Secured Party.




          (f) At its option, the Collateral Agent may discharge past due taxes, assessments, charges,
fees, Liens, security interests or other encumbrances at any time levied or placed on the Security
Agreement Collateral and not permitted pursuant to Section 7.03 of the Credit Agreement, and may
pay for the maintenance and preservation of the Security Agreement Collateral to the extent any
Grantor fails to do so as required by the Credit Agreement or this Agreement, and each Grantor
jointly and severally agrees to reimburse the Collateral Agent on demand for any payment made or
any expense incurred by the Collateral Agent pursuant to the foregoing authorization;
provided that nothing in this Section 4.03(f) shall be interpreted as excusing any Grantor
from the performance of, or imposing any obligation on the Collateral Agent or any Secured Party to
cure or perform, any covenants or other promises of any Grantor with respect to taxes, assessments,
charges, fees, liens, security interests or other encumbrances and maintenance as set forth herein
or in the other Credit Documents.




          (g) If at any time any Grantor shall take a security interest in any property that has a
value, individually, in excess of $250,000 of an Account Debtor or any other Person to secure
payment and performance of an Account, such Grantor shall promptly assign such security interest to
the Collateral Agent (unless, in the case of any such property, such assignment is prohibited by
any contract giving rise to such property or by applicable law, provided that (i) with
respect to such contract in existence on the Effective Date, such Grantor has used reasonable
efforts to remove any such prohibition, and (ii) with respect to such contract acquired after the
Effective Date, such Grantor shall have used reasonable efforts to prevent the inclusion of any
such prohibitions in any such contracts). Such assignment need not be filed of public record
unless necessary to continue the perfected status of the security interest against creditors of and
transferees from the Account Debtor or other Person granting the security interest.




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




          (i) None of the Grantors shall make or permit to be made an assignment, pledge or
hypothecation of the Security Agreement Collateral or shall grant any other Lien in respect of the
Security Agreement Collateral, except as expressly permitted by Section 7.03 of the Credit
Agreement. None of the Grantors shall make or permit to be made any transfer of the Security
Agreement Collateral and each Grantor shall remain at all times in possession of the Security
Agreement Collateral owned by it, except that (i) Inventory may be sold in the ordinary course of
business and (ii) unless and until the Collateral Agent shall notify the Grantors that an Event of
Default shall have occurred










 



24



and be continuing and that during the continuance thereof the Grantors
shall not sell, convey, lease, assign, transfer or otherwise dispose of any Security Agreement
Collateral (which notice may be given by telephone if confirmed in writing within 2 Business Days),
the Grantors may use and dispose of the Security Agreement Collateral in any lawful manner not
inconsistent with the provisions of this Agreement, the Credit Agreement or any other Credit
Document. Without limiting the generality of the foregoing, each Grantor agrees that it shall not
permit any Inventory in an aggregate amount in excess of $250,000 to be in the possession or
control of any warehouseman, bailee, agent or processor at any time after March 31, 2006, unless
such warehouseman, bailee, agent or processor shall have been notified of the Security Interest and
the US Borrower shall have used commercially reasonable efforts to obtain from such warehouseman,
bailee, agent or processor an acknowledgment in writing, in form and substance satisfactory to the
Collateral Agent, that such warehouseman, bailee, agent or processor holds the Inventory for the
benefit of the Collateral Agent subject to the Security Interest and shall act upon the
instructions of the Collateral Agent without further consent from the Grantor, and that such
warehouseman, bailee, agent or processor further agrees to waive and release (or subordinate in a
manner satisfactory to the Collateral Agent) any Lien held by it with respect to such Inventory,
whether arising by operation of law or otherwise.




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




          (k) The Grantors, at their own expense, shall maintain or cause to be maintained insurance
covering physical loss or damage to the Inventory and Equipment in accordance with Section 6.03 of
the Credit Agreement. Each Grantor irrevocably makes, constitutes and appoints the Collateral
Agent (and all officers, employees or agents designated by the Collateral Agent) as such Grantor’s true and lawful agent (and
attorney-in-fact) for the purpose, during the continuance of an Event of Default, of making,
settling and adjusting claims in respect of Security Agreement Collateral under policies of
insurance, endorsing the name of such Grantor on any check, draft, instrument or other item of
payment for the proceeds of such policies of insurance and for making all determinations and
decisions with respect thereto. In the event that any Grantor at any time or times shall fail to
obtain or maintain any of the policies of insurance required hereby or to pay any premium in whole
or part relating thereto, the Collateral Agent may, without waiving or releasing any obligation or
liability of the Grantors hereunder or any Event of Default, in its sole discretion, obtain and
maintain such policies of insurance and pay such premium and take any other actions with respect
thereto as the Collateral Agent deems advisable. All sums disbursed by the Collateral Agent in
connection with this Section 4.03(k), including reasonable attorneys’ fees, court costs, expenses
and other charges relating thereto, shall be payable, upon demand, by the Grantors to the
Collateral Agent and shall be additional Obligations secured hereby.










 



25




          (l) Each Grantor shall maintain, in form and manner satisfactory to the Collateral Agent, its
Chattel Paper and its books, records and documents evidencing or pertaining thereto with an
appropriate reference to the fact that such Chattel Paper has been assigned to the Collateral Agent
for the benefit of the Secured Parties and that the Collateral Agent has a security interest
therein.




          SECTION 4.04. Other Actions. In order to further insure the attachment, perfection
and priority of, and the ability of the Collateral Agent to enforce, the Collateral Agent’s
security interest in the Security Agreement Collateral, each Grantor agrees, in each case at such
Grantor’s own expense, to take the following actions with respect to the following Security
Agreement Collateral:





     (a) Instruments and Tangible Chattel Paper. If any Grantor shall at any time
hold or acquire any Instruments or Tangible Chattel Paper that have a value, individually,
in excess of $2,000,000, such Grantor shall forthwith endorse, assign and deliver the same
to the Collateral Agent, accompanied by such instruments of transfer or assignment duly
executed in blank as the Collateral Agent may from time to time specify.




     (b) Deposit Accounts. For each deposit account that any Grantor at any time
opens or maintains in respect of deposits in excess of $500,000 for all accounts at such
deposit bank, such Grantor shall, at the Collateral Agent’s request and option, pursuant to
an agreement in form and substance satisfactory to the Collateral Agent, either (i) cause
the depositary bank to agree to comply at any time with instructions from the Collateral
Agent to such depositary bank directing the disposition of funds from time to time credited
to such deposit account, without further consent of such Grantor, or (ii) arrange for the
Collateral Agent to become the customer of the depositary bank with respect to the deposit
account, with the Grantor being permitted, only with the consent of the Collateral Agent,
to exercise rights to withdraw funds from such deposit account. The Collateral Agent
agrees with each Grantor that the Collateral Agent shall not give any such instructions or
withhold any withdrawal rights from any Grantor, unless an Event of Default has occurred
and is continuing, or, after giving effect to any withdrawal would occur. The provisions
of this paragraph shall not apply to (A) any deposit account for which any Grantor, the depositary bank and the Collateral
Agent have entered into a cash collateral agreement specially negotiated among such
Grantor, the depositary bank and the Collateral Agent for the specific purpose set forth
therein and (B) deposit accounts for which the Collateral Agent is the depositary.




     (c) Investment Property. If any Grantor shall at any time hold or acquire
any certificated securities with a value, individually, in excess of $500,000, such Grantor
shall forthwith endorse, assign and deliver the same to the Collateral Agent, accompanied
by such instruments of transfer or assignment duly executed in blank as the Collateral
Agent may from time to time specify. If any securities now or hereafter acquired by any
Grantor with a value, individually, in excess of $500,000 are uncertificated and are issued
to such Grantor or its nominee directly by the issuer thereof, such Grantor shall
immediately notify the Collateral Agent thereof and, at the Collateral Agent’s request and
option, pursuant to an agreement in form and substance satisfactory to the Collateral
Agent, either









 



26



(i) cause the issuer to agree to comply with instructions from the Collateral
Agent as to such securities, without further consent of any Grantor or such nominee, or
(ii) arrange for the Collateral Agent to become the registered owner of the securities. If
any securities, whether certificated or uncertificated, or other investment property now or
hereafter acquired by any Grantor that have a value, individually, in excess of $500,000
are held by such Grantor or its nominee through a securities intermediary or commodity
intermediary, such Grantor shall immediately notify the Collateral Agent thereof and, at
the Collateral Agent’s request and option, pursuant to an agreement in form and substance
satisfactory to the Collateral Agent, either (A) cause such securities intermediary or (as
the case may be) commodity intermediary to agree to comply with entitlement orders or other
instructions from the Collateral Agent to such securities intermediary as to such security
entitlements, or (as the case may be) to apply any value distributed on account of any
commodity contract as directed by the Collateral Agent to such commodity intermediary, in
each case without further consent of any Grantor or such nominee, or (B) in the case of
Financial Assets or other Investment Property held through a securities intermediary,
arrange for the Collateral Agent to become the entitlement holder with respect to such
investment property, with the Grantor being permitted, only with the consent of the
Collateral Agent, to exercise rights to withdraw or otherwise deal with such investment
property. The Collateral Agent agrees with each of the Grantors that the Collateral Agent
shall not give any such entitlement orders or instructions or directions to any such
issuer, securities intermediary or commodity intermediary, and shall not withhold its
consent to the exercise of any withdrawal or dealing rights by any Grantor, unless an Event
of Default has occurred and is continuing, or, after giving effect to any such investment
and withdrawal rights would occur. The provisions of this paragraph (c) shall not apply to
any financial assets credited to a securities account for which the Collateral Agent is the
securities intermediary.




     (d) Electronic Chattel Paper and Transferable Records. If any Grantor at any
time holds or acquires an interest in any electronic chattel paper or any “transferable
record,” as that term is defined in Section 201 of the Federal Electronic Signatures in
Global and National Commerce Act, or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction, in
either case that have a value, individually, in excess of $500,000, such Grantor shall
promptly notify the Collateral Agent thereof and, at the request of the Collateral Agent,
shall take such action as the Collateral Agent may reasonably request to vest in the
Collateral Agent control under UCC Section 9-105 of such electronic chattel paper or
control under Section 201 of the Federal Electronic Signatures in Global and National
Commerce Act or, as the case may be, Section 16 of the Uniform Electronic Transactions Act,
as so in effect in such jurisdiction, of such transferable record. The Collateral Agent
agrees with such Grantor that the Collateral Agent will arrange, pursuant to procedures
satisfactory to the Collateral Agent and so long as such procedures will not result in the
Collateral Agent’s loss of control, for the Grantor to make alterations to the electronic
chattel paper or transferable record permitted under UCC Section 9-105 or, as the case may
be, Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or
Section 16 of the Uniform Electronic Transactions Act for a party in control to allow
without loss of control, unless an Event of









 



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Default has occurred and is continuing or would
occur after taking into account any action by such Grantor with respect to such electronic
chattel paper or transferable record.




     (e) Letter-of-credit Rights. If any Grantor is at any time a beneficiary
under a letter of credit now or hereafter issued in favor of such Grantor that has a face
amount, individually, in excess of $600,000 such Grantor shall promptly notify the
Collateral Agent thereof and, at the request and option of the Collateral Agent, such
Grantor shall, pursuant to an agreement in form and substance satisfactory to the
Collateral Agent, either (i) arrange for the issuer and any confirmer of such letter of
credit to consent to an assignment to the Collateral Agent of the proceeds of any drawing
under the letter of credit or (ii) arrange for the Collateral Agent to become the
transferee beneficiary of the letter of credit, with the Collateral Agent agreeing, in each
case, that the proceeds of any drawing under the letter of credit are to be paid to the
applicable Grantor unless an Event of Default has occurred or is continuing.




     (f) Commercial Tort Claims. If any Grantor shall at any time hold or acquire
a commercial tort claim in an amount reasonably estimated to exceed $500,000, the Grantor
shall immediately notify the Collateral Agent thereof in a writing signed by such Grantor,
including a summary description of such claim, and grant to the Collateral Agent in such
writing a security interest therein and in the proceeds thereof, all upon the terms of this
Agreement, with such writing to be in form and substance satisfactory to the Collateral
Agent.



          SECTION 4.05. Covenants regarding Patent, Trademark and Copyright Collateral. (a)
Each Grantor agrees that it will not, and will not permit any of its licensees to, do any act, or
omit to do any act, whereby any Patent that is material to the conduct of such Grantor’s business
may become invalidated or dedicated to the public, and agrees that it shall continue to mark any
products covered by a Patent with the relevant patent number as necessary and sufficient to
establish and preserve its maximum rights under applicable patent laws.




          (b) Each Grantor (either itself or through its licensees or its sublicensees) will, for each
Trademark material to the conduct of such Grantor’s business, (1) maintain such Trademark in full
force free from any claim of abandonment or invalidity for non-use, (2) maintain the quality of
products and services offered under such Trademark, (3) display such Trademark with notice of
Federal or foreign registration to the extent necessary and sufficient to establish and preserve
its maximum rights under applicable law and (4) not knowingly use or knowingly permit the use of
such Trademark in violation of any third party rights.




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




          (d) Each Grantor shall notify the Collateral Agent promptly if it knows or has reason to know
that any Patent, Trademark or Copyright material to the conduct of its










 



28



business may become abandoned, lost or dedicated to the public, or of any materially adverse determination or
development (including the institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office, United States Copyright Office or any
court or similar office of any country) regarding such Grantor’s ownership of any such Patent,
Trademark or Copyright, its right to register the same, or its right to keep and maintain the same.




          (e) In no event shall any Grantor, either itself or through any agent, employee, licensee or
designee, file an application for any Patent, Trademark or Copyright (or for the registration of
any Trademark or Copyright) material to the conduct of such Grantor’s business with the United
States Patent and Trademark Office, United States Copyright Office or any office or agency in any
political subdivision of the United States or in any other country or any political subdivision
thereof, unless it promptly informs the Collateral Agent thereof, and, upon request of the
Collateral Agent, executes and delivers any and all agreements, instruments, documents and papers
as the Collateral Agent may request to evidence the Collateral Agent’s security interest in such
Patent, Trademark or Copyright, and each Grantor hereby appoints the Collateral Agent as its
attorney-in-fact to execute and file such writings for the foregoing purposes, all acts of such
attorney being hereby ratified and confirmed; such power, being coupled with an interest, is
irrevocable.




          (f) Each Grantor will take all necessary steps that are consistent with the practice in any
proceeding before the United States Patent and Trademark Office, United States Copyright Office or
any office or agency in any political subdivision of the United States or in any other country or
any political subdivision thereof, to maintain and pursue each application that is material to the
conduct of any Grantor’s business relating to the Patents, Trademarks and/or Copyrights (and to
obtain the relevant grant or registration) and to maintain each issued Patent and each registration
of the Trademarks and Copyrights that is material to the conduct of any Grantor’s business,
including timely filings of applications for renewal, affidavits of use, affidavits of
incontestability and payment of maintenance fees, and, if consistent with good business judgment,
to initiate opposition, interference and cancellation proceedings against third parties.




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




          (h) Upon and during the continuance of an Event of Default, each Grantor shall use its best
efforts to obtain all requisite consents or approvals by the licensor of each Copyright License,
Patent License or Trademark License to effect the assignment of all such Grantor’s right, title and
interest thereunder to the Collateral Agent or its designee.




          SECTION 4.06. Lockbox System. (a) Within 30 days after the occurrence and during the
continuance of any Event of Default, the Grantors shall










 



29



establish in the name of the Collateral Agent, and subject to the control of the Collateral Agent pursuant to the Lockbox Agreements, for
the benefit of the Collateral Agent and the other Secured Parties, a system of lockboxes and
related deposit accounts (the “Lockbox System”) with one or more financial institutions
that are reasonably satisfactory to the Collateral Agent into which the Proceeds of all Accounts,
Inventory and Assigned Contracts shall be deposited and forwarded to the Collateral Agent in
accordance with the Lockbox Agreements.




          (b) All Proceeds of Accounts, Inventory and Assigned Contracts that have been received on any
Business Day through the Lockbox System will be transferred into the Concentration Account on such
Business Day to the extent required by the applicable Lockbox Agreement. All Proceeds stemming
from the sale of a substantial portion of the Security Agreement Collateral (other than Proceeds of
Inventory and Accounts) that have been received by a Grantor on any Business Day will be
transferred into the Concentration Account on such Business Day. All Proceeds received on any
Business Day by the Collateral Agent pursuant to Section 4.07 will be transferred into the
Concentration Account on such Business Day.




          (c) The Concentration Account is, and shall remain, under the sole dominion and control of
the Collateral Agent. Each Grantor acknowledges and agrees that (i) such Grantor has no right of
withdrawal from the Concentration Account, (ii) the funds on deposit in the Concentration Account
shall continue to be collateral security for all of the Obligations and (iii) upon the occurrence
and during the continuance of an Event of Default, at the Collateral Agent’s election, the funds on
deposit in the Concentration Account shall be applied as provided in Section 5.02.




          (d) Effective upon notice to the Grantors from the Collateral Agent after the occurrence and
during the continuance of an Event of Default (provided that the Lockbox System has been
established pursuant to Section 4.06(a))(which notice may be given by telephone if confirmed in
writing within two Business Days), the Concentration Account will, without any further action on
the part of any Grantor, the Collateral Agent or any Sub-Agent, convert into a closed lockbox
account under the exclusive dominion and control of the Collateral Agent in which funds are held
subject to the rights of the Collateral Agent hereunder. Each Grantor irrevocably authorizes the Collateral Agent to
notify each Sub-Agent (i) of the occurrence of an Event of Default (provided that the
Lockbox System has been established pursuant to Section 4.06(a)) and (ii) of the matters referred
to in this paragraph (d). Following the occurrence of an Event of Default (provided that
the Lockbox System has been established pursuant to Section 4.06(a)), the Collateral Agent may
instruct each Sub-Agent to transfer immediately all funds held in each Collection Deposit Account
to the Concentration Account. Each Grantor hereby agrees to irrevocably direct each Sub-Agent to
comply with the instructions of the Collateral Agent with respect to each Collection Deposit
Account without further consent from the Grantor or any other Person.




          SECTION 4.07. Collections. If the Lockbox System has been established pursuant to
Section 4.06(a):




          (a) Effective upon notice to the Grantors from the Collateral Agent after the occurrence and
during the continuance of an Event of Default, each Grantor agrees (i) to notify and direct
promptly each Account Debtor and every other Person obligated to










 



30



make payments on Accounts, in respect of any Inventory or with respect to any Assigned Contracts to make all such payments
directly to the Lockbox System established in accordance with Section 4.06, (ii) to use all
reasonable efforts to cause each Account Debtor and every other Person identified in clause (i)
above to make all payments with respect to Accounts, Inventory and Assigned Contracts directly to
the Lockbox System and (iii) promptly to deposit all payments received by it on account of
Accounts, Inventory and Assigned Contracts, whether in the form of cash, checks, notes, drafts,
bills of exchange, money orders or otherwise, in the Lockbox System in precisely the form in which
received (but with any endorsements of such Grantor necessary for deposit or collection), and until
they are so deposited such payments shall be held in trust by such Grantor for and as the property
of the Collateral Agent.




          (b) Effective upon notice to the Grantors from the Collateral Agent after the occurrence and
during the continuance of an Event of Default, without the prior written consent of the Collateral
Agent, no Grantor shall, in a manner adverse to the Lenders, change the general instructions given
to Account Debtors in respect of payment on Accounts to be deposited in the Lockbox System. Until
the Collateral Agent shall have advised the Grantors to the contrary, each Grantor shall, and the
Collateral Agent hereby authorizes each Grantor to, enforce and collect all amounts owing on the
Accounts, Inventory and Assigned Contracts, for the benefit and on behalf of the Collateral Agent
and the other Secured Parties; provided, however, that such privilege may at the
option of the Collateral Agent be terminated upon the occurrence and during the continuance of any
Event of Default.




ARTICLE V



Remedies




          SECTION 5.01. Remedies upon Default. Upon the occurrence and during the continuance
of an Event of Default, each Grantor and each Pledgor agrees to deliver each item of Collateral to
the Collateral Agent on demand, and it is agreed that the Collateral Agent shall have the right to
take any of or all the following actions at the same or different times: (a) with respect
to any Security Agreement Collateral consisting of Intellectual Property, on demand, to cause
the Security Interest to become an assignment, transfer and conveyance of any of or all such
Security Agreement Collateral by the applicable Grantors to the Collateral Agent, or to license or
sublicense, whether general, special or otherwise, and whether on an exclusive or nonexclusive
basis, any such Security Agreement Collateral throughout the world on such terms and conditions and
in such manner as the Collateral Agent shall determine (other than in violation of any
then-existing licensing arrangements to the extent that waivers cannot be obtained), and (b) with
or without legal process and with or without prior notice or demand for performance, to take
possession of the Security Agreement Collateral and without liability for trespass to enter any
premises where the Security Agreement Collateral may be located for the purpose of taking
possession of or removing the Security Agreement Collateral and, generally, to exercise any and all
rights afforded to a secured party under the Uniform Commercial Code or other applicable law.
Without limiting the generality of the foregoing, each Grantor and each Pledgor agrees that the
Collateral Agent shall have the right, subject to the requirements of applicable law, to sell or
otherwise dispose of all or any part of the Collateral at a public or private sale or at any
broker’s board or on any securities exchange, for cash, upon credit or for future delivery as the
Collateral










 



31



Agent shall deem appropriate. The Collateral Agent shall be authorized at any such sale
(if it deems it advisable to do so) to restrict the prospective bidders or purchasers to Persons
who will represent and agree that they are purchasing the Collateral for their own account for
investment and not with a view to the distribution or sale thereof, and upon consummation of any
such sale the Collateral Agent shall have the right to assign, transfer and deliver to the
purchaser or purchasers thereof the Collateral so sold. Each such purchaser at any such sale shall
hold the property sold absolutely, free from any claim or right on the part of any Grantor or
Pledgor, and the Grantors and Pledgors hereby waive (to the extent permitted by law) all rights of
redemption, stay and appraisal that such Grantor or Pledgor now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.




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










 



32



Agent shall have entered into such an agreement all Events of Default shall have been remedied and the Obligations paid in full. As an alternative
to exercising the power of sale herein conferred upon it, the Collateral Agent may proceed by a
suit or suits at law or in equity to foreclose this Agreement and to sell the Collateral or any
portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction
or pursuant to a proceeding by a court-appointed receiver. Any sale pursuant to the provisions of
this Section 5.01 shall be deemed to conform to the commercially reasonable standards as provided
in Section 9-610(b) of the New York UCC or its equivalent in other jurisdictions.




          SECTION 5.02. Application of Proceeds. The Collateral Agent shall apply the proceeds
of any collection or sale of Collateral, as well as any Collateral consisting of cash, as follows:





     FIRST, to the payment of all costs and expenses incurred by the Collateral Agent in
connection with such collection or sale or otherwise in connection with this Agreement, any
other Credit Document or any of the Obligations, including all court costs and the fees and
expenses of its agents and legal counsel, the repayment of all advances made by the
Collateral Agent or the Administrative Agent hereunder or under any other Credit Document
on behalf of any Grantor or Pledgor and any other costs or expenses incurred by any Secured
Party in connection with the exercise of any right or remedy hereunder or under any other
Credit Document;




     SECOND, to the payment in full of the Obligations (the amounts so applied to be
distributed among the Secured Parties pro rata in accordance with the amounts of the
Obligations owed to them on the date of any such distribution); and




     THIRD, to the Grantors and Pledgors, their successors or assigns, or as a court of
competent jurisdiction may otherwise direct.


The Collateral Agent shall have absolute discretion as to the time of application of any such
proceeds, moneys or balances in accordance with this Agreement. Upon any sale of Collateral by the
Collateral Agent (including pursuant to a power of sale granted by statute or under a judicial
proceeding), the receipt of the Collateral Agent or of the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the Collateral so sold and such purchaser or
purchasers shall not be obligated to see to the application of any part of the purchase money paid
over to the Collateral Agent or such officer or be answerable in any way for the misapplication
thereof.




          SECTION 5.03. Grant of License to Use Intellectual Property. For the purpose of
enabling the Collateral Agent to exercise rights and remedies under this Article at such time as
the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, each Grantor
hereby grants to the Collateral Agent an irrevocable (unless and until this Agreement is
terminated, in which case such license shall be revoked automatically without further action by
either party), nonexclusive license, exercisable without payment of royalty or other compensation
to the Grantors, to use, license or sublicense any of the Security Agreement Collateral consisting
of Intellectual Property now owned or hereafter acquired by such Grantor, except to the extent that
the










 



33



granting of such license would result in the permanent destruction of the validity or value of
such Intellectual Property, and wherever the same may be located, and including in such license
reasonable access to all media in which any of the licensed items may be recorded or stored and to
all computer software and programs used for the compilation or printout thereof. The use of such
license by the Collateral Agent shall be exercised, at the option of the Collateral Agent, upon the
occurrence and during the continuation of an Event of Default; provided that any license,
sublicense or other transaction entered into by the Collateral Agent in accordance herewith shall
be binding upon the Grantors notwithstanding any subsequent cure of an Event of Default.




          SECTION 5.04. Securities Act, etc. In view of the position of the Pledgors in
relation to the Pledged Collateral, or because of other current or future circumstances, a question
may arise under the Securities Act of 1933, as now or hereafter in effect, or any similar statute
hereafter enacted analogous in purpose or effect (such Act and any such similar statute as from
time to time in effect being called the “Federal Securities Laws”) with respect to any
disposition of the Pledged Collateral permitted hereunder. Each Pledgor understands that
compliance with the Federal Securities Laws might very strictly limit the course of conduct of the
Collateral Agent if the Collateral Agent were to attempt to dispose of all or any part of the
Pledged Collateral, and might also limit the extent to which or the manner in which any subsequent
transferee of any Pledged Collateral could dispose of the same. Similarly, there may be other
legal restrictions or limitations affecting the Collateral Agent in any attempt to dispose of all
or part of the Pledged Collateral under applicable Blue Sky or other state securities laws or
similar laws analogous in purpose or effect. Each Pledgor recognizes that in light of such
restrictions and limitations the Collateral Agent may, with respect to any sale of the Pledged
Collateral, limit the purchasers to those who will agree, among other things, to acquire such
Pledged Collateral for their own account, for investment, and not with a view to the distribution
or resale thereof. Each Pledgor acknowledges and agrees that in light of such restrictions and
limitations, the Collateral Agent, in its sole and absolute discretion, (a) may proceed to make
such a sale whether or not a registration statement for the purpose of registering such Pledged
Collateral or part thereof shall have been filed under the Federal Securities Laws and (b) may
approach and negotiate with a single potential purchaser to effect such sale. Each Pledgor
acknowledges and agrees that any such sale might result in prices and other terms less favorable to
the seller than if such sale were a public sale without such restrictions. In the event of any
such sale, the Collateral Agent shall incur no responsibility or liability for selling all or any
part of the Pledged Collateral at a price that the Collateral Agent, in its sole and absolute
discretion, may in good faith deem reasonable under the circumstances, notwithstanding the
possibility that a substantially higher price might have been realized if the sale were deferred
until after registration as aforesaid or if more than a single purchaser were approached. The
provisions of this Section 5.04 will apply notwithstanding the existence of a public or private
market upon which the quotations or sales prices may exceed substantially the price at which the
Collateral Agent sells.




          SECTION 5.05. Registration. Each Pledgor agrees that, upon the occurrence and during
the continuance of an Event of Default, if for any reason the Collateral Agent desires to sell any
of the Pledged Collateral at a public sale, it will, at any time and from time to time, upon the
written request of the Collateral Agent, use its best efforts to take or to cause the issuer of
such Pledged Collateral to take such action










 



34



and prepare, distribute and/or file such documents, as
are required or advisable in the reasonable opinion of counsel for the Collateral Agent to permit
the public sale of such Pledged Collateral. Each Pledgor further agrees to indemnify, defend and
hold harmless the Collateral Agent, each other Secured Party, any underwriter and their respective
affiliates and each of their respective officers, directors and controlling persons from and
against all loss, liability, expenses, costs of counsel (including, without limitation, reasonable
fees and expenses to the Collateral Agent of legal counsel), and claims (including the costs of
investigation) that they may incur insofar as such loss, liability, expense or claim arises out of
or is based upon any alleged untrue statement of a material fact contained in any prospectus (or
any amendment or supplement thereto) or in any notification or offering circular, or arises out of
or is based upon any alleged omission to state a material fact required to be stated therein or
necessary to make the statements in any thereof not misleading, except insofar as the same may have
been caused by any untrue statement or omission based upon information furnished in writing to such
Pledgor or the issuer of such Pledged Collateral by the Collateral Agent or any other Secured Party
expressly for use therein. Each Pledgor further agrees, upon such written request referred to
above, to use its best efforts to qualify, file or register, or cause the issuer of such Pledged
Collateral to qualify, file or register, any of the Pledged Collateral under the Blue Sky or other
securities laws of such states as may be requested by the Collateral Agent and keep effective, or
cause to be kept effective, all such qualifications, filings or registrations. Each Pledgor will
bear all costs and expenses of carrying out its obligations under this Section 5.05. Each Pledgor
acknowledges that there is no adequate remedy at law for failure by it to comply with the
provisions of this Section 5.05 and that such failure would not be adequately compensable in
damages, and therefore agrees that its agreements contained in this Section 5.05 may be
specifically enforced.




ARTICLE VI



Indemnity, Subrogation and Subordination




          SECTION 6.01. Indemnity and Subrogation. In addition to all such rights of indemnity
and subrogation as the Guarantors may have under applicable law (but subject to Section 6.03), each
Borrower agrees that (a) in the event a payment shall be made by Holdings or any other Guarantor
under this Agreement, each Borrower shall indemnify such Guarantor for the full amount of such
payment and such Guarantor shall be subrogated to the rights of the Person to whom such payment
shall have been made to the extent of such payment and (b) in the event any assets of any Guarantor
shall be sold pursuant to any Security Document to satisfy a claim of any Secured Party, each
Borrower shall indemnify Holdings or such other Guarantor in an amount equal to the greater of the
book value or the fair market value of the assets so sold.




          SECTION 6.02. Contribution and Subrogation. Holdings and each other Guarantor (a
“Contributing Guarantor”) agrees (subject to Section 6.03) that, in the event a payment
shall be made by Holdings or any other Guarantor hereunder or assets of Holdings or any other
Guarantor shall be sold pursuant to any Security Document to satisfy a claim of any Secured Party
and Holdings or such other Guarantor (the “Claiming Guarantor”) shall not have been fully
indemnified by the Borrowers as provided in Section 6.01, the Contributing Guarantor shall
indemnify the Claiming Guarantor in an amount equal to the amount of such payment or the greater of
the book value or the fair market value of such assets, as the case may be, in each case multiplied
by a fraction of










 



35



which the numerator shall be the net worth of the Contributing Guarantor on the
date hereof and the denominator shall be the aggregate net worth of all the Guarantors on the date
hereof (or, in the case of any Guarantor becoming a party hereto pursuant to Section 7.16, the date
of the Supplement hereto executed and delivered by such Guarantor). Any Contributing Guarantor
making any payment to a Claiming Guarantor pursuant to this Section 6.02 shall be subrogated to the
rights of such Claiming Guarantor under Section 6.01 to the extent of such payment.




          SECTION 6.03. Subordination. Notwithstanding any provision of this Agreement to the
contrary, all rights of the Guarantors under Sections 6.01 and 6.02 and all other rights of
indemnity, contribution or subrogation under applicable law or otherwise shall be fully
subordinated to the indefeasible payment in full in cash of the Obligations. No failure on the
part of any Borrower, Holdings or any other Guarantor to make the payments required by Sections
6.01 and 6.02 (or any other payments required under applicable law or otherwise) shall in any
respect limit the obligations and liabilities of any Guarantor with respect to its obligations
hereunder, and each Guarantor shall remain liable for the full amount of the obligations of such
Guarantor hereunder.




ARTICLE VII



Miscellaneous




          SECTION 7.01. Notices. All communications and notices hereunder shall (except as
otherwise expressly permitted herein) be in writing and given as provided in Section 10.03 of the
Credit Agreement. All communications and notices hereunder to any Subsidiary Party shall be given to it in care
of the US Borrower as provided in Section 10.03 of the Credit Agreement.




          SECTION 7.02. Security Interest Absolute. All rights of the Collateral Agent
hereunder, the Security Interest, the security interest in the Pledged Collateral and all
obligations of each Grantor and Pledgor hereunder shall be absolute and unconditional irrespective
of (a) any lack of validity or enforceability of the Credit Agreement, any other Credit Document,
any agreement with respect to any of the Obligations or any other agreement or instrument relating
to any of the foregoing, (b) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any
departure from the Credit Agreement, any other Credit Document or any other agreement or
instrument, (c) any exchange, release or non-perfection of any Lien on other collateral, or any
release or amendment or waiver of or consent under or departure from any guaranty, securing or
guaranteeing all or any of the Obligations, or (d) any other circumstance that might otherwise
constitute a defense available to, or a discharge of, any Grantor or Pledgor in respect of the
Obligations or this Agreement.




          SECTION 7.03. Survival of Agreement. All covenants, agreements, representations and
warranties made by the Credit Parties in the Credit Documents and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement or any other Credit Document
shall be considered to have been relied upon by the other parties hereto and shall survive (except
as otherwise provided in the applicable Credit Documents) the execution and delivery of the Credit
Documents and the making of any Loans, acceptance and purchase of any B/As and issuance of any
Letters of Credit,










 



36



regardless of any investigation made by any such other party or on its behalf
and notwithstanding that the Collateral Agent, the Administrative Agent, the Letter of Credit
Issuer or any Lender may have had notice or knowledge of any Default or incorrect representation or
warranty at the time any credit is extended under the Credit Agreement, and shall continue in full
force and effect (except as otherwise provided in the applicable Credit Document) as long as the
principal of, premium (if any) or any accrued interest on any Loan or B/A or any fee or any other
amount payable under the Credit Agreement or any other Credit Document is outstanding and unpaid or
any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated.




          SECTION 7.04. Binding Effect; Several Agreement. This Agreement shall become
effective as to any Credit Party when a counterpart hereof executed on behalf of such Credit Party
shall have been delivered to the Collateral Agent and a counterpart hereof shall have been executed
on behalf of the Collateral Agent, and thereafter shall be binding upon such Credit Party and the
Collateral Agent and their respective successors and assigns, and shall inure to the benefit of
such Credit Party, the Collateral Agent and the other Secured Parties and their respective
successors and assigns, except that no Credit Party shall have the right to assign or transfer its
rights or obligations hereunder or any interest herein or in the Collateral (and any such
assignment or transfer shall be void) except as expressly contemplated by this Agreement or the
Credit Agreement. This Agreement shall be construed as a separate agreement with respect to each
Credit Party and may be amended, modified, supplemented, waived or released with respect to any Credit Party without the
approval of any other Credit Party and without affecting the obligations of any other Credit Party
hereunder.




          SECTION 7.05. Successors and Assigns. Whenever in this Agreement any of the parties
hereto is referred to, such reference shall be deemed to include the successors and assigns of such
party; and all covenants, promises and agreements by or on behalf of any Guarantor, any Grantor,
any Pledgor or the Collateral Agent that are contained in this Agreement shall bind and inure to
the benefit of their respective successors and assigns.




          SECTION 7.06. Collateral Agent’s Fees and Expenses; Indemnification. (a) Each
Guarantor, each Grantor and each Pledgor jointly and severally agrees to pay upon demand to the
Collateral Agent the amount of any and all reasonable expenses, including the reasonable fees,
disbursements and other charges of its counsel and of any experts or agents, that the Collateral
Agent may incur in connection with (i) the administration of this Agreement (including the
customary fees and charges of the Collateral Agent for any audits conducted by it or on its behalf
with respect to the Accounts or Inventory), (ii) the custody or preservation of, or the sale of,
collection from or other realization upon any of the Collateral, (iii) the exercise, enforcement or
protection of any of the rights of the Collateral Agent hereunder or (iv) the failure of any
Guarantor, Grantor or Pledgor to perform or observe any of the provisions hereof.




          (b) Without limitation of its indemnification obligations under the other Credit Documents
and without duplication of any amounts paid pursuant to clause (a) of this Section 7.06, each
Grantor and each Pledgor jointly and severally agrees to indemnify the Collateral Agent, the
Administrative Agent, each Letter of Credit Issuer and each Lender and their respective affiliates
and each of their respective, officers, directors, employees, representatives, trustees and agents
(each, an “Indemnitee”) against,










 



37



and hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses, including the reasonable fees, charges
and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee
arising out of, in connection with, or as a result of, the execution, delivery or performance of
this Agreement or any claim, litigation, investigation or proceeding relating hereto or to the
Collateral, whether or not any Indemnitee is a party thereto; provided that such indemnity
shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or wilful misconduct of such
Indemnitee.




          (c) Any such amounts payable as provided hereunder shall be additional Obligations secured
hereby and by the other Security Documents. The provisions of this Section 7.06 shall remain
operative and in full force and effect regardless of the termination of this Agreement or any other
Credit Document, the consummation of the transactions contemplated hereby, the repayment of any of
the Obligations, the invalidity or unenforceability of any term or provision of this Agreement or
any other Credit Document, or any investigation made by or on behalf of the Collateral Agent or any
other Secured Party. All amounts due under this Section 7.06 shall be payable on written demand
therefor.




          SECTION 7.07. Collateral Agent Appointed Attorney-in-Fact. Each Grantor and each
Pledgor hereby appoints the Collateral Agent the attorney-in-fact of such Grantor or Pledgor for
the purpose of carrying out the provisions of this Agreement and taking any action and executing
any instrument that the Collateral Agent may deem necessary or advisable to accomplish the purposes
hereof, which appointment is irrevocable (unless and until this Agreement is terminated, in which
case such power-of-attorney shall be revoked automatically without further action by any party) and
coupled with an interest. Without limiting the generality of the foregoing, the Collateral Agent
shall have the right, upon the occurrence and during the continuance of an Event of Default, with
full power of substitution either in the Collateral Agent’s name or in the name of such Grantor or
Pledgor (a) in the case of a Grantor (i) to receive, endorse, assign and/or deliver any and all
notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the
Security Agreement Collateral or any part thereof; (ii) to demand, collect, receive payment of,
give receipt for and give discharges and releases of all or any of the Security Agreement
Collateral; (iii) to sign the name of any Grantor on any invoice or bill of lading relating to any
of the Security Agreement Collateral; (iv) to send verifications of Accounts to any Account Debtor;
(v) to commence and prosecute any and all suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect or otherwise realize on all or any of the Security
Agreement Collateral or to enforce any rights in respect of any Security Agreement Collateral; (vi)
to settle, compromise, compound, adjust or defend any actions, suits or proceedings relating to all
or any of the Security Agreement Collateral; (vii) to notify, or to require any Grantor to notify,
Account Debtors to make payment directly to the Collateral Agent; and (viii) to use, sell, assign,
transfer, pledge, make any agreement with respect to or otherwise deal with all or any of the
Security Agreement Collateral, and to do all other acts and things necessary to carry out the
purposes of this Agreement, as fully and completely as though the Collateral Agent were the
absolute owner of the Security Agreement Collateral for all purposes; and (b) in the case of a











 



38



Pledgor (i) to ask for, demand, sue for, collect, receive and give acquittance for any and all
moneys due or to become due under and by virtue of any Pledged Collateral; (ii) to endorse checks,
drafts, orders and other instruments for the payment of money payable to the Pledgor representing
any interest or dividend or other distribution payable in respect of the Pledged Collateral or any
part thereof or on account thereof and to give full discharge of the same; (iii) to settle,
compromise, prosecute or defend any action, claim or proceeding with respect thereto; and (iv) to
sell, assign, endorse, pledge, transfer and to make any agreement respecting, or otherwise deal
with, the same; provided that nothing herein contained shall be construed as requiring or
obligating the Collateral Agent to make any commitment or to make any inquiry as to the nature or
sufficiency of any payment received by the Collateral Agent, or to present or file any claim or
notice, or to take any action with respect to the Pledged Collateral or any part thereof or the
moneys due or to become due in respect thereof or any property covered thereby. The Collateral
Agent and the other Secured Parties shall be accountable only for amounts actually received as a
result of the exercise of the powers granted to them herein, and neither they nor their officers,
directors, employees or agents shall be responsible to any Grantor or Pledgor for any act or
failure to act hereunder, except for their own gross negligence or wilful misconduct.




          SECTION 7.08. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.




          SECTION 7.09. Waivers; Amendment. (a) No failure or delay by the Collateral Agent,
the Administrative Agent, the Letter of Credit Issuer or any other Secured Party in exercising any
right or power hereunder or under any other Credit Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of the Collateral
Agent, the Administrative Agent, the Letter of Credit Issuer and the other Secured Parties
hereunder and under the other Credit Documents are cumulative and are not exclusive of any rights
or remedies that they would otherwise have. No waiver of any provision of this Agreement or
consent to any departure by any Credit Party therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) of this Section 7.09, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which given. Without
limiting the generality of the foregoing, the making of a Loan, the acceptance and purchase of a
B/A or the issuance of a Letter of Credit shall not be construed as a waiver of any Default,
regardless of whether the Collateral Agent, the Administrative Agent, any Lender or the Letter of
Credit Issuer may have had notice or knowledge of such Default at the time.




          (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except
pursuant to an agreement or agreements in writing entered into by the Collateral Agent and the
Credit Party or Credit Parties with respect to which such waiver, amendment or modification is to
apply, subject to any consent required in accordance with Section 10.11 of the Credit Agreement.




          SECTION 7.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE










 



39



LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER CREDIT DOCUMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.




          SECTION 7.11. Severability. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such invalidity, illegality or unenforceability without affecting the validity, legality
and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.




          SECTION 7.12. Counterparts. This Agreement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall constitute a single
contract (subject to Section 7.04), and shall become effective as provided in Section 7.04.
Delivery of an executed signature page to this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.




          SECTION 7.13. Headings. Article and Section headings used herein are for the purpose
of reference only, are not part of this Agreement and are not to affect the construction of, or to
be taken into consideration in interpreting, this Agreement.




          SECTION 7.14. Jurisdiction; Consent to Service of Process. (a) Each of the Credit
Parties hereby irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County
and of the United States District Court of the Southern District of New York, and any appellate
court from any thereof, in any action or proceeding arising out of or relating to any Credit
Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding
may be heard and determined in such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. Nothing in this Agreement or any other Credit Document
shall affect any right that the Collateral Agent, the Administrative Agent, the Letter of Credit
Issuer or any other Secured Party may otherwise have to bring any action or proceeding relating to
this Agreement or any other Credit Document against Holdings, any of the Borrowers, any other
Guarantor, Grantor or Pledgor or any of their properties in the courts of any jurisdiction.










 



40




          (b) Each of the Credit Parties hereby irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection that it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or
any other Credit Document in any court referred to in paragraph (a) of this Section. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such court.




          (c) Each Guarantor, each Grantor and each Pledgor irrevocably consents to service of process
in the manner provided for notices in Section 10.07 of the Credit Agreement. Nothing in this
Agreement or any other Credit Document will affect the right of any Secured Party to serve process
in any other manner permitted by law.




          SECTION 7.15. Termination or Release. (a) This Agreement, the Guaranties hereunder,
the Security Interest and all other security interests granted hereby shall terminate when all the
Credit Agreement Obligations have been indefeasibly paid in full in cash and the Lenders have no
further commitment to lend or purchase and accept B/As under the Credit Agreement, the LC Exposure
has been reduced to zero and the Letter of Credit Issuer has no further obligations to issue
Letters of Credit under the Credit Agreement.




          (b) A Subsidiary Party shall automatically be released from its obligations hereunder and
the Security Interest in the Collateral of such Subsidiary Party shall be automatically released
(i) upon the designation by the US Borrower of such Subsidiary Party as an Unrestricted Subsidiary,
provided that such designation was permitted by the Credit Agreement, and (ii) in the
event that all the capital stock of such Subsidiary Party shall be sold, transferred or otherwise
disposed of to a Person that is not Holdings, the US Borrower or a Subsidiary Party in accordance
with the terms of the Credit Agreement, provided that the Required Lenders shall have
consented to such sale, transfer or other disposition (to the extent required by the Credit
Agreement) and the terms of such consent did not provide otherwise.




          (c) Upon any sale or other transfer by any Grantor or Pledgor of any Collateral that is
permitted under the Credit Agreement to any Person that is not Holdings, the US Borrower or any
Subsidiary Party in accordance with the terms of the Credit Agreement, or upon the effectiveness of
any written consent to the release of the Security Interest granted hereby in any Collateral
pursuant to Section 10.11 of the Credit Agreement, the Security Interest in such Collateral shall
be automatically released.




          (d) In connection with any termination or release pursuant to paragraph (a), (b) or (c) of
this Section 7.15, the Collateral Agent shall execute and deliver to any Grantor or Pledgor, as the
case may be, at such Grantor’s or Pledgor’s expense, all documents that such Grantor or Pledgor
shall reasonably request to evidence such termination or release. Any execution and delivery of
documents pursuant to this Section 7.15 shall be without recourse to or warranty by the Collateral
Agent.




          SECTION 7.16. Additional Subsidiaries. Pursuant to Section 6.11 of the Credit
Agreement, each Domestic Subsidiary of the US Borrower that was not in existence or not a Domestic
Subsidiary of the US Borrower on the date of the Credit Agreement is required to enter into this
Agreement (a) as a Guarantor, (b) as a Grantor










 



41



and (c) as a Pledgor. Upon execution and delivery
by the Collateral Agent and a Subsidiary of the US Borrower of an instrument in the form of Annex
I, such Subsidiary shall become a Subsidiary Party hereunder with the same force and effect as if
originally named as a Subsidiary Party herein. The execution and delivery of any such instrument
shall not require the consent of Holdings, the US Borrower or any Subsidiary Party hereunder. The
rights and obligations of Holdings, the US Borrower and each Subsidiary Party hereunder shall
remain in full force and effect notwithstanding the addition of any new Subsidiary Party as a party
to this Agreement.




          SECTION 7.17. Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time
to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final) at any time held and other obligations at any
time owing by such Lender or Affiliate to or for the credit or the account of any Subsidiary Party
against any of and all the obligations of such Subsidiary Party now or hereafter existing
under this Agreement held by such Lender or Affiliate, irrespective of whether or not such Lender
or Affiliate shall have made any demand under this Agreement and although such obligations may be
unmatured. The rights of each Lender and each of its Affiliates under this Section are in addition
to other rights and remedies (including other rights of setoff) that such Lender or Affiliate may
have.




[Signature Page Follows]










 



42




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




	 	 	 	 	 
	 	COMPASS MINERALS INTERNATIONAL, INC.,

 	 
	 	by  	 
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	 	COMPASS MINERALS GROUP, INC.,

 	 
	 	by  	 
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	 	CAREY SALT COMPANY,

 	 
	 	by  	 
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	 	GREAT SALT LAKE MINERALS CORPORATION,

 	 
	 	by  	 
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	 	GSL CORPORATION,

 	 
	 	by  	 
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 









 



43

	 	 	 	 	 



	 	 	 	 	 
	 	NAMSCO INC.,

 	 
	 	by  	 
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	 	NORTH AMERICAN SALT COMPANY,

 	 
	 	by  	 
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	 	COMPASS RESOURCES, INC.,

 	 
	 	by  	 
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	 	GREAT SALT LAKE HOLDINGS, LLC,

 	 
	 	by  	 
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A., as

Collateral Agent,

 	 
	 	by  	 
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 










 



44

	 	 	 	 	 




Schedule I

to the US Collateral

and Guaranty Agreement




SUBSIDIARY PARTIES



Compass Resources, Inc.



Great Salt Lake Holdings, LLC



Carey Salt Company



Great Salt Lake Minerals Corporation



GSL Corporation



NAMSCO Inc.



North American Salt Company










 



45




Schedule II

to the US Collateral

and Guaranty Agreement




CAPITAL STOCK




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Number and	 	 
	 	 	Number of	 	Registered	 	Class of	 	Percentage
	Issuer	 	Certificate	 	Owner	 	Equity Interests	 	of Equity Interests
	 	 	 	 	 	 	 	 	 





DEBT SECURITIES




	 	 	 	 	 	 	 
	 	 	Principal	 	 	 	 
	Issuer	 	Amount	 	Date of Note	 	Maturity Date
	 	 	 	 	 	 	 





OTHER PROPERTY










 



46




Schedule III

to the US Collateral

and Guaranty Agreement










 



47




Annex I to the

US Collateral and

Guaranty Agreement





     SUPPLEMENT NO. ___dated as of [l ], to the US Collateral and
Guaranty Agreement dated as of November 28, 2001, as amended and restated
as of December 22, 2005 (as amended, supplemented, waived or otherwise
modified from time to time, the “US Collateral and Guaranty
Agreement”), among COMPASS MINERALS INTERNATIONAL, INC., a Delaware
corporation (“Holdings”), COMPASS MINERALS GROUP, INC., a Delaware
corporation (the “US Borrower”), each other Subsidiary of Holdings
listed on Schedule I thereto (each such Subsidiary individually a
“Subsidiary Party”) and JPMORGAN CHASE BANK, N.A., a national
banking association (“JPMCB”), as collateral agent (in such
capacity, the “Collateral Agent”) for the Secured Parties (as
defined therein).



          A. Reference is made to the Credit Agreement dated as of November 28, 2001, as amended and
restated as of April 10, 2002, as further amended and restated as of December 22, 2005 (as further
amended, supplemented, waived or otherwise modified from time to time, the “Credit
Agreement”), among Holdings, the US Borrower, Sifto Canada Corp., a corporation continued and
amalgamated under the laws of the province of Nova Scotia, Canada, Salt Union Limited, a company
incorporated under the laws of England and Wales in the United Kingdom, the lenders from time to
time party thereto (the “Lenders”) and JPMCB, as administrative agent for the Lenders (in
such capacity, the “Administrative Agent”).




          B. Capitalized terms used herein and not otherwise defined herein shall have the meanings
assigned to such terms in the US Collateral and Guaranty Agreement.




          C. The Grantors have entered into the US Collateral and Guaranty Agreement in order to induce
the Lenders to make Loans and accept and purchase B/As and the Letter of Credit Issuer to issue
Letters of Credit. Section 7.16 of the US Collateral and Guaranty Agreement provides that
additional Subsidiaries of the US Borrower may become Grantors, Pledgors and Guarantors under the
US Collateral and Guaranty Agreement by execution and delivery of an instrument in the form of this
Supplement. The undersigned Subsidiary of the US Borrower (the “New Subsidiary Party”) is
executing this Supplement in accordance with the requirements of the Credit Agreement to become a
Grantor, Pledgor and Guarantor under the US Collateral and Guaranty Agreement in order to induce
the Lenders to make additional Loans and accept and purchase additional B/As and the Letter of
Credit Issuer to issue additional Letters of Credit and as consideration for Loans previously made
and B/As previously accepted and purchased and Letters of Credit previously issued.




          Accordingly, the Collateral Agent and the New Subsidiary Party agree as follows:




          SECTION 1. In accordance with Section 7.16 of the US Collateral and Guaranty Agreement, the
New Subsidiary Party by its signature below becomes a










 



48



Grantor, Pledgor and Guarantor under the US Collateral and Guaranty Agreement with the same
force and effect as if originally named therein as a Grantor, Pledgor and Guarantor and the New
Subsidiary Party hereby (a) agrees to all the terms and provisions of the US Collateral and
Guaranty Agreement applicable to it as a Grantor, Pledgor and Guarantor thereunder and (b)
represents and warrants that the representations and warranties made by it as a Grantor, Pledgor
and Guarantor thereunder are true and correct on and as of the date hereof. In furtherance of the
foregoing, the New Subsidiary Party, as security for the payment and performance in full of the
Obligations (as defined in the US Collateral and Guaranty Agreement), does hereby create and grant
to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, their
successors and assigns, a security interest in and lien on all of the New Subsidiary Party’s right,
title and interest in and to the Collateral (as defined in the US Collateral and Guaranty
Agreement) of the New Subsidiary Party. Each reference to a “Grantor,” “Pledgor” and “Guarantor”
in the US Collateral and Guaranty Agreement shall be deemed to include the New Subsidiary Party.
The US Collateral and Guaranty Agreement is hereby incorporated herein by reference.




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




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




          SECTION 4. The New Subsidiary Party hereby represents and warrants that (a) set forth on
Schedule I attached hereto is a true and correct schedule of the location of any and all Collateral
of the New Subsidiary Party, (b) set forth on Schedule II attached hereto is a true and correct
schedule of all the Pledged Securities of the New Subsidiary Party and (c) set forth under its
signature hereto, is the true and correct location of the chief executive office of the New
Subsidiary Party and its jurisdiction of formation.




          SECTION 5. Except as expressly supplemented hereby, the US Collateral and Guaranty Agreement
shall remain in full force and effect.




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




          SECTION 7. In case any one or more of the provisions contained in this Supplement should be
held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein and in the US Collateral and Guaranty Agreement shall not
in any way be affected or impaired thereby










 



49



(it being understood that the invalidity of a particular provision in a particular
jurisdiction shall not in and of itself affect the validity of such provision in any other
jurisdiction). The parties hereto shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of which comes as
close as possible to that of the invalid, illegal or unenforceable provisions.




          SECTION 8. All communications and notices hereunder shall be in writing and given as provided
in Section 7.01 of the US Collateral and Guaranty Agreement. All communications and notices
hereunder to the New Subsidiary Party shall be given to it in care of the US Borrower as provided
in Section 10.03 of the Credit Agreement.




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




          IN WITNESS WHEREOF, the New Subsidiary Party and the Collateral Agent have duly executed this
Supplement to the US Collateral and Guaranty Agreement as of the day and year first above written.




	 	 	 	 	 
	 	[Name Of New Subsidiary Party],

 	 
	 	by  	 
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 	 	Address: 	 	 
	 



	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A., as Collateral Agent,

 	 
	 	by  	 
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 









 



50

	 	 	 	 	 




Schedule I to

Supplement No. __

to the US Collateral

and Guaranty Agreement




LOCATION OF SECURITY AGREEMENT COLLATERAL




	 	 	 
	Location	 	Description
	 	 	 











 



51


Schedule II to

Supplement No. __

to the US Collateral

and Guaranty Agreement




PLEDGED COLLATERAL




CAPITAL STOCK




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Number and	 	 
	 	 	Number of	 	Registered	 	Class of	 	Percentage
	Issuer	 	Certificate	 	Owner	 	Shares	 	of Shares
	 	 	 	 	 	 	 	 	 





DEBT SECURITIES




	 	 	 	 	 	 	 
	 	 	Principal	 	 	 	 
	Issuer	 	Amount	 	Date of Note	 	Maturity Date
	 	 	 	 	 	 	 





OTHER PROPERTY










 



52




Annex II

to the US Collateral

and Guaranty Agreement




[Form of]

PERFECTION CERTIFICATE










 



53




Annex III

to the US Collateral

and Guaranty Agreement




[Form of]

NAME CHANGE AGREEMENT




Re: [US Borrower]




          Reference is made to the Credit Agreement dated as of November 28, 2001, as amended and
restated as of December 22, 2005 (as further amended, supplemented, waived or otherwise modified
from time to time, the “Credit Agreement”), among Compass Minerals International, Inc.,
Compass Minerals Group, Inc. (the “US Borrower”), Sifto Canada Corp., Salt Union Limited,
the Lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent.
All capitalized terms used but not defined herein have the meanings assigned in the Credit
Agreement.




          This will advise you in accordance with Section 4.03 of the US Collateral and Guaranty
Agreement that [l] (the “Subsidiary”) will change its name effective as of [date must be at
least 30 days following this notice].




          The Subsidiary hereby reaffirms its obligations as Grantor, Pledgor and Guarantor under the US
Collateral and Guaranty Agreement and (i) [the US Borrower] [PARENT OF SUBSIDIARY] (the
“Parent”) hereby reaffirms its pledge of all the Pledged Collateral in the Subsidiary under
the US Collateral and Guaranty Agreement and (ii) [the US Borrower] hereby reaffirms its pledge of
the Intercompany Note evidencing Indebtedness owed by the Subsidiary under the US Collateral and
Guaranty Agreement.




          Each of the undersigned hereby confirms to you that all the information set forth in the
Perfection Certificate most recently delivered by the US Borrower under the Credit Agreement with
respect to the Subsidiary continues to be complete and accurate, other than the name thereof, which
will change as set forth above [and except that [l]], and the Perfection Certificate is hereby
deemed amended to reflect the foregoing changes.




          Enclosed herewith are the following:





     (a) [a] replacement stock certificate[s] representing all the Pledged Collateral in
the Subsidiary, together with [an] undated executed stock power[s] executed in blank;




     (b) UCC amendments reflecting the name change for every filing office requiring a
filing, as reflected in the Perfection Certificate;




     (c) [Describe intellectual property filings required in connection with items whose
registrations have been changed;]



          [Describe any other UCC filings or other materials delivered in connection with the name
change.]










 



54




          [Discuss whether an opinion under the US Collateral and Guaranty Agreement is appropriate or
necessary under these particular circumstances.]




          If you have any questions about the foregoing, please call [l] at [l].




	 	 	 	 	 
	 	[US Borrower]

 	 
	 	by  	 
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	 	[SUBSIDIARY]

 	 
	 	by  	 
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	 	[PARENT]

 	 
	 	by  	 
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	 	 	 
	 	by  	 
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 









 



55

	 	 	 	 	 




Annex IV

to the US Collateral

and Guaranty Agreement






LOCKBOX AGREEMENT dated as of [l], among [Name of Grantor] (the
“Grantor”), JPMORGAN CHASE BANK, N.A., a national banking
association (“JPMCB”), as collateral agent (in such
capacity, the “Collateral Agent”) for the Secured Parties
(such term and each other capitalized terms used but not defined
herein have the meaning given to them in the US Collateral and
Guaranty Agreement referred to below) and [l], a [l] banking
corporation (the “Sub-Agent”).



          A. The Grantor and the Collateral Agent are parties to a US Collateral and Guaranty Agreement
dated as of November 28, 2001, as amended and restated as of December 22, 2005 (as further amended,
supplemented, waived or otherwise modified from time to time, the “US Collateral and Guaranty
Agreement”). Pursuant to the terms of the US Collateral and Guaranty Agreement, the Grantor
has granted to the Collateral Agent, for the benefit of the Secured Parties, a security interest in
its Accounts and other Collateral (including Inventory, cash, cash accounts and Proceeds) to secure
the payment and performance of the Obligations and has irrevocably appointed the Collateral Agent
as its agent to collect amounts due in respect of Accounts, Inventory and Assigned Contracts.




          B. The Sub-Agent has agreed to act as collection sub-agent of the Collateral Agent to receive
and forward payments with respect to the Accounts, Inventory and Assigned Contracts on the terms
and subject to the conditions set forth herein.




          NOW, THEREFORE, the parties hereto agree as follows:




          1. The Collateral Agent hereby appoints the Sub-Agent as its collection sub-agent under the
US Collateral and Guaranty Agreement and authorizes the Sub-Agent, on the terms and subject to the
conditions set forth herein, to receive payments in respect of Collateral consisting of Accounts,
Inventory and Assigned Contracts.




          2. The Sub-Agent has established and shall maintain deposit account number [l] (including all
subaccounts thereof) for the benefit of the Collateral Agent (such account being called the
“Collection Deposit Account”). The Collection Deposit Account shall be designated with the
title “JPMorgan Chase Bank, N.A. as Collateral Agent under the US Collateral and Guaranty Agreement
dated as of November 28, 2001, as amended and restated as of December 22, 2005” (or a similar
title). Subject to the Sub-Agent’s Terms for Remittance Banking (Lockbox) Services attached hereto
as Exhibit A, to the extent that the terms thereof relate to procedures or fees and to the extent
not inconsistent with the terms hereof, all payments received by the Sub-Agent in Lockbox Number
[l] and [l] or any replacements in respect thereof (the “Lockboxes”) shall be promptly
deposited in the Collection Deposit Account and shall not be










 



56



commingled with other funds. All funds at any time on deposit in the Collection Deposit
Account shall be held by the Sub-Agent for application in accordance with the terms of this
Agreement. The Sub-Agent agrees to give the Collateral Agent and the applicable Grantor prompt
notice if the Collection Deposit Account shall become subject to any writ, judgment, warrant of
attachment, execution or similar process. As security for the payment and performance of the
Obligations, the Grantor hereby confirms and pledges, assigns and transfers to the Collateral
Agent, and hereby creates and grants to the Collateral Agent, a security interest in the Collection
Deposit Account, all property and assets held therein and all Proceeds thereof.




          3. The Collection Deposit Account shall be under the sole dominion and control of the
Collateral Agent, who shall possess all right, title and interest in all of the items from time to
time in the Collection Deposit Account and their Proceeds. The Sub-Agent shall be the Collateral
Agent’s agent for the purpose of holding and collecting such items and their Proceeds. Neither the
Grantor nor any Person or entity claiming by, through or under the Grantor shall have any right,
title or interest in, or control over the use of, or any right to withdraw any amount from, the
Collection Deposit Account, except that the Collateral Agent shall have the right to withdraw
amounts from the Collection Deposit Account. The Sub-Agent shall be entitled to rely on, and shall
act in accordance with, all instructions given to it by the Collateral Agent with respect to the
Collection Deposit Account. The Collateral Agent shall have the sole power to agree with the
Sub-Agent as to specifications for Lockbox services.




          4. Upon receipt of written, telecopy or telephonic notice (which, in the case of telephonic
notice, shall be promptly confirmed in writing or by telecopy) from the Collateral Agent, the
Sub-Agent shall, if so directed in such notice (subject to the Sub-Agent’s right to request that
the Collateral Agent furnish, in form satisfactory to the Sub-Agent, signature cards and/or other
appropriate documentation), promptly transmit or deliver to the Collateral Agent at the office
specified in paragraph 12 hereof (or such other office as the Collateral Agent shall specify) (a)
all funds, if any, then on deposit in, or otherwise to the credit of, the Collection Deposit
Account (provided that funds on deposit that are subject to collection may be transmitted
promptly upon availability for withdrawal), (b) all checks, drafts and other instruments for the
payment of money received in the Lockboxes and in the possession of the Sub-Agent, without
depositing such checks, drafts or other instruments in the Collection Deposit Account or any other
account and (c) any checks, drafts and other instruments for the payment of money received in the
Lockboxes by the Sub-Agent after such notice, in whatever form received, provided that the
Sub-Agent may retain a reasonable reserve in a separate deposit account with the Sub-Agent in
respect of unpaid fees and amounts that may be subject to collection.




          5. The Sub-Agent is hereby instructed and authorized to transfer by wire transfer or
Automated Clearing House (“ACH”) from the Collection Deposit Account all funds that are
from time to time deposited or otherwise credited to such account (after such funds become
available to the Sub-Agent, either through the Federal Reserve System or other clearing mechanism
used by the Sub-Agent’s branch and to the extent such funds exceed $1,000), to such account as the
Collateral Agent may from time to time direct, provided that, unless the Collateral Agent
otherwise instructs, no such transfer shall be required if such transfer would result in the
transfer of an amount less










 



57



than $1,000. Unless otherwise directed by the Collateral Agent, such funds shall be
transferred on each Business Day by wire transfer or ACH and shall be identified as follows:



JPMorgan Chase Bank

ABA Number

For credit to JPMorgan Chase Bank,

New York, NY 10017

Account Number

Re: [l] Cash Collateral Account




          These transfer instructions and authorizations may not be amended, altered or revoked by the
Grantor without the prior written consent of the Collateral Agent. The Collateral Agent, however,
shall have the right to amend or revoke these transfer instructions and authorizations at any time
without the consent of the Grantor.




          6. The Sub-Agent shall furnish the Collateral Agent and the applicable Grantor with monthly
statements setting forth the amounts deposited in the Collection Deposit Account and all transfers
and withdrawals therefrom, and shall furnish such other information at such times as shall be
reasonably requested by the Collateral Agent.




          7. The fees for the services of the Sub-Agent shall be mutually agreed upon between the
Grantor and the Sub-Agent and shall be the obligation of the Grantor; provided,
however, that, notwithstanding the terms of any agreement under which the Collection
Deposit Account shall have been established with the Sub-Agent, the Grantor and the Sub-Agent agree
not to terminate such Collection Deposit Account for any reason (including the failure of the
Grantor to pay such fees) for so long as this Agreement shall remain in effect (it being understood
that the foregoing shall not be construed to prohibit the resignation of the Sub-Agent in
accordance with paragraph 9 below). Neither the Collateral Agent nor the Secured Parties shall
have any liability for the payment of any such fees. The Sub-Agent may perform any of its duties
hereunder by or through its agents, officers or employees.




          8. The Sub-Agent hereby represents and warrants that (a) it is a banking corporation duly
organized, validly existing and in good standing under the laws of [l] and has full corporate power
and authority under such laws to execute, deliver and perform its obligations under this Agreement
and (b) the execution, delivery and performance of this Agreement by the Sub-Agent have been duly
and effectively authorized by all necessary corporate action and this Agreement has been duly
executed and delivered by the Sub-Agent and constitutes a valid and binding obligation of the
Sub-Agent enforceable in accordance with its terms.




          9. The Sub-Agent may resign at any time as Sub-Agent hereunder by delivery to the Collateral
Agent and the applicable Grantor of written notice of resignation not less than thirty days prior
to the effective date of such resignation. The Sub-Agent may be removed by the Collateral Agent at
any time, with or without cause, by written, telecopy or telephonic notice (which, in the case of
telephonic notice, shall be promptly confirmed in writing or by telecopy) of removal delivered to
the Sub-Agent and the applicable Grantor. Upon receipt of such notice of removal, or delivery of
such notice of resignation, the Sub-Agent shall (subject to the Sub-Agent’s right to request that
the










 



58



Collateral Agent furnish, in form satisfactory to the Sub-Agent, signature cards and/or other
appropriate documentation), promptly transmit or deliver to the Collateral Agent at the office
specified in paragraph 12 (or such other office as the Collateral Agent shall specify (a) all
funds, if any, then on deposit in, or otherwise to the credit of, the Collection Deposit Account
(provided that funds on deposit that are subject to collection may be transmitted promptly
upon availability for withdrawal), (b) all checks, drafts and other instruments for the payment of
money received in the Lockboxes and in the possession of the Sub-Agent, without depositing such
checks, drafts or other instruments in the Collection Deposit Account or any other account, and (c)
any checks, drafts and other instruments for the payment of money received in the Lockboxes by the
Sub-Agent after such notice, in whatever form received.




          10. The Grantor consents to the appointment of the Sub-Agent and agrees that the Sub-Agent
shall incur no liability to the Grantor as a result of any action taken pursuant to an instruction
given by the Collateral Agent in accordance with the provisions of this Agreement. The Grantor
agrees to indemnify and defend the Sub-Agent against any loss, liability, claim or expense
(including reasonable attorneys’ fees) arising from the Sub-Agent’s entry into this Agreement and
actions taken hereunder, except to the extent resulting from the Sub-Agent’s gross negligence or
willful misconduct.




          11. The term of this Agreement shall extend from the date hereof until the earlier of (a) the
date on which the Sub-Agent has been notified in writing by the Collateral Agent that the Sub-Agent
has no further duties under this Agreement and (b) the date of termination specified in the notice
of removal given by the Collateral Agent, or notice of resignation given by the Sub-Agent, as the
case may be, pursuant to paragraph 9. The obligations of the Sub-Agent contained in the last
sentence of paragraph 9 and in paragraph 15, and the obligations of the Grantor contained in
paragraphs 7 and 10, shall survive the termination of this Agreement.




          12. All notices and communications hereunder shall be in writing and shall be delivered by
hand or by courier service, mailed by certified or registered mail or sent by telecopy (except
where telephonic instructions or notices are authorized herein) and shall be effective on the day
on which received (a) in the case of the Collateral Agent, to JPMorgan Chase Bank, 270 Park Avenue,
New York, New York 10017, Attention of [Collateral Monitoring Department], (b) in the case of the
Sub-Agent, addressed to [l], Attention of [l] and (c) in the case of any Grantor, addressed as set
forth below the name of such Grantor on the signature page hereto. For purposes of this Agreement,
any officer of the Collateral Agent shall be authorized to act, and to give instructions and
notices, on behalf of the Collateral Agent hereunder.




          13. The Sub-Agent will not assign or transfer any of its rights or obligations hereunder
(other than to the Collateral Agent) without the prior written consent of the other parties hereto,
and any such attempted assignment or transfer shall be void.




          14. Except as provided in paragraph 5 above, this Agreement may be amended only by a written
instrument executed by the Collateral Agent, the Sub-Agent and the Grantor, acting by their duly
authorized representative officers.










 



59




          15. Except as otherwise provided in the Credit Agreement with respect to rights of set off
available to the Sub-Agent in its capacity as a Lender (if and so long as the Sub-Agent is a Lender
thereunder), the Sub-Agent hereby irrevocably waives any right to set off against, or otherwise
deduct from, any funds held in the Collection Deposit Account and all items (and Proceeds thereof)
that come into its possession in connection with the Collection Deposit Account any indebtedness or
other claim owed by the Grantor or any affiliate thereof to the Sub-Agent; provided,
however, that this paragraph shall not limit the ability of the Sub-Agent to, and the
Sub-Agent may, (a) exercise any right to set off against, or otherwise deduct from, any such funds
to the extent necessary for the Sub-Agent to collect any fees owed to it by the Grantor in
connection with the Collection Deposit Account, (b) charge back and net against the Collection
Deposit Account any returned or dishonored items or other adjustments in accordance with the
Sub-Agent’s usual practices and (c) (i) establish the reserves contemplated in paragraph 4 in
respect of unpaid fees and amounts that may be subject to collection and (ii) transfer funds in
respect of such reserves from the Collection Deposit Account to the separate deposit account with
the Sub-Agent as contemplated in paragraph 4.




          16. This Agreement shall inure to the benefit of and be binding upon the Collateral Agent,
the Sub-Agent, the Grantor and their respective permitted successors and assigns.




          17. This Agreement may be executed in two or more counterparts, each of which shall be deemed
an original but all of which together shall constitute one and the same instrument. Delivery of an
executed signature page to this Agreement by facsimile transmission shall be effective as delivery
of a manually executed counterpart hereof.




          18. EXCEPT TO THE EXTENT THE LAWS OF THE STATE OF [l] GOVERN THE COLLECTION DEPOSIT ACCOUNT,
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.




          19. The Sub-Agent shall be an independent contractor. This Agreement does not give rise to
any partnership, joint venture or fiduciary relationship.




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




[Signature Page Follows]










 



60




          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly
authorized officers as of the day and year first above written.




	 	 	 	 	 
	 	[Name of Grantor],

 	 
	 	by  	 
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 	 	Address: 	 	 
	 



	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A.

as Collateral Agent,

 	 
	 	by  	 
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 	 	Address: 	 	 
	 



	 	 	 	 	 
	 	[Sub-Agent],

 	 
	 	by  	 
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 	 	Address: