Ex-10.3


 


EXECUTION VERSION


 


AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT


 


THIS
AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT dated as of
September 30, 2010 (as it may be amended, restated, supplemented and
otherwise modified from time to time, this “Security Agreement”), among
Clopay Ames True Temper LLC, a Delaware limited liability company (“Holdings”),
Clopay Ames True Temper Holding Corp., a Delaware corporation (the “Borrower”)
and certain subsidiaries of the Borrower listed on Schedule 1 hereto
(together with Holdings and the Borrower, the “Grantors”), and JPMorgan
Chase Bank, N.A., in its capacity as administrative agent (the “Administrative
Agent”) for the Secured Parties referred to below.


 


Notwithstanding
anything herein to the contrary, the lien and security interest granted
pursuant to this Security Agreement and the exercise of any right or remedy
hereunder are subject to the provisions of the Intercreditor Agreement, dated
as of September 30, 2010 (as amended, restated, supplemented or otherwise
modified from time to time, the “Intercreditor Agreement”), among the
Borrower, Holdings, certain subsidiaries of the Borrower, the Term Loan
Representative (as defined therein) and the ABL Representative (as defined
therein).  In the event of any conflict
between the terms of the Intercreditor Agreement and this Security Agreement,
the terms of the Intercreditor Agreement shall govern and control.


 


PRELIMINARY STATEMENT


 


WHEREAS,
certain of the Grantors are parties to that certain Credit Agreement, dated as
of June 24, 2008, by and between Clopay Building, as a borrower, Clopay
Plastic, as a borrower, the lenders parties thereto and JPMorgan Chase Bank,
N.A., as administrative agent (the “Existing Credit Agreement”);


 


WHEREAS,
certain of the Grantors are parties to that certain Pledge and Security
Agreement, dated as of June 24, 2008, among the Grantors named therein and
JPMorgan Chase Bank, N.A., as administrative agent (the “Existing Security
Agreement”);


 


WHEREAS
the Grantors, the Administrative Agent and the Lenders intend to amend and
restate the Existing Credit Agreement by entering into the Amended and Restated
Credit Agreement, dated as of September 30, 2010 (as it may be amended or
modified from time to time, the “Credit Agreement”); and


 


WHEREAS
it is a condition precedent to the effectiveness of the Credit Agreement that
the Grantors amend and restate the Existing Security Agreement;


 


ACCORDINGLY,
the Grantors and the Administrative Agent, on behalf of the Secured Parties,
hereby agree that the Existing Security Agreement shall be amended and restated
in its entirety as follows:


 


ARTICLE I

DEFINITIONS


 


1.1           Terms Defined in Credit Agreement.  All capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms in the Credit
Agreement.


 


1

















 


1.2           Terms Defined in UCC.  Terms defined in the UCC which are not
otherwise defined in this Security Agreement or the Credit Agreement are used
herein as defined in the UCC.


 


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


 


“ABL
Collateral” shall have the meaning set forth in the Intercreditor
Agreement.


 


“Account
Debtor” means any Person obligated on an Account.


 


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


 


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


 


“Borrower
Obligations” means the collective reference to the unpaid principal of and
interest on the Loans and reimbursement obligations and all other obligations
and liabilities of the Borrower (including, without limitation, interest
accruing at the then applicable rate provided in the Credit Agreement after the
maturity of the Loans and reimbursement obligations and interest accruing at
the then applicable rate provided in the Credit Agreement after the filing of
any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding)
to the Administrative Agent or any Lender (or, in the case of any Specified
Banking Service Agreement or Specified Swap Agreement, any Affiliate of any
Lender), whether direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred, which may arise under, out of, or
in connection with, the Credit Agreement, this Agreement, the other Loan
Documents, any Letter of Credit, any Specified Swap Agreement, any Specified
Banking Service Agreement or any other document made, delivered or given in
connection with any of the foregoing, in each case whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Administrative Agent or to the Lenders that are
required to be paid by the Borrower pursuant to the terms of any of the
foregoing agreements).


 


“Cash
Dominion Period” means each period when an Event of Default shall have
occurred and be continuing or each period beginning on a date on which Availability
is less than 15% of the Revolving Commitments; provided that the Cash
Dominion Period shall be discontinued when and if Availability shall have been
greater than 20% of the Revolving Commitments for a period of 90 consecutive
days and no Event of Default shall be continuing.


 


“Chattel
Paper” shall have the meaning set forth in Article 9 of the UCC.


 


“Collateral”
shall have the meaning set forth in Article II.


 


“Collateral
Access Agreement” means any landlord waiver or other agreement, in form and
substance reasonably satisfactory to the Administrative Agent, between the
Administrative Agent (and prior to the Term Loan Obligations Payment Date, the
Term Loan Representative) and any third party (including any bailee, consignee,
customs broker, or other similar Person) in possession of any Collateral or any
landlord of any Loan Party for any real property where any Collateral is
located, as such landlord waiver or other agreement may be amended, restated,
or otherwise modified from time to time.


 


2

















 


“Collateral
Report” means any certificate (including any Borrowing Base Certificate),
report or other document delivered by any Grantor to the Administrative Agent
or any Lender with respect to the Collateral pursuant to any Loan Document.


 


“Collection
Account” shall have the meaning set forth in Section 7.1(b).


 


“Commercial
Tort Claims” shall have the meaning set forth in Article 9 of the UCC.


 


“Commodity
Account” shall have the meaning set forth in Article 9 of the UCC.


 


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


 


“Controlled
Account” shall have the meaning set forth in Section 7.1.


 


“Control
Agreement” means an agreement, in form and substance reasonably
satisfactory to the Administrative Agent, among any Loan Party, a banking
institution holding such Loan Party’s funds, the Administrative Agent and,
prior to the Term Loan Obligations Payment Date, the Term Loan Collateral Agent
with respect to collection and control of all deposits and balances held in a
deposit account maintained by any Loan Party with such banking institution.


 


“Copyrights”
means, with respect to any Person, all of such Person’s right, title, and
interest in and to the following: 
(a) all copyrights, rights and interests in copyrights, works
protectable by copyright, copyright registrations, and copyright applications;
(b) all renewals of any of the foregoing; (c) all income, royalties,
damages, and payments now or hereafter due and/or payable under any of the
foregoing, including, without limitation, damages or payments for past or
future infringements for any of the foregoing; (d) the right to sue for
past, present, and future infringements of any of the foregoing; and (e) 
all rights corresponding to any of the foregoing throughout the world.


 


“Copyright
Security Agreement” shall mean the Copyright Security Agreement
substantially in the form of Exhibit H.


 


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


 


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


 


“Equipment”
shall have the meaning set forth in Article 9 of the UCC.


 


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


 


“Existing
Term Loan Agreement” means the credit agreement dated as of
September 30, 2010, among Clopay Ames True Temper Holding Corp., as
borrower, Clopay Ames True Temper LLC, Goldman Sachs Lending Partners LLC, and
the other lenders party thereto, as in effect on the date hereof.


 


“Foreign
Subsidiary” means any Subsidiary of a Grantor organized under the laws of
any jurisdiction outside the United States of America.


 


“Foreign
Subsidiary Voting Stock” means the voting Equity Interests in any
first-tier Foreign Subsidiary.


 


“General
Intangibles” shall have the meaning set forth in Article 9 of the UCC.


 


3

















 


“Goods”
shall have the meaning set forth in Article 9 of the UCC.


 


“Guaranteed
Obligations” with respect to any Guarantor, all obligations and liabilities
of such Guarantor which may arise under or in connection with the Credit
Agreement (including, without limitation, Article X) or any other Loan
Document, any Specified Swap Agreement or any Specified Banking Service
Agreement to which such Guarantor is a party, in each case whether on account
of guarantee obligations, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all reasonable fees and
disbursements of counsel to the Administrative Agent or to the Lenders that are
required to be paid by such Guarantor pursuant to the terms of the Credit
Agreement or any other Loan Document).


 


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


 


“Instruments”
shall have the meaning set forth in Article 9 of the UCC.


 


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


 


“Intellectual
Property” means all intellectual property of every kind and nature now
owned or hereafter acquired by any Grantor, including inventions, designs,
Patents, Copyrights, Licenses, Trademarks, trade secret licenses, confidential
or proprietary technical or 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 booked and records describing or
used in connection with, any of the foregoing.


 


“Intellectual
Property Security Agreements” means the Copyright Security Agreement, the
Patent Security Agreement, and the Trademark Security Agreement.


 


“Intercompany
Note” means any promissory note evidencing loans made by any Grantor to
Holdings or any of its Subsidiaries.


 


“Inventory”
shall have the meaning set forth in Article 9 of the UCC.


 


“Investment
Accounts” means the Securities Accounts, Commodity Accounts and Deposit
Accounts, including any Prepayment Accounts.


 


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


 


“Letter-of-Credit
Rights” shall have the meaning set forth in Article 9 of the UCC.


 


“Licenses”
means, with respect to any Person, all of such Person’s right, title, and
interest in and to (a) any and all licensing agreements or similar
arrangements in and to its Patents, Copyrights, or Trademarks, (b) all
income, royalties, damages, claims, and payments now or hereafter due or
payable under and with respect thereto, including, without limitation, damages
and payments for past and future breaches thereof, and (c) all rights to
sue for past, present, and future breaches thereof.


 


“Lock
Boxes” shall have the meaning set forth in Section 7.1(a).


 


4

















 


“Lock
Box Agreements” shall have the meaning set forth in Section 7.1(a).


 


“Patents”
means, with respect to any Person, all of such Person’s right, title, and
interest in and to:  (a) any and all
patents and patent applications; (b) all inventions and improvements
described and claimed therein; (c) all reissues, divisions, continuations,
renewals, extensions, and continuations-in-part thereof; (d) all income, royalties,
damages, claims, payments and Proceeds now or hereafter due or payable under
and with respect thereto, including, without limitation, damages and payments
for past and future infringements thereof; (e) all rights to sue for past,
present, and future infringements thereof; and (f) all other rights
corresponding to any of the foregoing throughout the world.


 


“Patent
Security Agreement” means the Patent Security Agreement substantially in
the form of Exhibit I.


 


“Pledged
Collateral” means all Instruments (including without limitation, Pledged
Debt), Securities, Pledged Equity Interests and other Investment Property of
the Grantors, whether or not physically delivered to the Administrative Agent
pursuant to this Security Agreement; provided that in no event shall
either the stock of any Immaterial Subsidiary or more than 65% of the total
outstanding Foreign Subsidiary Voting Stock of each Foreign Subsidiary be
required to be pledged hereunder.


 


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


 


“Pledged
Equity Interests” means (i) all Equity Interests owned by a Grantor
(including, without limitation, all Equity Interests listed on Exhibit E,
as such schedule may be amended or supplemented from time to time),
(ii) the certificates if any, representing such Equity Interests and
(iii) any other participation or interest in any equity or profits of any
business entity including, without limitation, any trusts and all management
rights relating to any entity whose equity interests are included as Collateral.


 


“Prepayment
Account” shall have the meaning set forth in the Intercreditor Agreement.


 


“Proceeds”
shall have the meaning set forth in the Intercreditor Agreement.


 


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


 


“Required
Secured Parties” means (a) prior to an acceleration of the Obligations
under the Credit Agreement, the Required Lenders, (b) after an
acceleration of the Obligations and termination of Commitments under the Credit
Agreement but prior to the date upon which the Credit Agreement has terminated
by its terms and all of the obligations thereunder have been paid in full,
Lenders holding in the aggregate at least a majority of the total of the
Aggregate Credit Exposure, and (c) after the Credit Agreement has
terminated by its terms and all of the Obligations thereunder have been paid in
full (whether or not the Obligations under the Credit Agreement were ever
accelerated), Secured Parties holding in the aggregate at least a majority of
the aggregate net early termination payments and all other amounts then due and
unpaid from any Grantor to the Secured Parties under the Specified Swap Agreements
or the Specified Banking Service Agreements, as determined by the
Administrative Agent in its reasonable discretion.


 


5

















 


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


 


“Secured
Obligations” means, collectively, the Borrower Obligations and the
Guaranteed Obligations.


 


“Secured
Parties” the collective reference to the Administrative Agent, the Lenders,
any affiliate of any Lender to which Borrower Obligations or Guaranteed
Obligations, as applicable, are owed and any other holder of Secured
Obligations.


 


“Securities
Accounts” shall have the meaning set forth in Article 8 of the UCC.


 


“Security”
shall have the meaning set forth in Article 8 of the UCC.


 


“Specified
Banking Service Agreement” means any agreement between a Loan Party and a
Lender or an Affiliate thereof, executed in writing and delivered in connection
with Banking Services which has been identified by the applicable Lender (or
Affiliate thereof) and the Borrower, by written notice to the Administrative
Agent not later than 90 days after the execution and delivery thereof by the
applicable Loan Party, as a Specified Banking Service Agreement (it being
understood that any such agreement with JPMorgan Chase Bank, N.A. or an
Affiliate thereof shall constitute a Specified Banking Service Agreement).


 


“Specified
Swap Agreement” means any Swap Agreement executed in writing and delivered
between a Loan Party and a Lender or an Affiliate thereof, which has been
identified by the applicable Lender (or Affiliate thereof) and the Borrower, by
written notice to the Administrative Agent not later than 90 days after the
execution and delivery thereof by the applicable Loan Party, as a Specified
Swap Agreement, which notice shall certify that the obligations thereunder do
not constitute Secured Term Loan Hedge Obligations (as defined in the
Intercreditor Agreement (it being understood that any such agreement with
JPMorgan Chase Bank, N.A. or an Affiliate thereof shall constitute a Specified
Swap Agreement).


 


“Stock
Rights” means all dividends, instruments or other distributions and any
other right or property which the Grantors shall receive or shall become
entitled to receive for any reason whatsoever with respect to, in substitution
for or in exchange for any Equity Interest constituting Collateral (including
any right to receive any Equity Interest).


 


“Supporting
Obligations” shall have the meaning set forth in Article 9 of the UCC.


 


“Term
Collateral” shall have the meaning set forth in the Intercreditor
Agreement.


 


“Term
Loan Collateral Agent” means Goldman Sachs Lending Partners LLC, in its
capacity as collateral agent under the Existing Term Loan Agreement.


 


“Term
Loan Obligations Payment Date” shall have the meaning set forth in the
Intercreditor Agreement.


 


“Trademarks”
means, with respect to any Person, all of such Person’s right, title, and
interest in and to the following: 
(a) all trademarks (including service marks), trade names, trade
dress, and trade styles and the registrations and applications for registration
thereof and the goodwill of the business symbolized by the foregoing;
(b) all licenses of the foregoing, whether as licensee or licensor;
(c) all renewals of the foregoing; (d) all income, royalties,
damages, and payments now or hereafter due or


 


6

















 


payable
with respect thereto, including, without limitation, damages, claims, and
payments for past and future infringements thereof; (e) all rights to sue
for past, present, and future infringements of the foregoing, including the
right to settle suits involving claims and demands for royalties owing; and
(f) all rights corresponding to any of the foregoing throughout the world.


 


“Trademark
Security Agreement” means the Trademark Security Agreement substantially in
the form of Exhibit J.


 


“UCC”
means the Uniform Commercial Code, as in effect from time to time, of the State
of New York  or
of any other state the laws of which are required as a result thereof to be
applied in connection with the attachment, perfection or priority of, or
remedies with respect to, Administrative Agent’s or any Secured Party’s Lien on
any Collateral.


 


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


 


ARTICLE II

GRANT OF SECURITY INTEREST


 


2.1           Each Grantor hereby pledges, assigns and grants to the
Administrative Agent, its successors and assigns, on behalf of and for the
benefit of the Secured Parties, a security interest in and continuing lien on
all of such Grantor’s right, title and interest in, to and under all personal
property and other assets, whether now owned by or owing to, or hereafter
acquired by or arising in favor of such Grantor (including under any trade name
or derivations thereof), and whether owned or consigned by or to, or leased
from or to, such Grantor, and regardless of where located (all of which will be
collectively referred to as the “Collateral”), including:


 


(i)            all Accounts;


 


(ii)           all Chattel Paper;


 


(iii)          all Intellectual Property;


 


(iv)          all Documents;


 


(v)           all Equipment;


 


(vi)          all General Intangibles;


 


(vii)         all Goods;


 


(viii)        all Instruments;


 


(ix)           all Inventory;


 


(x)            all Investment Property, other than any stock of any
Immaterial Subsidiary and Foreign Subsidiary Voting Stock excluded from the
definition of Pledged Collateral;


 


(xi)           all cash or cash equivalents (including Permitted
Investments));


 


(xii)          all Letter-of-Credit Rights and Supporting Obligations;


 


7

















 


(xiii)         all Deposit Accounts;


 


(xiv)        Insurance;


 


(xv)         Commercial Tort Claims now or hereafter described on
Exhibit E; and


 


(xvi)        all accessions to, substitutions for and replacements,
Proceeds (including Stock Rights), insurance proceeds and products of the
foregoing, together with all books and records, customer lists, credit files,
computer files, programs, printouts and other computer materials and records
related thereto and any General Intangibles at any time evidencing or relating
to any of the foregoing;


 


to
secure the prompt and complete payment and performance of the Secured
Obligations; provided, however, that notwithstanding any of the
other provisions set forth in this Article II, this Security Agreement shall
not constitute a grant of a security interest in (i) any leasehold
interest in real property, (ii) any property to the extent that such grant
of a security interest is prohibited by any Requirement of Law of a
Governmental Authority, requires a consent not obtained of any Governmental
Authority pursuant to such Requirement of Law or conflicts with or is
prohibited by, or constitutes a breach or default under or results in the
termination of or requires any consent not obtained under, any contract, license,
agreement, instrument or other document evidencing or giving rise to such
property or, in the case of any Equity Interests in Persons which are not
Subsidiaries of a Grantor, any applicable shareholder or similar agreement
among holders of Equity Interests in such Persons, except to the extent that
such Requirement of Law or the term in such contract, license, agreement,
instrument or other document or shareholder or similar agreement providing for
such prohibition, breach, default or termination or requiring such consent is
ineffective under applicable law, or (iii) any vehicle subject to a
certificate of title statute.  It is
hereby understood and agreed that any property described in the preceding
proviso, and any property that is otherwise expressly excluded from any clause
in this section above, and any property specifically excluded from any defined
term used in any clause of this section above, shall be excluded from the
definition of “Collateral”.


 


2.2           Continuing Liability Under Collateral.  Notwithstanding anything herein to the
contrary, (i) each Grantor shall remain liable for all obligations under
the Collateral and nothing contained herein is intended or shall be a
delegation of duties to Administrative Agent or any other Secured Party,
(ii) each Grantor shall remain liable under each of the agreements
included in the Collateral, to perform all of the obligations undertaken by it
thereunder all in accordance with and pursuant to the terms and provisions
thereof and neither Administrative Agent nor any Secured Party shall have any
obligation or liability under any such agreement by reason of or arising out of
this Security Agreement or any other document related hereto nor shall
Administrative Agent nor any Secured Party have any obligation to make any
inquiry as to the nature or sufficiency of any payment received by it or have
any obligation to take any action to collect or enforce any rights under any
such agreement included in the Collateral and (iii) the exercise by
Administrative Agent of any of its rights hereunder shall not release any
Grantor from any of its duties or obligations under the contracts and
agreements included in the Collateral.


 


ARTICLE III

REPRESENTATIONS AND WARRANTIES


 


Each
Grantor represents and warrants to the Administrative Agent and the Lenders
that:


 


3.1           Title, Perfection and Priority.  Such Grantor has good and valid rights in or
the power to transfer the Collateral and title to the Collateral with respect
to which it has purported to grant a security interest hereunder, free and
clear of all Liens except for Liens permitted under Section 4.1(f), and
has full


 


8

















 


power and authority to grant to the Administrative
Agent the security interest in such Collateral pursuant hereto.  When financing statements have been filed in
the appropriate offices against such Grantor in the locations listed on Exhibit F,
the Administrative Agent will have a fully perfected first priority security
interest in that Collateral of the Grantor in which a security interest may be
perfected by filing, subject only to Liens permitted under Section 4.1(f).


 


3.2           Name, Type and Jurisdiction of Organization,
Organizational and Identification Numbers. 
The full legal name of such Grantor, all trade names or other names
under which such Grantor currently conducts business, the type of entity of
such Grantor, its state of organization, the organizational number issued to it
by its state of organization and its federal employer identification number are
set forth on Exhibit A.


 


3.3           Principal Location. 
Such Grantor’s mailing address and the location of its place of business
(if it has only one) or its chief executive office (if it has more than one
place of business), are
disclosed in Exhibit A.


 


3.4           Collateral Locations.  All of such Grantor’s locations where any
Collateral with an aggregate value in excess of $500,000 is located are listed
on Exhibit A.  All of said
locations are owned by such Grantor except for locations (i) which are
leased by the Grantor as lessee and designated in Part VII(b) of
Exhibit A and (ii) at which Inventory is held in a public
warehouse or is otherwise held by a bailee or on consignment as designated in Part VII(c) of
Exhibit A.


 


3.5           Deposit Accounts. 
All of such Grantor’s Deposit Accounts are listed on Exhibit B.


 


3.6           Exact Names. 
Such Grantor’s name in which it has executed this Security Agreement is
the exact name as it appears in such Grantor’s organizational documents, as
amended, as filed with such Grantor’s jurisdiction of organization.  Other than as set forth on Exhibit A,
such Grantor has not, during the past five years, been known by or used any
other corporate, trade, fictitious or other name, or been a party to any merger
or consolidation, or been a party to any acquisition.


 


3.7           Letter-of-Credit Rights and Chattel Paper.  Exhibit C lists all
Letter-of-Credit Rights and Chattel Paper of such Grantor.  All action by such Grantor reasonably
necessary to protect and perfect the Administrative Agent’s Lien on each item
listed on Exhibit C (including the delivery of all originals and
the placement of a legend on all Chattel Paper as required hereunder) has been
duly taken.  The Administrative Agent
will have a fully perfected first priority security interest in the Collateral
listed on Exhibit C, subject only to Liens permitted under
Section 4.1(f).


 


3.8           Accounts and Chattel Paper.


 


(a)           The names of the obligors, amounts owing, due dates and
other information with respect to its Accounts and Chattel Paper are and will
be correctly stated in all material respects in all records of such Grantor
relating thereto and in all invoices and Collateral Reports with respect
thereto furnished to the Administrative Agent by such Grantor from time to
time.  As of the time when each Account
or each item of Chattel Paper arises, such Grantor shall be deemed to have
represented and warranted that such Account or Chattel Paper, as the case may
be, and all records relating thereto, are genuine and in all material respects
what they purport to be.


 


(b)           With respect to its Accounts, except as specifically
disclosed on the most recent Borrowing Base Certificate, (i) all Accounts
are Eligible Accounts; (ii) all Accounts represent bona fide sales of
Inventory or rendering of services to Account Debtors in the ordinary course of
such Grantor’s business and are not evidenced by a judgment, Instrument or
Chattel Paper; (iii) there are no setoffs,


 


9

















 


claims or disputes existing or asserted in writing
with respect thereto and such Grantor has not made any agreement with any
Account Debtor for any extension of time for the payment thereof, any
compromise or settlement for less than the full amount thereof, any release of
any Account Debtor from liability therefor, or any deduction therefrom except a
discount or allowance allowed by such Grantor in the ordinary course of its
business for prompt payment or otherwise permitted pursuant to the Credit
Agreement; (iv) to such Grantor’s knowledge, there are no facts, events or
occurrences which in any material way impair the validity or enforceability
thereof or would reasonably be expected to materially reduce the amount payable
thereunder as shown on such Grantor’s books and records and any invoices,
statements and Collateral Reports with respect thereto; (v) such Grantor
has not received any written notice of proceedings or actions which are
threatened or pending against any Account Debtor which might result in any
material adverse change in such Account Debtor’s financial condition; and
(vi) such Grantor has no knowledge that any Account Debtor is unable
generally to pay its debts as they become due.


 


(c)           In addition, with respect to all of its Accounts,
(i) the amounts shown on all invoices, statements and Collateral Reports
with respect thereto are actually owing to such Grantor as indicated thereon
and are not in any way contingent; (ii) if applicable, no payments have
been or shall be made thereon except payments delivered to a Lock Box or
Controlled Account as and to the extent required pursuant to Section 7.1;
and (iii) to such Grantor’s knowledge, all Account Debtors have the
capacity to contract.


 


3.9           Commercial Tort Claims.  All of such Grantor’s Commercial Tort Claims,
other than any Commercial Tort Claims having a value of less than $200,000
individually and $500,000 in the aggregate, are listed on Exhibit E.


 


3.10         Inventory. 
With respect to any of its Inventory scheduled or listed on the most
recent Borrowing Base Certificate, (a) such Inventory (other than
Inventory in transit) is located at one of such Grantor’s locations set forth
on Exhibit A, (b) no Inventory (other than Inventory in
transit) is now, or shall at any time or times hereafter be stored at any other
location except as permitted by Section 4.1(h), (c) such Grantor has
good and merchantable title to such Inventory and such Inventory is not subject
to any Lien or security interest or document whatsoever except for the Lien
granted to the Administrative Agent, for the benefit of the Secured Parties,
and except for Permitted Encumbrances and the Lien granted to the Term Loan
Collateral Agent for the benefit of the Term Loan Secured Parties (as defined
in the Intercreditor Agreement), (d) except as specifically disclosed in
the most recent Borrowing Base Certificate, such Inventory is Eligible
Inventory of good and merchantable quality, free from any material defects,
(e) such Inventory is not subject to any licensing, patent, royalty,
trademark, trade name or copyright agreements with any third parties which
would require any consent of any third party upon sale or disposition of that
Inventory or the payment of any monies to any third party upon such sale or
other disposition, (f) such Inventory has been produced in all material
respects in accordance with the Federal Fair Labor Standards Act of 1938, as
amended, and all applicable rules, regulations and orders thereunder and
(g) the completion of manufacture, sale or other disposition of such
Inventory by the Administrative Agent following an Event of Default shall not
require the consent of any Person and shall not constitute a material breach or
default under any contract or agreement to which such Grantor is a party or to
which such property is subject.


 


3.11         Intellectual Property.  Other than any “off the shelf”, “shrink
wrap”, or similar license agreements, such Grantor does not have any interest
in, or title to, any License or any registration or application to register any
Patent, Trademark or Copyright, except as set forth in Exhibit D.  This Security Agreement is effective to
create a valid and continuing Lien and, upon the giving of value and filing of
appropriate financing statements in the offices listed on Exhibit F
and Intellectual Property Security Agreements substantially in the form of Exhibit H,
Exhibit I and Exhibit J with the United States


 


10
















 


Copyright Office and the United States Patent and
Trademark Office, fully perfected first priority security interests in favor of
the Administrative Agent on such Grantor’s Patents, Trademarks, Copyrights and
Licenses (other than security interests in Patents, Trademarks, Copyrights and
Licenses in which the perfection of security interest requires filing outside
of the United States), and such perfected security interests in such collateral
are enforceable as such as against any and all creditors of and purchasers from
such Grantor.


 


3.12         Filing Requirements. 
None of its Equipment is covered by any certificate of title, except for
vehicles.  None of the Collateral owned
by it is of a type for which security interests or liens may be perfected by
filing under any federal statute except for Patents, Trademarks and Copyrights
held by such Grantor and described in Exhibit D.


 


3.13         No Financing Statements, Security Agreements.  No financing statement or security agreement
describing all or any portion of the Collateral which has not lapsed or been
terminated naming such Grantor as debtor has been filed or is of record in any
jurisdiction except (a) for financing statements or security agreements
naming the Administrative Agent on behalf of the Secured Parties as the secured
party and (b) for financing statements which have been filed without the
consent of the Grantor and with respect to which no Lien has been created and
(c) as permitted by Section 4.1(f).


 


3.14         Pledged Collateral.


 


(a)           Exhibit E sets forth a complete and accurate
(in all material respects) list of all Pledged Collateral owned by such
Grantor.  Such Grantor is the direct,
sole beneficial owner and sole holder of record of the Pledged Collateral
listed on Exhibit E as being owned by it, free and clear of any
Liens, except for the security interest granted to the Administrative Agent,
for the benefit of the Secured Parties hereunder, and any Liens permitted under
Section 6.02 of the Credit Agreement. 
Such Grantor further represents and warrants that (i) all Pledged
Collateral owned by it constituting an Equity Interest of a Subsidiary of a
Grantor has been (to the extent such concepts are relevant with respect to such
Pledged Collateral) duly authorized and validly issued, and is fully paid and
non-assessable, (ii) with respect to any certificates delivered to the
Administrative Agent representing an Equity Interest, either such certificates
are Securities as defined in Article 8 of the UCC as a result of actions
by the issuer or otherwise, or, if such certificates are not Securities, such
Grantor has so informed the Administrative Agent so that the Administrative
Agent may take steps to perfect its security interest therein as a General
Intangible, (iii) all such Pledged Collateral held by a securities
intermediary will be covered by a control agreement among such Grantor, the
securities intermediary and the Administrative Agent pursuant to which the
Administrative Agent has Control within the time period set forth in this
Security Agreement and (iv) to such Grantor’s knowledge all Pledged
Collateral which represents Indebtedness owed to such Grantor has been duly
authorized, authenticated or issued and delivered by the issuer of such
Indebtedness, is the legal, valid and binding obligation of such issuer and
such issuer is not in default thereunder.


 


(b)           In addition, (i) to such Grantor’s knowledge none of
the Pledged Collateral owned by it has been issued or transferred in violation
of the securities registration, securities disclosure or similar laws of any
jurisdiction to which such issuance or transfer may be subject,
(ii) except for restrictions and limitations imposed by the Loan Documents
or securities laws generally, the Pledged Collateral is and will continue to be
freely transferable and assignable, (iii) there are existing no options,
warrants, calls or commitments of any character whatsoever relating to such
Pledged Collateral or which obligate the issuer of any Equity Interest included
in the Pledged Collateral to issue additional Equity Interests, and none of the
Pledged Collateral is subject to any right of first refusal, shareholders
agreement, charter or by-law provisions or contractual restriction of any
nature that would materially prohibit, impair, delay or otherwise affect the
pledge of such Pledged Collateral hereunder, the sale or


 


11

















 


disposition thereof pursuant hereto or the exercise
by the Administrative Agent of rights and remedies hereunder and (iv) no
consent, approval, authorization, or other action by, and no giving of notice,
filing with, any governmental authority or any other Person is required for the
pledge by such Grantor of such Pledged Collateral pursuant to this Security
Agreement or for the execution, delivery and performance of this Security
Agreement by such Grantor, or for the exercise by the Administrative Agent of
the voting or other rights provided for in this Security Agreement or for the
remedies in respect of the Pledged Collateral pursuant to this Security
Agreement, except as may be required in connection with such disposition by
laws affecting the offering and sale of securities generally.


 


(c)           Except as set forth in Exhibit E, or as
expressly permitted pursuant to Section 6.06 of the Credit Agreement, such
Grantor owns 100% of the issued and outstanding Equity Interests which
constitute Pledged Collateral owned by it and none of the Pledged Collateral
which represents Indebtedness owed to such Grantor is subordinated in right of
payment to other Indebtedness or subject to the terms of an indenture.


 


(d)           Pledged Debt. 
Each Intercompany Note and, to the knowledge of such Grantor, any other
Pledged Debt constitutes the legal, valid and binding obligation of the obligor
with respect thereto, enforceable in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors’ rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and subject to an implied covenant of good faith and fair
dealing.


 


ARTICLE IV

COVENANTS


 


From
the date of this Security Agreement, and thereafter until this Security
Agreement is terminated, each Grantor agrees that:


 


4.1           General.


 


(a)           Collateral Records. 
Such Grantor will maintain complete and accurate (in all material
respects) books and records with respect to the Collateral owned by it, and
furnish to the Administrative Agent, such reports relating to such Collateral
as the Administrative Agent shall from time to time reasonably request.


 


(b)           Authorization to File Financing Statements;
Ratification.  Such Grantor hereby
authorizes the Administrative Agent to file, and if requested will deliver to
the Administrative Agent all financing statements and other documents and take
such other actions as may from time to time be reasonably requested by the
Administrative Agent in order to maintain a first perfected security interest
in and, if applicable, Control of, the Collateral owned by such Grantor.  Any financing statement filed by the
Administrative Agent may be filed in any filing office in any UCC jurisdiction
and may (i) indicate such Grantor’s Collateral (1) as all assets of
the Grantor or words of similar effect, regardless of whether any particular
asset comprised in the Collateral falls within the scope of Article 9 of
the UCC of such jurisdiction, or (2) by any other description which
reasonably approximates the description contained in this Security Agreement,
and (ii) contain any other information reasonably required by part 5 of
Article 9 of the UCC filing office acceptance of any financing statement
or amendment, including (A) whether such Grantor is an organization, the
type of organization and any organization identification number issued to such
Grantor, and (B) in the case of a financing statement filed as a fixture
filing or indicating such Grantor’s Collateral as as-extracted collateral or
timber to be cut, a reasonably sufficient description of real property to which
the Collateral relates.  Such Grantor
also agrees to furnish any such information to the Administrative Agent
promptly upon request.  Such Grantor also
ratifies its authorization for the


 


12

















 


Administrative Agent to have filed in any UCC
jurisdiction any initial financing statements or amendments thereto if filed
prior to the date hereof.


 


(c)           Intellectual Property Filings. The Administrative
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 documents, including Intellectual
Property Security Agreements, 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 Administrative Agent as
secured party.


 


(d)           Further Assurances. 
Such Grantor will, if so reasonably requested by the Administrative
Agent, furnish to the Administrative Agent, as often as the Administrative
Agent reasonably requests, statements and schedules further identifying and
describing the Collateral owned by it and such other reports and information in
connection with its Collateral as the Administrative Agent may reasonably
request, in each case subject to the terms and conditions of the Credit
Agreement, all in such detail as the Administrative Agent may specify.  Such Grantor shall, at its own expense, use
commercially reasonable efforts to defend title to the Collateral against all
persons and to defend the security interest of the Administrative Agent and the
other Secured Parties in the Collateral and the priority thereof against any
Lien not expressly permitted hereunder.


 


(e)           Disposition of Collateral.  Such Grantor will not sell, lease, license or
otherwise dispose of the Collateral owned by it except for dispositions
expressly permitted pursuant to Section 6.04 of the Credit Agreement.


 


(f)            Liens. 
Except as expressly permitted pursuant to Section 6.02 of the
Credit Agreement, such Grantor will not create, incur, or suffer to exist any
Lien on the Collateral owned by it except (i) the security interest
created by this Security Agreement, and (ii) other Permitted Encumbrances.


 


(g)           Other Financing Statements.  Such Grantor will not authorize the filing of
any financing statement naming it as debtor covering all or any portion of the
Collateral owned by it, except with respect to Liens permitted by Section 4.1(f).  Such Grantor acknowledges that it is not
authorized to file any financing statement or amendment or termination
statement with respect to any financing statement other than with respect to any
Lien permitted by Section 4.1(f), without the prior written consent of the
Administrative Agent, subject to such Grantor’s rights under
Section 9-509(d)(2) of the UCC.


 


(h)           Locations. 
Such Grantor will not (i) maintain any Collateral, in an aggregate value
in excess of $500,000, owned by it at any location other than those locations
listed on Exhibit A (ii) otherwise change, or add to, such
locations without the Administrative Agent’s prior written consent (such
consent not to be unreasonably withheld, delayed or conditioned) as required by
the Credit Agreement (and if the Administrative Agent gives such consent, such
Grantor will use commercially reasonable efforts to obtain a Collateral Access
Agreement for each such location to the extent required by the Credit
Agreement), or (iii) change its principal place of business or chief
executive office from the location identified on Exhibit A, other
than as permitted by the Credit Agreement.


 


(i)            Compliance with Terms.  Such Grantor will perform and comply with all
obligations in respect of the Collateral owned by it and all agreements to
which it is a party or by which it is bound relating to such Collateral, except
where a failure to do so, individually or in the aggregate would not reasonably
be expected to result in a material adverse effect.


 


13

















 


4.2           Receivables.


 


(a)           Certain Agreements on Receivables.  Such Grantor will not make or agree to make
any discount, credit, rebate or other reduction in the original amount owing on
a Receivable or accept in satisfaction of a Receivable less than the original
amount thereof, except that, prior to the occurrence of an Event of Default,
such Grantor may reduce the amount of Accounts arising from the sale of
Inventory in accordance with its present policies and in the ordinary course of
business, or as otherwise permitted pursuant to the Credit Agreement.


 


(b)           Collection of Receivables.  Except as otherwise provided in this Security
Agreement and the Credit Agreement, such Grantor will use commercially
reasonable efforts to collect and enforce, at such Grantor’s sole expense, all
amounts due or hereafter due to such Grantor under the Receivables owned by it,
in accordance with its present policies and in the ordinary course of business.


 


(c)           Delivery of Invoices.  Such Grantor will deliver to the
Administrative Agent as soon as reasonably practicable upon its request after the occurrence and during the
continuation of an Event of Default duplicate invoices with respect to
each Account owned by it bearing such language of assignment as the
Administrative Agent shall reasonably specify.


 


(d)           Disclosure of Counterclaims on Receivables.  If (i) any discount, credit or agreement
to make a rebate or to otherwise reduce the amount owing on any Receivable
owned by such Grantor other than in accordance with its present policies and in
the ordinary course of business or as otherwise expressly permitted pursuant to
the Credit Agreement exists or (ii) if, to the knowledge of such Grantor,
any dispute, setoff, claim, counterclaim or defense exists or has been asserted
or threatened in writing with respect to any such Receivable, such Grantor will
promptly disclose such fact to the Administrative Agent in writing.  Such Grantor shall send the Administrative
Agent a copy of each credit memorandum in excess of $50,000 (or such higher
amount as may be agreed to by the Administrative Agent in its Permitted
Discretion) promptly after it is issued, and such Grantor shall promptly report
each such credit memo and each of the facts required to be disclosed to the
Administrative Agent in accordance with this Section 4.2(d) on
the Borrowing Base Certificate submitted by the Borrower.


 


(e)           Electronic Chattel Paper.  Such Grantor shall grant the Administrative
Agent Control of all electronic chattel paper in accordance with the UCC and
all “transferable records” as defined in each of the Uniform Electronic
Transactions Act and the Electronic Signatures in Global and National Commerce
Act.


 


4.3           Inventory and Equipment.


 


(a)           Maintenance of Goods.  Such Grantor will use commercially reasonable
efforts to maintain, preserve, protect and keep its Inventory and the Equipment
in reasonably good repair and working and saleable condition, except for
damaged or defective goods arising in the ordinary course of such Grantor’s
business and except for ordinary wear and tear in respect of the Equipment.


 


(b)           Returned Inventory. 
If an Account Debtor returns any Inventory to such Grantor when no Event
of Default exists, then such Grantor shall promptly determine the reason for
such return and shall issue a credit memorandum to the Account Debtor in the
appropriate amount.  Such Grantor shall
immediately report to the Administrative Agent any return involving an amount
in excess of $100,000 (or such higher amount as may be agreed to by the
Administrative Agent in its Permitted Discretion).  Each such report shall indicate the purported
reasons for the returns and the locations and condition of the returned
Inventory.  In the event any Account
Debtor returns Inventory to such Grantor when an Event of Default exists, such
Grantor, upon the reasonable request of the Administrative Agent,


 


14

















 


shall: (i) hold the returned Inventory in trust
for the Administrative Agent; (ii) segregate all returned Inventory from
all of its other property; (iii) dispose of the returned Inventory solely
according to the Administrative Agent’s written instructions; and (iv) not
issue any credits or allowances with respect thereto without the Administrative
Agent’s prior written consent.  All
returned Inventory shall be subject to the Administrative Agent’s Liens
thereon.  Whenever any Inventory is
returned, the related Account shall be deemed ineligible to the extent of the
amount owing by the Account Debtor with respect to such returned Inventory.


 


(c)           Inventory Count; Perpetual Inventory System.  Such Grantor will conduct a physical count of
its Inventory at least once per fiscal year, and after and during the
continuation of an Event of Default, at such other times as the Administrative
Agent reasonably requests.  Such Grantor,
at its own expense, shall deliver to the Administrative Agent the results of
each physical verification, which such Grantor has made, or has caused any
other Person to make on its behalf, of all or any material portion of its
Inventory.  Such Grantor will maintain a
perpetual inventory reporting system at all times.


 


(d)           Equipment. 
Such Grantor shall promptly inform the Administrative Agent of any
additions to or deletions from its Equipment which individually have a fair
market value in excess of $1,000,000 and $2,000,000 in the aggregate.  Such Grantor shall not permit any Equipment
to become a fixture with respect to real property or to become an accession
with respect to other personal property with respect to which real or personal
property the Administrative Agent does not have a Lien.  Such Grantor will not, without the
Administrative Agent’s prior written consent (such consent not to be
unreasonably withheld or delayed), alter or remove any identifying symbol or
number on any of such Grantor’s Equipment constituting Collateral.


 


(e)           Property.  If
at any time any Grantor shall take a security interest in any property of an Account
Debtor or any other Person with a fair
market value in excess of $150,000 to secure payment and performance of
an Account, such Grantor shall promptly assign such security interest to the
Administrative Agent; provided that the aggregate fair market value of
all property in which the Grantors have taken a security interest and have not
assigned such security interests to the Administrative Agent shall not exceed
$300,000. 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.


 


4.4           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; provided, however,
that in the case of any limited liability company or limited partnership that,
in either case, is formed or acquired by a Grantor after the Effective Date,
Borrower shall cause interests in such limited liability company or limited
partnership to be represented by a certificate, to be a “security” within the
meaning of Article 8 of the New York UCC and to be governed by
Article 8 of the New York UCC, in each case not later than 20 Business
Days (or such later dates from time to time consented to by the Administrative
Agent in its reasonable discretion) after the date of formation or acquisition
thereof, as applicable.


 


4.5           Delivery of Instruments, Securities, Chattel Paper and
Documents.  Such Grantor will
(a) deliver to the Administrative Agent promptly upon execution of this
Security Agreement the originals of all Chattel Paper, Securities and
Instruments (including certificates evidencing Pledged Debt in an aggregate
principal amount exceeding $250,000 and Pledged Equity Interests) constituting
Collateral owned by it (if any then exist), in each case duly endorsed by an
effective indorsement (within the meaning of Section 8-107 of the UCC), or
accompanied by undated instruments of transfer duly endorsed by such an effective
endorsement, in each case, to the Administrative Agent or in blank,
(b) hold in trust


 


15

















 


for the Administrative Agent upon receipt and as
soon as reasonably practicable thereafter deliver to the Administrative Agent
any such Chattel Paper, Securities and Instruments (including certificates
evidencing Pledged Debt in an aggregate principal amount exceeding $250,000 and
Pledged Equity Interests) constituting Collateral in each case duly endorsed by
an effective indorsement (within the meaning of Section 8-107 of the UCC),
or accompanied by undated instruments of transfer duly endorsed by such an
effective endorsement, in each case, to the Administrative Agent or in blank,
(c) upon the Administrative Agent’s reasonable request, deliver to the
Administrative Agent (and thereafter hold in trust for the Administrative Agent
upon receipt and promptly deliver to the Administrative Agent) any Document
evidencing or constituting Collateral and (d) upon the Administrative
Agent’s reasonable request, deliver to the Administrative Agent a duly executed
amendment to this Security Agreement, in the form of Exhibit G
hereto (the “Amendment”), pursuant to which such Grantor will pledge
such additional Collateral.  Such Grantor
hereby authorizes the Administrative Agent to attach each Amendment to this
Security Agreement and agrees that all additional Collateral owned by it set
forth in such Amendment shall be considered to be part of the Collateral.


 


4.6           Uncertificated Pledged Collateral.  Such Grantor will use commercially reasonable
efforts to cause the appropriate issuers (and, if held with a securities
intermediary, such securities intermediary) of uncertificated securities or
other types of Pledged Collateral owned by it not represented by certificates
to mark their books and records with the numbers and face amounts of all such
uncertificated securities or other types of Pledged Collateral not represented
by certificates and all rollovers and replacements therefor to reflect the Lien
of the Administrative Agent granted pursuant to this Security Agreement.  With respect to any Pledged Collateral owned
by it on the Effective Date, such Grantor will use commercially reasonable
efforts to cause (a) the issuers of uncertificated securities which are
Pledged Collateral and (b) any securities intermediary which is the holder
of any such Pledged Collateral, to cause the Administrative Agent to have and
retain Control over such Pledged Collateral. 
Without limiting the foregoing, such Grantor will, (i) with respect
to any such Pledged Collateral held with a securities intermediary as of the
Effective Date, cause such securities intermediary, no later than 90 days after
the Effective Date (or such later date as the Administrative Agent shall
agree), to enter into a control agreement with the Administrative Agent, in
form and substance reasonably satisfactory to the Administrative Agent, giving
the Administrative Agent Control and (ii) otherwise with respect to any
Pledged Collateral, prior to the opening or replacement of any Securities
Account (including the replacement of any Securities Account in place as of the
Effective Date) or any applicable securities intermediary receiving any Pledged
Collateral, enter into a control agreement with such securities intermediary
and the Administrative Agent, in form and substance reasonably satisfactory to
the Administrative Agent, giving the Administrative Agent Control.


 


4.7           Pledged Collateral.


 


(a)           Changes in Capital Structure of Issuers.  Except as expressly permitted pursuant to
Section 6.03 of the Credit Agreement, such Grantor will not
(i) permit any issuer of an Equity Interest constituting Pledged
Collateral owned by it to dissolve, merge, liquidate, retire any of its Equity
Interests or other Instruments or Securities evidencing ownership, reduce its
capital, sell or encumber all or substantially all of its assets (except for
Permitted Encumbrances, Liens expressly permitted pursuant to Section 6.02
of the Credit Agreement and sales of assets permitted pursuant to Section 4.1(e))
or merge or consolidate with any other entity, or (ii) vote any such
Pledged Collateral in favor of any of the foregoing.


 


(b)           Issuance of Additional Securities.  Except as expressly permitted pursuant to
Section 6.12 of the Credit Agreement, such Grantor will not permit the
issuer of an Equity Interest constituting Pledged Collateral owned by it to
issue additional Equity Interests, any right to receive the same or any right
to receive earnings, except to such Grantor.


 


16

















 


(c)           Equity
Interests. No Grantor will permit any Equity Interest which is included
within the Collateral to constitute a Security, nor will any Grantor allow any
issuer of any such Equity Interest to take any action to have such interests
treated as a Security, unless (i) all certificates or other documents
constituting such Security have promptly been delivered to the Administrative
Agent and such Security is properly defined as such under Article 8 of the
UCC of the applicable jurisdiction, whether as a result of actions by the
issuer thereof or otherwise, or (ii) the Administrative Agent has entered
into a control agreement with the issuer of such Security or with a securities
intermediary relating to such Security and such Security is defined as such
under Article 8 of the UCC of the applicable jurisdiction, whether as a
result of actions by the issuer thereof or otherwise.


 


(d)           Registration of Pledged Collateral.  Upon the occurrence and during the
continuance of an Event of Default, such Grantor will permit any registerable
Pledged Collateral owned by it to be registered in the name of the
Administrative Agent or its nominee at any time at the option of the Required
Secured Parties.


 


(e)           Less than Wholly-Owned Pledged Collateral. With
respect to any issuer of Pledged Collateral consisting of partnership interests
or limited liability company interests in which the Grantor owns less than 100%
of such Equity Interests, promptly upon the occurrence of the Term Loan
Obligations Payment Date, Grantor shall use commercially reasonable efforts to
cause the partnership agreement or limited liability company agreement of such
entity to be amended to include the following provision:  “Notwithstanding any other provision of this
agreement, in the event that an Event of Default shall have occurred under that
certain Amended and Restated Credit Agreement (as such Amended and Restated
Credit Agreement may be amended, modified, supplemented or restated from time to
time) dated as of September 30, 2010 among Clopay Ames True Temper Holding
Corp., as Borrower, Clopay Ames True Temper LLC, as Holdings, the subsidiaries
of Holdings from time to time party thereto, JPMorgan Chase Bank, N.A., as
Administrative Agent, the lenders from time to time parties thereto and the
Administrative Agent shall exercise any of its rights and remedies with respect
to equity interests in the company, then each [member][partner] hereby
irrevocably consents to the transfer of any equity interest and all related
management and other rights in the company to the Administrative Agent or any
designee of the Administrative Agent. 
The Administrative Agent is a third-party beneficiary of this provision
and this provision cannot be amended or repealed without the consent of the
Administrative Agent until the Credit Agreement has been discharged in full.”


 


(f)            Exercise of Rights in Pledged Collateral.


 


(i)            Without in any way limiting the foregoing and subject to
clause (ii) below, such Grantor shall have the right to exercise all
voting rights or other rights relating to the Pledged Collateral owned by it
for all purposes not inconsistent with this Security Agreement, the Credit
Agreement or any other Loan Document; provided, however, that no
vote or other right shall be exercised or action taken which would have the
effect of materially impairing the rights of the Administrative Agent in
respect of such Pledged Collateral.


 


(ii)           Such Grantor will permit the Administrative Agent or its
nominee at any time after the occurrence and during the continuance of an Event
of Default to solely and exclusively exercise all voting rights or other rights
relating to the Pledged Collateral owned by it, including, without limitation,
exchange, subscription or any other rights, privileges, or options pertaining
to any Equity Interest or Investment Property constituting such Pledged
Collateral as if it were the absolute owner thereof.


 


(iii)          Such Grantor shall be entitled to collect and receive for
its own use all cash dividends and interest paid in respect of the Pledged
Collateral owned by it to the extent not


 


17

















 


in violation of the Credit
Agreement other than any of the following distributions and payments
(collectively referred to as the “Excluded Payments”):
(A) dividends and interest paid or payable other than in cash in respect
of such Pledged Collateral, and instruments and other property received,
receivable or otherwise distributed in respect of, or in exchange for, any
Pledged Collateral; (B) dividends and other distributions paid or payable
in cash in respect of such Pledged Collateral in connection with a partial or
total liquidation or dissolution or in connection with a reduction of capital,
capital surplus or paid-in capital of an issuer; and (C) cash paid,
payable or otherwise distributed, in respect of principal of, or in redemption
of, or in exchange for, such Pledged Collateral; provided, however,
that until actually paid, all rights to such distributions shall remain subject
to the Lien created by this Security Agreement. 
Upon the occurrence and during the continuance of an Event of Default,
then all Stock Rights, including all rights of such Grantor to dividends, interest,
principal or other distributions, shall cease and thereupon become vested in
the Administrative Agent, which shall have the sole and exclusive right to
retain such dividends, interest, principal or other distributions.


 


(iv)          All Excluded Payments and all other distributions in
respect of any of the Pledged Collateral owned by such Grantor, whenever paid
or made, shall be  promptly made subject
to the Lien of the Administrative Agent in the same manner as if it were
Collateral on the date hereof and, in the case of any Excluded Payment described
in clause 4.7(d)(iii)(A), shall be forthwith delivered to the Administrative
Agent in the same form and so received with any necessary endorsement.


 


4.8           Intellectual Property.


 


(a)           Such Grantor will use its reasonable efforts to secure all
consents and approvals necessary or appropriate for the grant of the security
interest for the benefit of the Administrative Agent of any License held by
such Grantor and to enforce the security interests granted hereunder.


 


(b)           Such Grantor shall notify the Administrative Agent
promptly if it knows that any application or registration relating to any
Patent, Trademark or Copyright (now or hereafter existing) may become abandoned
or dedicated excluding the expiration by its terms of any License or the
expiration at the conclusion of its maximum statutory term of any Patent or
Copyright owned by Grantor, or of any adverse determination or development
(including the institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office, the United States
Copyright Office or any court, (but excluding any non-final office actions or
similar non-final actions or proceedings) regarding such Grantor’s ownership of
any Patent, Trademark or Copyright, its right to register the same, or to keep
and maintain the same.


 


(c)           Within 30 Business Days after which, either directly or
through any agent, employee, licensee or designee, any Grantor files an
application for the registration of any Patent, Trademark or Copyright with the
United States Patent and Trademark Office, the United States Copyright Office
or any similar office or agency, such Grantor shall report such filing to the
Administrative Agent, and, upon the reasonable request of the Administrative
Agent, such Grantor shall execute and deliver any and all security agreements
as the Administrative Agent may reasonably request to evidence the
Administrative Agent’s first priority security interest on such Patent,
Trademark or Copyright, and the General Intangibles of such Grantor relating
thereto or represented thereby.


 


(d)           Such Grantor shall take all actions necessary or
reasonably requested by the Administrative Agent to maintain and pursue each
application, to obtain the relevant registration and to maintain the registration
of each of its Patents, Trademarks and Copyrights (now or hereafter existing),
including the filing of applications for renewal, affidavits of use, affidavits
of noncontestability and


 


18

















 


opposition and interference and cancellation
proceedings, except as such Grantor may otherwise determine in the exercise of
its reasonable business judgment.


 


(e)           Such Grantor shall, unless it shall reasonably determine
that such Patent, Trademark or Copyright is not material to the conduct of its
business or operations, sue for infringement, misappropriation or dilution,
except as such Grantor may determine in its reasonable business judgment, to
recover any and all damages for such infringement, misappropriation or dilution,
or shall take such other reasonable and necessary actions as the Administrative
Agent shall deem appropriate under the circumstances to protect such material
Patent, Trademark or Copyright.  In the
event that such Grantor institutes suit because any of its Patents, Trademarks
or Copyrights constituting Collateral is infringed upon, or misappropriated or
diluted by a third party, such Grantor shall comply with Section 4.8.


 


4.9           Commercial Tort Claims.  Such Grantor shall promptly, and in any event
within ten Business Days after the same is acquired by it, notify the
Administrative Agent of any commercial tort claim (as defined in the UCC) in
excess of $200,000 acquired by it and, unless the Administrative Agent
otherwise consents, such Grantor shall enter into a supplement to this Security
Agreement, in the form of Exhibit G hereto, granting to
Administrative Agent a first priority security interest in such commercial tort
claim.


 


4.10         Letter-of-Credit Rights.  If such Grantor is or becomes the beneficiary
of a letter of credit, with a stated value in excess of $200,000, it shall
promptly, and in any event within ten Business Days after becoming aware that
it is a beneficiary, notify the Administrative Agent thereof and cause the
issuer and/or confirmation bank to (i) consent to the assignment of any
Letter-of-Credit Rights to the Administrative Agent and (ii) agree to
direct all payments thereunder to a Deposit Account at the Administrative Agent
or subject to a Control Agreement for application to the Secured Obligations,
in accordance with Section 2.18 of the Credit Agreement, all in form and
substance reasonably satisfactory to the Administrative Agent.


 


4.11         Federal, State or Municipal Claims.  Such Grantor will promptly notify the
Administrative Agent of any Collateral which constitutes a material claim
against the United States government or any state or local government or any
instrumentality or agency thereof, the assignment of which claim is restricted
by federal, state or municipal law.


 


4.12         No Interference. 
Such Grantor agrees that it will not interfere with any right, power and
remedy of the Administrative Agent provided for in this Security Agreement or
now or hereafter existing at law or in equity or by statute or otherwise, or
the exercise or beginning of the exercise by the Administrative Agent of any
one or more of such rights, powers or remedies.


 


4.13         Insurance. 
(a)  In the event any Collateral is located in any area that has
been designated by the Federal Emergency Management Agency as a “Special Flood
Hazard Area”, such Grantor shall use commercially reasonable efforts to
purchase and maintain flood insurance on such Collateral (including any
personal property which is located on any real property leased by such Loan
Party within a “Special Flood Hazard Area”). 
The amount of flood insurance required by this Section shall be in
an amount equal to the lesser of the total Commitments or the total replacement
cost value of the improvements.


 


(b)           All insurance policies required hereunder and under
Section 5.06 of the Credit Agreement shall name the Administrative Agent
(for the benefit of the Secured Parties) as an additional insured or as loss
payee, as applicable, and shall contain loss payable clauses or mortgagee
clauses, through endorsements in form and substance reasonably satisfactory to
the Administrative Agent, which provide that: (i) all proceeds thereunder
with respect to any Collateral shall be payable to the Administrative Agent;
(ii) no such insurance shall be affected by any act or neglect of the
insured or


 


19

















 


owner of the property described in such policy; and
(iii) such policy and loss payable or mortgagee clauses may be canceled,
amended, or terminated only upon at least thirty days prior written notice
given to the Administrative Agent.


 


(c)           All premiums on any such insurance shall be paid when due
by such Grantor, and copies of the policies delivered to the Administrative
Agent.  If such Grantor fails to obtain
any insurance as required by this Section, the Administrative Agent may obtain
such insurance at the Borrowers’ expense. 
By purchasing such insurance, the Administrative Agent shall not be
deemed to have waived any Default arising from the Grantor’s failure to
maintain such insurance or pay any premiums therefor.


 


4.14         Collateral Access Agreements.  Such Grantor shall use commercially
reasonable efforts to obtain a Collateral Access Agreement, from the lessor of
each leased property, mortgagee of owned property or bailee or consignee with
respect to any warehouse, processor or converter facility or other location
where Equipment or Inventory in excess of $500,000 is stored or located, which
agreement or letter shall provide access rights, contain a waiver or subordination
of all Liens or claims that the landlord, mortgagee, bailee or consignee may
assert against the Collateral at that location, and shall otherwise be
reasonably satisfactory in form and substance to the Administrative Agent.  With respect to such locations or warehouse
space leased as of the Effective Date and thereafter at which Inventory or
Equipment valued in excess of $500,000 is maintained, if the Administrative
Agent has not received a Collateral Access Agreement within 90 days after the
Effective Date (or, if later, as of the date such location is acquired or
leased), the Borrowers’ Eligible Inventory at that location shall be subject to
such Rent Reserves as may be established by the Administrative Agent in its
Permitted Discretion.  Such Grantor shall
timely and fully pay and perform its obligations in all material respects under
all leases and other agreements with respect to each leased location or third
party warehouse where any material Collateral is or may be located.


 


4.15         Change of Name or Location; Change of Fiscal Year.  Such Grantor shall not (a) change its
name as it appears in official filings in the state of its incorporation or
organization, (b) change its chief executive office, principal place of
business, mailing address, corporate offices or warehouses or locations at
which Collateral is held or stored, or the location of its records concerning
the Collateral as set forth in the Security Agreement, (c) change the type
of entity that it is, (d) change its organization identification number,
if any, issued by its state of incorporation or other organization, or
(e) change its state of incorporation or organization, in each case,
unless the Administrative Agent shall have received at least thirty days prior
written notice of such change and the Administrative Agent shall have
acknowledged in writing that either (1) such change will not adversely
affect the validity, perfection or priority of the Administrative Agent’s
security interest in the Collateral, or (2) any reasonable action requested
by the Administrative Agent in connection therewith has been completed or taken
(including any action to continue the perfection of any Liens in favor of the
Administrative Agent, on behalf of Secured Parties, in any Collateral), provided
that, any new location shall be in the continental U.S.


 


ARTICLE V

REMEDIES


 


5.1           Remedies.


 


(a)           Upon the occurrence of an Event of Default that is
continuing, the Administrative Agent may,
with the concurrence or at the direction of the Required Secured Parties, exercise
any or all of the following rights and remedies:


 


(i)            those rights and remedies provided in this Security
Agreement, the Credit Agreement, or any other Loan Document; provided
that, this Section 5.1(a) shall
not be


 


20
















 


understood to limit any
rights or remedies available to the Administrative Agent and the Secured
Parties prior to an Event of Default;


 


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


 


(iii)          give notice of sole control or any other instruction under
any Control Agreement or and other control agreement with any securities
intermediary and take any action therein with respect to such Collateral;


 


(iv)          without notice (except as specifically provided in
Section 8.1 or elsewhere herein), demand or advertisement of any kind to
any Grantor or any other Person, enter the premises of any Grantor where any
Collateral is located (through self-help and without judicial process) to
collect, receive, assemble, process, appropriate, sell, lease, assign, grant an
option or options to purchase or otherwise dispose of, deliver, or realize
upon, the Collateral or any part thereof in one or more parcels at public or
private sale or sales (which sales may be adjourned or continued from time to
time with or without notice and may take place at any Grantor’s premises or
elsewhere), for cash, on credit or for future delivery without assumption of
any credit risk, and upon such other terms as the Administrative Agent may deem
commercially reasonable; and


 


(v)           concurrently with written notice to the applicable
Grantor, transfer and register in its name or in the name of its nominee the
whole or any part of the Pledged Collateral, to exchange certificates or
instruments representing or evidencing Pledged Collateral for certificates or
instruments of smaller or larger denominations, to exercise the voting and all
other rights as a holder with respect thereto, to collect and receive all cash
dividends, interest, principal and other distributions made thereon and to
otherwise act with respect to the Pledged Collateral as though the
Administrative Agent was the outright owner thereof.


 


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


 


(c)           The Administrative Agent shall have the right upon any
such public sale or sales and, to the extent permitted by law, upon any such
private sale or sales, to purchase for the benefit of the Secured Parties, the
whole or any part of the Collateral so sold, free of any right of equity
redemption, which equity redemption the Grantor hereby expressly releases.


 


(d)           Until the Administrative Agent is able to effect a sale,
lease, or other disposition of Collateral, the Administrative Agent shall have
the right to hold or use Collateral, or any part thereof, to the extent that it
deems appropriate for the purpose of preserving Collateral or its value or for
any other purpose deemed appropriate by the Administrative Agent.  The Administrative Agent may, if it so
elects, seek the appointment of a receiver or keeper to take possession of
Collateral and to enforce any of the Administrative Agent’s remedies (for the
benefit of the Secured Parties), with respect to such appointment without prior
notice or hearing as to such appointment.


 


(e)           If, after the Credit Agreement has terminated by its terms
and all of the Obligations have been paid in full, there remain Secured
Obligations outstanding, the Required Secured


 


21

















 


Parties may exercise the remedies provided in this
Section 5.1 upon the occurrence of any event which would allow or require
the termination or acceleration of any Secured Obligations pursuant to the
terms of a Specified Swap Agreement or a Specified Banking Service Agreement.


 


(f)            Notwithstanding the foregoing, neither the Administrative
Agent nor the Secured Parties shall be required to (i) make any demand
upon, or pursue or exhaust any of their rights or remedies against, any
Grantor, any other obligor, guarantor, pledgor or any other Person with respect
to the payment of the Secured Obligations or to pursue or exhaust any of their
rights or remedies with respect to any Collateral therefor or any direct or
indirect guarantee thereof, (ii) marshal the Collateral or any guarantee
of the Secured Obligations or to resort to the Collateral or any such guarantee
in any particular order, or (iii) effect a public sale of any Collateral.


 


(g)           Each Grantor recognizes that the Administrative Agent may
be unable to effect a public sale of any or all the Pledged Collateral and may
be compelled to resort to one or more private sales thereof in accordance with clause
(a) above.  Each Grantor also
acknowledges that any private sale may result in prices and other terms less
favorable to the seller than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall not
be deemed to have been made in a commercially unreasonable manner solely by
virtue of such sale being private.  The
Administrative Agent shall be under no obligation to delay a sale of any of the
Pledged Collateral for the period of time necessary to permit any Grantor or
the issuer of the Pledged Collateral to register such securities for public
sale under the Securities Act of 1933, as amended, or under applicable state
securities laws, even if the applicable Grantor and the issuer would agree to
do so.


 


5.2           Grantor’s Obligations Upon an Event of Default.  Upon the request of the Administrative Agent
after the occurrence and during the continuation of an Event of Default, each
Grantor will:


 


(a)           assemble and make available to the Administrative Agent
the Collateral and all books and records relating thereto at any place or
places reasonably specified by the Administrative Agent, whether at a Grantor’s
premises or elsewhere;


 


(b)           permit the Administrative Agent, by the Administrative
Agent’s representatives and agents, to enter, occupy and use  any premises where all or any part of the
Collateral, or the books and records relating thereto, or both, are located, to
take possession of all or any part of the Collateral or the books and records
relating thereto, or both, to remove all or any part of the Collateral or the
books and records relating thereto, or both, and to conduct sales of the
Collateral, without any obligation to pay the Grantor for such use and
occupancy;


 


(c)           prepare and file, or use commercially reasonable efforts
to cause an issuer of Pledged Collateral to prepare and file, with the
Securities and Exchange Commission or any other applicable government agency,
registration statements, a prospectus and such other documentation in
connection with the Pledged Collateral as the Administrative Agent may
reasonably request, all in form and substance reasonably satisfactory to the
Administrative Agent, and furnish to the Administrative Agent, or use
commercially reasonable efforts to cause an issuer of Pledged Collateral to
furnish to the Administrative Agent, any information regarding the Pledged
Collateral in such detail as the Administrative Agent may reasonably specify;


 


(d)           take, or cause an issuer of Pledged Collateral to take,
any and all actions necessary to register or qualify the Pledged Collateral to
enable the Administrative Agent to consummate a public sale or other
disposition of the Pledged Collateral; and


 


22

















 


(e)           at its own expense, cause the independent certified public
accountants then engaged by each Grantor to prepare and deliver to the
Administrative Agent and each Lender, at any time, and from time to time,
promptly upon the Administrative Agent’s request, the following reports with
respect to the applicable Grantor: (i) a reconciliation of all Accounts;
(ii) an aging of all Accounts; (iii) trial balances; and (iv) a
test verification of such Accounts.


 


5.3           Grant of Intellectual Property License.  For the purpose of enabling the
Administrative Agent to exercise the rights and remedies under this Article V
at such time as the Administrative Agent shall be lawfully entitled to exercise
such rights and remedies, each Grantor hereby (a) grants to the
Administrative Agent, for the benefit of Secured Parties, an irrevocable,
nonexclusive license (exercisable after the occurrence and during the
continuance of an Event of Default without payment of royalty or other
compensation to any Grantor) to use, license or sublicense any Intellectual
Property rights now owned or hereafter acquired by such Grantor, and wherever
the same may be located, and including in such license access to all media in
which any of the licensed items may be recorded or stored and to all computer
software and programs used for the compilation or printout thereof and
(b) irrevocably agrees that after the occurrence and during the
continuance of an Event of Default the Administrative Agent may sell any of such
Grantor’s Inventory directly to any person, including without limitation
persons who have previously purchased the Grantor’s Inventory from such Grantor
and in connection with any such sale or other enforcement of the Administrative
Agent’s rights under this Security Agreement, may sell Inventory which bears
any Trademark owned by or licensed to such Grantor and any Inventory that is
covered by any Copyright owned by or licensed to such Grantor and may finish
any work in process and affix any Trademark owned by or licensed to such
Grantor and sell such Inventory as provided herein.


 


ARTICLE VI

ACCOUNT VERIFICATION; ATTORNEY IN FACT; PROXY


 


6.1           Account Verification.  The Administrative Agent may after the
occurrence and during the continuance of an Event of Default, in the
Administrative Agent’s own name, in the name of a nominee of the Administrative
Agent, or in the name of any Grantor communicate (by mail, telephone, facsimile
or otherwise) with the Account Debtors of any such Grantor, parties to
contracts with any such Grantor and obligors in respect of Instruments of any
such Grantor to verify with such Persons, to the Administrative Agent’s
satisfaction, the existence, amount, terms of, and any other matter relating
to, Accounts, Instruments, Chattel Paper, payment intangibles and/or other
Receivables.


 


6.2           Authorization for Secured Party to Take Certain Action.


 


(a)           After the occurrence and during the continuation of an
Event of Default (except in the case of clauses (i) and (iii) below
which can be performed by the Administrative Agent at any time), each Grantor
irrevocably authorizes the Administrative Agent at any time and from time to
time in the sole discretion of the Administrative Agent and appoints the
Administrative Agent as its attorney in fact (i) to execute on behalf of
such Grantor as debtor and to file financing statements necessary or desirable
in the Administrative Agent’s sole discretion to perfect and to maintain the
perfection and priority of the Administrative Agent’s security interest in the
Collateral, (ii) to endorse and collect any cash proceeds of the
Collateral, (iii) to file a carbon, photographic or other reproduction of
this Security Agreement or any financing statement with respect to the
Collateral as a financing statement and to file any other financing statement
or amendment of a financing statement (which does not add new collateral or add
a debtor) in such offices as the Administrative Agent in its sole discretion
deems necessary or desirable to perfect and to maintain the perfection and
priority of the Administrative Agent’s security interest in the Collateral,
(iv) to contact and enter into one or more agreements with the issuers of
uncertificated securities which are Pledged Collateral or with securities
intermediaries holding Pledged Collateral as may be necessary or advisable to
give the Administrative Agent Control over such Pledged


 


23

















 


Collateral, (v) to apply the proceeds of any
Collateral received by the Administrative Agent to the Secured Obligations as
provided in Section 7.3, (vi) to discharge past due taxes,
assessments, charges, fees or Liens on the Collateral (except for such Liens as
are specifically permitted hereunder), (vii) to contact Account Debtors
for any reason, (viii) to demand payment or enforce payment of the
Receivables and any other Collateral in the name of the Administrative Agent or
such Grantor and to endorse any and all checks, drafts, and other instruments
for the payment of money relating to the Receivables and any other Collateral,
(ix) to sign such Grantor’s name on any invoice or bill of lading relating
to the Receivables and any other Collateral, drafts against any Account Debtor
of the Grantor, assignments and verifications of Receivables, (x) to
exercise all of such Grantor’s rights and remedies with respect to the
collection of the Receivables and any other Collateral, (xi) to settle,
adjust, compromise, extend or renew the Receivables, (xii) to settle,
adjust or compromise any legal proceedings brought to collect Receivables,
(xiii) to prepare, file and sign such Grantor’s name on a proof of claim
in bankruptcy or similar document against any Account Debtor of such Grantor,
(xiv) to prepare, file and sign such Grantor’s name on any notice of Lien,
assignment or satisfaction of Lien or similar document in connection with the
Receivables, (xv) to change the address for delivery of mail addressed to
such Grantor to such address as the Administrative Agent may designate and to
receive, open and dispose of all mail addressed to such Grantor, and
(xvi) to do all other acts and things necessary to carry out this Security
Agreement; and such Grantor agrees to reimburse the Administrative Agent on
demand for any payment made or any expense incurred by the Administrative Agent
in connection with any of the foregoing; provided that, this
authorization shall not relieve such Grantor of any of its obligations under
this Security Agreement or under the Credit Agreement.


 


(b)           All acts of said attorney or designee are hereby ratified
and approved. The powers conferred on the Administrative Agent, for the benefit
of the Secured Parties, under this Section 6.2 are solely to protect the
Administrative Agent’s interests in the Collateral and shall not impose any
duty upon the Administrative Agent or any Lender to exercise any such
powers.  The Administrative Agent
agrees that, except for the powers granted in Section 6.2(a)(i) and
Section 6.2(a)(ii), it shall not exercise any power or authority granted
to it unless an Event of Default has occurred and is continuing.


 


6.3           Proxy. EACH GRANTOR HEREBY IRREVOCABLY CONSTITUTES
AND APPOINTS THE ADMINISTRATIVE AGENT AS ITS PROXY AND ATTORNEY-IN-FACT (AS SET
FORTH IN SECTION 6.2 ABOVE) WITH RESPECT TO ITS PLEDGED
COLLATERAL, INCLUDING THE RIGHT TO VOTE SUCH PLEDGED COLLATERAL, WITH FULL
POWER OF SUBSTITUTION TO DO SO.  IN
ADDITION TO THE RIGHT TO VOTE ANY SUCH PLEDGED COLLATERAL, THE APPOINTMENT OF
THE ADMINISTRATIVE AGENT AS PROXY AND ATTORNEY-IN-FACT SHALL INCLUDE THE RIGHT
TO EXERCISE ALL OTHER RIGHTS, POWERS, PRIVILEGES AND REMEDIES TO WHICH A HOLDER
OF SUCH PLEDGED COLLATERAL WOULD BE ENTITLED (INCLUDING GIVING OR WITHHOLDING
WRITTEN CONSENTS OF SHAREHOLDERS, CALLING SPECIAL MEETINGS OF SHAREHOLDERS AND
VOTING AT SUCH MEETINGS).  SUCH PROXY
SHALL BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE NECESSITY OF ANY ACTION
(INCLUDING ANY TRANSFER OF ANY SUCH PLEDGED COLLATERAL ON THE RECORD BOOKS OF
THE ISSUER THEREOF) BY ANY PERSON (INCLUDING THE ISSUER OF SUCH PLEDGED
COLLATERAL OR ANY OFFICER OR AGENT THEREOF), UPON THE OCCURRENCE AND DURING THE
CONTINUATION OF AN EVENT OF DEFAULT.


 


6.4           Nature of Appointment; Limitation of Duty.  THE APPOINTMENT OF THE ADMINISTRATIVE AGENT
AS PROXY AND ATTORNEY-IN-FACT IN THIS ARTICLE VI IS COUPLED WITH AN
INTEREST AND SHALL BE IRREVOCABLE UNTIL THE DATE ON WHICH THIS SECURITY
AGREEMENT IS TERMINATED IN ACCORDANCE WITH SECTION 8.14. NOTWITHSTANDING
ANYTHING CONTAINED HEREIN, NEITHER THE ADMINISTRATIVE


 


24

















 


AGENT, NOR ANY LENDER, NOR ANY OF THEIR RESPECTIVE
AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES SHALL
HAVE ANY DUTY TO EXERCISE ANY RIGHT OR POWER GRANTED HEREUNDER OR OTHERWISE OR
TO PRESERVE THE SAME AND SHALL NOT BE LIABLE FOR ANY FAILURE TO DO SO OR FOR
ANY DELAY IN DOING SO, EXCEPT  IN RESPECT
OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT AS FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION; PROVIDED
THAT, IN NO EVENT SHALL THEY BE LIABLE FOR ANY PUNITIVE,
EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.


 


ARTICLE VII

COLLECTION AND APPLICATION OF COLLATERAL PROCEEDS; DEPOSIT ACCOUNTS


 


7.1           Deposit Accounts.


 


(a)           Within 90 days after the Effective Date (or such later
date as the Administrative Agent shall agree), each Grantor shall
(i) execute and deliver to the Administrative Agent Control Agreement for
each Deposit Account (other than accounts with a balance not exceeding $25,000
individually or $100,000 in the aggregate) maintained by such Grantor into
which all cash, checks or other similar payments relating to or constituting
payments made in respect of Receivables will be deposited into a depositary
account (such Deposit Account, a “Controlled Account”), which Controlled
Accounts are identified as such on Exhibit B, and
(ii) establish lock box service (the “Lock Boxes”) with the
bank(s) set forth in Exhibit B, which lock boxes shall be
subject to irrevocable lockbox agreements in the form provided by or otherwise
reasonably acceptable to the Administrative Agent and shall be accompanied by
an acknowledgment by the bank where the Lock Box is located of the Lien of the
Administrative Agent granted hereunder and of irrevocable instructions to wire
all amounts collected therein to Controlled Accounts (a “Lock Box Agreement”).
After the Effective Date, each Grantor will comply with the terms of
Section 7.2.


 


(b)           Within 90 days after the Effective Date (or such later
date as the Administrative Agent shall agree), each Grantor shall direct all of
its Account Debtors and all Buying Groups to forward payments directly to Lock
Boxes subject to Lock Box Agreements. 
The Administrative Agent shall have sole access to the Lock Boxes at all
times and each Grantor shall take all actions necessary to grant the
Administrative Agent such sole access. 
At no time shall any Grantor remove any item from a Lock Box without the
Administrative Agent’s prior written consent. 
If any Grantor should refuse or neglect to notify any Account Debtor to
forward payments directly to a Lock Box subject to a Lock Box Agreement after
notice from the Administrative Agent, the Administrative Agent shall, notwithstanding the language set forth in
Section 6.2(b), be entitled to make such notification directly to
Account Debtor.  If notwithstanding the
foregoing instructions, any Grantor receives any proceeds of any Receivables,
such Grantor shall receive such payments as the Administrative Agent’s trustee,
and shall immediately deposit all cash, checks or other similar payments related
to or constituting payments made in respect of Receivables received by it to a
Controlled Account.  All funds deposited
into any Lock Box subject to a Lock Box Agreement will be swept daily into
Controlled Accounts and, to the extent provided in Section 7.3, swept on a
daily basis into a collection account maintained by the Borrower with the Administrative Agent (the “Collection
Account”). The Administrative Agent shall hold and apply funds received
into the Collection Account as provided by the terms of Section 7.3.


 


7.2           Covenant Regarding New Deposit Accounts; Lock Boxes.  Before opening or replacing any Controlled
Account or other Deposit Account (other than accounts with a balance not
exceeding $25,000 individually or $100,000 in the aggregate), or establishing a
new Lock Box, each Grantor shall  cause
each bank or financial institution in which it seeks to open (i) a Deposit
Account, to enter into a


 


25

















 


Control Agreement with the Administrative Agent in
order to give the Administrative Agent Control of such Deposit Account, or
(ii) a Lock Box, to enter into a Lock Box Agreement with the
Administrative Agent Control of the Lock Box. 
In the case of Deposit Accounts or Lock Boxes maintained with Lenders, the
terms of such letter shall be subject to the provisions of the Credit Agreement
regarding setoffs.


 


7.3           Application
of Proceeds; Deficiency.


 


(a)           Collections which
are deposited into Controlled Accounts shall, at any time during a Cash
Dominion Period, be applied (and allocated) by the Administrative Agent in
accordance with Section 2.10(b) of the Credit Agreement.  At any time that an Event of Default has
occurred and is continuing, the Administrative Agent may require all other cash
proceeds of the Collateral, which are not required to be applied to the
Obligations pursuant to Section 2.11 of the Credit Agreement, to be
deposited in a special non-interest bearing cash collateral account with the
Administrative Agent and held there as security for the Secured
Obligations.  No Grantor shall have any
control whatsoever over said cash collateral account.  Any such proceeds of the Collateral shall be
applied in the order set forth in Section 2.18 of the Credit Agreement
unless a court of competent jurisdiction shall otherwise direct.  The balance, if any, after all of the Secured
Obligations have been satisfied, shall be deposited by the Administrative Agent
into the Borrower’s general operating account with the Administrative Agent.
The Grantors shall remain liable for any deficiency if the proceeds of any sale
or disposition of the Collateral are insufficient to pay all Secured
Obligations, including any attorneys’ fees and other expenses incurred by
Administrative Agent or any Lender to collect such deficiency.


 


(b)           Upon any sale of Collateral by the
Administrative Agent (including pursuant to a power of sale granted by statute
or under a judicial proceeding), the receipt of proceeds by the Administrative
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 Administrative Agent or such officer or be answerable
in any way for the misapplication thereof.


 


ARTICLE VIII

GENERAL PROVISIONS


 


8.1           Waivers. 
Each Grantor hereby waives notice (to the maximum extent permitted by
applicable law) of the time and place of any public sale or the time after
which any private sale or other disposition of all or any part of the
Collateral may be made.  To the extent
such notice may not be waived under applicable law, any notice made shall be
deemed reasonable if sent to the Grantors, addressed as set forth in
Article IX, at least ten days prior to (i) the date of any such
public sale or (ii) the time after which any such private sale or other
disposition may be made.  To the maximum
extent permitted by applicable law, each Grantor waives all claims, damages,
and demands against the Administrative Agent or any Lender arising out of the
repossession, retention or sale of the Collateral, except such as arise solely
out of the gross negligence or willful misconduct of the Administrative Agent
or such Lender as finally determined by a court of competent jurisdiction.  To the extent it may lawfully do so, each
Grantor absolutely and irrevocably waives and relinquishes the benefit and
advantage of, and covenants not to assert against the Administrative Agent or
any Lender, any valuation, stay, appraisal, extension, moratorium, redemption
or similar laws and any and all rights or defenses it may have as a surety now
or hereafter existing which, but for this provision, might be applicable to the
commercially reasonable sale of any Collateral made under the judgment, order
or decree of any court, or privately under the power of sale conferred by this
Security Agreement, or otherwise.  Except
as otherwise specifically provided herein, each Grantor hereby waives
presentment, demand, protest or any notice (to the maximum extent permitted by
applicable law) of any kind in connection with this Security Agreement or any
Collateral.


 


26

















 


8.2           Limitation on Administrative Agent’s and
Lenders’ Duty with Respect to the Collateral.  The Administrative Agent shall have no
obligation to clean-up or otherwise prepare the Collateral for sale.  The Administrative Agent and each Lender
shall use reasonable care with respect to the Collateral in its possession or
under its control.  Neither the
Administrative Agent nor any Lender shall have any other duty as to any
Collateral in its possession or control or in the possession or control of any
agent or nominee of the Administrative Agent or such Lender, or any income
thereon or as to the preservation of rights against prior parties or any other
rights pertaining thereto. To the extent that applicable law imposes duties on
the Administrative Agent to exercise remedies in a commercially reasonable
manner, each Grantor acknowledges and agrees that each of the following, in and
of itself, it is commercially unreasonable for the Administrative Agent to do:
(i) to fail to incur expenses deemed significant by the Administrative
Agent to prepare Collateral for disposition or otherwise to transform raw
material or work in process into finished goods or other finished products for
disposition, (ii) to fail to obtain third party consents for access to
Collateral to be disposed of, or to obtain or, if not required by other law, to
fail to obtain governmental or third party consents for the collection or
disposition of Collateral to be collected or disposed of, (iii) to fail to
exercise collection remedies against Account Debtors or other Persons obligated
on Collateral or to remove Liens on or any adverse claims against Collateral,
(iv) to exercise collection remedies against Account Debtors and other
Persons obligated on Collateral directly or through the use of collection
agencies and other collection specialists, (v) to advertise dispositions
of Collateral through publications or media of general circulation, whether or
not the Collateral is of a specialized nature, (vi) to contact other
Persons, whether or not in the same business as such Grantor, for expressions
of interest in acquiring all or any portion of such Collateral, (vii) to
hire one or more professional auctioneers to assist in the disposition of
Collateral, whether or not the Collateral is of a specialized nature,
(viii) to dispose of Collateral by utilizing internet sites that provide
for the auction of assets of the types included in the Collateral or that have
the reasonable capacity of doing so, or that match buyers and sellers of
assets, (ix) to dispose of assets in wholesale rather than retail markets,
(x) to disclaim disposition warranties, such as title, possession or quiet
enjoyment, (xi) to purchase insurance or credit enhancements to insure the
Administrative Agent against risks of loss, collection or disposition of
Collateral or to provide to the Administrative Agent a guaranteed return from
the collection or disposition of Collateral, or (xii) to the extent deemed
appropriate by the Administrative Agent, to obtain the services of other
brokers, investment bankers, consultants and other professionals to assist the
Administrative Agent in the collection or disposition of any of the
Collateral.  Each Grantor acknowledges
that the purpose of this Section 8.2 is to provide non-exhaustive
indications of what actions or omissions by the Administrative Agent would not,
in and of themselves be commercially unreasonable in the Administrative Agent’s
exercise of remedies against the Collateral and that other actions or omissions
by the Administrative Agent shall not be deemed commercially unreasonable
solely on account of not being indicated in this Section 8.2.  Without limitation upon the foregoing,
nothing contained in this Section 8.2 shall be construed to grant any
rights to any Grantor or to impose any duties on the Administrative Agent that
would not have been granted or imposed by this Security Agreement or by
applicable law in the absence of this Section 8.2.


 


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


 


27

















 


8.4           Secured Party Performance of Debtor Obligations.  Without having any obligation to do so, the
Administrative Agent may perform or pay any obligation which any Grantor has
agreed to perform or pay in this Security Agreement and which such Grantor has
failed to timely perform or pay and the Grantors shall reimburse the
Administrative Agent for any amounts paid by the Administrative Agent pursuant
to this Section 8.4.  The Grantors’
obligation to reimburse the Administrative Agent pursuant to the preceding
sentence shall be a Secured Obligation payable on demand.


 


8.5           Specific Performance of Certain Covenants.  Each Grantor acknowledges and agrees that a
breach of any of the covenants contained in Sections 4.1(e), 4.1(f), 4.4, 4.5,
4.6, 4.7, 4.8, 4.9, 4.10, 4.11, 4.13, 4.14, 4.15 or 5.2 or in Article VII
will cause irreparable injury to the Administrative Agent and the Lenders, that
the Administrative Agent and the Lenders have no adequate remedy at law in
respect of such breaches and therefore agrees, without limiting the right of
the Administrative Agent or the Lenders to seek and obtain specific performance
of other obligations of the Grantors contained in this Security Agreement, that
the covenants of the Grantors contained in the Sections referred to in this
Section 8.5 shall be specifically enforceable against the Grantors.


 


8.6           Dispositions Not Authorized.  No Grantor is authorized to sell or otherwise
dispose of the Collateral except as set forth in Section 4.1(e) and
notwithstanding any course of dealing between any Grantor and the
Administrative Agent or other conduct of the Administrative Agent, no
authorization to sell or otherwise dispose of the Collateral (except as set
forth in Section 4.1(e)) shall be binding upon the Administrative Agent or
the Lenders unless such authorization is in writing signed by the
Administrative Agent with the consent or at the direction of the Required
Secured Parties, such consent not to be unreasonably withheld, delayed or
conditioned.


 


8.7           No Waiver; Amendments; Cumulative Remedies.  No delay or omission of the Administrative Agent
or any Secured Parties to exercise any right or remedy granted under this
Security Agreement shall impair such right or remedy or be construed to be a
waiver of any Default or an acquiescence therein, and any single or partial
exercise of any such right or remedy shall not preclude any other or further
exercise thereof or the exercise of any other right or remedy.  No waiver, amendment or other variation of
the terms, conditions or provisions of this Security Agreement whatsoever shall
be valid unless in writing signed by the Administrative Agent with the
concurrence or at the direction of the Secured Parties and then only to the
extent in such writing specifically set forth. 
All rights and remedies contained in this Security Agreement or by law
afforded shall be cumulative and all shall be available to the Administrative
Agent and the Secured Parties until the Secured Obligations have been paid in
full.


 


8.8           Limitation by Law; Severability of Provisions.  All rights, remedies and powers provided in
this Security Agreement may be exercised only to the extent that the exercise
thereof does not violate any applicable provision of law, and all the
provisions of this Security Agreement are intended to be subject to all
applicable mandatory provisions of law that may be controlling and to be
limited to the extent necessary so that they shall not render this Security
Agreement invalid, unenforceable or not entitled to be recorded or registered,
in whole or in part.  Any provision in
this Security Agreement that is held to be inoperative, unenforceable, or
invalid in any jurisdiction shall, as to that jurisdiction, be inoperative,
unenforceable, or invalid without affecting the remaining provisions in that
jurisdiction or the operation, enforceability, or validity of that provision in
any other jurisdiction, and to this end the provisions of this Security
Agreement are declared to be severable.


 


8.9           Reinstatement. 
This Security Agreement shall remain in full force and effect and
continue to be effective should any petition be filed by or against any Grantor
for liquidation or reorganization, should any Grantor become insolvent or make
an assignment for the benefit of any creditor or creditors or should a receiver
or trustee be appointed for all or any significant part of any Grantor’s
assets, and shall continue to be effective or be reinstated, as the case may
be, if at any time


 


28

















 


payment and performance of the Secured Obligations,
or any part thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee of the Secured
Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or
otherwise, all as though such payment or performance had not been made.  In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Secured Obligations
shall be reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.


 


8.10         Benefit of Agreement. 
The terms and provisions of this Security Agreement shall be binding
upon and inure to the benefit of the Grantors, the Administrative Agent and the
Lenders and their respective successors and assigns (including all persons who
become bound as a debtor to this Security Agreement), except that no Grantor
shall have the right to assign its rights or delegate its obligations under
this Security Agreement or any interest herein, without the prior written
consent of the Administrative Agent (such consent not to be unreasonably
withheld or delayed).  No sales of
participations, assignments, transfers, or other dispositions of any agreement
governing the Secured Obligations or any portion thereof or interest therein
shall in any manner impair the Lien granted to the Administrative Agent, for
the benefit of the Secured Parties, hereunder.


 


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


 


8.12         Taxes and Expenses. 
Any taxes (including income taxes) payable or ruled payable by Federal
or State authority in respect of this Security Agreement shall be paid by the
Grantors, together with interest and penalties, if any.  The Grantors shall reimburse the
Administrative Agent for any and all out-of-pocket expenses (including
reasonable attorneys’, auditors’ and accountants’ fees and reasonable time
charges of attorneys, paralegals, auditors and accountants) paid or incurred by
the Administrative Agent in connection with the preparation, execution,
delivery, administration, collection and enforcement of this Security Agreement
and in the audit, analysis, administration, collection, preservation or sale of
the Collateral (including the expenses and charges associated with any periodic
or special audit of the Collateral authorized pursuant to this Security
Agreement).  Any and all costs and
expenses incurred by the Grantors in the performance of actions required
pursuant to the terms hereof shall be borne solely by the Grantors.


 


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


 


8.14         Termination. 
This Security Agreement shall continue in effect (notwithstanding the
fact that from time to time there may be no Secured Obligations outstanding)
until (i) the Credit Agreement has terminated pursuant to its express
terms and (ii) all of the Secured Obligations have been indefeasibly paid
and performed in full (or with respect to any outstanding Letters of Credit,
cash collateral has been delivered to the Administrative Agent as required by
the Credit Agreement) and no commitments of the Administrative Agent or the
Lenders which would give rise to any Secured Obligations are outstanding.


 


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


 


8.16         CHOICE OF LAW. 
THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS (AND NOT THE LAW OF


 


29

















 


CONFLICTS) OF THE STATE OF NEW YORK, BUT GIVING
EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.


 


8.17         CONSENT TO JURISDICTION.  EACH GRANTOR HEREBY IRREVOCABLY SUBMITS TO
THE EXCLUSIVE JURISDICTION OF ANY U.S. FEDERAL OR NEW YORK STATE COURT SITTING
IN NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT AND EACH GRANTOR HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING
MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY
OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM.  NOTHING HEREIN SHALL
LIMIT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY LENDER TO BRING PROCEEDINGS
AGAINST ANY GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION.  ANY JUDICIAL PROCEEDING BY ANY GRANTOR
AGAINST THE ADMINISTRATIVE AGENT OR ANY LENDER OR ANY AFFILIATE OF THE AGENT OR
ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT
OF, RELATED TO, OR CONNECTED WITH THIS SECURITY AGREEMENT OR ANY OTHER LOAN
DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK, NEW YORK.


 


8.18         WAIVER OF JURY TRIAL. EACH GRANTOR, THE
ADMINISTRATIVE AGENT AND EACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.


 


8.19         Indemnity. 
Each Grantor hereby agrees to indemnify the Collateral Agent and the
Lenders, and their respective successors, assigns, agents and employees  (each
an “Indemnitee”), from and against any and all liabilities, damages,
penalties, suits, costs, and expenses of any kind and nature (including, without
limitation, all reasonable expenses of litigation or preparation therefor
whether or not the Collateral Agent or any Lender is a party thereto) imposed
on, incurred by or asserted against the Collateral Agent or the Lenders, or
their respective successors, assigns, agents and employees, in any way relating
to or arising out of this Security Agreement, or the manufacture, purchase,
acceptance, rejection, ownership, delivery, lease, possession, use, operation,
condition, sale, return or other disposition of any Collateral (including,
without limitation, latent and other defects, whether or not discoverable by
the Collateral Agent or the Lenders or any Grantor, and any claim for Patent,
Trademark or Copyright infringement);
provided, however, that no Grantor shall have any indemnity obligation under
this Section 8.19 to the extent such indemnity obligation arises from the
gross negligence or willful misconduct of an Indemnitee, in each case, as
determined by a final, non-appealable judgment of a court of competent
jurisdiction.


 


8.20         Counterparts. 
This Security Agreement may be executed in any number of counterparts,
all of which taken together shall constitute one agreement, and any of the
parties hereto may execute this Security Agreement by signing any such
counterpart.


 


ARTICLE IX

NOTICES


 


9.1           Sending Notices. 
Any notice required or permitted to be given under this Security
Agreement shall be sent by United States mail, telecopier, personal delivery or
nationally established


 


30

















 


overnight courier service, and shall be deemed
received (a) when received, if sent by hand or overnight courier service,
or mailed by certified or registered mail notices or (b) when sent, if
sent by telecopier (except that, if not given during normal business hours for
the recipient, shall be deemed to have been given at the opening of business on
the next Business Day for the recipient), in each case addressed to the
Grantors at the notice address set forth on Exhibit A, and to the Administrative
Agent and the Lenders at the addresses set forth in accordance with
Section 9.01 of the Credit Agreement.


 


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


 


ARTICLE X

THE ADMINISTRATIVE AGENT


 


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


 


[Signature Page Follows]


 


31
















 


EXECUTION VERSION


 


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


 


	
   

  	
  GRANTORS:

  
	
   

  	
   

  	
   

  
	
   

  	
  CLOPAY
  AMES TRUE TEMPER HOLDING CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Tom Gibbons

  
	
   

  	
   

  	
  Name:
  Tom Gibbons

  
	
   

  	
   

  	
  Title:
  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CLOPAY
  AMES TRUE TEMPER LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Seth L. Kaplan

  
	
   

  	
   

  	
  Name:
  Seth K. Kaplan

  
	
   

  	
   

  	
  Title:
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CLOPAY
  PLASTIC PRODUCTS COMPANY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Tom Gibbons

  
	
   

  	
   

  	
  Name:
  Tom Gibbons

  
	
   

  	
   

  	
  Title:
  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CLOPAY
  BUILDING PRODUCTS COMPANY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Tom Gibbons

  
	
   

  	
   

  	
  Name:
  Tom Gibbons

  
	
   

  	
   

  	
  Title:
  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CLOPAY
  BUILDING PRODUCTS INTERNATIONAL SALES CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Tom Gibbons

  
	
   

  	
   

  	
  Name:
  Tom Gibbons

  
	
   

  	
   

  	
  Title:
  Vice President and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CLOPAY
  TRANSPORTATION COMPANY

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Tom Gibbons

  
	
   

  	
   

  	
  Name:
  Tom Gibbons

  
	
   

  	
   

  	
  Title:
  Treasurer

  



 


32

















 


	
   

  	
  CLOPAY
  ACQUISITION CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Seth L. Kaplan

  
	
   

  	
   

  	
  Name:
  Seth K. Kaplan

  
	
   

  	
   

  	
  Title:
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CHATT
  HOLDINGS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  David Nuti

  
	
   

  	
   

  	
  Name:
  David Nuti

  
	
   

  	
   

  	
  Title:
  Vice President of Finance and CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ATT
  HOLDING CO.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  David Nuti

  
	
   

  	
   

  	
  Name:
  David Nuti

  
	
   

  	
   

  	
  Title:
  Vice President of Finance and CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AMES
  TRUE TEMPER, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  David Nuti

  
	
   

  	
   

  	
  Name:
  David Nuti

  
	
   

  	
   

  	
  Title:
  Vice President of Finance and CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AMES
  U.S. HOLDING CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  David Nuti

  
	
   

  	
   

  	
  Name:
  David Nuti

  
	
   

  	
   

  	
  Title:
  Vice President, Treasurer and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AMES
  TRUE TEMPER PROPERTIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  David Nuti

  
	
   

  	
   

  	
  Name:
  David Nuti

  
	
   

  	
   

  	
  Title:
  CFO and Assistant Secretary

  



 


33

















 


	
   

  	
  JPMORGAN
  CHASE BANK, N.A.,

  
	
   

  	
  as
  Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Kathleen C. Maggi

  
	
   

  	
   

  	
  Name:
  Kathleen C. Maggi

  
	
   

  	
   

  	
  Title:
  Senior Vice President

  



 


34