Exhibit 4.5


 


EXECUTION COPY




 





 


SECURITY AGREEMENT


 


from


 


RDA HOLDING CO.,


 


THE READER’S DIGEST ASSOCIATION, INC.


 


and


 


THE GRANTORS IDENTIFIED HEREIN,


 


to


 


JPMORGAN CHASE BANK, N.A.,


 


as Administrative Agent

under the Credit Agreement referred to herein,


 


WELLS FARGO BANK, NATIONAL ASSOCIATION,


 


as Trustee

under the Indenture referred to herein


 


and


 


WILMINGTON TRUST FSB,


 


as Collateral Agent

for the Secured Parties referred to herein


 


Dated as of February 19, 2010




 





 

















 


TABLE
OF CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section I

  	
  DEFINED TERMS

  	
  1

  
	
  1.1.

  	
  Definitions

  	
  1

  
	
  1.2.

  	
  Other Definitional Provisions

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section II

  	
  GRANT OF SECURITY INTEREST

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section III

  	
  REPRESENTATIONS AND WARRANTIES

  	
  11

  
	
  3.1.

  	
  Title; No Other Liens

  	
  11

  
	
  3.2.

  	
  Perfected First Priority Liens

  	
  12

  
	
  3.3.

  	
  Jurisdiction of Organization

  	
  12

  
	
  3.4.

  	
  Inventory and Equipment

  	
  12

  
	
  3.5.

  	
  Farm Products

  	
  12

  
	
  3.6.

  	
  Investment Property

  	
  12

  
	
  3.7.

  	
  Receivables

  	
  13

  
	
  3.8.

  	
  Intellectual Property

  	
  13

  
	
  3.9.

  	
  Commercial Tort Claims

  	
  13

  
	
   

  	
   

  	
   

  
	
  Section IV

  	
  COVENANTS

  	
  14

  
	
  4.1.

  	
  Delivery of Instruments, Certificated Securities and
  Chattel Paper

  	
  14

  
	
  4.2.

  	
  Maintenance of Insurance

  	
  14

  
	
  4.3.

  	
  [Reserved]

  	
  14

  
	
  4.4.

  	
  Maintenance of Perfected Security Interest; Further
  Documentation

  	
  14

  
	
  4.5.

  	
  Changes in Locations, Name, etc.

  	
  15

  
	
  4.6.

  	
  Notices

  	
  15

  
	
  4.7.

  	
  Investment Property

  	
  15

  
	
  4.8.

  	
  Receivables

  	
  16

  
	
  4.9.

  	
  Intellectual Property

  	
  17

  
	
  4.10.

  	
  Commercial Tort Claims

  	
  18

  
	
   

  	
   

  	
   

  
	
  Section V

  	
  REMEDIAL PROVISIONS

  	
  19

  
	
  5.1.

  	
  Certain Matters Relating to Receivables

  	
  19

  
	
  5.2.

  	
  Communications with Obligors; Grantors Remain Liable

  	
  19

  
	
  5.3.

  	
  Pledged Equity

  	
  20

  
	
  5.4.

  	
  Proceeds to be Turned Over to Collateral Agent

  	
  21

  
	
  5.5.

  	
  Application of Proceeds

  	
  21

  
	
  5.6.

  	
  Code and Other Remedies

  	
  22

  
	
  5.7.

  	
  Registration Rights

  	
  23

  
	
  5.8.

  	
  Deficiency

  	
  24

  
	
   

  	
   

  	
   

  
	
  Section VI

  	
  THE AGENTS

  	
  24

  
	
  6.1.

  	
  Collateral Agent’s Appointment as Attorney-in-Fact, etc.

  	
  24

  
	
  6.2.

  	
  Duty of Collateral Agent

  	
  25

  
	
  6.3.

  	
  Execution of Financing Statements

  	
  26

  
	
  6.4.

  	
  Authority of Collateral Agent

  	
  26

  
	
  6.5.

  	
  Enforcement by the Collateral Agent

  	
  26

  
	
  6.6.

  	
  Competing Instructions to the Collateral Agent

  	
  27

  
	
  6.7.

  	
  Exemption

  	
  27

  



 


i

















 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  6.8.

  	
  Termination and Resignation of Collateral Agent

  	
  28

  
	
  6.9.

  	
  Agents’ and Collateral Agent’s Duties; Reliance

  	
  29

  
	
   

  	
   

  	
   

  
	
  Section VII

  	
  PARI PASSU OBLIGATIONS

  	
  30

  
	
  7.1.

  	
  Actions with Respect to Collateral; Prohibition on
  Contesting Liens

  	
  30

  
	
   

  	
   

  	
   

  
	
  Section VIII

  	
  MISCELLANEOUS

  	
  32

  
	
  8.1.

  	
  Amendments; Waivers; Additional Grantors; Additional
  Secured Parties, etc.

  	
  32

  
	
  8.2.

  	
  Notices

  	
  33

  
	
  8.3.

  	
  Enforcement Expenses; Indemnification

  	
  33

  
	
  8.4.

  	
  Successors and Assigns

  	
  34

  
	
  8.5.

  	
  Set-Off

  	
  34

  
	
  8.6.

  	
  Counterparts

  	
  35

  
	
  8.7.

  	
  Severability

  	
  35

  
	
  8.8.

  	
  Section Headings

  	
  35

  
	
  8.9.

  	
  Integration

  	
  35

  
	
  8.10.

  	
  GOVERNING LAW

  	
  35

  
	
  8.11.

  	
  Submission To Jurisdiction; Waivers

  	
  35

  
	
  8.12.

  	
  Acknowledgments

  	
  36

  
	
  8.13.

  	
  Additional Grantors

  	
  36

  
	
  8.14.

  	
  Releases

  	
  36

  
	
  8.15.

  	
  WAIVER OF JURY TRIAL

  	
  37

  



 


	
  SCHEDULES

  	
   

  
	
  Schedule 1

  	
  Notice
  Addresses

  
	
  Schedule 2

  	
  Investment
  Property

  
	
  Schedule 3

  	
  Perfection
  Matters

  
	
  Schedule 4

  	
  Jurisdictions
  of Organization and Chief Executive Offices

  
	
  Schedule 5

  	
  Inventory
  and Equipment Locations

  
	
  Schedule 6

  	
  Intellectual
  Property

  
	
   

  	
   

  
	
  ANNEX

  	
   

  
	
  Annex 1

  	
  Intellectual
  Property Short Form Security Agreement

  
	
  Annex 2

  	
  Form of
  Security Agreement Supplement

  
	
  Annex 3

  	
  Secured
  Party Security Agreement Supplement

  



 


ii

















 


SECURITY AGREEMENT, dated as of February 19, 2010, among RDA
HOLDING CO., a Delaware corporation (“Holdings”), THE READER’S DIGEST
ASSOCIATION, INC., a Delaware corporation (the “Borrower”), the
other Persons listed on the signature pages hereof (together with the
Borrower, Holdings, and any other entity that may become a party hereto as
provided herein, the “Grantors”), JPMORGAN CHASE BANK, N.A., as
administrative agent (in such capacity, together with any successor
administrative agent, the “Administrative Agent”) for the “Secured
Parties” (as defined in the Credit Agreement referred to below), WELLS FARGO
BANK, NATIONAL ASSOCIATION, as trustee (in such capacity, together with any
successor trustee, the “Trustee”) for the holders of the Notes (together
with the Trustee, the “Bond Secured Parties”) and WILMINGTON TRUST FSB,
as collateral agent for the Secured Parties (in such capacity, together with
any successor collateral agent pursuant to Section 6.8, the “Collateral
Agent”).


 


W  I  T  N  E
S  S  E  T  H:


 


WHEREAS, Holdings, the Borrower and certain subsidiaries of the
Borrower have entered into the Revolving Credit and Guarantee Agreement dated
of even date herewith (as it may hereafter be amended, amended and restated,
supplemented, waived or otherwise modified from time to time, the “Credit
Agreement”) with the Administrative Agent and the other agents party
thereto;


 


WHEREAS, Holdings, the Borrower and certain subsidiaries of the
Borrower have entered into the Indenture dated as of February 11, 2010 (as
it may hereafter be amended, amended and restated, supplemented, waived or
otherwise modified from time to time, the “Indenture”) with the Trustee;


 


WHEREAS, pursuant to the Credit Agreement, the Grantors are entering
into this Agreement in order to grant to the Collateral Agent (on behalf of the
Administrative Agent, for the ratable benefit of the Bank Secured Parties), a
security interest in the Collateral (as hereinafter defined) to secure their
respective Secured Obligations (as hereinafter defined), and pursuant to the
Indenture, the Grantors are entering into this Agreement in order to grant to
the Collateral Agent (on behalf of the Trustee, for the ratable benefit of the
Bond Secured Parties), a security interest in the Collateral to secure their
respective Secured Obligations;


 


WHEREAS, the Borrower is a member of an affiliated group of companies
that includes each other Grantor;


 


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


 


NOW, THEREFORE, each Grantor hereby agrees with the Collateral Agent,
for the ratable benefit of the Secured Parties, as follows:


 


SECTION I            DEFINED TERMS


 


1.1.          Definitions.  Unless otherwise defined herein, terms
defined in the Credit Agreement as in effect on the date hereof and used herein
shall have the meanings given to them in the Credit Agreement and the following
terms are used herein as defined in the New York UCC:  Accounts, Certificated Security, Chattel
Paper, Commercial Tort Claims, Documents, Equipment, Farm Products, Fixtures,
General Intangibles, Instruments, Inventory, Letter of Credit Rights
and Supporting Obligations.


 

















 


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


 


“Additional Agent”:  as defined in Section 8.1(b).


 


“Additional Lenders”: as defined in a
Secured Party Security Agreement Supplement.


 


“Additional Loan Documents”: as
defined in a Secured Party Security Agreement Supplement.


 


“Additional Secured Obligations”:  the obligations owing pursuant to the
Additional Loan Documents.


 


“Additional Secured Parties”:  the Additional Agent and the Additional
Lenders.


 


“Administrative Agent”: as defined in
the introductory paragraph to this Agreement.


 


“Agents”:  the Trustee, the First Priority
Representative and the Additional Agent.


 


“Agreement”:  this Security Agreement, as the same may be
amended, supplemented or otherwise modified from time to time.


 


“Applicable Authorized Representative”:  (i) initially the Largest Holder at such
time, (ii) following the date hereof, subject to clause (iii) below,
upon the occurrence of a Larger Holder Event, the Authorized Representative in
respect of the Series of Pari Passu Obligations with the then largest
principal amount outstanding, and (iii) from and after the Non-Controlling
Authorized Representative Enforcement Date, the Major Non-Controlling
Authorized Representative.


 


“Authorized Representative” means
(i) in the case of any Bond Obligations or the Bond Secured Parties, the
Trustee and (ii) in the case of any Additional Secured Obligations that
are Pari Passu Obligations, the applicable Additional Agent.


 


“Applicable Governmental Authority”:  as defined in Section 4.8(b).


 


“Bank Additional Obligations”:  any obligations described in clauses
(a) and (b) of the definition of Bank Priority Obligations to the
extent such obligations are not permitted to be “Priority Payment Lien
Obligations” or “Pari Passu Payment Lien Obligations” pursuant to the Indenture
(it being understood that, in all events, the obligations described in clause
(a) of the definition of “Obligations” in the Credit Agreement will
constitute Bank Priority Obligations).


 


“Bank Obligations”:  the Bank Priority Obligations and the Bank
Additional Obligations.


 


“Bank Priority Obligations Discharge Date”:  the first date on which (a) the Bank
Priority Obligations (other than unasserted contingent indemnity obligations)
have been paid in cash in full, (b) all commitments to extend credit under
each First Priority Agreement have been terminated, (c) there are no
outstanding letters of credit (unless cash collateralized or otherwise
supported in a manner reasonably acceptable to the issuer thereof) or similar
instruments issued under any First Priority Agreement, and (d) the First
Priority Representative has delivered a written notice to the Collateral Agent
stating that the events described in clauses (a), (b) and (c) hereof
have occurred to the reasonable satisfaction of the First Priority
Representative (the First Priority Representative hereby agrees that promptly
following occurrence of the events described 


 


2

















 


in clauses (a), (b) and (c) hereof to its reasonable satisfaction,
it will deliver such written notice to the Collateral Agent).


 


“Bank Priority Obligations”:  means (a) with respect to the Credit
Agreement, all “Secured Obligations” as defined in the Credit Agreement and
(b) with respect to each other First Priority Agreement (i) all
principal of and interest (including without limitation any Post-Petition
Interest) and premium (if any) on all loans made pursuant to the First Priority
Agreement, (ii) all reimbursement obligations (if any) and interest
thereon (including without limitation any Post-Petition Interest) with respect
to any letter of credit or similar instruments issued pursuant to the First
Priority Agreement, (iii) all monetary Hedging Obligations, (iv) all
monetary Cash Management Obligations and (v) all guarantee obligations,
fees, expenses and other amounts payable from time to time pursuant to the
First Priority Documents, in each case whether or not allowed or allowable in
an Insolvency or Liquidation Proceeding, in the case of each of clauses (a) and
(b), to the extent such obligations are permitted to be “Priority Payment Lien
Obligations” pursuant to the Indenture; provided that the obligations
described in clause (a) of the definition of “Obligations” in the Credit
Agreement will, in any event, constitute Bank Priority Obligations.


 


“Bank Secured Parties”:  the “Secured Parties”, as defined in the
Credit Agreement and any other holders of Bank Obligations.


 


“Bankruptcy Code”:  Title
11 of the United States Code, as amended.


 


“Bankruptcy Law”:  the Bankruptcy Code and any similar Federal,
state or foreign law for the relief of debtors.


 


“Bond Additional Excluded Property”:  any Capital Stock and other securities of a
Subsidiary of the Borrower to the extent that the pledge of such Capital Stock
and other securities results in the Borrower being required to file separate
financial statements of such Subsidiary with the SEC (or any other governmental
agency), but only to the extent necessary not to be subject to such
requirement.  In the event that Rule 3-16
of Regulation S-X under the Securities Act is amended, modified or interpreted
by the SEC to require (or is replaced with another rule or regulation, or
any other law, rule or regulation is adopted, which would require) the
filing with the SEC (or any other governmental agency) of separate financial
statements of any Subsidiary of the Borrower due to the fact that such
Subsidiary’s Capital Stock secures the Bond Obligations, then the Capital Stock
of such Subsidiary shall automatically be deemed to be “Bond Additional
Excluded Property” without consent from any Bond Secured Party, but only to the
extent necessary to not be subject to such requirement.  In the event that Rule 3-16 of
Regulation S-X under the Securities Act is amended, modified or interpreted by
the SEC to permit (or are replaced with another rule or regulation, or any
other law, rule or regulation is adopted, which would permit) such
Subsidiary’s Capital Stock to secure the Bond Obligations in excess of the
amount then pledged without the filing with the SEC (or any other governmental
agency) of separate financial statements of such Subsidiary, then the Capital
Stock of such Subsidiary shall automatically cease to be deemed “Bond
Additional Excluded Property”.


 


“Bond Obligations”:  (i) any principal, interest, penalties
(if any), fees, premiums (if any), indemnifications, reimbursements, guarantees
and other liabilities payable under and pursuant to the terms in the Notes, the
Indenture and the Security Documents (as defined in the Indenture), in each
case, whether now or hereafter existing, renewed or restructured, whether or
not from time to time decreased or extinguished and later increased, created or
incurred, whether or not arising on or after the commencement of an Insolvency
or Liquidation Proceeding (including Post-Petition Interest) and whether or not
allowed or allowable as a claim in any such proceeding and 


 


3

















 


(ii) all obligations and liabilities of each Subsidiary Guarantor
(as defined in the Indenture) which may arise under, out of, or in connection
with this Agreement, and the guarantee by each Subsidiary Guarantor of the
Notes, in each case whether on account of guarantee obligations, reimbursement
obligations, fees, indemnities, costs, expenses or otherwise but to the extent
provided for and in accordance with the terms thereunder (including, without
limitation, all fees and disbursements of counsel to the Collateral Agent or
any Secured Party that are required to be paid by such Subsidiary Guarantor
pursuant to the terms of any of the foregoing agreements).


 


“Bond Secured Parties”: as defined in
the introductory paragraph to this Agreement.


 


“Borrower”:  as defined in the introductory paragraph to
this Agreement.


 


“Cash Management Obligations”:  obligations owed by any Grantor to any Bank
Secured Party (or any of its affiliates) in respect of any overdraft and
related liabilities arising from treasury, depository and cash management
services or any automated clearing house transfers of funds.


 


“Collateral”:  as defined in Section II.


 


“Collateral Account”:  any collateral account established by the
Collateral Agent as provided in Section 5.1 or 5.4.


 


“Collateral Agent”: as defined in the
introductory paragraph to this Agreement.


 


“Collateral Agent Obligations”:  any and all monetary obligations of any
Grantor now or hereafter existing, whether direct or indirect, absolute or
contingent, and whether for principal, reimbursement obligations, interest,
fees, premiums (if any), penalties (if any), indemnifications, contract causes
of action, costs, expenses or otherwise, owed to the Collateral Agent under or
in connection with this Agreement or any other Loan Document, Indenture
Document or Additional Loan Document, if any.


 


“Consultation Period”: as defined in
Section 6.6(a).


 


“Controlling Secured Parties”:  the Series of Pari Passu Secured Parties
whose Authorized Representative is the Applicable Authorized Representative.


 


“Copyrights”:  (i) all copyrights arising under the
laws of the United States, any other country or any political subdivision
thereof, whether registered or unregistered and whether published or
unpublished (including, without limitation, those listed in Schedule 6),
all registrations and recordings thereof, and all applications in connection
therewith, including, without limitation, all registrations, recordings and
applications in the United States Copyright Office, and (ii) the right to
obtain all renewals thereof.


 


“Copyright Licenses”:  all written agreements naming any Grantor as
licensor or licensee (including, without limitation, those listed in Schedule
6), granting any right under any Copyright, including, without limitation,
the grant of rights to manufacture, distribute, exploit and sell materials derived
from any Copyright.


 


“Credit Agreement”:  as defined in the recitals hereof.


 


4

















 


“Deposit Account”:  as defined in the Uniform Commercial Code of
any applicable jurisdiction and, in any event, including, without limitation,
any demand, time savings, passbook or like account maintained with a depositary
institution.


 


“Excluded Property”: (i) any
property (including but not limited to the Equity Interests of Direct Holdings
IP L.L.C., a Delaware limited liability company) to the extent that a grant of
a security interest in such property pursuant to this Agreement is prohibited
by any Requirements of Law of a Governmental Authority, requires a consent not
obtained of any Governmental Authority pursuant to such Requirement of Law or
is prohibited by, or constitutes a breach or default under or results in the
termination of or requires any consent not obtained under, any contract,
license, agreement, instrument or other document evidencing or giving rise to
such property or, in the case of any Investment Property, Pledged Equity or
Pledged Note (other than any of the foregoing issued by a Grantor), any
applicable shareholder, joint venture or similar agreement, except, in each
case, 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 (including but not
limited to the UCC or the Bankruptcy Code), (ii) any Intellectual Property
to the extent that the grant of a security interest therein would result in the
invalidity, unenforceability, voiding or cancellation thereof (including, without
limitation, any Trademark application filed on an intent to use basis),
(iii) any assets of Foreign Subsidiaries, unless any such Foreign
Subsidiary is required to become a Grantor pursuant to the Credit Agreement,
the Indenture or any Additional Loan Documents, (iv) any assets held by
any Unrestricted Subsidiaries and any other Subsidiary that is not a Grantor,
(v) amounts used to cash collateralize the letters of credit
(a) existing on the Emergence Date (but not any renewals of such letters
of credit) and (b) issued under the Credit Agreement in an amount not to
exceed $26.5 million at any one time, (vi) any capital stock of any
Foreign Subsidiary owned by any Grantor in excess of 65% of the Capital Stock
of such Foreign Subsidiary, (vii) any aircraft or any trucks, trailers,
tractors, service vehicles, automobiles, rolling stock or other registered
mobile equipment of the Grantors or equipment of the Grantors covered by
certificates of title or ownership, (viii) any real property other than
Material Real Property and (ix) any payroll accounts, employee benefit
accounts and tax accounts.


 


“Finance Documents”: the First
Priority Documents, the Indenture Documents and the Additional Loan Documents,
if any.


 


“First Priority Agreement”:  means the collective reference to
(a) the Credit Agreement, (b) any other credit agreement, loan
agreement, note agreement, promissory note, indenture or other agreement or
instrument evidencing or governing the terms of any obligations which are
(i) permitted to be “Priority Payment Lien Obligations” under the
Indenture and have been designated as such and (ii) are permitted to be,
and have been, incurred pursuant to Section 7.02(b)(i) of the Credit
Agreement and (c) any other credit agreement, loan agreement, note
agreement, promissory note, indenture or other agreement or instrument
evidencing or governing the terms of any indebtedness or other financial
accommodation that has been incurred to extend, increase, renew, refund,
replace (whether upon or after termination or otherwise) or refinance
(including by means of sales of debt securities to institutional investors) in
whole or in part from time to time the indebtedness and other obligations
outstanding under the Credit Agreement and/or the agreements or instruments
referred to in clause (b) hereof and/or any other agreement or instrument
referred to in this clause (c) unless such agreement or instrument
expressly provides that it is not intended to be and is not a First Priority
Agreement hereunder (a “Replacement First Priority Agreement”).  Any reference to the Credit Agreement
hereunder shall be deemed a reference to any First Priority Agreement then
extant, as amended, modified and supplemented 


 


5

















 


from time to time.  Any reference
to a specific provision of the Credit Agreement hereunder shall be deemed a
reference to any comparable provision in any other First Priority Agreement.


 


“First Priority Documents”: each First
Priority Agreement, each other agreement entered into in favor of the
Collateral Agent for the purpose of securing any Bank Obligations and any
guarantee by any Grantor of any or all of the Bank Obligations (including the
Loan Documents, as defined in the Credit Agreement).


 


“First Priority Representative”:  the Administrative Agent.  In the case of any Replacement First Priority
Agreement, the First Priority Representative shall be the Person identified as
such in such agreement.


 


“Foreign Subsidiary Voting Stock”:  the voting Equity Interests of any Foreign
Subsidiary and of any Domestic Subsidiary substantially all of whose assets
consist of voting Equity Interests of one or more Foreign Subsidiaries.


 


“Grantors”: as defined in the
introductory paragraph to this Agreement, which, notwithstanding anything to
the contrary contained herein, shall not include Direct Holdings IP L.L.C., a
Delaware limited liability company, or any Unrestricted Subsidiary, if any.


 


“Hedging Obligations”:  obligations under any Swap Contract that is
entered into by and between any Grantor and any Bank Secured Party (or any of
its affiliates)


 


“Indemnified Party”: as defined in
Section 8.3(c).


 


“Indenture Documents”: the Indenture
and the Security Documents (as defined in the Indenture).


 


“Indenture”:  as defined in the recitals hereof.


 


“Insolvency or Liquidation Proceeding”
means:


 


(1) any case commenced by or against the
Borrower or any other Grantor under any Bankruptcy Law, any other proceeding
for the reorganization, recapitalization or adjustment or marshalling of the
assets or liabilities of the Borrower or any other Grantor, any receivership or
assignment for the benefit of creditors relating to the Borrower or any other
Grantor or any similar case or proceeding relative to the Borrower or any other
Grantor or its creditors, as such, in each case whether or not voluntary;


 


(2) any liquidation, dissolution,
marshalling of assets or liabilities or other winding up of or relating to the
Borrower or any other Grantor, in each case whether or not voluntary and
whether or not involving bankruptcy or insolvency; or


 


(3) any other proceeding of any type or
nature in which substantially all claims of creditors of the Borrower or any
other Grantor are determined and any payment or distribution is or may be made
on account of such claims.


 


“Intellectual Property”:  the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including,
without limitation, the Copyrights, the Patents, and the Trademarks, 


 


6

















 


and all rights to sue at law or in equity for any infringement or other
impairment thereof, including the right to receive all proceeds and damages
therefrom.


 


“Intellectual Property Licenses”: the
collective reference to all Copyright Licenses, Patent Licenses and Trademark
Licenses, and all rights to sue at law or in equity for any infringement or
other impairment thereof, including the right to receive all proceeds and damages
therefrom.


 


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


 


“Investment Property”:  the collective reference to (i) all
“investment property” as such term is defined in Section 9-102(a)(49) of
the New York UCC (other than any Foreign Subsidiary Voting Stock excluded from
the definition of “Pledged Equity”) and (ii) whether or not constituting
“investment property” as so defined, all Pledged Debt and all Pledged Equity,
in each case other than Excluded Property.


 


“Issuers”:  the collective reference to each issuer of
any Investment Property.


 


“Larger Holder Event”:  as of any date of determination, the date
when the applicable Series of Pari Passu Obligations held by the Largest
Holder on such date ceases to represent the largest principal amount
outstanding of any Series of Pari Passu Obligations.


 


“Largest Holder”:  initially, the Trustee, and from time to time
after the date hereof, the Authorized Representative in respect of the Series of
Pari Passu Obligations representing the largest principal amount outstanding of
any then outstanding Series of Pari Passu Obligations.


 


“Major Non-Controlling Authorized
Representative”:  as of any date of
determination, the Non-Controlling Authorized Representative of the
Series of Pari Passu Obligations that constitutes the second largest
outstanding principal amount of any then outstanding Series of Pari Passu
Obligations.


 


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


 


“Non-Controlling Authorized Representative”:  at any time, any Authorized Representative
that is not the Applicable Authorized Representative at such time.


 


“Non-Controlling Authorized Representative
Enforcement Date”:  following the
Bank Priority Obligations Discharge Date, with respect to any Non-Controlling
Authorized Representative, the date which is 90 days (throughout which 90-day
period such Non-Controlling Authorized Representative was the Major
Non-Controlling Authorized Representative) after the occurrence of both
(i) an Event of Default (under and as defined in the Additional Loan
Document or Indenture Document under which such Non-Controlling Authorized
Representative is the Authorized Representative) and (ii) the Collateral
Agent’s and each other Authorized Representative’s receipt of written notice
from such Non-Controlling Authorized Representative certifying that
(x) such Non-Controlling Authorized Representative is the Major
Non-Controlling Authorized Representative and that an Event of Default (under
and as defined in the Additional Loan Document or Indenture Document under
which such Non-Controlling Authorized Representative is the Authorized
Representative) has occurred and is continuing and (y) the Pari Passu Obligations
of the Series with respect to which such Non-Controlling Authorized 


 


7






 










 


Representative is the Authorized Representative are currently due and
payable in full (whether as a result of acceleration thereof or otherwise) in
accordance with the terms of the applicable Additional Loan Document or
Indenture Document; provided that the Non-Controlling Authorized
Representative Enforcement Date shall be stayed and shall not occur and shall
be deemed not to have occurred (1) at any time the Collateral Agent, at
the request of the then Applicable Authorized Representative, has commenced and
is diligently pursuing any enforcement action with respect to the Collateral
with reasonable diligence in light of the then existing circumstances or (2) at
any time a Grantor which has granted a security interest in the Collateral is
then a debtor under or with respect to (or otherwise subject to) any Insolvency
or Liquidation Proceeding.


 


“Non-Controlling Secured Parties”:  the Pari Passu Secured Parties which are not
Controlling Secured Parties.


 


“Notes”:  the Borrower’s Floating Rate Senior Secured Notes
due 2017 issued from time to time pursuant to the Indenture.


 


“Pari Passu Obligations”:  the Bond Obligations and any Additional
Secured Obligations that rank equally with the Bond Obligations with respect to
the receipt of proceeds from the Collateral pursuant to Section 5.5.


 


“Pari Passu Secured Parties”:  (i) the Bond Secured Parties and (ii) the
Additional Secured Parties with respect to each Series of Additional
Secured Obligations that constitute Pari Passu Obligations.


 


“Pari Passu Security Documents”:  the Security Documents (as defined in the
Indenture) and each other agreement entered into in favor of the Collateral
Agent for the purpose of securing any Series of Pari Passu Obligations.


 


“Patents”:  (i) all letters patent of the United
States, any other country or any political subdivision thereof, all reissues
and extensions thereof and all goodwill associated therewith, including,
without limitation, any of the foregoing referred to in Schedule 6, (ii) all
applications for letters patent of the United States or any other country and
all divisions, continuations and continuations-in-part thereof, including,
without limitation, any of the foregoing referred to in Schedule 6, and
including, for each of (i) and (ii), the right to make, use and/or sell
the inventions disclosed or claimed therein and (iii) all rights to obtain
any reissues or extensions of the foregoing.


 


“Patent License”:  all agreements, whether written or oral,
providing for the grant by or to any Grantor of any right to manufacture, use
or sell any invention covered in whole or in part by a Patent, including,
without limitation, any of the foregoing referred to in Schedule 6.


 


“Pledged Debt”:  all promissory notes listed on Schedule 2,
all Intercompany Notes at any time issued to any Grantor and all other
promissory notes issued to or held by any Grantor (other than promissory notes
issued in connection with extensions of trade credit by any Grantor in the
ordinary course of business).


 


“Pledged Equity”:  Equity Interests listed on Schedule 2,
together with any other shares, stock certificates, options, interests or
rights of any nature whatsoever in respect of the Equity Interests of any
Person that may be issued or granted to, or held by, any Grantor while this
Agreement is in effect; provided that, notwithstanding anything herein to the
contrary, in no event 


 


8

















 


shall more than 65% of the issued and total outstanding Foreign
Subsidiary Voting Stock of any Foreign Subsidiary or of any Domestic Subsidiary
substantially all of whose assets consist of voting Equity Interests of one or
more Foreign Subsidiaries be required to be pledged hereunder.


 


“Post-Petition Interest” means any
interest or entitlement to fees or expenses or other charges that accrues after
the commencement of any Insolvency or Liquidation Proceeding, whether or not
allowed or allowable in any such proceeding.


 


“Proceeds”:  all “proceeds” as such term is defined in
Section 9-102(a)(64) of the New York UCC and, in any event, shall include,
without limitation, all dividends or other income from Investment Property,
collections thereon or distributions or payments with respect thereto.


 


“Proceeds Collateral Account”:  one or more segregated accounts that is under
the sole control of the Collateral Agent and is free from all other Liens
(other than Liens permitted to be incurred under clauses (30) and (31) under
the definition of “Permitted Liens” in the Credit Agreement as in effect on the
date hereof and Liens securing Bank Obligations, Pari Passu Obligations and
Junior Lien Indebtedness).


 


“Receivable”:  any right to payment for goods sold or leased
or for services rendered, whether or not such right is evidenced by an
Instrument or Chattel Paper and whether or not it has been earned by
performance (including, without limitation, any Account), other than Excluded
Property.


 


“Replacement
First Priority Agreement”:  as
defined in the definition of “First Priority Agreement.”


 


“Secured Obligations”:  the Bank Obligations, the Bond Obligations,
the Collateral Agent Obligations and the Additional Secured Obligations, if
any.


 


“Secured Parties”:  the collective reference to the Bank Secured
Parties, the Bond Secured Parties, the Collateral Agent, and the Additional
Secured Parties, if any.


 


“Secured Party Security Agreement
Supplement” as defined in Section 8.1(b).


 


“Securities Act”:  the Securities Act of 1933, as amended.


 


“Securities Laws”: as defined in
Section 5.7(a).


 


“Security Documents”:  the Collateral Documents and the Pari Passu
Security Documents.


 


“Series”:  (i) with respect to the Pari Passu
Secured Parties, each of (a) the Bond Secured Parties (in their capacities
as such) and (b) the Additional Secured Parties that become subject to
this Agreement after the date hereof that are represented by a common
Authorized Representative (in its capacity as such for such Additional Secured
Parties) and (ii) with respect to any Pari Passu Obligations, each of (a) the
Bond Obligations and (b) the Additional Secured Obligations incurred
pursuant to any Additional Loan Document, which pursuant to any Secured Party
Security Agreement Supplement, are to be represented hereunder by a common
Authorized Representative (in its capacity as such for such Additional Secured
Obligations).


 


9

















 


“Swap Contract”:  (a) any and all rate swap transactions,
basis swaps, credit derivative transactions, forward rate transactions,
commodity swaps, commodity options, forward commodity contracts, equity or
equity index swaps or options, bond or bond price or bond index swaps or
options or forward bond or forward bond price or forward bond index
transactions, interest rate options, forward foreign exchange transactions, cap
transactions, floor transactions, collar transactions, currency swap
transactions, cross-currency rate swap transactions, currency options, spot
contracts, or any other similar transactions or any combination of any of the
foregoing (including any options to enter into any of the foregoing), whether
or not any such transaction is governed by or subject to any master agreement,
and (b) any and all transactions of any kind, and the related
confirmations, which are subject to the terms and conditions of, or governed
by, any form of master agreement published by the International Swaps and
Derivatives Association, Inc., any International Foreign Exchange Master
Agreement, or any other master agreement (any such master agreement, together
with any related schedules, a “Master
Agreement”), including any such obligations or liabilities under any
Master Agreement.


 


“Trademarks”:  (i) all trademarks, trade names,
corporate names, company names, business names, fictitious business names,
trade styles, service marks, domain names, logos and other source or business
identifiers, and all goodwill associated therewith, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, whether in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof or any other country or any political subdivision thereof, or
otherwise, and all common-law rights related thereto, including, without
limitation, any of the foregoing referred to in Schedule 6, and
(ii) the right to obtain all renewals thereof.


 


“Trademark License”:  any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right to use any Trademark,
including, without limitation, any of the foregoing referred to in Schedule
6.


 


“Trustee”:  as defined in the introductory paragraph to
this Agreement.


 


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


 


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


 


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


 


SECTION II           GRANT OF SECURITY INTEREST


 


Each Grantor hereby collaterally grants to the Collateral Agent (for
the benefit of the Secured Parties) a security interest in such Grantor’s
right, title and interest in and to the following property, in each case, as to
each type of property described below, whether now owned or hereafter acquired
by such Grantor, wherever located, and whether now or hereafter existing or
arising 


 


10

















 


(collectively,
the “Collateral”), as collateral security for the prompt and complete
payment and performance when due of such Grantor’s Secured Obligations, as
applicable:


 


(a)           all Accounts;


 


(b)           all
Chattel Paper;


 


(c)           all
Deposit Accounts;


 


(d)           all
Documents (other than title
documents with respect to Vehicles);


 


(e)           all
Equipment;


 


(f)            all
Fixtures;


 


(g)           all
General Intangibles;


 


(h)           all
Instruments;


 


(i)            all
Intellectual Property and
Intellectual Property Licenses;


 


(j)            all
Inventory;


 


(k)           all
Investment Property;


 


(l)            all
Letter of Credit Rights;


 


(m)          all
other property not otherwise described above (except for any property
specifically excluded from any clause in this Section, and any property
specifically excluded from any defined term used in this Section);


 


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


 


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


 


provided, however,
that notwithstanding any of the other provisions set forth in this Section II
and elsewhere to the contrary, this Agreement shall not constitute a grant of a
security interest in any Excluded Property; provided, further,
that notwithstanding anything to the contrary contained herein or in the other
Finance Documents, this Agreement shall not constitute a grant of a security
interest in any Bond Additional Excluded Property to secure any Bond
Obligations.


 


SECTION III          REPRESENTATIONS AND WARRANTIES


 


Each Grantor hereby represents and warrants that:


 


3.1.          Title; No Other Liens.  Except for the security interest granted to
the Collateral Agent (for the benefit of the Secured Parties) pursuant to this
Agreement and the other Liens permitted to exist on the Collateral by all
applicable Finance Documents, such Grantor owns or has a license or other right
to use, each item of the Collateral free and clear of any and all Liens.  No financing statement or 


 


11

















 


other
public notice with respect to all or any part of the Collateral is on file or
of record in any public office, except (i) such as have been filed in
favor of the Collateral Agent (for the benefit of the Secured Parties) pursuant
to this Agreement, (ii) as are permitted by all applicable Finance
Documents or (iii) such as were filed with respect to Liens that shall
have been eliminated after giving effect to the Reorganization Plan and the
Effective Date.  For the avoidance of
doubt, it is understood and agreed that any Grantor may, as part of its
business, grant licenses to third parties to use Intellectual Property owned or
developed by a Grantor.  For purposes of
this Agreement and the other Finance Documents, such licensing activity shall
not constitute a “Lien” on such Intellectual Property, provided that
such licensing activity is not intended to create a security interest of any
kind or nature whatsoever.  Each of the
Collateral Agent and each other Secured Party understands that any such
licenses may be exclusive to the applicable licensees, and such exclusivity
provisions may limit the ability of the Collateral Agent to utilize, sell,
lease or transfer the related Intellectual Property or otherwise realize value
from such Intellectual Property pursuant hereto.


 


3.2.          Perfected First Priority Liens.  The security interests granted pursuant to
this Agreement (a) upon completion of the filings and other actions
specified on Schedule 3 (which, in the case of all filings and other
documents referred to on said Schedule, have been delivered to the Collateral
Agent (or arrangements reasonably satisfactory to the Collateral Agent have
been made for such delivery) in completed and, where required, duly executed
form) will constitute valid perfected security interests in all of the
Collateral in favor of the Collateral Agent (for the benefit of the Secured
Parties) (if and to the extent perfection may be achieved by such filings and
actions and provided that additional filings may be necessary to perfect the
Collateral Agent’s security interest in any Intellectual Property acquired
after the date hereof), as collateral security for such Grantor’s Obligations,
enforceable in accordance with the terms hereof against all creditors of such
Grantor and any Persons purporting to purchase any Collateral from such Grantor
(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 an implied covenant of good faith and
fair dealing) and (b) are prior to all other Liens on the Collateral in
existence on the date hereof except for, in the case of Collateral other than
Pledged Equity, Liens permitted by all applicable Finance Documents, to have
priority over the Liens on the Collateral.


 


3.3.          Jurisdiction of Organization.  On the date hereof, such Grantor’s
jurisdiction of organization, identification number from the jurisdiction of
organization (if any), and, if such Grantor is not a registered organization,
the location of such Grantor’s chief executive office or sole place of
business, as the case may be, are specified on Schedule 4.  Such Grantor has furnished to the Collateral
Agent a certified charter, certificate of incorporation or other organization
document, as applicable, and long-form good standing certificate as of a date
which is recent to the date hereof.


 


3.4.          Inventory and Equipment.  On the date hereof, the Inventory and the
Equipment of each Grantor are kept at the locations listed on Schedule 5.  The provisions of this Section 3.4 shall
not apply to Equipment or Inventory in transit, that has been sold (including
sales on consignment or approval in the ordinary course of business), that is
out for repair, that is at other locations for purposes of onsite maintenance
or repair or at locations where Equipment and Inventory with less than
$2,500,000 in aggregate value is located.


 


3.5.          Farm Products.  None of the Collateral constitutes, or is the
Proceeds of, Farm Products.


 


3.6.          Investment Property.  (a) On the date hereof, the shares of
Pledged Equity pledged by such Grantor hereunder constitute all the issued and
outstanding shares of all classes of the 


 


12

















 


Equity
Interests of each Issuer owned by such Grantor or, in the case of Foreign
Subsidiary Voting Stock, if less, 65% of the outstanding Foreign Subsidiary
Voting Stock of each relevant Issuer.


 


(b)           All the shares of the Pledged Equity
have been duly and validly issued and, if applicable, are fully paid and
nonassessable.


 


(c)           To
the best of such Grantor’s knowledge, each of the 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 an implied covenant of good faith and
fair dealing.


 


(d)           Such
Grantor is the record and beneficial owner of, and has good and marketable
title to, the Investment Property pledged by it hereunder, free of any and all
Liens or options in favor of, or claims of, any other Person, except the security interest created
by this Agreement or the other Finance Documents or nonconsensual Liens
permitted pursuant to the terms under all applicable Finance Documents.


 


3.7.          Receivables No amount
payable to such Grantor under or in connection with any Receivable is evidenced
by any Instrument or Chattel Paper in excess, individually or in the aggregate,
of $1,000,000 which has not been delivered to the Collateral Agent.


 


3.8.          Intellectual Property.  (a) Schedule 6
lists all Intellectual Property (other than domain names) that is registered in
the United States or for which application for registration in the United
States has been filed owned by such Grantor in its own name on the date hereof.


 


(b)           On the date hereof, all material
Intellectual Property owned by such Grantor is valid, subsisting, unexpired and
enforceable, has not been abandoned and neither the conduct of each Grantor’s business
nor the use of their Intellectual Property infringes on the Intellectual
Property rights of any other Person, except in each case as could not
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the value of any material Intellectual Property owned by such
Grantor.


 


(c)           On
the date hereof, no holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the validity of,
or such Grantor’s rights in, any Intellectual Property owned by such Grantor in
any respect that could reasonably be expected to have a material adverse effect
on the value of any material Intellectual
Property owned by such Grantor.


 


(d)           On
the date hereof, no action or proceeding is pending, or, to the knowledge of
such Grantor, threatened, on the date hereof (i) seeking to cancel or contesting the validity of
any material Intellectual Property owned by such Grantor (other than routine
office actions issued in the ordinary course of prosecution before the United
States Patent and Trademark Office), or (ii) which, if adversely
determined, would have a material adverse effect on the value of any material Intellectual Property owned
by such Grantor.


 


3.9.          Commercial Tort Claims.  On the date hereof, no Grantor has knowledge
of rights in any Commercial Tort Claim as to which it reasonably expects to
recover more than $2,500,000.


 


13

















 


SECTION IV          COVENANTS


 


Each Grantor covenants and agrees with the Collateral Agent and the
other Secured Parties that, from and after the date of this Agreement until the
Secured Obligations (other than contingent indemnification and contingent
expense reimbursement obligations and Secured Obligations in respect of Hedge
Obligations and Cash Management Obligations that are not due and payable) shall
have been paid in full and the Revolving Credit Commitments shall have
terminated:


 


4.1.          Delivery of Instruments,
Certificated Securities and Chattel Paper.  If any amount in excess of $1,000,000
payable, individually or in the aggregate, under or in connection with any of
the Collateral shall be or become evidenced by any Instrument, Certificated
Security or Chattel Paper, such Instrument, Certificated Security or Chattel Paper,
shall be delivered as soon as reasonably practicable to the Collateral Agent,
duly indorsed in a manner reasonably satisfactory to the Collateral Agent, to
be held as Collateral pursuant to this Agreement.


 


4.2.          Maintenance of Insurance.  (a) Such Grantor will maintain with
financially sound and reputable insurance companies (provided, that if
any such insurance company shall at any time cease to be financially sound and
reputable, there shall be no breach of this provision in the event that such
Grantor promptly (and in any event within sixty (60) days of such date) obtains
insurance from an alternative insurance carrier that is financially sound and
reputable), insurance with respect to its properties and business against loss
or damage of the kinds customarily insured against by Persons engaged in the
same or similar business, of such types and in such amounts (after giving
effect to any self-insurance reasonable and customary for similarly situated
Persons engaged in the same or similar businesses as the Borrower and its
Subsidiaries) and with deductible levels as are customarily carried under
similar circumstances by such other Persons and ensure that the Collateral
Agent is an additional insured and/or loss payee under such liability and
property insurance as reasonably requested by the Collateral Agent.


 


(b)           (i) Such Grantor shall use
commercially reasonable efforts to cause all such insurance to provide that no
cancellation, material reduction in amount or material change in coverage
thereof shall be effective until at least 30 days after receipt by the
Collateral Agent of written notice thereof and (ii) such Grantor shall
cause all such insurance to name the Collateral Agent as additional insured or
loss payee.


 


4.3.          [Reserved].


 


4.4.          Maintenance of Perfected Security
Interest; Further Documentation.  (a) Such Grantor shall take all actions
reasonably requested by the Collateral Agent to maintain the security interest
created by this Agreement as a perfected security interest having the priority
described in Section 3.2 and shall take all commercially reasonable
actions to defend such security interest against the claims and demands of all
Persons whomsoever, subject in each case, (i) in the case of Collateral
consisting of Pledged Equity and Pledged Debt, nonconsensual Liens permitted by
all applicable Finance Documents and (ii) in the case of Collateral other
than Pledged Equity and Pledged Debt, Liens permitted by all applicable Finance
Documents and to the rights of such Grantor under the Finance Documents to
dispose of the Collateral.


 


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


 


14

















 


(c)           At
any time and from time to time, upon the written request of the Collateral
Agent, and at the sole expense of such Grantor, such Grantor will promptly and
duly execute and deliver, and have recorded, such further instruments and
documents and take such further actions as the Collateral Agent may reasonably
request for the purpose of obtaining or preserving the full benefits of this
Agreement and of the rights and powers herein granted, including, without
limitation, (i) filing any financing or continuation statements under the
Uniform Commercial Code (or other similar laws) in effect in any jurisdiction
with respect to the security interests created hereby, (ii) in the case of
Investment Property, Deposit Accounts, Letter-of-Credit Rights and any other
relevant Collateral, taking any additional actions necessary to enable the
Collateral Agent to obtain “control” (within the meaning of the applicable
Uniform Commercial Code) with respect thereto, and (iii) in the case of
registered and applied for Intellectual Property, filing an Intellectual
Property Short Form Security Agreement substantially in the form of Annex
1 hereto with the United States Patent and Trademark Office and the United
States Copyright Office, as applicable.


 


4.5.          Changes in Locations,
Name, etc.  Such Grantor
will furnish to the Collateral Agent promptly (and in any event within 30 days
of such change) written notice of any change in such Grantor’s (i) legal
name, (ii) jurisdiction of organization or formation, (iii) identity
or form of legal entity or (iv) organizational identification number.  Such Grantor will not effect or permit any
change referred to in the preceding sentence unless all additional financing
statements and other documents reasonably requested by the Collateral Agent to
maintain the validity, perfection and priority of the security interests
provided for herein have been filed prior to or substantially simultaneously
with the effectiveness of such change.


 


4.6.          Notices.  (a) Such Grantor will advise the
Collateral Agent promptly, in reasonable detail:


 


(i)            of any Lien (other than security
interests created hereby or Liens permitted under all applicable Finance
Documents) on any of the Collateral which would adversely affect the ability of
the Collateral Agent to exercise any of its remedies hereunder; and


 


(ii)           the occurrence of
any other event which could reasonably be expected to have a material adverse
effect on the aggregate value of the Collateral or on the security interests
created hereby.


 


4.7.          Investment Property.  (a) If such Grantor shall become
entitled to receive or shall receive any certificate (including, without
limitation, any certificate representing a dividend or a distribution in
connection with any reclassification, increase or reduction of capital or any
certificate issued in connection with any reorganization), option or rights in
respect of the Equity Interests of any Issuer, whether in addition to, in
substitution of, as a conversion of, or in exchange for, any shares of the
Pledged Equity, or otherwise in respect thereof, such Grantor shall accept the
same as the agent of the Collateral Agent and the Secured Parties, hold the
same in trust for the Collateral Agent and the Secured Parties and deliver the
same promptly to the Collateral Agent in the exact form received, duly indorsed
by such Grantor to the Collateral Agent, if required, together with an undated
stock power covering such certificate duly executed in blank by such Grantor to
be held by the Collateral Agent, subject to the terms hereof, as additional
collateral security for the Secured Obligations.  If an Event of Default under any Finance
Document shall have occurred and be continuing, any sums paid upon or in
respect of the pledged Investment Property upon the liquidation or dissolution
of any Issuer shall be paid over to the Collateral Agent to be held by it
hereunder as additional collateral security for the Secured Obligations, and in
case any distribution of capital shall be made on or in respect of the pledged
Investment Property or any property shall be distributed upon or with respect
to the pledged Investment Property pursuant to the recapitalization or
reclassification of the capital of any Issuer or pursuant to the reorganization
thereof, 


 


15

















 


the
property so distributed shall, unless otherwise subject to a perfected security
interest in favor of the Collateral Agent, be delivered to the Collateral Agent
to be held by it hereunder as additional collateral security for the Secured
Obligations.  If any sums of money or
property so paid or distributed in respect of the pledged Investment Property
shall be received by such Grantor upon the occurrence and during the
continuation of an Event of Default under any Finance Document, such Grantor
shall, until such money or property is paid or delivered to the Collateral
Agent, hold such money or property in trust for the Collateral Agent and the
Secured Parties, segregated from other funds of such Grantor, as additional
collateral security for the Secured Obligations.


 


(b)           Without the prior written consent of
the Collateral Agent, such Grantor will not (i) except as permitted by all
applicable Finance Documents, vote to enable, or take any other action to
permit, any Issuer to issue any Equity Interests of any nature or to issue any
other securities convertible into or granting the right to purchase or exchange
for any Equity Interests of any nature of any Issuer, (ii) sell, assign,
transfer, exchange, or otherwise dispose of, or grant any option with respect
to, the Investment Property or Proceeds thereof (except pursuant to a
transaction expressly permitted by all applicable Finance Documents or the
Reorganization Plan (where applicable)), (iii) create, incur or permit to
exist any Lien or option in favor of, or any claim of any Person with respect
to, any of the Investment Property or Proceeds thereof, or any interest
therein, except for the security interests created by this Agreement or
permitted under all applicable Finance Documents or (iv) except as
permitted by all applicable Finance Documents, enter, subsequent to the date
upon which such Investment Property becomes Collateral hereunder, into any
agreement (other than any Finance Documents or the Reorganization Plan (where
applicable)) or undertaking restricting the right or ability of such Grantor or
the Collateral Agent to sell, assign or transfer any of the Investment Property
required to be included in Collateral or Proceeds thereof.


 


(c)           In the case of each Grantor which is
an Issuer, such Issuer agrees that (i) it will be bound by the terms of
this Agreement relating to the Investment Property constituting Collateral
issued by it and will comply with such terms insofar as such terms are
applicable to it, (ii) it will notify the Collateral Agent promptly in
writing of the occurrence of any of the events described in Section 4.7(a) with
respect to the Investment Property issued by it and (iii) the terms of
Sections 5.3(c) and 5.7 shall apply to it, mutatis  mutandis,
with respect to all actions that may be required of it pursuant to
Section 5.3(c) or 5.7 with respect to the Investment Property issued
by it.


 


(d)           No Grantor shall permit any security
interest in certificated Pledged Equity of any Issuer that is not a Subsidiary
to be perfected by possession in favor of a Person other than the Collateral
Agent.


 


4.8.          Receivables.


 


(a)           Such Grantor will deliver to the
Collateral Agent a copy of each material written demand, notice or document
received by it that questions or calls into doubt the validity or
enforceability of more than 20% of the aggregate amount of the then-outstanding
Receivables that constitute Collateral.


 


(b)           If
such Grantor shall enter into any contract or other transaction with an
Applicable Governmental Authority (as defined below) which will result in an
Applicable Governmental Authority becoming an obligor on any Receivable
required to be included in
Collateral of an amount greater than $500,000, such Grantor shall (i) promptly thereafter notify the Collateral Agent thereof, (ii) provide
to the Collateral Agent all such
documents and instruments, and take all such actions, as reasonably
required by the Collateral Agent, to enable the Collateral Agent to comply with the
requirements of the Federal Assignment of Claims Act or any other applicable
Law to perfect its security interest in such Receivables and (iii) otherwise
comply with its obligations under Section 4.4(c) with 


 


16

















 


respect thereto. 
As used in this paragraph, the term “Applicable Governmental Authority”
shall mean any Governmental Authority the Law applicable to which provides
that, for a creditor of a Person to which such Governmental Authority has an
obligation to pay money, whether pursuant to a Receivable, a General Intangible
or otherwise, to perfect such creditor’s Lien on such obligation and/or to
obtain the full benefits of such Lien and such Law, certain notice, filing,
recording or other similar actions other than the filing of a financing
statement under the Uniform Commercial Code must be given, executed, filed,
recorded, delivered or completed, including, without limitation, any federal
Governmental Authority to which the Federal Assignment of Claims Act of 1940 is
applicable.


 


4.9.          Intellectual Property.  (a) Such Grantor (either itself or
through licensees) will, in the exercise of its reasonable business judgment
(i) continue to use each material Trademark owned or exclusively licensed
by such Grantor on each and every trademark class of goods applicable to its
current line as reflected in its current catalogs, brochures and price lists to
the extent necessary to maintain such Trademark in full force free from any
claim of abandonment or invalidity for non-use, (ii) maintain as in the
past the quality of products and services offered under such Trademark, (iii) use
such Trademark with the appropriate notice of registration and all other
notices and legends required by applicable Requirements of Law, (iv) not
adopt or use any mark which is confusingly similar or a colorable imitation of
such Trademark unless the Collateral Agent (for the benefit of the Secured
Parties) shall obtain a perfected security interest (subject to the
qualifications set forth in Section 3.2) in such mark pursuant to this
Agreement, and (v) not (and not permit any licensee or sublicensee thereof
to) do any act or knowingly omit to do any act whereby such material Trademark
may become invalidated or impaired in any material way, in each case of the
foregoing, except as could not reasonably be expected to have a material adverse effect to the aggregate value of the Intellectual
Property in the Collateral.


 


(b)           Such Grantor (either itself or
through licensees) will not do any act, or omit to do any act, whereby any
material Patent owned or exclusively licensed by such Grantor may become
prematurely invalidated, forfeited, abandoned or dedicated to the public, in
each case of the foregoing, except as could not reasonably be expected to have
a material adverse effect to the aggregate value of
the Intellectual Property in the Collateral.


 


(c)           Such
Grantor (either itself or through licensees) (i) will use copyright
notices in connection with each Copyright owned or exclusively licensed by such
Grantor as required by applicable Requirements of Law, (ii) will not (and
will not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby any
material portion of the Copyrights owned by such Grantor may become invalidated
or otherwise impaired, in each case of
the foregoing, except as could not reasonably be expected to have a material
adverse effect to the aggregate value of the Intellectual
Property in the Collateral.  Such
Grantor will not (either itself or through licensees) do any act whereby any
material portion of the Copyrights owned or exclusively licensed by such
Grantor may fall into the public domain,
in each case of the foregoing, except as could not reasonably be expected to
have a material adverse effect to the aggregate value of
the Intellectual Property in the Collateral.


 


(d)           Such
Grantor (either itself or through licensees) will not knowingly do any act that
uses any material Intellectual Property to infringe the intellectual property
rights of any other Person.


 


(e)           Such
Grantor will notify the Collateral Agent
promptly if it knows, or has reason to know, that any material Intellectual Property owned or
exclusively licensed by such Grantor may become forfeited, abandoned or
dedicated to the public, or of any adverse determination or material adverse
development (including, without limitation, 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 or tribunal
in any country, but excluding routine office actions or similar determinations
in the ordinary course of prosecution before the United States Patent and
Trademark 


 


17






 










 


Office or any foreign counterpart) regarding such
Grantor’s ownership of, or the validity of, any material Intellectual Property
owned or exclusively licensed by such Grantor or such Grantor’s right to
register the same or to own and maintain the same.


 


(f)            In
the event such Grantor, either by itself or through any agent, employee,
licensee or designee, shall file an application for the registration of any
Intellectual Property with the United States Patent and Trademark Office, the
United States Copyright Office or any similar office or agency in any other
country or any political subdivision
thereof, such Grantor shall report such filing to the Collateral Agent and the
Agents within 45 days after the end of each fiscal quarter of the
Borrower (or such later date as consented to by the Collateral Agent).  Upon request of the Collateral Agent, such
Grantor shall execute and deliver, and have recorded, any and all agreements,
instruments, documents, and papers as the Collateral Agent may reasonably request to evidence and perfect
the Collateral Agent’s and the
Secured Parties’ security interest in any Intellectual Property and the
goodwill and general intangibles of such Grantor relating thereto or
represented thereby, in each case, to the extent that such shall constitute
part of the Collateral in accordance with the terms hereof.


 


(g)           Such
Grantor will, subject to and in the exercise of its reasonable business
judgment, take all reasonable and necessary steps including, without
limitation, in any proceeding before the United States Patent and Trademark
Office, the United States Copyright Office or any similar office or agency in
any other country or any political subdivision thereof, to maintain and pursue
each application for registration of any material Intellectual Property owned
by such Grantor and any material Intellectual Property License where such
Grantor is an exclusive licensee (and to obtain the relevant registration) and
to maintain each registration of the material Intellectual Property owned by such
Grantor and of any material Intellectual Property License where such Grantor is
an exclusive licensee, including, without limitation, filing of applications
for renewal, affidavits of use and affidavits of incontestability, payment of
maintenance fees and opposition and interference and cancellation proceedings; provided,
however, that such Grantor shall not be required to take any of the
foregoing actions with respect to licensed Intellectual Property to the extent
such action would not be permitted by the terms of the applicable license.


 


(h)           In
the event that any material Intellectual Property owned or exclusively licensed
by such Grantor is infringed, misappropriated or diluted by a third party, such
Grantor shall (i) take such actions as such Grantor shall reasonably deem
appropriate under the circumstances to protect such Intellectual Property and
(ii) promptly notify the Collateral
Agent and the Agents after
it learns thereof and, to the extent such Grantor shall reasonably deem it to
be appropriate under the circumstances, sue for infringement, misappropriation
or dilution, to seek injunctive relief where appropriate and to recover any and
all damages for such infringement, misappropriation or dilution.


 


(i)            For
the avoidance of doubt, nothing in this Section 4.9 shall prohibit a sale,
transfer or disposition of any Intellectual Property made in accordance with all applicable Finance Documents.


 


4.10.        Commercial Tort Claims.  If such Grantor shall obtain an interest in
any Commercial Tort Claim as to which it determines that it reasonably expects
to recover more than $2,500,000, such Grantor shall within 30 days of making
such determination (or such other period reasonably satisfactory to the
Collateral Agent) sign and deliver documentation reasonably acceptable to the
Collateral Agent granting a security interest under the terms and provisions of
this Agreement in and to such Commercial Tort Claim.


 


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4.11.        Proceeds Collateral Account.


 


(a)           Such Grantor will deposit the Net
Proceeds from Asset Sales of Collateral in the Proceeds Collateral Account to
the extent required and in accordance with the terms of the applicable Finance
Documents.


 


(b)           (i) Any Net Award or Net
Insurance Proceeds shall be invested in Replacement Assets (which may include
performance of a restoration of the Collateral) and (ii) pending such
investment, any Net Award or Net Insurance Proceeds in an aggregate amount in
excess of $10,000,000 shall be deposited in the Proceeds Collateral Account.


 


(c)           Amounts deposited in the Proceeds
Collateral Account pursuant to clauses (a) and (b) of this Section 4.11
shall be released in accordance with the terms of the applicable Finance
Documents.


 


SECTION V           REMEDIAL PROVISIONS


 


5.1.          Certain Matters Relating to
Receivables.  (a) The
Collateral Agent shall have the right annually (or, if an Event of Default
under any Finance Document has occurred and is continuing, at any time) to make
test verifications of the Receivables required to be included in the Collateral
in any manner and through any medium that it reasonably considers advisable,
and each Grantor shall furnish all such assistance and information as the
Collateral Agent may reasonably require in connection with such test
verifications.  Annually (or if an Event
of Default under any Finance Document has occurred and is continuing, at any
time), upon the Collateral Agent’s reasonable written request and at the
expense of the relevant Grantor, such Grantor shall cause independent public
accountants or others reasonably satisfactory to the Collateral Agent to
furnish to the Collateral Agent and the Agents reports showing reconciliations,
aging and test verifications of, and trial balances for, such Receivables.


 


(b)           The Collateral Agent hereby
authorizes each Grantor to collect such Grantor’s Receivables and the
Collateral Agent may curtail or terminate said authority upon written notice at
any time after the occurrence and during the continuance of an Event of Default
under any Finance Document.  If required
by the Collateral Agent at any time after the occurrence and during the
continuance of an Event of Default under any Finance Document, any payments of
Receivables that constitute Collateral, when collected by any Grantor, (i) shall
be forthwith (and, in any event, within two Business Days) deposited by such
Grantor in the exact form received, duly indorsed by such Grantor to the
Collateral Agent if required, in a Collateral Account maintained under the sole
dominion and control of the Collateral Agent, subject to withdrawal by the
Collateral Agent for the account of the Secured Parties only as provided in
Section 5.5, and (ii) until so turned over, shall be held by such
Grantor in trust for the Collateral Agent and the Secured Parties, segregated
from other funds of such Grantor.  Each
such deposit of Proceeds of Receivables shall be accompanied by a report
identifying in reasonable detail the nature and source of the payments included
in the deposit.


 


(c)           If
an Event of Default under any Finance
Document has occurred and is continuing, at the Collateral Agent’s reasonable written request, each Grantor shall
deliver to the Collateral Agent,
to the extent available, all original and other documents evidencing, and relating to, the
agreements and transactions which gave rise to the Receivables that constitute
Collateral, including, without limitation, all original orders, invoices and
shipping receipts.


 


5.2.          Communications with Obligors;
Grantors Remain Liable.  (a) The
Collateral Agent in its own name or in the name of others may at any time after
the occurrence and during the continuance of an Event of Default under any
Finance Document, communicate with obligors under the 


 


19

















 


Receivables
that constitute Collateral to verify with them to the Collateral Agent’s
satisfaction the existence, amount and terms of any such Receivables.


 


(b)           Upon the request of the Collateral
Agent at any time after the occurrence and during the continuance of an Event of
Default under any Finance Document, each Grantor shall notify obligors on the
Receivables that constitute Collateral that such Receivables have been
collaterally assigned to the Collateral Agent (for the benefit of the Secured
Parties) and that payments in respect thereof shall be made directly to the
Collateral Agent.


 


(c)           Anything
herein to the contrary notwithstanding, each Grantor shall remain liable under
each of the Receivables to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, all in accordance
with the terms of any agreement giving rise thereto.  Neither the Collateral Agent nor any Secured Party shall have any obligation
or liability under any Receivable (or any agreement giving rise thereto) by
reason of or arising out of this Agreement or the receipt by the Collateral Agent or any Secured Party
of any payment relating thereto, nor shall the Collateral Agent or any Secured Party be obligated in any manner
to perform any of the obligations of any Grantor under or pursuant to any
Receivable (or any agreement giving rise thereto), to make any payment, to make
any inquiry as to the nature or the sufficiency of any payment received by it
or as to the sufficiency of any performance by any party thereunder, to present
or file any claim, to take any action to enforce any performance or to collect
the payment of any amounts which may have been assigned to it or to which it
may be entitled at any time or times.


 


5.3.          Pledged Equity.  (a) Unless an Event of Default under any
Finance Document shall have occurred and be continuing and the Collateral Agent
shall have given written notice to the relevant Grantor of the Collateral
Agent’s intent to exercise its corresponding rights pursuant to 5.3(b), each
Grantor shall be permitted to receive all cash dividends paid in respect of the
Pledged Equity and all payments made in respect of the Pledged Debt, in each
case to the extent otherwise permitted in all applicable Finance Documents, and
to exercise all voting and corporate or other organizational rights with
respect to the Investment Property; provided, however, that such Grantor will
not be entitled to exercise any such right if the result thereof could
materially and adversely affect the rights and remedies of the Collateral Agent
or the Secured Parties under any Finance Document or the ability of the
Collateral Agent or the Secured Parties to exercise the same.


 


(b)           If an Event of Default under any
Finance Document shall occur and be continuing and the Collateral Agent has
given written notice of its intent to exercise the following rights to the
relevant Grantor or Grantors: (i) the Collateral Agent shall have the
right to receive any and all cash dividends, payments (including sums paid upon
the liquidation or dissolution of any Issuer or in connection with any
distribution of capital) or other Proceeds paid in respect of the pledged
Investment Property and make application thereof to the Secured Obligations in
accordance with Section 5.5, and (ii) any or all of the pledged
Investment Property shall be registered in the name of the Collateral Agent or
its nominee, and the Collateral Agent or its nominee may thereafter exercise
(x) all voting, corporate and other rights pertaining to such Investment
Property at any meeting of shareholders of the relevant Issuer or Issuers or
otherwise and (y) any and all rights of conversion, exchange and
subscription and any other rights, privileges or options pertaining to such
Investment Property as if it were the absolute owner thereof (including,
without limitation, the right to exchange at its discretion any and all of the
pledged Investment Property upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate or other organizational
structure of any Issuer, or upon the exercise by any Grantor or the Collateral
Agent of any right, privilege or option pertaining to such Investment Property,
and in connection therewith, the right to deposit and deliver any and all of
the pledged Investment Property with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions as the
Collateral Agent may determine), all without liability except to account for 


 


20

















 


property actually received
by it, but the Collateral Agent shall have no duty to any Grantor to exercise
any such right, privilege or option and shall not be responsible for any
failure to do so or delay in so doing. 
If any sums of money paid or distributed in respect of any pledged
Investment Property, which the Collateral Agent shall be entitled to receive
pursuant to clause (i) above, shall be received by a Grantor, such Grantor
shall, until such money is paid to the Collateral Agent, hold such money in
trust for the Collateral Agent and the Secured Parties as additional collateral
for the Secured Obligations.


 


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


 


5.4.          Proceeds to be Turned Over to
Collateral Agent.  In addition
to the rights of the Collateral Agent and the Secured Parties specified in
Section 5.1 with respect to payments of Receivables, if an Event of
Default under any Finance Document shall occur and be continuing and the
Collateral Agent so requests, all Proceeds of the Collateral received by any
Grantor consisting of cash, checks and other near-cash items shall be held by
such Grantor in trust for the Collateral Agent and the Secured Parties,
segregated from other funds of such Grantor, and shall, forthwith upon receipt
by such Grantor, be turned over to the Collateral Agent in the exact form
received by such Grantor (duly indorsed by such Grantor to the Collateral
Agent, if required).  All such Proceeds
received by the Collateral Agent hereunder shall be held by the Collateral
Agent in a Collateral Account maintained under its sole dominion and control.  All Proceeds while held by the Collateral
Agent in a Collateral Account (or by such Grantor in trust for the Collateral
Agent and the Secured Parties) shall continue to be held as collateral security
for all the Secured Obligations and shall not constitute payment thereof until
applied as provided in Section 5.5.


 


5.5.          Application of Proceeds.  The proceeds of any collection, sale,
disposition or other realization of Collateral upon the enforcement of the
security for the Secured Obligations (including for these purposes
distributions of cash, securities or other property on account of the value of
the Collateral in a bankruptcy case of any Grantor), including any Collateral
consisting of cash, shall be applied as follows (or as this Section 5.5
may be amended from time to time with the consent of the First Priority
Representative, the Trustee and the Additional Agent, if any, to the extent
necessary to permit additional junior debt):


 


FIRST, to the payment of all
costs and reasonable expenses incurred by the Collateral Agent in connection
with such collection or sale or otherwise in connection with this Agreement or
any other Finance Document, including all and the reasonable and documented
out-of-pocket court costs fees and documented expenses of its agents and one
lead legal counsel in each relevant jurisdiction, the repayment of all advances
made by the Collateral Agent hereunder or under any other Finance Document on
behalf of any Grantor and any other reasonable and documented out-of-pocket
costs or expenses incurred in connection with the exercise of any right or
remedy hereunder or under any other Finance Document;


 


SECOND, to the payment in
full of all Obligations constituting fees, indemnities, expenses and other
amounts (other than principal and interest) owed to the Agents in their capacities
as such;


 


21

















 


THIRD, to the payment in
full of all of the remaining Bank Priority Obligations (other than the amounts
referred to in the immediately following paragraph), the amounts so applied to
be distributed among the Bank Secured Parties in accordance with Section 8.03
of the Credit Agreement;


 


FOURTH, to the payment in
full of all interest or entitlement to fees or expenses or other charges that
accrue on the Bank Priority Obligations after the commencement of any
Insolvency or Liquidation Proceeding with respect to Holdings or any of its
Subsidiaries, whether or not allowed or allowable in any such proceeding (it
being understood that if it is held that the Bank Priority Obligations and the
Bond Obligations constitute only one secured class (rather than separate
classes for the Bank Priority Obligations and the Bond Obligations), all
distributions pursuant to this provision FOURTH shall be made as if there were
separate classes of claims);


 


FIFTH, to the payment in
full of all of the Pari Passu Obligations, the amounts so applied to be
distributed among the Bond Secured Parties in accordance with Section 6.10
of the Indenture and among the Additional Secured Parties in accordance with
any comparable provision in the Additional Loan Documents, as applicable;


 


SIXTH, to the payment in
full of all interest or entitlement to fees or expenses or other charges that
accrue on the Pari Passu Obligations after the commencement of any Insolvency
or Liquidation Proceeding with respect to Holdings or any of its Subsidiaries,
whether or not allowed or allowable in any such proceeding;


 


SEVENTH, to the payment in
full of all of the Bank Additional Obligations, the amounts so applied to be
distributed among the Bank Secured Parties in accordance with Section 8.03
of the Credit Agreement;


 


EIGHTH, to the payment in
full of all interest or entitlement to fees or expenses or other charges that
accrue on the Bank Additional Obligations after the commencement of any Insolvency
or Liquidation Proceeding with respect to Holdings or any of its Subsidiaries,
whether or not allowed or allowable in any such proceeding; and


 


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


 


5.6.          Code and Other Remedies.  If an Event of Default under any Finance
Document occurs and is continuing, the Collateral Agent, on behalf of the
Secured Parties, may exercise, in addition to all other rights and remedies
granted to them in this Agreement, the Finance Documents and in any other
instrument or agreement securing, evidencing or relating to the Secured
Obligations, all rights and remedies of a secured party under the New York UCC
or any other applicable law.  Without
limiting the generality of the foregoing, if an Event of Default under any
Finance Document occurs and is continuing, the Collateral Agent, without demand
of performance or other demand, presentment, protest, advertisement or notice
of any kind (except any notice required by law referred to below) to or upon
any Grantor or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, license, sublicense, lease, assign,
give an option or options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, at any exchange, broker’s
board or office of the Collateral Agent or any Secured Party or elsewhere upon
such terms and conditions as it may deem advisable and at such prices as it may
deem best, for cash or on credit or for future delivery without assumption of
any credit risk.  The Collateral Agent or
any Secured Party shall 


 


22

















 


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 the whole or any part of
the Collateral so sold, free of any right or equity of redemption in any
Grantor, which right or equity is hereby waived and released.  Each Grantor further agrees, at the
Collateral Agent’s request following and during the continuance of an Event of
Default under any Finance Document, to assemble the Collateral and make it
available to the Collateral Agent at places which the Collateral Agent shall
reasonably select, whether at such Grantor’s premises or elsewhere.  The Collateral Agent shall apply the net
proceeds of any action taken by it pursuant to this Section 5.6, after
deducting all reasonable costs and expenses of every kind incurred in
connection therewith or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the
Collateral Agent and the Secured Parties hereunder, including, without
limitation, reasonable attorneys’ fees and disbursements, to the payment in whole
or in part of the Obligations, in the order provided in Section 5.5, and
only after such application and after the payment by the Collateral Agent of
any other amount required by any provision of law, including, without
limitation, Section 9-615(a)(3) of the New York UCC, need the
Collateral Agent account for the surplus, if any, to any Grantor.  To the extent permitted by applicable law,
each Grantor waives all claims, damages and demands it may acquire against the
Collateral Agent or any Secured Party arising out of the exercise by them of
any rights hereunder.  If any notice of a
proposed sale or other disposition of Collateral shall be required by law, such
notice shall be deemed reasonable and proper if given at least 10 days before
such sale or other disposition.


 


5.7.          Registration Rights.  (a) If the Collateral
Agent shall determine to exercise its rights to sell all or any of the Pledged
Equity pursuant to Section 5.6, and if in the opinion of the Collateral
Agent it is necessary or advisable to have the Pledged Equity, or that portion
thereof to be sold, registered under the provisions of the Securities Act or
other applicable laws (together with the Securities Act, the “Securities
Laws”), the relevant Grantor will cause the Issuer thereof to (i) execute
and deliver, and cause the directors and officers of such Issuer to execute and
deliver, all such instruments and documents, and do or cause to be done all
such other acts as may be, in the opinion of the Collateral Agent, necessary or
advisable to register the Pledged Equity, or that portion thereof to be sold,
under the provisions of the relevant Securities Laws, (ii) use its best
efforts to cause the registration statement relating thereto to become
effective and to remain effective for a period of one year from the date of the
first public offering of the Pledged Equity, or that portion thereof to be
sold, and (iii) make all amendments thereto and/or to the related
prospectus which, in the opinion of the Collateral Agent, are necessary or
advisable, all in conformity with the requirements of the relevant Securities
Laws and the rules and regulations of the SEC or any other United States
securities regulator applicable thereto. 
Each Grantor agrees to cause such Issuer to comply with the provisions
of the securities or “Blue Sky” laws of any and all jurisdictions which the
Collateral Agent shall designate and to make available to its security holders,
as soon as practicable, an earnings statement (which need not be audited) which
will satisfy the provisions of Section 11(a) of the Securities Act.


 


(b)           Each Grantor recognizes that the
Collateral Agent may be unable to effect a public sale of any or all the
Pledged Equity, by reason of certain prohibitions contained in the Securities
Act and applicable state securities laws or otherwise, and may be compelled to
resort to one or more private sales thereof to a restricted group of purchasers
which will be obliged to agree, among other things, to acquire such securities
for their own account for investment and not with a view to the distribution or
resale thereof.  Each Grantor
acknowledges and agrees that any such private sale may result in prices and
other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner.  The Collateral Agent shall be under no
obligation to delay a sale of any of the Pledged Equity for the period of time
necessary to permit the Issuer thereof to register such securities for public
sale under the Securities Act, or under applicable state securities laws, even
if such Issuer would agree to do so.


 


23

















 


(c)           Each Grantor agrees to use its best
efforts to do or cause to be done all such other acts as may be necessary to
make such sale or sales of all or any portion of the Pledged Equity pursuant to
this Section 5.7 valid and binding and in compliance with any and all
other applicable Requirements of Law. 
Each Grantor further agrees that a breach of any of the covenants
contained in this Section 5.7 will cause irreparable injury to the
Collateral Agent and the Secured Parties, that the Collateral Agent and the
Secured Parties have no adequate remedy at law in respect of such breach and,
as a consequence, that each and every covenant contained in this
Section 5.7 shall be specifically enforceable against such Grantor, and
such Grantor hereby waives, to the fullest extent permitted by law, and agrees
not to assert any defenses against an action for specific performance of such
covenants except for a defense that no Event of Default under any Finance
Document has occurred and is continuing and a defense in respect of payment in
full.


 


5.8.          Deficiency.  Each Grantor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Collateral
are insufficient to pay its Obligations and the reasonable fees and
disbursements of any attorneys employed by the Collateral Agent or any Secured
Party to collect such deficiency.


 


SECTION VI          THE AGENTS


 


6.1.          Collateral Agent’s Appointment as
Attorney-in-Fact, etc.  (a) Each Grantor hereby irrevocably
constitutes and appoints the Collateral Agent and any officer or agent thereof,
with full power of substitution, as its true and lawful attorney-in-fact with
full irrevocable power and authority in the place and stead of such Grantor and
in the name of such Grantor or in its own name, for the purpose of carrying out
the terms of this Agreement, to take any and all appropriate action and to
execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Agreement, and, without limiting
the generality of the foregoing, each Grantor hereby gives the Collateral Agent
the power and right, on behalf of such Grantor, without notice to or assent by
such Grantor, to do any or all of the following:


 


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


 


(ii)           in the case of any pledged
Intellectual Property, execute and deliver, and have recorded, any and all
agreements, instruments, documents and papers as the Collateral Agent may request to
evidence and perfect the Collateral Agent’s and the Secured Parties’ security interest in such Intellectual
Property
and the goodwill and general intangibles of such Grantor relating thereto or
represented thereby;


 


(iii)          pay or discharge taxes and Liens
levied or placed on or threatened against the Collateral, effect any repairs or
any insurance called for by the terms of this Agreement and pay all or any part
of the premiums therefor and the costs thereof;


 


(iv)          execute, in connection with any sale
or license provided for in Section 5.6 or 5.7, any endorsements,
assignments or other instruments of conveyance or transfer with respect to the Collateral;
and


 


24

















 


(v)           (1) direct
any party liable for any payment under any of the Collateral to make payment of
any and all moneys due or to become due thereunder directly to the Collateral Agent or as the Collateral Agent shall direct; (2) ask
or demand for, collect, and receive payment of and receipt for, any and all
moneys, claims and other amounts due or to become due at any time in respect of
or arising out of any Collateral; (3) sign and indorse any invoices,
freight or express bills, bills of lading, storage or warehouse receipts,
drafts against debtors, assignments, verifications, notices and other documents
in connection with any of the Collateral; (4) commence and prosecute any
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any portion thereof and to enforce
any other right in respect of any Collateral; (5) defend any suit, action
or proceeding brought against such Grantor with respect to any Collateral; (6) settle,
compromise or adjust any such suit, action or proceeding and, in connection
therewith, give such discharges or releases as the Collateral
Agent may deem appropriate; (7) subject
to any licenses (and the rights granted therein) existing at the time of such
assignment, assign any Copyright, Patent or Trademark (along with the goodwill
of the business to which any such Intellectual Property pertains), owned by
such Grantor, throughout the world for such term or terms, on such conditions,
and in such manner, as the Collateral Agent shall in its sole discretion determine; and (8) generally,
sell, transfer, pledge and make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though the Collateral Agent were the absolute
owner thereof for all purposes, and do, at the Collateral
Agent’s option and such Grantor’s expense,
at any time, or from time to time, all acts and things which the Collateral Agent deems necessary to
protect, preserve or realize upon the Collateral and the Collateral Agent’s and the Secured
Parties’ security interests therein and to effect the intent of this Agreement,
all as fully and effectively as such Grantor might do.


 


Notwithstanding anything in this Section 6.1(a) or in any
other Finance Document to the contrary, the Collateral Agent agrees that it
will not exercise any rights under the power of attorney provided for in this
Section 6.1(a) (other than pursuant to clause (ii) thereof)
unless an Event of Default under any Finance Document shall have occurred and
be continuing.


 


(b)           If any Grantor fails to perform or
comply with any of its agreements contained herein, the Collateral Agent, at
its option, but without any obligation so to do, may perform or comply, or
otherwise cause performance or compliance, with such agreement.


 


(c)           The
expenses of the Collateral Agent
incurred in connection with actions undertaken as provided in this Section 6.1
shall be payable in accordance with the terms of Section 8.3.


 


(d)           Each
Grantor hereby ratifies all that said attorneys shall lawfully do or cause to
be done by virtue hereof.  All powers, authorizations and agencies contained
in this Agreement are coupled with an interest and are irrevocable until this
Agreement is terminated and the security interests created hereby are released
in accordance with Section 8.14.


 


6.2.          Duty of Collateral Agent.  The Collateral Agent’s sole duty with respect
to the custody, safekeeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the New York UCC or otherwise, shall be
to deal with it in the same manner as the Collateral Agent deals with similar
property for its own account.  Neither
the Collateral Agent, any Secured Party nor any of their respective officers,
directors, employees or agents shall be liable for failure to demand, collect
or realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of any Grantor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof.  The powers conferred on the Collateral Agent
and the Secured Parties hereunder are solely to protect the Collateral Agent’s
and the Secured Parties’ interests in the Collateral and shall not impose any
duty upon the Collateral Agent or any 


 


25

















 


Secured
Party to exercise any such powers.  The
Collateral Agent and the Secured Parties shall be accountable only for amounts
that they actually receive as a result of the exercise of such powers, and
neither they nor any of their officers, directors, employees or agents shall be
responsible to any Grantor for any act or failure to act hereunder, except for
their own gross negligence or willful misconduct as determined pursuant to a
final order of a court of competent jurisdiction.


 


6.3.          Execution of Financing Statements.  Pursuant to Section 9-509 of the New
York UCC and any other applicable law, each Grantor authorizes the Collateral
Agent to file or record financing statements and other filing or recording
documents or instruments with respect to the Collateral without the signature
of such Grantor in such form and in such offices in any jurisdiction as the
Collateral Agent determines appropriate to perfect the security interests of
the Collateral Agent under this Agreement. 
A photographic or other reproduction of this Agreement shall, if and to
the extent effective under applicable law in the relevant jurisdiction, be
sufficient as a financing statement or other filing or recording document or
instrument for filing or recording in any such jurisdiction.  Each Grantor authorizes the Collateral Agent
to use the collateral description “all personal property”, “all personal
property, whether now owned or hereafter acquired”, “all assets” or words of
similar meaning in any such financing statements.  Each Grantor hereby ratifies and authorizes
the filing by the Collateral Agent of any financing statement with respect to
the Collateral made prior to the date hereof. 
Notwithstanding the foregoing, the Collateral Agent shall be under no
obligation whatsoever to prepare or file any financing or confirmation
statements or record any documents or instruments in any public office at any
time or times or otherwise to perfect or maintain the perfection of any
security interest in the Collateral.


 


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


 


6.5.          Enforcement by the Collateral Agent.  (a) If any Event of Default under any
Finance Document shall have occurred and be continuing, the Collateral Agent
shall act in relation to the Collateral in accordance with the instructions of
(i) on or prior to the Bank Priority Obligations Discharge Date, the First
Priority Representative and the Applicable Authorized Representative and (ii) after
the Bank Priority Obligations Discharge Date, the Applicable Authorized
Representative.


 


(b)        The Collateral Agent shall disregard any
instructions from any other Person to exercise any right or remedy hereunder
with respect to the Collateral if those instructions are inconsistent with this
Agreement.


 


(c)         Any Person entitled to instruct the
Collateral Agent to exercise any right or remedy hereunder with respect to the
Collateral may give or refrain from giving instructions to the Collateral Agent
to exercise or refrain from exercising the Collateral as it sees fit in
accordance with the other provisions of this Agreement; provided that
the consent of the Applicable Authorized Representative and, if such
instruction is delivered to the Collateral Agent on or prior to the occurrence
of the Bank Priority Obligations Discharge Date, the First Priority
Representative, shall be required before the Collateral Agent is entitled to
rely on or follow such instruction.


 


26

















 


(d)        Subject to paragraph (e) below, before
giving any instructions to the Collateral Agent to exercise any right or remedy
hereunder with respect to the Collateral, the First Priority Representative and
the Applicable Authorized Representative shall consult with one another and
with the Collateral Agent in good faith, with a view to coordinating those
instructions, for a period of up to 45 days or such shorter period as the First
Priority Representative and the Applicable Authorized Representative may agree.


 


(e)         The First Priority Representative and
the Applicable Authorized Representative shall not be obliged to consult in
accordance with paragraph (d) above if the First Priority Representative
and the Applicable Authorized Representative determine in good faith (and give
the Collateral Agent prior notice in writing) that to enter into such
consultations and thereby delay the commencement of enforcement of the
Collateral could reasonably be expected to have a material adverse effect on
their ability to enforce any of the Collateral or the realization of any
proceeds of any enforcement of the Collateral.


 


(f)            The Collateral Agent shall inform
each other Agent on receiving any instructions under this Section 6.5 to
enforce the Collateral.


 


6.6.          Competing Instructions to the
Collateral Agent


 


(a)           If the instructions given to the
Collateral Agent by the First Priority Representative and the Applicable
Authorized Representative conflict with the instructions given to the
Collateral Agent by the other such party: (i) the Collateral Agent shall
promptly notify the First Priority Representative and the Applicable Authorized
Representative; and (ii) following such notification, the First Priority
Representative and the Applicable Authorized Representative shall consult with
one another in good faith for at least 15 days (the “Consultation Period”)
with a view to resolving the conflict in such instructions, provided that the
Consultation Period shall end immediately if the First Priority Representative
and the Applicable Authorized Representative determine in good faith (and give
the Collateral Agent prior notice in writing) that such consultation and
thereby the delay in the enforcement of the Collateral could reasonably be
expected to have a material adverse effect on (A) their ability to enforce
any of the Collateral or (B) the realization of any proceeds of any
enforcement of the Collateral.


 


(b)           If, following the end of the
Consultation Period, the Collateral Agent has not received consistent
instructions from the First Priority Representative and the Applicable
Authorized Representative, the Collateral Agent shall enforce the Collateral in
accordance with the instructions of the First Priority Representative as
evidenced in a written certificate delivered to the Collateral Agent.


 


6.7.          Exemption.


 


(a)           No Agent or Secured Party shall be responsible to any
other Agent or Secured Party with respect to any instructions given or not
given to the Collateral Agent in relation or in connection with any of the
Security Documents, provided in each case they act in good faith and in all
material respects in accordance with their obligations under this Agreement and
the applicable Finance Documents.


 


(b)           None of the Agents or Secured Parties
shall be liable for any loss or damage suffered by any Grantor as a result of
any instructions given or not given by such Agent or such Secured Party in
relation or in connection with any of the Security Documents.


 


27






 










 


6.8.          Termination and Resignation of
Collateral Agent.


 


(a)           Subject to clause (f) below, the
Collateral Agent may resign its appointment under this Agreement at any time by
giving notice to the First Priority Representative, the Trustee, the Additional
Agent (if any) and the Borrower.


 


(b)           A successor Collateral Agent shall be
selected (i) by the retiring Collateral Agent nominating one of its
Affiliates, following consultation with the First Priority Representative, the
Trustee, the Additional Agent (if any) and, so long as no Event of Default
under any Finance Document has occurred and is continuing, the Borrower, as
successor Collateral Agent in its notice of resignation, (ii) if the
retiring Collateral Agent makes no such nomination, by the First Priority
Representative, the Trustee, the Additional Agent (if any) and, so long as no
Event of Default under any Finance Document has occurred and is continuing, the
Borrower or (iii) if a Collateral Agent is not appointed pursuant to sub
clause (i) or (ii) above, the Collateral Agent may (at the expense of
the Grantors), at its option, petition a court of competent jurisdiction for
appointment of a successor Collateral Agent, which must be a bank or trust
company that has a combined capital and surplus of at least $500,000,000 and
maintains an office in New York, New York.


 


(c)           The appointment of the Collateral
Agent may be terminated and a successor Collateral Agent appointed at any time
with the consent of the First Priority Representative, the Trustee, the Additional
Agent (if any) and, so long as no Event of Default under any Finance Document
has occurred and is continuing, the Borrower on at least 30 days prior written
notice being given to the Collateral Agent.


 


(d)           The resignation of the retiring
Collateral Agent and the appointment of the successor Collateral Agent will
become effective only upon the successor Collateral Agent accepting its
appointment as Collateral Agent, and upon the execution of all documents
necessary to substitute the successor as holder of the security comprised in
the Security Documents and the relevant Additional Loan Documents, if any, at
which time, (i) the successor Collateral Agent will become bound by all
the obligations of the Collateral Agent and become entitled to all the rights,
privileges, powers, authorities and discretions of the Collateral Agent under
this Agreement, (ii) the agency of the retiring Collateral Agent will
terminate (but without prejudice to any liabilities which the retiring
Collateral Agent may have incurred prior to the termination of its agency) and
(iii) the retiring Collateral Agent will be discharged from any further
liability or obligation under or in connection with this Agreement or the other
Security Documents.


 


(e)           The retiring Collateral Agent will
cooperate with the successor Collateral Agent in order to ensure that its
functions are transferred to the successor Collateral Agent without disruption
to the service provided to the Agents, the Secured Parties and the Borrower and
will promptly make available to the successor Collateral Agent the documents
and records which have been maintained in connection with this Agreement and
the other Security Documents in order that the successor Collateral Agent is
able to discharge its functions.


 


(f)            The Collateral Agent may resign its
appointment upon appointment of a successor Collateral Agent and such successor
Collateral Agent having accepted the role of the Collateral Agent under this
Agreement. Any such new appointment and all powers to be granted to the
Collateral Agent will be granted pursuant to an accession agreement
satisfactory to the Borrower, the Administrative Agent, the Trustee and the
Additional Agent (if any).


 


(g)           The provisions of this Agreement will
continue in effect for the benefit of any retiring Collateral Agent in respect
of any actions taken or omitted to be taken by it or any event occurring before
the termination of its agency.


 


28

















 


6.9.          Agents’ and Collateral Agent’s
Duties; Reliance.  (a) The
powers conferred on the Agents and the Collateral Agent hereunder are solely to
protect the Secured Parties’ interest in the Collateral and shall not impose
any duty upon any of them to exercise any such powers.  Except for the safe custody of any Collateral
in its possession and the accounting for moneys actually received by it
hereunder, the Agents and the Collateral Agent shall have no duty as to any
Collateral, as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not any Secured Party has or is deemed to have knowledge
of such matters, or as to the taking of any necessary steps to preserve rights
against any parties or any other rights pertaining to any Collateral.  Each of the Agents and the Collateral Agent
shall be deemed to have exercised reasonable care in the custody and
preservation of any Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which it accords its own property, and
will not be liable or responsible for any loss or damage to any Collateral, or
for any diminution in the value thereof, by reason of any act or omission of
any sub-agent or bailee selected by it in good faith, except to the extent that
such liability arises from its own gross negligence or willful misconduct as
determined pursuant to a final order of a court of competent jurisdiction.


 


(b)           Whenever in the performance of its
duties hereunder the Collateral Agent shall deem it necessary or desirable that
a matter be proved or established with respect to any Grantor or any other
Person in connection with the taking, suffering or omitting of any action
hereunder by the Collateral Agent, the Collateral Agent shall be entitled to
rely upon such matter that is proved or established by a certificate executed
by an officer of such Person which is believed by the Collateral Agent to be
genuine and to have been signed or sent by the proper Person or a written
opinion from legal counsel acceptable to the Collateral Agent, and the
Collateral Agent shall have no liability with respect to any action taken, not
taken, suffered or omitted in reliance thereon.


 


(c)           The Collateral Agent may consult with
counsel and shall be entitled to take or not to take any action hereunder in
good faith in relying upon any advice of such counsel.  The Collateral Agent shall have the right but
not the obligation at any time to seek instructions concerning the administration
of this Agreement, the duties created hereunder or the Collateral from the
Collateral Agent or any Representative or any court of competent jurisdiction.


 


(d)           The Collateral Agent shall not incur
any liability in relying upon any resolution, statement, certificate (including
any certificate delivered pursuant to Section 6.6(b)), instrument,
opinion, report, notice, request, consent, order or other paper or document
which it in good faith believes to be genuine and to have been signed or
presented by the proper party.  The
Collateral Agent may rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificate (including
any certificate delivered pursuant to Section 6.6(b)) or opinions that are
believed by the Collateral Agent to be genuine and signed or furnished by the
proper Person furnished to the Collateral Agent in connection with this
Agreement.


 


(e)           The Collateral Agent shall not be
deemed to have actual, constructive, direct or indirect notice or knowledge of
the occurrence of any Event of Default unless and until the Collateral Agent
shall have received written notice thereof from any Grantor, Agent or any
Secured Party.  The Collateral Agent
shall have no obligation whatsoever either prior to or after receiving such a
notice which is believed by the Collateral Agent to be genuine and to have been
signed or sent by the proper Person to inquire whether an Event of Default has,
in fact, occurred and shall be entitled to rely, and shall be fully protected
in so relying, on any such notice so furnished to it.


 


(f)            Anything herein contained to the
contrary notwithstanding, the Grantors shall remain liable under each of the
agreements to which they are a party to perform all of their duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, and the Collateral 


 


29

















 


Agent shall have no
obligation or liability under any such agreements to perform any of the
obligations or duties of the Grantors thereunder. Notwithstanding anything
contained herein to the contrary, the right of the Collateral Agent to perform
any discretionary act enumerated herein (including the right to consent to or
approve of any action or document) shall not be construed as giving rise to any
expressed or implied duty. Beyond the exercise of reasonable care in the
custody thereof, the Collateral Agent shall have no duty as to any Collateral
in its possession or control or in the possession or control of any agent or
bailee or any income thereon or as to preservation of rights against prior
parties or any other rights pertaining thereto. 
The Collateral Agent shall not be responsible for the existence,
genuineness or value of any of the Collateral or for the validity, perfection,
priority or enforceability of the liens in any of the Collateral, whether
impaired by operation of law or by reason of any of any action or omission to
act on its part hereunder, except to the extent such action or omission
constitutes gross negligence or willful misconduct on the part of the
Collateral Agent. Nor shall the Collateral Agent be responsible for the
validity or sufficiency of the Collateral, for the validity of the title of the
Grantors to the Collateral, for insuring the Collateral or for the payment of
taxes, charges, assessments or liens upon the Collateral or otherwise as to the
maintenance of the Collateral.


 


(g)           Nothing set forth in this Agreement
or any other document, nor the exercise by the Collateral Agent of any of the
rights or remedies hereunder, shall relieve any Grantor from the performance of
any term, covenant, condition or agreement on such Grantor’s part to be
performed or observed under or in respect of any of the Collateral or from any
liability to any person under or in respect of any of the Collateral or shall
impose any obligation on either of the Collateral Agent or any other Secured
Party to perform or observe any such term, covenant, condition or agreement on
such Grantor’s part to be so performed or observed or shall impose any
liability on either of the Collateral Agent or any other Secured Party for any
act or omission on the part of such Grantor relating thereto or for any breach
of any representation or warranty on the part of such Grantor contained in this
Agreement, the Indenture or any other documents, or under or in respect of the
Collateral or made in connection herewith or therewith. Anything herein to the
contrary notwithstanding, neither the Collateral Agent nor any other Secured
Party shall have any obligation or liability under any contracts, agreements
and other documents included in the Collateral by reason of this Agreement, nor
shall the Collateral Agent or any other Secured Party be obligated to perform
any of the obligations or duties of any Grantor thereunder or to take any
action to collect or enforce any such contract, agreement or other document
included in the Collateral hereunder.


 


SECTION VII        PARI PASSU OBLIGATIONS


 


7.1.          Actions with Respect to Collateral;
Prohibition on Contesting Liens.


 


(a)           Subject to the provisions of Section 6.5,
(i) the Collateral Agent shall not follow any instructions with respect to
the Collateral from any Non-Controlling Authorized Representative (or any other
Pari Passu Secured Party other than the Applicable Authorized Representative)
and (ii) no Non-Controlling Authorized Representative or other Pari Passu
Secured Party (other than the Applicable Authorized Representative) shall or
shall instruct the Collateral Agent to, commence any judicial or nonjudicial
foreclosure proceedings with respect to, seek to have a trustee, receiver,
liquidator or similar official appointed for or over, attempt any action to
take possession of, exercise any right, remedy or power with respect to, or
otherwise take any action to enforce its security interest in or realize upon,
or take any other action available to it in respect of, any Collateral, whether
under any Pari Passu Security Document, applicable law or otherwise, it being
agreed that only the Collateral Agent, acting on the instructions of the
Applicable Authorized Representative (and, if prior to the Bank Priority
Obligations 


 


30

















 


Discharge Date, the First
Priority Representative) and in accordance with the applicable Pari Passu
Security Documents, shall be entitled to take any such actions or exercise any
such remedies with respect to the Collateral. 
Notwithstanding the equal priority of the Liens securing the Pari Passu
Obligations and subject to the provisions of Section 6.5, with respect to
the Pari Passu Obligations the Collateral Agent (acting on the instructions of
the Applicable Authorized Representative) may deal with the Collateral as if
such Applicable Authorized Representative had a senior Lien on the Collateral.  No Non-Controlling Authorized Representative
or Non-Controlling Secured Party will contest, protest or object to any
foreclosure proceeding or action brought by the Collateral Agent, Applicable
Authorized Representative or Controlling Secured Party or any other exercise by
the Collateral Agent, Applicable Authorized Representative or Controlling
Secured Party of any rights and remedies relating to the Collateral, or to
cause the Collateral Agent to do so.


 


(b)           Each of the Authorized
Representatives agrees that it will not accept any Lien on any Collateral for
the benefit of any Series of Pari Passu Obligations (other than funds
deposited for the redemption, discharge or defeasance of the Bond Secured
Obligations or any Additional Secured Obligations) other than pursuant to the
Pari Passu Security Documents, and by executing this Agreement (or a Secured
Party Security Agreement Supplement), each Authorized Representative and the
Series of Pari Passu Secured Parties for which it is acting hereunder
agree to be bound by the provisions of this Agreement and the other Pari Passu
Security Documents applicable to it.


 


(c)           Each of the Pari Passu Secured
Parties agrees that it will not (and hereby waives any right to) question or
contest or support any other Person in contesting, in any proceeding (including
any Insolvency or Liquidation Proceeding), the perfection, priority, validity
or enforceability of a Lien held by or on behalf of any of the Pari Passu
Secured Parties in all or any part of the Collateral, or any of the provisions
of the Secured Party Security Agreement Supplement or this Agreement; provided
that nothing in this Agreement shall be construed to prevent or impair the
rights of any of the Collateral Agent or any Authorized Representative to
enforce this Agreement.


 


(d)           Each Non-Controlling Secured Party
acknowledges and agrees that, subject to the provisions of Section 6.5,
the Collateral Agent shall be entitled, for the benefit of the Pari Passu
Secured Parties, to sell, transfer or otherwise dispose of or deal with any
Collateral as provided herein without regard to any rights to which the holders
of the Non-Controlling Secured Obligations would otherwise be entitled as a
result of such Non-Controlling Secured Obligations.  Without limiting the foregoing, each Non-Controlling
Secured Party agrees that none of the Collateral Agent, the Applicable
Authorized Representative or any other Pari Passu Secured Party shall have any
duty or obligation first to marshal or realize upon any type of Collateral, or
to sell, dispose of or otherwise liquidate all or any portion of the Collateral
in any manner that would maximize the return to the Non-Controlling Secured
Parties, notwithstanding that the order and timing of any such realization,
sale, disposition or liquidation may affect the amount of proceeds actually
received by the Non-Controlling Secured Parties from such realization, sale,
disposition or liquidation.  Each of the
Pari Passu Secured Parties waives any claim it may now or hereafter have
against the Collateral Agent or the Authorized Representative of any other
Series of Pari Passu Obligations or any other Pari Passu Secured Party of
any other Series arising out of (i) any actions which the Collateral
Agent, any Authorized Representative or any Pari Passu Secured Party takes or
omits to take (including, actions with respect to the creation, perfection or
continuation of Liens on any Collateral, actions with respect to the
foreclosure upon, sale, release or depreciation of, or failure to realize upon,
any of the Collateral and actions with respect to the collection of any claim
for all or any part of the Pari Passu Obligations from any account debtor,
guarantor or any other party) in accordance with the Pari Passu Security
Documents or any other agreement or document related thereto or to the
collection of the Pari Passu Obligations or the valuation, use, protection or
release of any security for the Pari Passu Obligations, (ii) any election
by any Applicable Authorized Representative or any holders of Pari Passu
Obligations, in any Insolvency or Liquidation Proceeding, of the application of



 


31

















 


Section 1111(b) of
the Bankruptcy Code or (iii) any borrowing by, or grant of a security
interest or administrative expense priority under Section 364 of the
Bankruptcy Code or any equivalent provision of any other Bankruptcy Law by, the
Company or any of its Subsidiaries, as debtor-in-possession.  Notwithstanding any other provision of this
Agreement, the Collateral Agent shall not accept any Collateral in full or
partial satisfaction of any Pari Passu Obligations pursuant to
Section 9-620 of the Uniform Commercial Code of any jurisdiction, without
the consent of each Authorized Representative.


 


(e)           None of the Pari Passu Secured Parties
may institute any suit or assert in any suit, bankruptcy, insolvency or other
proceeding any claim against the Collateral Agent or any other Pari Passu
Secured Party seeking damages from or other relief by way of specific
performance, instructions or otherwise with respect to any Collateral.  In addition, none of the Pari Passu Secured
Parties may seek to have any Collateral or any part thereof marshaled upon any
foreclosure or other disposition of such Collateral.  If any Pari Passu Secured Party obtains
possession of any Collateral or realizes any proceeds or payment in respect
thereof, in each case, as a result of the enforcement of remedies, at any time
prior to the discharge of each of the relevant Pari Passu Obligations
Obligations, then it must hold such Collateral, proceeds or payment in trust
for the other Secured Parties and promptly transfer such Collateral, proceeds
or payment to the Collateral Agent to be distributed in accordance with the
applicable Security Documents.


 


SECTION VIII       MISCELLANEOUS


 


8.1.          Amendments; Waivers; Additional
Grantors; Additional Secured Parties, etc.  (a)Except as otherwise expressly specified
herein, no amendment or waiver of any provision of this Agreement, and no
consent to any departure by any Grantor herefrom, shall in any event be
effective unless the same shall be in writing and signed by each Grantor to
which such amendment or waiver is to apply, the Applicable Authorized
Representative (with the consent of the requisite number of holders of Pari
Passu Obligations specified in the Indenture or the relevant Additional Loan
Document), the Collateral Agent and, prior to the Bank Priority Obligations
Discharge Date, the First Priority Representative (with the consent of the
requisite number of Lenders specified in the Credit Agreement), and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.  No
failure on the part of the Collateral Agent, any Agent or any other Secured
Party to exercise, and no delay in exercising any right hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of
any other right.


 


(b)           Upon the execution and delivery, or
authentication, by any Person of a secured party security agreement supplement
in substantially the form of Annex 3 hereto (each a “Secured Party Security
Agreement Supplement”), (i) such Person shall be referred to as, in
the case of an Additional Loan Document, an “Additional Agent” or, in
the case of a Replacement First Priority Agreement, the First Priority Representative and shall
be and become a Secured Party hereunder, (ii) each reference in this
Agreement to “Secured Parties” shall also mean and be a reference to the
Additional Secured Parties or the additional Bank Secured Parties, as
applicable, (iii) each reference in this Agreement of a grant of a
security interest in Grantor’s Collateral to a Secured Party shall also mean a
grant of a security interest to the Additional Secured Parties, or the
additional Bank Secured Parties, as applicable, (iv) in the case of a
Secured Party Security Agreement Supplement delivered by an Additional Agent,
each reference to the First Priority Representative and/or the Trustee shall be
a reference to the First Priority Representative, the Trustee and/or the
Additional Agent, (v) in the case of a Secured Party Security Agreement
Supplement delivered by an Additional Agent, each reference to Agents shall be
a reference to the First Priority Representative, the Trustee and the
Additional Agent, (vi) Section 5.5 may be amended from time to time
with the consent of the First Priority Representative and the Applicable
Authorized Representative 


 


32

















 


to the extent necessary to
permit additional junior debt and (vii) Sections 6.5, 6.6, and 6.9 may be
amended and restated if deemed prudent in the reasonable discretion of the
Collateral Agent, the First Priority Representative and the Applicable
Authorized Representative, acting unanimously. 
Among other things the Secured Party Security Agreement Supplement shall
(x) for the avoidance of doubt, appoint the Collateral Agent as the
Additional Secured Parties’, or the additional Bank Secured Parties’, as
applicable, collateral agent pursuant to reasonable terms and conditions agreed
to by the Additional Agent or First Priority Representative, as applicable, and
the Collateral Agent, which terms shall not in any event be inconsistent with
the provisions of this Agreement, and (y) in the case of a Secured Party
Security Agreement Supplement delivered by an Additional Agent, among other
terms define “Obligations”, “Additional Loan Documents” and “Additional
Lenders”.  The execution and delivery of
any such Secured Party Security Agreement Supplement shall not require the
consent of any other party to this Agreement providing the Indebtedness secured
by such Secured Party Security Agreement Supplement is otherwise permitted by
all applicable Finance Documents.  The
rights and obligations of each party to this Agreement shall remain in full
force and effect notwithstanding the addition of any new Secured Party to this
Agreement.


 


8.2.          Notices.  All notices and other communications provided
for hereunder shall be in writing (including telegraphic or telecopy
communication or facsimile transmission) and mailed, telegraphed, telecopied,
telexed, faxed or delivered to it (a) if to any Grantor, addressed to it
in care of the Borrower at the Borrower’s address specified in Section 11.02
of the Credit Agreement and Section 13.2 of the Indenture, (b) if to
the First Priority Representative, at its address specified in the First
Priority Agreement, (c) if to the Trustee, at its address specified in Section 13.2
of the Indenture, (d) if to the Collateral Agent, to Wilmington Trust FSB,
Corporate Client Services, Suite 1290, 50 South Sixth Street, Minnesota,
MN 55402, and (e) if to the Additional Agent (if any) at its address
specified in the Additional Loan Documents (as applicable).  All such notices and other communications
shall be deemed to be given or made at such time as shall be set forth in
Section 11.02 of the Credit Agreement, Section 13.2 of the Indenture
and in the Additional Loan Documents (as applicable).  Delivery by telecopier of an executed
counterpart of any amendment or waiver of any provision of this Agreement or of
any Security Agreement Supplement or Schedule hereto shall be effective as
delivery of an original executed counterpart thereof.


 


8.3.          Enforcement Expenses;
Indemnification.  (a) 
Each Grantor agrees to pay or reimburse each Bank Secured Party, including the
First Priority Representative, for all its costs and expenses incurred in
collecting against such Grantor under the guarantee contained in Article X
of the Credit Agreement or otherwise enforcing or preserving any rights under
this Agreement and the other First Priority Documents to which such Grantor is
a party, including, without limitation, the fees and disbursements of counsel
to each Bank Secured Party, including the First Priority Representative, in
each case subject to and in accordance with Section 11.04 of the Credit
Agreement.


 


(b)           Each Grantor agrees to pay or
reimburse each Bond Secured Party, including the Trustee, for all its costs and
expenses incurred in collecting against such Grantor under the guarantee
contained in the Indenture or otherwise enforcing or preserving any rights
under this Agreement and the other Indenture Documents to which such Grantor is
a party, including, without limitation, the fees and disbursements of counsel
to each Bond Secured Party, including the Trustee, in each case subject to and
in accordance with Section 10.1 of the Indenture.


 


(c)           Each Grantor agrees to indemnify, defend and save and hold
harmless the Collateral Agent and each of its Affiliates and their respective
officers, directors, employees, agents and advisors (each, an “Indemnified
Party”) from and against, and shall pay within 10 Business Days after
demand therefor, any and all claims, damages (excluding any special, punitive,
indirect or consequential damages), losses, liabilities and out-of-pocket
expenses (including, without limitation, expenses and 


 


33

















 


reasonable fees of external counsel) that may be
incurred by or asserted or awarded against any Indemnified Party, in each case
arising out of or in connection with or resulting from this Agreement
(including, without limitation, enforcement of this Agreement), except to the
extent such claim, damage, loss, liability or expense has resulted from such
Indemnified Party’s gross negligence, bad faith or willful misconduct as determined
pursuant to a final non-appealable order of a court of competent jurisdiction,
provided however, that such Indemnified Party shall promptly refund any amount
received under this clause (c) to the extent that there is a final
judicial or arbitral determination that such Indemnified Party was not entitled
to indemnification with respect to such payment pursuant to the terms under
this clause (c).


 


(d)           Each Grantor will, within 10 Business
Days after demand therefor, pay to the Collateral Agent the amount of any and
all reasonable and documented out-of-pocket expenses, including, without
limitation, the reasonable and documented out-of-pocket fees and expenses for
one lead counsel and of any experts and agents, that they may incur in
connection with (i) the negotiation and administration of this Agreement
(including, without limitation, reasonable and documented out-of-pocket fees
and expenses for one lead counsel), or (ii) the custody, preservation, use
or operation of, or the sale of, collection from or other realization upon, any
of the Collateral of such Grantor, or (iii) the exercise or enforcement of
any of the rights of the Collateral Agent, the Agents or the other Secured
Parties hereunder.


 


(e)           Each Grantor agrees to pay, and to save the
Collateral Agent and the other Secured Parties harmless from, any and all
liabilities with respect to, or resulting from any delay in paying, any and all
stamp, excise, sales or other taxes which may be payable or determined to be
payable with respect to any of the Collateral or in connection with any of the
transactions contemplated by this Agreement.


 


(f)            The
agreements in this Section 8.3 shall survive repayment of the Secured
Obligations and all other amounts payable under the Finance Documents.


 


8.4.          Successors and Assigns.  This Agreement shall be binding upon the
successors and assigns of each Grantor and shall inure to the benefit of the
Collateral Agent and the Secured Parties and their successors and assigns;
provided that no Grantor may, except pursuant to a merger or consolidation or
other transaction permitted by the Credit Agreement, the Indenture and the
Additional Loan Documents, if any, assign, transfer or delegate any of its
rights or obligations under this Agreement without the prior written consent of
the Collateral Agent.


 


8.5.          Set-Off.  In addition to any rights and remedies of the
Secured Parties provided by Law, upon the occurrence and during the continuance
of any Event of Default under any Finance Document, each Secured Party and its
Affiliates is authorized at any time and from time to time, without prior
notice to any Grantor, any such notice being waived by each Grantor to the
fullest extent permitted by applicable Law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held by, and other Indebtedness at any time owing by, such Secured Party and
its Affiliates to or for the credit or the account of any Grantor against any
and all Obligations owing to such Secured Party and its Affiliates hereunder or
under any other Finance Document, now or hereafter existing, irrespective of
whether or not such Secured Party or Affiliate shall have made demand under
this Agreement or any other Finance Document and although such Secured
Obligations may be contingent or unmatured or denominated in a currency
different from that of the applicable deposit or Indebtedness; provided that, in the case of any such deposits or other
Indebtedness for the credit or the account of any Foreign Subsidiary, such
set-off may only be against any Obligations of Foreign Subsidiaries.  Each Secured Party agrees promptly to notify
such Grantor, the Collateral Agent and the Agents after any such set off and
application made by such Secured Party; provided, that the failure to give such
notice shall not 


 


34

















 


affect
the validity of such set-off and application. 
The rights of the Secured Parties under this Section 8.5 are in
addition to other rights and remedies (including other rights of set-off) that
the Secured Parties may have.


 


8.6.          Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.  Delivery by telecopier or pdf of an executed
counterpart of a signature page to this Agreement shall be effective as
delivery of an original executed counterpart of this Agreement.


 


8.7.          Severability.  If any provision of this Agreement is held to
be illegal, invalid or unenforceable, the legality, validity and enforceability
of the remaining provisions of this Agreement shall not be affected or impaired
thereby.  The invalidity of a provision
in a particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.


 


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


 


8.9.          Integration.  This Agreement, together with the other
Finance Documents, comprises the complete and integrated agreement of the
parties on the subject matter hereof and thereof and supersedes all prior
agreements, written or oral, on such subject matter.


 


8.10.        GOVERNING
LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEW YORK.


 


8.11.        Submission To Jurisdiction; Waivers.  (a) Each Grantor hereby irrevocably and
unconditionally:


 


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


 


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


 


(d)           agrees
that service of process in any such action or proceeding may be effected by
mailing a copy thereof by registered
or certified mail (or any substantially similar form of mail), postage prepaid,
to such Grantor at its address referred to in Section 8.2 or at such other
address of which the Collateral Agent shall have been notified pursuant
thereto;


 


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


 


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


 


8.12.        Acknowledgments.  (a) Each Grantor hereby acknowledges
that:


 


35

















 


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


 


(ii)           neither the Collateral
Agent nor any other Secured Party has any fiduciary relationship with or duty
to any Grantor arising out of or in connection with this Agreement or any of
the other Finance Documents, and
the relationship between the Grantors, on the one hand, and the Collateral Agent and the other Secured
Parties, on the other hand, in connection herewith or therewith is solely that
of debtor and creditor; and


 


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


 


8.13.        Additional Grantors.  Each Subsidiary of the Borrower that is
required to become a party to this Agreement pursuant to Section 6.13 of
the Credit Agreement, Section 3.12 of the Indenture or any comparable
provision in any Additional Loan Document shall become a Grantor for all purposes
of this Agreement upon execution and delivery by such Subsidiary of a Security
Agreement Supplement in the form of Annex 2 hereto.


 


8.14.        Releases.  (a)  If any of the Collateral shall be
sold, transferred or otherwise disposed of by any Grantor in a transaction
otherwise permitted by all applicable Finance Documents, to any Person other
than Holdings, the Borrower or any other Grantors, then the Collateral Agent,
at the request and sole expense of such Grantor, shall promptly execute and
deliver to such Grantor all releases or other documents reasonably necessary or
desirable for the release of the Liens created hereby on such Collateral (but
not on any Proceeds thereof).  A Grantor
shall be automatically released from its obligations hereunder if such Person
ceases to be a Subsidiary as a result of a transaction otherwise permitted by
all applicable Finance Documents and the Liens on the applicable Collateral
pledged by such Grantor hereunder shall be automatically released, in each case
without any further actions by any Person; provided that the Borrower
shall deliver to the Collateral Agent a written notice for release identifying
the relevant Grantor, together with a certification by the Borrower stating
that such transaction is in compliance with the Finance Documents; provided
further that no such release shall occur to the extent such Person is
not released as a guarantor under the First Priority Agreement in accordance
with the terms thereof.


 


(b)           Upon (i) the payment in full in
cash of the Secured Obligations that are Bank Obligations other than Secured
Obligations with respect to Hedge Obligations and Cash Management Obligations
not yet due and payable and contingent indemnification obligations not yet
accrued and payable, (ii) the termination or expiration of all Letters of
Credit that are not Cash Collateralized and (iii) the termination of all
Revolving Commitments, the Lien on all Collateral created under this Agreement
that secures the Secured Obligations with respect to the Bank Obligations shall
automatically terminate and be released and all rights of the First Priority
Representative and the Bank Secured Parties to the Collateral shall
automatically revert to the applicable Grantor, in each case without further
actions by any Person.  Upon any such
termination, the First Priority Representative and the Collateral Agent will,
at the applicable Grantor’s request and expense, execute and deliver to such
Grantor such documents as such Grantor shall reasonably request to evidence
such termination.


 


(c)           To the extent provided in Sections
11.6 of the Indenture, the Lien on all Collateral created under this Agreement
that secures the Secured Obligations with respect to the Bond Obligations shall
automatically terminate and be released and all rights of the Trustee and the
Bond Secured Parties to the Collateral shall automatically revert to the
applicable Grantor, in each case without further actions by an Person.  Upon any such termination, the Trustee and
the Collateral Agent will, at the 


 


36

















 


applicable Grantor’s
expense, execute and deliver to such Grantor such documents as such Grantor
shall reasonably request to evidence such termination.


 


(d)           Upon the occurrence of (i) the
payment in full in cash of the Secured Obligations that are Collateral Agent
Obligations (other than contingent or unliquidated obligations or liabilities)
or (ii) the date when the Collateral Agent consents to the termination of
this Agreement, the Lien on all Collateral created under this Agreement that
secures the Secured Obligations with respect to the Collateral Agent
Obligations shall automatically terminate and all rights of the Collateral
Agent to the Collateral shall automatically revert to the applicable Grantor
without further actions by any Person. 
Upon any such termination, the Collateral Agent will, at the applicable
Grantor’s expense, execute and deliver to such Grantor such documents as such
Grantor shall reasonably request to evidence such termination.


 


(e)           Upon the payment in full in cash of
the Additional Secured Obligations (if any) (other than contingent obligations
or liabilities or obligations with respect to Hedge Obligations and Cash
Management Obligations not yet due and payable) as required by the Additional
Loan Documents (if any) the Lien on all Collateral created under this Agreement
that secures the Additional Secured Obligations shall automatically terminate
and all rights of the Additional Secured Parties to the Collateral shall
automatically revert to the applicable Grantor without futher actions by any
Person.  Upon any such termination, the
Additional Agent will, at the applicable Grantor’s expense, execute and deliver
to such Grantor such documents as such Grantor shall reasonably request to
evidence such termination.


 


(f)            Any execution and delivery of
documents pursuant to this Section 8.14 shall be without recourse to or
warranty by the Agents.


 


8.15.        WAIVER
OF JURY TRIAL.  EACH GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
FINANCE DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.


 


[THE REMAINDER OF THIS PAGE IS
INTENTIONALLY LEFT BLANK.]


 


37






 


 










 


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


 


	
   

  	
  RDA
  HOLDING CO.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Thomas A. Williams

  
	
   

  	
   

  	
  Name:
  Thomas A. Williams

  
	
   

  	
   

  	
  Title:
  Senior Vice President and Chief Financial

  
	
   

  	
   

  	
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  THE
  READER’S DIGEST ASSOCIATION, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Thomas A. Williams

  
	
   

  	
   

  	
  Name:
  Thomas A. Williams

  
	
   

  	
   

  	
  Title:
  Senior Vice President and Chief Financial

  
	
   

  	
   

  	
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  EACH
  OF THE GRANTORS LISTED

  
	
   

  	
  ON
  SCHEDULE I HERETO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Thomas A. Williams

  
	
   

  	
   

  	
  Name:
  Thomas A. Williams

  
	
   

  	
   

  	
  Title:
  Senior Vice President and Chief Financial

  
	
   

  	
   

  	
  Officer

  



 


[Security
Agreement]


 

















 


Alex
Inc.


Allrecipes.com, Inc.


Ardee
Music Publishing, Inc.


Christmas
Angel Productions, Inc.


CompassLearning, Inc.


Direct
Entertainment Media Group, Inc.


Direct
Holdings Americas Inc.


Direct
Holdings Custom Publishing Inc.


Direct
Holdings Customer Service, Inc.


Direct
Holdings Education Inc.


Direct
Holdings Libraries Inc.


Direct
Holdings U.S. Corp.


Funk &
Wagnalls Yearbook Corp.


Gareth
Stevens, Inc.


Home
Service Publications, Inc.


Pegasus
Asia Investments, Inc.


Pegasus
Investment, Inc.


Pegasus
Sales, Inc.


Pleasantville
Music Publishing, Inc.


R.D.
Manufacturing Corporation


RD
Large Edition, Inc.


RD
Publications, Inc.


RD
Walking, Inc.


RDA
Sub Co.


Reader’s
Digest Children’s Publishing, Inc.


Reader’s
Digest Consumer Services, Inc.


Reader’s
Digest Entertainment, Inc.


Reader’s
Digest Financial Services, Inc.


Reader’s
Digest Latinoamerica S.A.


Reader’s
Digest Sales and Services, Inc.


Reader’s
Digest Sub Nine, Inc.


Reader’s
Digest Young Families, Inc.


Reiman
Manufacturing, LLC


Reiman
Media Group, Inc.


Retirement
Living Publishing Company, Inc.


Saguaro
Road Records, Inc.


Taste
of Home Media Group, Inc.


Taste
of Home Productions, Inc.


Travel Publications, Inc.


W.A. Publications, LLC


WAPLA,
LLC


Weekly
Reader Corporation


Weekly
Reader Custom Publishing, Inc.


World
Almanac Education Group, Inc.


World
Wide Country Tours, Inc.


WRC
Media Inc.


 


[Security Agreement]


 

















 


	
   

  	
  WILMINGTON
  TRUST FSB, as Collateral Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Peter Finkel

  
	
   

  	
   

  	
  Name:
  Peter Finkel

  
	
   

  	
   

  	
  Title:
  Vice President

  



 


[Security
Agreement]


 

















 


	
   

  	
  WELLS
  FARGO BANK, NATIONAL ASSOCIATION, as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Martin Reed

  
	
   

  	
   

  	
  Name:
  Martin Reed

  
	
   

  	
   

  	
  Title:
  Vice President

  



 


[Security
Agreement]


 

















 


	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Tina Ruyter

  
	
   

  	
   

  	
  Name:
  Tina Ruyter

  
	
   

  	
   

  	
  Title:
  Executive Director

  



 


[Security
Agreement]