EX-10.5



 






Exhibit 10.5




 





SECURITY AGREEMENT




by




SOLUTIA INC.




and




THE SUBSIDIARIES PARTY HERETO,

as Grantors,




and




CITIBANK, N.A.,

as Collateral Agent




 






Dated as of February 28, 2008




 





 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 	 	 
	 

	 	ARTICLE I	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	DEFINITIONS	 	 	 	 
	 
	 	 	 	 	 	 
	SECTION 1.01.

	 	Uniform Commercial Code Defined Terms
	 	 	2	 
	SECTION 1.02.

	 	Credit Agreement Defined Terms
	 	 	2	 
	SECTION 1.03.

	 	Definition of Certain Terms Used Herein
	 	 	2	 
	SECTION 1.04.

	 	Interpretation
	 	 	7	 
	SECTION 1.05.

	 	Resolution of Drafting Ambiguities
	 	 	7	 
	SECTION 1.06.

	 	Perfection Certificate
	 	 	7	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE II	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	SECURITY INTERESTS	 	 	 	 
	 
	 	 	 	 	 	 
	SECTION 2.01.

	 	Grant of Security Interest
	 	 	7	 
	SECTION 2.02.

	 	No Assumption of Liability
	 	 	8	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE III	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	REPRESENTATIONS AND WARRANTIES	 	 	 	 
	 
	 	 	 	 	 	 
	SECTION 3.01.

	 	Title and Authority
	 	 	8	 
	SECTION 3.02.

	 	Filings
	 	 	9	 
	SECTION 3.03.

	 	Validity of Security Interests
	 	 	9	 
	SECTION 3.04.

	 	Limitations on and Absence of Other Liens
	 	 	9	 
	SECTION 3.05.

	 	Other Actions
	 	 	9	 
	SECTION 3.06.

	 	Condition and Maintenance of Equipment.
	 	 	13	 
	SECTION 3.07.

	 	No Conflicts, Consents, etc.
	 	 	13	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE IV	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	COVENANTS	 	 	 	 
	 
	 	 	 	 	 	 
	SECTION 4.01.

	 	Change of Name; Location of Collateral; Records; Place of Business
	 	 	13	 
	SECTION 4.02.

	 	Protection of Security
	 	 	13	 
	SECTION 4.03.

	 	Further Assurances
	 	 	14	 
	SECTION 4.04.

	 	Inspection and Verification
	 	 	14	 
	SECTION 4.05.

	 	Taxes; Encumbrances
	 	 	14	 
	SECTION 4.06.

	 	Assignment of Security Interest
	 	 	14	 
	SECTION 4.07.

	 	Continuing Obligations of the Grantors
	 	 	15	 
	SECTION 4.08.

	 	Use and Disposition of Collateral
	 	 	15	 
	SECTION 4.09.

	 	Insurance
	 	 	15	 
	SECTION 4.10.

	 	Certain Covenants and Provisions Regarding Patent, Trademark and Copyright Collateral
	 	 	15	 






 -i- 




 









 








	 	 	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 	 	 
	SECTION 4.11.

	 	Certain Covenants and Provisions Regarding Receivables
	 	 	17	 
	SECTION 4.12.

	 	Inventory and Equipment.
	 	 	18	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE V	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	REMEDIES	 	 	 	 
	 
	 	 	 	 	 	 
	SECTION 5.01.

	 	Remedies upon Default
	 	 	19	 
	SECTION 5.02.

	 	Notice of Sale
	 	 	20	 
	SECTION 5.03.

	 	Waiver of Notice and Claims
	 	 	21	 
	SECTION 5.04.

	 	Certain Sales of Collateral
	 	 	21	 
	SECTION 5.05.

	 	No Waiver; Cumulative Remedies
	 	 	22	 
	SECTION 5.06.

	 	Certain Additional Actions Regarding Intellectual Property
	 	 	22	 
	SECTION 5.07.

	 	Application of Proceeds
	 	 	22	 
	SECTION 5.08.

	 	Collateral Agent’s Calculations
	 	 	23	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE VI	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	The Collateral Agent	 	 	 	 
	 
	 	 	 	 	 	 
	SECTION 6.01.

	 	General Authority of the Collateral Agent over the Collateral
	 	 	24	 
	SECTION 6.02.

	 	Exercise of Powers
	 	 	24	 
	SECTION 6.03.

	 	Remedies Not Exclusive
	 	 	24	 
	SECTION 6.04.

	 	Waiver and Estoppel
	 	 	25	 
	SECTION 6.05.

	 	Limitation on Collateral Agent’s Duty in Respect of Collateral
	 	 	25	 
	SECTION 6.06.

	 	Limitation by Law
	 	 	25	 
	SECTION 6.07.

	 	Rights of Secured Parties in Respect of Obligations
	 	 	25	 
	SECTION 6.08.

	 	Compensation and Expenses
	 	 	25	 
	SECTION 6.09.

	 	Stamp and Other Similar Taxes
	 	 	26	 
	SECTION 6.10.

	 	Filing Fees, Excise Taxes, etc.
	 	 	26	 
	SECTION 6.11.

	 	Indemnification
	 	 	26	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE VII	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	MISCELLANEOUS	 	 	 	 
	 
	 	 	 	 	 	 
	SECTION 7.01.

	 	Notices
	 	 	26	 
	SECTION 7.02.

	 	Survival of Agreement
	 	 	26	 
	SECTION 7.03.

	 	Binding Effect
	 	 	26	 
	SECTION 7.04.

	 	GOVERNING LAW
	 	 	27	 
	SECTION 7.05.

	 	Waivers; Amendment; Several Agreement
	 	 	27	 
	SECTION 7.06.

	 	WAIVER OF JURY TRIAL
	 	 	27	 
	SECTION 7.07.

	 	Severability
	 	 	27	 
	SECTION 7.08.

	 	Counterparts
	 	 	27	 
	SECTION 7.09.

	 	Headings
	 	 	28	 
	SECTION 7.10.

	 	Jurisdiction; Consent to Service of Process
	 	 	28	 
	SECTION 7.11.

	 	Termination
	 	 	28	 
	SECTION 7.12.

	 	Additional Grantors
	 	 	29	 
	SECTION 7.13.

	 	Financing Statements
	 	 	29	 
	SECTION 7.14.

	 	Collateral Agent Appointed Attorney-in-Fact
	 	 	29	 
	SECTION 7.15.

	 	Intercreditor Agreement Governs
	 	 	30	 






 -ii 




 









 








	 	 	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 	 	 
	SECTION 7.16.

	 	Delivery of Collateral
	 	 	30	 
	SECTION 7.17.

	 	Mortgages
	 	 	30	 
	SECTION 7.18.

	 	Conflicts
	 	 	30	 
	 
	 	 	 	 	 	 
	 

	 	SCHEDULES	 	 	 	 
	 
	 	 	 	 	 	 
	Schedule I

	 	Subsidiary Guarantors	 	 	 	 
	Schedule II

	 	Excluded Deposit Account(s)	 	 	 	 
	Schedule III

	 	Excluded Securities Account	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	ANNEXES	 	 	 	 
	 
	 	 	 	 	 	 
	Annex I

	 	Form of Joinder Agreement	 	 	 	 
	Annex II

	 	Form of Perfection Certificate	 	 	 	 
	Annex III

	 	Form of Bailee Letter	 	 	 	 
	Annex IV

	 	Form of Landlord Access Agreement	 	 	 	 






 -iii 





 









 







This instrument, the rights and obligations evidenced hereby, and the liens created hereunder, are
subordinate in the manner and to the extent set forth in the Intercreditor Agreement (the
“Intercreditor Agreement”), dated as of February 28, 2008, by and among SOLUTIA INC., a Delaware
corporation (the “Company”), each of the Company’s Subsidiaries party thereto from time to time and
CITIBANK, N.A. (“Citi”), in its capacity as administrative agent for the holders of the Term Loan
Obligations, and as collateral agent for the holders of the Term Loan Obligations, Citi, in its
capacity as administrative agent for the holders of the Revolving Credit Obligations, and as
collateral agent for the holders of the Revolving Credit Obligations, as amended from time to time;
and each holder of this instrument, by its acceptance hereof, irrevocably agrees to be bound by the
provisions of the Intercreditor Agreement.




SECURITY AGREEMENT




     SECURITY AGREEMENT (as amended, restated, amended and restated, supplemented or otherwise
modified from time to time, this “Agreement”) dated as of February 28, 2008 among SOLUTIA
INC., a Delaware corporation (the “Borrower”), each Subsidiary of the Borrower listed on
Schedule I hereto (collectively, together with each Subsidiary that becomes a party hereto
pursuant to Section 7.12 of this Agreement, the “Subsidiary Guarantors” and, together with
the Borrower, the “Grantors”), and CITIBANK, N.A., as collateral agent (in such capacity,
together with its successors in such capacity, the “Collateral Agent”) for the Secured
Parties (as defined in the Credit Agreement referred to below).



R E C I T A L S




     A. The Borrower, the Collateral Agent, Citibank, N.A., as administrative agent (in such
capacity and together with any successors in such capacity, the “Administrative Agent”) for
the Lenders (as defined herein), the lending institutions from time to time party thereto (the
“Lenders”) and the other agents party thereto have entered into that certain Credit
Agreement, dated as of the date hereof (as amended, restated, amended and restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”), providing for the making of
Loans to the Borrower pursuant to, and upon the terms and subject to the conditions specified in,
the Credit Agreement.



     B. Each Subsidiary Guarantor has, pursuant to the Guarantee Agreement, dated as of the date
hereof, among other things, unconditionally guaranteed the obligations of the Borrower under the
Credit Agreement.



     C. The Borrower and each Subsidiary Guarantor will receive substantial benefits from the
execution, delivery and performance of the obligations of the Borrower under the Credit Agreement
and are, therefore, willing to enter into this Agreement.



     D. Contemporaneously with the execution and delivery of this Agreement, the Borrower and
Subsidiary Guarantors have executed and delivered to the Collateral Agent a Pledge Agreement (as
amended, restated, amended and restated, supplemented or otherwise modified from time to time, the
“Pledge Agreement”).



     E. This Agreement is given by each Grantor in favor of the Collateral Agent for the benefit of
the Secured Parties to secure the payment and performance of all of the Obligations (as hereinafter
defined).



 









 





     NOW THEREFORE, in consideration of the foregoing and other benefits accruing each Grantor, the
receipt and sufficiency of which are hereby acknowledged, each Grantor and the Collateral Agent
hereby agree as follows:



ARTICLE I




DEFINITIONS




     SECTION 1.01. Uniform Commercial Code Defined Terms. Unless otherwise defined herein, terms used herein that are defined in the UCC shall have
the meanings assigned to them in the UCC, including the following which are capitalized herein:




     “Account Debtor”; “Accounts”; “Bank”; “Certificates of
Title”; “Chattel Paper”; “Commercial Tort Claim”; “Commodity
Account”; “Commodity Contract”; “Commodity Intermediary”; “Deposit
Accounts”; “Documents”; “Electronic Chattel Paper”; “Entitlement
Holder”, “Entitlement Order”; “Equipment”; “Fixtures”;
“General Intangibles”; “Goods”; “Instruments” (as defined in Article
9 rather than Article 3); “Inventory”; “Investment Property”;
“Letter-of-Credit Rights”; “Letters of Credit”; “Money”;
“Proceeds”; “Records”; “Securities Account”; “Securities
Intermediary”; “Security Entitlement”; “Supporting Obligations”; and
“Tangible Chattel Paper”.



     SECTION 1.02. Credit Agreement Defined Terms. Capitalized terms used but not otherwise defined herein that are defined in the Credit
Agreement shall have the meanings given to them in the Credit Agreement.



     SECTION 1.03. Definition of Certain Terms Used Herein. As used herein, the following terms shall have the following meanings:



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



     “Agreement” shall have the meaning assigned to such term in the Preamble of this
Agreement.



     “Bailee Letter” shall mean an agreement in form substantially similar to Annex
III hereto or in such other form reasonably satisfactory to the Collateral Agent.



     “Bankruptcy Code” shall mean Title 11 of the United States Code entitled “Bankruptcy”,
as now and hereinafter in effect, or any successor statute.



     “Books and Records” shall mean all instruments, files, Records, ledger sheets and
documents.



     “Borrower” shall have the meaning assigned to such term in the Preamble of this
Agreement.



     “Charges” shall mean any and all property and other taxes, assessments and special
assessments, levies, fees and all governmental charges imposed upon or assessed against, and all
claims (including, without limitation, landlords’, carriers’, mechanics’, maritime, workmen’s, repairmen’s,
laborers’, mate-



-2









 







rialmen’s, suppliers’ and warehousemen’s Liens and other claims arising by operation
of law) against, all or any portion of the Collateral.



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



     “Collateral Agent” shall have the meaning assigned to such term in the Preamble of
this Agreement.



     “Collateral Agent Fees” shall mean all fees, costs and expenses of the Collateral
Agent of the types described in Sections 6.08, 6.09, 6.10 and 6.11.



     “Collateral Estate” shall have the meaning assigned to such term in Section 6.01(c).



     “Collateral Report” shall mean any certificate, report or other document delivered by
any Grantor to any Agent with respect to the Collateral pursuant to any Loan Document.



     “Collateral Support” shall mean all property (real or personal) assigned, hypothecated
or otherwise securing any Collateral and shall include any security agreement or other agreement
granting a lien or security interest in such real or personal property.



     “Control” shall mean (i) in the case of each Deposit Account, “control,” as such term
is defined in Section 9-104 of the UCC, (ii) in the case of any Security Entitlement, “control,” as
such term is defined in Section 8-106(d) of the UCC, and (iii) in the case of any Commodity
Contract, “control,” as such term is defined in Section 9-106(b) of the UCC.



     “Control Agreement” shall mean an agreement in form and substance reasonably
acceptable to the Collateral Agent for the purpose of effecting Control with respect to any Deposit
Account, Securities Account or Commodity Account.



     “Copyrights” shall mean all U.S. and foreign copyrights (whether registered or
unregistered and whether published or unpublished) and all mask works (as such term is defined in
17 U.S.C. Section 901, et seq.), together with any and all (i) registrations and applications
therefor, including those listed on Schedule 14(b) of the Perfection Certificate, (ii)
rights and privileges arising under applicable law with respect thereto, (iii) renewals and
extensions thereof, (iv) income, fees, royalties, damages, claims and payments now or hereafter due
and/or payable with respect thereto, including damage awards and payments for past, present or
future infringements or other violations thereof, (v) rights corresponding thereto throughout the
world and (vi) rights to sue for past, present or future infringements thereof.



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



     “Current Asset Collateral” shall have the meaning assigned to such term in the
Intercreditor Agreement.



     “Discharge of Revolving Credit Obligations” shall have the meaning assigned to such
term in the Intercreditor Agreement.



     “Distribution Date” shall mean each date fixed by the Collateral Agent in its sole
discretion for a distribution to the Secured Parties of funds held by the Collateral Agent for the
benefit of the Secured Parties.



-3









 





     “Excluded Account” shall mean (i) any Deposit Account(s) used solely as a payroll,
trust, tax or other fiduciary account and (ii) any Deposit Account(s) set forth on Schedule
II hereto.



     “Excluded Property” shall mean:




     (a) any permit, lease, license, contract, instrument or other document, or the assets
subject thereto or covered thereby, held by any Grantor that validly prohibits the creation
by such Grantor of a security interest therein or thereon (other than to the extent that any
such prohibition would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or
9-409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction or
any other applicable law (including the Bankruptcy Code) or principles of equity);




     (b) any permit, lease, license, contract, instrument or other document, or the assets
subject thereto or covered thereby, held by any Grantor to the extent that any Requirement
of Law applicable thereto prohibits the creation of a security interest therein or thereon
(other than to the extent that any such prohibition would be rendered ineffective pursuant
to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or
provisions) of any relevant jurisdiction or any other applicable law (including the
Bankruptcy Code) or principles of equity);




     (c) goods owned by any Grantor on the date hereof or hereafter acquired that are
subject to a Lien securing a purchase money obligation (as defined in the UCC) or Capital
Lease Obligation permitted to be incurred pursuant to the provisions of Section 6.01(vi) of
the Credit Agreement if the contract or other agreement in which such Lien is granted (or
the documentation providing for such purchase money obligation or Capital Lease Obligation)
validly prohibits the creation of any other Lien on such Goods;




     (d) any Collateral consisting of Intellectual Property for which the creation by a
Grantor of a security interest therein is prohibited (i) without the consent of a third
party, (ii) by Requirement of Law, or (iii) any Trademark applications filed in the United
States Patent and Trademark Office on the basis of such Grantor’s “intent-to-use” such
Trademark, unless and until acceptable evidence of use of the Trademark has been filed with
the United States Patent and Trademark Office pursuant to Section 1(c) or 1(d) of the Lanham
Act (at which time such Trademark application will no longer be considered Excluded
Property), in each case, other than to the extent that any such prohibition would be
rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any
successor provision or provisions) of any relevant jurisdiction or any other applicable law
(including the Bankruptcy Code) or principles of equity);




     (e) Securities Collateral (as defined in the Pledge Agreement) and the Equity Interests
and debt securities excluded from the definition of “Securities Collateral” in the Pledge
Agreement;




     (f) any Equity Interests pledged pursuant to any Non-U.S. Pledge Agreement and any
issued and outstanding shares of voting stock of any Subsidiary of a Grantor organized under
the laws of a Non-U.S. Jurisdiction that is expressly excluded from the pledge contained in
any Non-U.S. Pledge Agreement;




     (g) motor vehicles and other assets subject to certificates of title;




     (h) any Equity Interests or debt securities owned by such Grantor if and to the extent
that the grant of the security interest shall, after giving effect to Sections 9-406, 9-407,
9-408 or 9-409 of the UCC (or any successor provision or provisions) or any other applicable
law, (A)



-4









 







constitute or result in the abandonment, invalidation or unenforceability of any right,
title or interest of such Grantor therein, (B) constitute or result in a breach or
termination pursuant to the terms of, or a default under, any such Equity Interest or debt
securities, (C) be void or illegal under any applicable governmental law, rule or
regulation, or (D) be prohibited by (i) the organizational documents of the issuer of such
Equity Interests or debt securities or (ii) agreements among the equity holders of the
issuer of such Equity Interests or debt securities, in each case, as in effect on the
Effective Date;




     (i) any Commercial Tort Claim with a value of less than $500,000;




     (j) such Grantor’s leasehold interests; and




     (k) any Excluded Accounts;


provided that the term “Excluded Property” shall not include any Proceeds, substitutions or
replacements of any Excluded Property (unless such Proceeds, substitutions or replacements would
constitute Excluded Property).




     “Grantors” shall have the meaning assigned to such term in the Preamble of this
Agreement.



     “Intellectual Property” shall mean, collectively, with respect to any Grantor, all
intellectual and similar property rights of every kind and nature, whether arising under United
States, multinational or foreign laws or otherwise, including Patents, Copyrights, Intellectual
Property Licenses, Trademarks, Trade Secrets, intangible rights in software and databases not
otherwise included in the foregoing, and all rights corresponding thereto throughout the world
(including the right to sue and to collect proceeds), and all embodiments or fixations thereof and
related documentation, registrations and franchises, and all additions, improvements and accessions
to, and Books and Records describing or used in connection with, any of the foregoing.



     “Intellectual Property Licenses” shall mean, collectively, with respect to each
Grantor, all agreements pursuant to which such Grantor receives or grants any right in, to, or
under Intellectual Property, including license agreements, distribution agreements and covenants
not to sue (regardless of whether such agreements and covenants are contained within an agreement
that also covers other matters, such as development or consulting) with respect to any Patent,
Trademark, Copyright, Trade Secrets or other Intellectual Property, whether such Grantor is a
licensor or licensee, distributor or distributee under any such agreement, including those listed
on Schedules 14(a) and 14(b) of the Perfection Certificate, together with any and
all (i) amendments, renewals, extensions, supplements and continuations thereof, and (ii) income,
fees, royalties, damages, claims and payments now and hereafter due and/or payable thereunder and
with respect thereto including damages and payments for past, present or future infringements or
violations thereof.



     “Intercreditor Agreement” shall mean that certain Intercreditor Agreement, dated as of
the date hereof, by and among the Grantors, the Administrative Agent, the Collateral Agent, the
Revolving Credit Facility Agents, and certain other Persons which may be or become parties thereto
or become bound thereto from time to time, as the same may be amended, restated, amended and
restated, supplemented or otherwise modified from time to time.



     “Landlord Access Agreement” shall mean a landlord access agreement in form
substantially similar to Annex IV hereto or in such other form reasonably satisfactory to
the Collateral Agent.



     “Lenders” shall have the meaning assigned to such term in the Recitals of this
Agreement.



-5









 





     “Patents” shall mean, collectively, all United States and foreign patents, patent
applications, certificates of inventions, and industrial designs, together with any and all (i)
rights and privileges arising under applicable law with respect to any of the foregoing, (ii)
inventions and improvements described and claimed therein, (iii) reissues, divisions, continuations
extensions and continuations-in-part thereof and amendments thereto, (iv) income, fees, royalties,
damages, claims and payments now or hereafter due and/or payable thereunder and with respect
thereto including damages and payments for past, present or future infringements or other
violations thereof, (v) rights corresponding thereto throughout the world and (vi) rights to sue
for past, present or future infringements or other violations thereof.



     “Perfection Certificate” shall mean a certificate substantially in the form of
Annex II hereto, completed and supplemented with the schedules and attachments contemplated
thereby, and duly executed by the Grantors.



     “Pledge Agreement” shall have the meaning assigned to such term in the Recitals of
this Agreement.



     “Pledged Securities” shall have the meaning assigned to such term in the Pledge
Agreement and shall include Equity Interests pledged pursuant to Non-U.S. Pledge Agreements.



     “Receivables” shall mean all (i) Accounts, (ii) Chattel Paper, (iii) Payment
Intangibles, (iv) General Intangibles, (v) Instruments and (vi) all other rights to payment,
whether or not earned by performance, for goods or other property sold, leased, licensed, assigned
or otherwise disposed of, or services rendered or to be rendered, regardless of how classified
under the UCC together with all of Grantors’ rights, if any, in any goods or other property giving
rise to such right to payment and all Collateral Support and Supporting Obligations related thereto
and all Records relating thereto.



     “Revolving Credit Facility Agents” shall have the meaning assigned to such term in the
Intercreditor Agreement.



     “Revolving Credit Facility Security Documents” shall have the meaning assigned to such
term in the Intercreditor Agreement.



     “Securities Collateral” shall have the meaning assigned to such term in the Pledge
Agreement.



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



     “Subsidiary Guarantors” shall have the meaning assigned to such term in the Preamble
of this Agreement.



     “Trademarks” shall mean, collectively, all United States, state, and foreign
trademarks, service marks, certification marks, slogans, logos, certification marks, trade dress,
internet domain names, corporate names, trade names, and other source or business identifiers,
whether registered or unregistered (whether statutory or common law and whether established or
registered in the United States or any other country or any political subdivision thereof),
together with any and all (i) registrations and applications for any of the foregoing, including
those listed on Schedule 14(a) of the Perfection Certificate, (ii) goodwill connected with
the use thereof and symbolized thereby, (iii) rights and privileges arising under applicable law
with respect to the use of any of the foregoing, (iv) renewals thereof and amendments thereto, (v)
income, fees, royalties, damages and payments now and hereafter due and/or payable thereunder and
with respect thereto, including damages, claims and payments for past, present or future
infringements, dilutions or other violations thereof, (vi) rights corresponding thereto throughout
the world and (vii) rights to sue for past, present and future infringements, dilutions or other
violations thereof.



-6









 





     “Trade Secrets” shall mean all trade secrets and all other confidential or proprietary
information and know-how, whether or not such information has been reduced to a writing or other
tangible form, together with all (i) rights and privileges arising under applicable law with
respect to the use of any of the foregoing, (ii) income, fees, royalties, damages and payments now
and hereafter due and/or payable thereunder and with respect thereto, including damages, claims and
payments for past, present or future misappropriation or other violations thereof, (iii) rights
corresponding thereto throughout the world and (iv) rights to sue for past, present and future
misappropriation or other violations thereof.



     “UCC” shall mean the Uniform Commercial Code as in effect on the date hereof in the
State of New York; provided, however, that if by reason of mandatory provisions of
law, any or all of the attachment, perfection or priority of the Collateral Agent’s and the Secured
Parties’ security interest in any item or portion of the Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than the State of New York, the term “UCC”
shall mean the Uniform Commercial Code as in effect on the date hereof in such other jurisdiction
for purposes of the provisions hereof relating to such attachment, perfection or priority and for
purposes of definitions relating to such provisions.



     SECTION 1.04. Interpretation. The rules of interpretation specified in the Credit Agreement (including Section 1.03
thereof) shall be applicable to this Agreement.



     SECTION 1.05. Resolution of Drafting Ambiguities. Each Grantor acknowledges and agrees that it was represented by counsel in connection with
the execution and delivery hereof, that it and its counsel reviewed and participated in the
preparation and negotiation hereof and that any rule of construction to the effect that ambiguities
are to be resolved against the drafting party (i.e., the Collateral Agent) shall not be employed in
the interpretation hereof.



     SECTION 1.06. Perfection Certificate. The Collateral Agent and each Grantor agree that the Perfection Certificate and all
schedules, amendments and supplements thereto are and shall at all times remain a part of this
Agreement.



ARTICLE II




SECURITY INTERESTS




     SECTION 2.01. Grant of Security Interest. As collateral security for the payment and performance in full of all the obligations of
each Grantor under the Loan Documents (“Obligations”), each Grantor hereby pledges and
grants to the Collateral Agent, for the benefit of the Secured Parties, a lien on and security
interest in and to all of the right, title and interest of such Grantor in, to and under the
following property, wherever located, and whether now existing or hereafter arising or acquired
from time to time (collectively, the “Collateral”):



     (a) Accounts Receivable;



     (b) Books and Records;



     (c) Money and Deposit Accounts;



     (d) Chattel Paper;



     (e) Commercial Tort Claims described on Schedule 15 to the Perfection
Certificate (as such schedule may be amended or supplemented from time to time);



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	 	(f)	 	Documents;
	 
	 	(g)	 	Equipment;
	 
	 	(h)	 	Fixtures;
	 
	 	(i)	 	General Intangibles (including Intellectual Property);
	 
	 	(j)	 	Goods;
	 
	 	(k)	 	Instruments;
	 
	 	(l)	 	Inventory;
	 
	 	(m)	 	Investment Property;
	 
	 	(n)	 	Supporting Obligations; and
	 
	 	(p)	 	all other personal property of such Grantor, whether tangible
or intangible, and all Proceeds and products of each of the foregoing and all
accessions to, substitutions and replacements for, and rents, profits and
products of, each of the foregoing, any and all Proceeds of any insurance,
indemnity, warranty or guaranty payable to such Grantor from time to time with
respect to any of the foregoing.





          Notwithstanding anything to the contrary contained in clauses (a) through (p) above, (x) the
security interest created by this Agreement shall not extend to, and the term “Collateral” shall
not include, any Excluded Property and (y) from and after the Effective Date, no Grantor shall
permit to become effective in any document creating, governing or providing for any permit, license
or agreement a provision that would prohibit the creation of a Lien on such permit, license or
agreement in favor of the Collateral Agent unless such prohibition is permitted under Section 6.09
of the Credit Agreement.




          The Liens granted hereunder to secure the Obligations are collectively referred to herein as
the “Security Interests”.




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



ARTICLE III




REPRESENTATIONS AND WARRANTIES




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



     SECTION 3.01. Title and Authority.Each Grantor has good and valid rights in and title to the
Collateral with respect to which it has purported to grant a Security Interest hereunder and has
full power and authority to grant to the Collateral Agent the Security Interest in such Collateral
pursuant hereto and to execute, deliver and perform its obligations in accordance with the terms of
this Agreement, without the consent or approval of any other Person other than any consent or
approval which has been obtained.




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     SECTION 3.02. Filings (a) All information set forth herein as of the date hereof and in the
Perfection Certificate as of the date hereof, including the Schedules annexed hereto and thereto,
has been duly prepared, completed and executed and the information set forth herein and therein is
correct and complete in all material respects. The Collateral described on the Schedules annexed
to the Perfection Certificate constitutes all of the property of such type of Collateral owned or
held by the Grantors to the extent required to be scheduled thereon. Fully completed and, to the
extent necessary or appropriate, duly executed UCC financing statements (including fixture filings,
as applicable) or other appropriate filings, recordings or registrations containing a description
of the Collateral have been delivered to the Collateral Agent for filing in each governmental,
municipal or other office specified in Schedule 7 to the Perfection Certificate, which are
all the filings, recordings and registrations (along with the concurrent payment of any applicable
taxes or filing fees) that are necessary to publish notice of and protect the validity of and to
establish a legal, valid and perfected security interest in favor of the Collateral Agent (for the
benefit of the Secured Parties) in respect of all Collateral in which a security interest may be
perfected by filing, recording or registration in the United States (or any political subdivision
thereof) and its territories and possessions, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration under Article 9 of the UCC is necessary in
any such jurisdiction, except as provided under applicable law with respect to the filing of
continuation statements.



     (b) Each Grantor represents and warrants that a fully executed security agreement in the form
hereof (or short form security agreements in a form reasonably satisfactory to the Collateral
Agent) containing a description of all Collateral consisting of Intellectual Property with respect
to (x) United States issued Patents and Patent applications and United States registered Trademarks
and Trademarks applications, in each case, owned by such Grantor, have been delivered
contemporaneously with the execution of this Agreement to the Collateral Agent for recordation with
the United States Patent and Trademark Office, and (y) United States registered Copyrights and
Copyright applications owned by such Grantor have been delivered contemporaneously with the
execution of this Agreement to the Collateral Agent for registration with the United States
Copyright Office.



     SECTION 3.03. Validity of Security Interests. This Agreement creates legal and valid security
interests in all the Collateral securing the payment and performance of the Obligations;
provided, however, that, for the avoidance of doubt, the foregoing representation
shall not be made with respect to, or construed in accordance with, the laws of any jurisdiction
other than the United States, any State thereof or the District of Columbia. The Security
Interests are and shall be prior to any other Lien on any of the Collateral, other than Permitted
Liens.



     SECTION 3.04. Limitations on and Absence of Other Liens. The Collateral is owned by the
Grantors or the Grantors have rights therein, free and clear of any Lien, except for Permitted
Liens. The Grantors have not filed or consented to the filing of (a) any financing statement or
analogous document
under the UCC or any other applicable laws covering any Collateral, (b) any assignment in
which any Grantor assigns any Collateral or any security agreement or similar instrument covering
any Collateral with the United States Patent and Trademark Office and the United States Copyright
Office or (c) any assignment in which any Grantor assigns any Collateral or any security agreement
or similar instrument covering any Collateral with any foreign governmental, municipal or other
office, which financing statement or analogous document, assignment, security agreement or similar
instrument is still in effect, except, in each case, for Permitted Liens or filings as to which a
duly authorized termination statement relating to such financing statement or other instrument has
been delivered to the Collateral Agent on the Effective Date.



     SECTION 3.05. Other Actions. In order to further ensure the attachment, perfection and
priority of, and the ability of the Collateral Agent to enforce, preserve and protect, the
Collateral Agent’s security interests in the Collateral, each Grantor hereby represents and
warrants as follows and agrees, in



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each case at such Grantor’s own expense, to take the following
actions with respect to the following Collateral:




     (a) Instruments and Tangible Chattel Paper. As of the date hereof, (x) each Instrument
representing indebtedness between or among the Grantors or owed to any Grantor by any of the
Borrower’s other Restricted Subsidiaries and (y) each other Instrument and each other item of
Tangible Chattel Paper specified in Schedule 12 to the Perfection Certificate valued in
excess of $500,000 has been properly endorsed, assigned and delivered to the Collateral Agent, and,
if necessary, accompanied by instruments of transfer or assignment duly executed in blank;
provided, that, to the extent that any such Instrument constitutes an Intercompany Note
and to the extent that any Grantor is required hereunder to deliver any such Intercompany Note to
the Collateral Agent for purposes of possession, such Grantor’s obligations hereunder with respect
to such delivery shall be deemed satisfied by the delivery to the Collateral Agent of the Master
Intercompany Note. If any amount individually or in the aggregate in excess of $500,000 payable
under or in connection with any of the Collateral shall be evidenced by any Instrument or Tangible
Chattel Paper, the Grantor acquiring such Instrument or Tangible Chattel Paper shall notify the
Collateral Agent and, on each date on which financial statements are required to be delivered under
Section 5.01(a) or (b) of the Credit Agreement, endorse, assign and deliver the same to the
Collateral Agent, accompanied by such instruments of transfer or assignment duly executed in blank
as the Collateral Agent may from time to time reasonably request; provided, that,
if any amount individually or in the aggregate in excess of $1,000,000 payable under or in
connection with any of the Collateral shall be evidenced by any Instrument or Tangible Chattel
Paper, the Grantor acquiring such Instrument or Tangible Chattel Paper shall promptly endorse,
assign and deliver the same to the Collateral Agent, accompanied by such instruments of transfer or
assignment duly executed in blank as the Collateral Agent may from time to time reasonably request;
provided, however, that so long as no Event of Default shall have occurred and be
continuing, the Collateral Agent shall return such Instrument or Tangible Chattel Paper to such
Grantor from time to time, to the extent necessary for collection in the ordinary course of such
Grantor’s business.



     (b) Deposit Accounts. Each Grantor hereby represents and warrants that (i) as of the date
hereof, it does not maintain any Deposit Accounts other than the accounts listed in Schedule
16 of the Perfection Certificate and (ii) with respect to each Deposit Account, other than any
Excluded Accounts and the other accounts set forth in Section 5.20(a) of the Revolving Credit
Agreement, upon execution and delivery of a Control Agreement for such Deposit Account, the
Collateral Agent will have a perfected security interest in such Deposit Account by Control. From
and after 90 days following the Effective Date (plus, in the event any depositary institution
refuses to execute a Control Agreement, then the Grantors shall have an additional 120 days to move
such Deposit Account), no Grantor shall hereafter establish and maintain any Deposit Account, other
than an Excluded Account or any other account set forth in Section 5.20(a) of the Revolving Credit
Agreement, unless (1) the applicable Grantor shall have given the Collateral Agent at least 10
days’ (or such shorter period as may be determined by the Collateral Agent in
its sole discretion) prior written notice of its intention to establish such new Deposit
Account with a Bank and (2) such Bank and such Grantor shall have duly executed and delivered to
the Collateral Agent a Control Agreement with respect to such Deposit Account. No Grantor shall
grant Control of any Deposit Account to any Person other than the Collateral Agent and, subject to
the terms of the Intercreditor Agreement, Revolving Credit Facility Agents. The Grantors shall not
permit the Accounts set forth on Schedule II hereto to have balances in excess of $1.0
million individually or $10.0 million in the aggregate at any time.



     (c) Investment Property. (i) Each Grantor hereby represents and warrants that (1) as of the
date hereof, it does not maintain any Securities Accounts or Commodity Accounts other than those
listed in Schedule 16 of the Perfection Certificate and, except with respect to the
Securities Account set forth on Schedule III hereto, the Collateral Agent has a perfected
first priority security interest in such Securities Accounts and Commodity Accounts by Control and
(2) it does not hold, own or have any interest in any



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certificated securities or uncertificated
securities other than those constituting Securities Collateral under the Pledge Agreement, those
not required to be pledged pursuant to the terms of the Pledge Agreement or this Agreement and
those maintained in Securities Accounts or Commodity Accounts listed in Schedule 16 of the
Perfection Certificate. The Grantors shall not permit the Account set forth on Schedule
III hereto to have a balance in excess of $50,000 at any time. If any Grantor shall at any
time hold or acquire any certificated securities constituting Investment Property (other than any
Excluded Property) valued in excess of $500,000 that are not Pledged Securities under the Pledge
Agreement, such Grantor shall, on each date on which financial statements are required to be
delivered under Section 5.01(a) or (b) of the Credit Agreement, endorse, assign and deliver the
same to the Collateral Agent, accompanied by such instruments of transfer or assignment duly
executed in blank, all in form and substance reasonably satisfactory to the Collateral Agent;
provided, that, if any Grantor shall at any time hold or acquire any certificated
securities constituting Investment Property (other than any Excluded Property) valued in excess of
$1,000,000 that are not Pledged Securities under the Pledge Agreement, such Grantor shall promptly
endorse, assign and deliver the same to the Collateral Agent, accompanied by such instruments of
transfer or assignment duly executed in blank, all in form and substance reasonably satisfactory to
the Collateral Agent. If any securities now or hereafter acquired by any Grantor constituting
Investment Property (other than any Excluded Property) that are not Pledged Securities are
uncertificated, such Grantor shall promptly notify the Collateral Agent thereof and use its
commercially reasonable efforts to, within five (5) Business Days and in any event no later than 30
days (except where legally prohibited therefrom), pursuant to an agreement in form and substance
reasonably satisfactory to the Collateral Agent, cause the issuer to agree to comply with
instructions from the Collateral Agent as to such securities, without further consent of any
Grantor. From and after 90 days following the Effective Date (plus, in the event any depositary
institution refuses to execute a Control Agreement, then the Grantors shall have an additional 120
days to move such Securities Account or Commodity Account), no Grantor shall hereafter establish
and maintain any Securities Account or Commodity Account with any Securities Intermediary or
Commodity Intermediary unless (1) the applicable Grantor shall have given the Collateral Agent at
least 10 days’ (or such shorter period as may be determined by the Collateral Agent in its sole
discretion) prior written notice of its intention to establish such new Securities Account or
Commodity Account with such Securities Intermediary or Commodity Intermediary and (2) such
Securities Intermediary or Commodity Intermediary, as the case may be, and such Grantor shall have
duly executed and delivered to the Collateral Agent a Control Agreement with respect to such
Securities Account or Commodity Account, as the case may be. Each Grantor shall accept any cash
and Investment Property (other than any Excluded Property) in trust for the benefit of the
Collateral Agent and promptly, and in any event within ten (10) Business Days of actual receipt
thereof, deposit such Investment Property and any new securities, instruments, documents or other
Investment Property by reason of ownership of such Investment Property received by it into a
Securities Account or Commodity Account subject to a Control Agreement in favor of the Collateral
Agent. No Grantor shall grant Control over any Investment Property to any Person other than the
Collateral Agent and, subject to the terms of the Intercreditor Agreement, Revolving Credit
Facility Agents.





     (ii) Each Grantor shall promptly pay all Charges and fees with respect to the
Investment Property pledged by it under this Agreement; provided that no Grantor
shall be required to pay any such Charge or fee that is being contested in good faith and by
proper proceedings diligently conducted, which proceedings have the effect of preventing the
forfeiture or sale of such Investment Property, if it has maintained adequate reserves with
respect thereto in accordance with and to the extent required by GAAP and such failure to
pay could not reasonably be expected to have a Material Adverse Effect; provided,
further, that no Liens shall be permitted to exist, directly or indirectly, on any
Investment Property other than Liens in favor of the Collateral Agent and Liens permitted by
Sections 6.02(v), 6.02(ix) and 6.02(xviii) of the Credit Agreement. In the event any
Grantor shall fail to make such payment contemplated in the immediately preceding sentence
(except to the extent any Grantor is contesting such Charges and fees in good faith), the
Collateral Agent may upon written notice to such Grantor, do so for the account of



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such
Grantor and the Grantors shall promptly reimburse and indemnify the Collateral Agent from
all reasonable costs and expenses incurred by the Collateral Agent under this Section
3.05(c).



     (d) Electronic Chattel Paper and Transferable Records. If any amount individually or in the
aggregate in excess of $500,000 payable under or in connection with any of the Collateral shall be
evidenced by any Electronic Chattel Paper or any “transferable record,” as that term is defined in
Section 201 of the Federal Electronic Signatures in Global and National Commerce Act, or in Section
16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction, the
Grantor acquiring such Electronic Chattel Paper or transferable record shall, on each date on which
financial statements are required to be delivered under Section 5.01(a) or (b) of the Credit
Agreement, notify the Collateral Agent and take such action as the Collateral Agent may reasonably
request in writing to vest in the Collateral Agent control under UCC Section 9-105 of such
Electronic Chattel Paper or control under Section 201 of the Federal Electronic Signatures in
Global and National Commerce Act or, as the case may be, Section 16 of the Uniform Electronic
Transactions Act, as so in effect in such jurisdiction, of such transferable record;
provided, that, if any amount individually or in the aggregate in excess of
$1,000,000 payable under or in connection with any of the Collateral shall be evidenced by any
Electronic Chattel Paper or any “transferable record,” as that term is defined in Section 201 of
the Federal Electronic Signatures in Global and National Commerce Act, or in Section 16 of the
Uniform Electronic Transactions Act as in effect in any relevant jurisdiction, the Grantor
acquiring such Electronic Chattel Paper or transferable record shall promptly notify the Collateral
Agent and take such action as the Collateral Agent may reasonably request in writing to vest in the
Collateral Agent control under UCC Section 9-105 of such Electronic Chattel Paper or control under
Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or, as the
case may be, Section 16 of the Uniform Electronic Transactions Act, as so in effect in such
jurisdiction, of such transferable record.



     (e) Intellectual Property. (i) Schedules 14(a) and (b) of the Perfection
Certificate set forth a true and complete list of (A) all United States and foreign registrations
of and applications for Patents, Trademarks, and Copyrights owned by such Grantor and (B) to the
best of each Grantor’s knowledge, all know-how and patent Intellectual Property Licenses currently
in effect; (ii) such Grantor is the sole and exclusive record and beneficial owner of the entire
right, title, and interest in and to all U.S. Intellectual Property listed on Schedules
14(a) and (b) of the Perfection Certificate, and such Grantor owns or has the valid
right to use all other Intellectual Property used in or necessary to conduct its business, free and
clear of all Liens, claims, encumbrances, and licenses, except for Permitted Liens; (iii) all
Intellectual Property listed on Schedule 14(a) of the Perfection Certificate is subsisting
and such Grantor has performed all acts and has paid all renewal, maintenance, and other fees and
taxes required to maintain such Intellectual Property in full force and effect except as may be
permitted under Section 4.10(f); (iv) to the best of such Grantor’s knowledge, all Intellectual
Property owned by such Grantor is valid and enforceable, and no holding, decision, or judgment has
been rendered in any action or proceeding before any court or administrative authority challenging
the validity of, such Grantor’s right to register, or such Grantor’s rights to
own or use, any Intellectual Property and no such action or proceeding is pending or, to the
best of such Grantor’s knowledge, threatened; (v) to the best of such Grantor’s knowledge, the
conduct of such Grantor’s business does not infringe upon or otherwise violate any Intellectual
Property right of any third party except as could not reasonably be expected to have a Material
Adverse Effect; (vi) to the best of each Grantor’s knowledge, no third party is infringing upon or
otherwise violating any rights in any Intellectual Property owned or used by such Grantor, or any
of its respective licensees except as could not reasonably be expected to have a Material Adverse
Effect; (vii) no settlement or consents, covenants not to sue, non-assertion assurances, or
releases have been entered into by such Grantor or to which such Grantor is bound adversely affect
Grantor’s rights to own or use any Intellectual Property that is material to the business of such
Grantor as currently conducted; and (viii) such Grantor has not made a previous assignment, sale,
transfer or agreement constituting a present or future assignment, sale, transfer or agreement of
any Intellectual Property that has not been terminated or released.



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     (f) Commercial Tort Claims. As of the date hereof, each Grantor hereby represents and
warrants that it holds no Commercial Tort Claims other than those listed in Schedule 15 to
the Perfection Certificate. If any Grantor shall at any time hold or acquire a Commercial Tort
Claim having a value individually or in the aggregate in excess of $500,000, such Grantor shall, on
each date on which financial statements are required to be delivered under Section 5.01(a) or (b)
of the Credit Agreement, notify the Collateral Agent in writing signed by such Grantor of the brief
details thereof and grant to the Collateral Agent in such writing a security interest therein and
in the Proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and
substance reasonably satisfactory to the Collateral Agent; provided, that, if any
Grantor shall at any time hold or acquire a Commercial Tort Claim having a value individually or in
the aggregate in excess of $1,000,000, such Grantor shall promptly notify the Collateral Agent in
writing signed by such Grantor of the brief details thereof and grant to the Collateral Agent in
such writing a security interest therein and in the Proceeds thereof, all upon the terms of this
Agreement, with such writing to be in form and substance reasonably satisfactory to the Collateral
Agent.



     (g) Landlord’s Access Agreements/Bailee Letters. Each Grantor shall use its commercially
reasonable efforts to obtain a Bailee Letter or a Landlord Access Agreement, as applicable, from
all such bailees and landlords, as applicable, who from time to time have possession of Collateral
in excess of $100,000; provided, that, so long as each Grantor has in fact used
commercially reasonable efforts to obtain Bailee Letters and Landlord Access Agreements, as
required above, during the sixty-day period following the Effective Date, the obligation of the
Grantors to continue to use commercially reasonable efforts to obtain Bailee Letters and Landlord
Access Agreements with respect to bailment and leased locations of the Grantors in existence on the
Effective Date shall terminate.



     SECTION 3.06. Condition and Maintenance of Equipment. The Equipment of such Grantor is in
good repair, working order and condition, reasonable wear and tear, casualty and condemnation
excepted. Each Grantor will maintain its Equipment in accordance with Section 5.03 of the Credit
Agreement.



     SECTION 3.07. No Conflicts, Consents, etc. In the event that the Collateral Agent desires to
exercise any remedies, voting or consensual rights or attorney-in-fact powers set forth in this
Agreement and determines it necessary to obtain any approvals or consents of any Governmental
Authority or any other Person therefor, then, upon the reasonable written request of the Collateral
Agent, such Grantor agrees to use its commercially reasonable efforts to assist and aid the
Collateral Agent to obtain as soon as practicable any necessary approvals or consents for the
exercise of any such remedies, rights and powers.



ARTICLE IV




COVENANTS




     SECTION 4.01. Change of Name; Location of Collateral; Records; Place of Business



     (a) Each Grantor shall comply with the provisions of Section 5.07 of the Credit Agreement.



     (b) Each Grantor agrees to maintain, at its own cost and expense, records which are complete
and accurate in all material respects with respect to the Collateral owned by it and to permit the
Collateral Agent to examine its records in accordance with Section 5.05 of the Credit Agreement.



     SECTION 4.02. Protection of Security. Except to the extent otherwise permitted by the Credit
Agreement, each Grantor shall, at its own cost and expense, defend title to the Collateral pledged
by it hereunder and the security interest therein and Lien thereon granted to the Collateral Agent
and the priority thereof against all claims and demands of all Persons at any time claiming any
interest therein



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adverse to the Collateral Agent or any other Secured Party other than Permitted
Liens. Except as permitted by the Credit Agreement and except for restrictions in agreements
entered into in the ordinary course of business with respect to Intellectual Property, which
restrictions would not, individually or in the aggregate, have an adverse effect on the business of
any Grantor or materially impair the value of the Collateral to the Collateral Agent, there is no
agreement, order, judgment or decree, and no Grantor shall enter into any agreement or take any
other action, that would restrict the transferability of any of the Collateral or otherwise impair
or conflict with such Grantor’s obligations or the rights of the Collateral Agent hereunder.




     SECTION 4.03. Further Assurances Each Grantor agrees, at its own expense, to promptly
execute, acknowledge, deliver and cause to be duly filed all such further instruments and documents
and take all such further actions as the Collateral Agent may reasonably request for the purpose of
obtaining or to preserve, protect and perfect the Security Interests and the rights and remedies
created hereby and the rights and powers herein granted, including the payment of any fees and
taxes required in connection with the execution and delivery of this Agreement, the granting of the
Security Interests and the filing of any financing or continuation statement required under the UCC
(or other similar laws) in effect in any jurisdiction with respect to the security interest created
hereby and the execution and delivery of Control Agreements required hereunder.



     SECTION 4.04. Inspection and Verification. The Collateral Agent and its representatives as
the Collateral Agent may reasonably designate shall have the right, at the Grantors’ own cost and
expense, to at all reasonable times and reasonable intervals and upon reasonable prior notice
inspect the Collateral, all records related thereto (and to make extracts and copies from such
records) and the premises upon which any of the Collateral is located in each case during business
hours. The Collateral Agent shall have the absolute right to share any information it gains from
such inspection or verification with any Secured Party (subject to Section 9.16 of the Credit
Agreement).



     SECTION 4.05. Taxes; Encumbrances. Each Grantor shall pay and discharge all of its material
Taxes and all lawful claims in accordance with Section 5.14 of the Credit Agreement. In its
reasonable discretion, the Collateral Agent may discharge past due taxes, assessments, charges,
fees, Liens, security interests or other encumbrances at any time levied or placed on the
Collateral except to the extent the same constitute Permitted Liens, and may pay for the
maintenance and preservation of the Collateral to the extent any Grantor fails to do so as required
by this Agreement (in each case with reasonable prior written notice to such Grantor), and each
Grantor jointly and severally agrees to reimburse the Collateral Agent within 20 days of written
demand for any payment made or any expense incurred by the Collateral Agent pursuant to the
foregoing authorization; provided, however, that nothing in this Section 4.05 shall
be interpreted as excusing any Grantor from the performance of, or imposing any obligation on
the Collateral Agent or any Secured Party to cure or perform, any covenants or other promises of
any Grantor with respect to taxes, assessments, charges, fees, liens, security interests or other
encumbrances and maintenance as set forth herein or in the other Loan Documents.



     SECTION 4.06. Assignment of Security Interest. If at any time any Grantor shall take a
security interest in any Property of an Account Debtor or any other Person to secure payment and
performance of an Account valued in excess of $500,000, such Grantor shall, on each date on which
financial statements are required to be delivered under Section 5.01(a) or (b) of the Credit
Agreement, notify the Collateral Agent and take such actions as may be requested by the Collateral
Agent to make the Collateral Agent’s interest in such Property a matter of public record;
provided, that, if at any time any Grantor shall take a security interest in any
Property of an Account Debtor or any other Person to secure payment and performance of an Account
valued in excess of $1,000,000, such Grantor shall promptly notify the Collateral Agent and take
such actions as may be requested by the Collateral Agent to make the Collateral Agent’s interest in
such Property a matter of public record.



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     SECTION 4.07. Continuing Obligations of the Grantors. Each Grantor shall remain liable to
observe and perform all the conditions and obligations to be observed and performed by it under
each contract, agreement or instrument relating to the Collateral, all in accordance with the terms
and conditions thereof.



     SECTION 4.08. Use and Disposition of Collateral. No Grantor shall make or permit to be made an
assignment for security, pledge or hypothecation of the Collateral, execute, authorize or permit to
be filed in any public office any financing statement (or similar statement, instrument of
registration or public notice under the law of any jurisdiction) relating to any Collateral or
shall grant any other Lien in respect of the Collateral other than Permitted Liens.



     SECTION 4.09. Insurance. The Grantors, at their own expense, shall maintain or cause to be
maintained insurance covering physical loss or damage to the Inventory and Equipment in accordance
with Section 5.04 of the Credit Agreement. Except as set forth in Section 5.04 of the Credit
Agreement, in the event that any Grantor at any time or times shall fail to obtain or maintain any
of the policies of insurance required hereby or to pay any premium in whole or part relating
thereto, the Collateral Agent may, without waiving or releasing any obligation or liability of the
Grantors hereunder or any Event of Default, in its reasonable discretion and upon prior written
notice to the Grantors obtain and maintain such policies of insurance and pay such premium and take
any other actions with respect thereto as the Collateral Agent deems reasonably advisable. All
sums disbursed by the Collateral Agent in connection with this Section 4.09, including reasonable
attorneys’ fees, court costs, out-of-pocket expenses and other charges relating thereto, shall be
payable, upon written demand, by the Grantors to the Collateral Agent and shall be additional
Obligations secured hereby in the same priority as the original Obligations. So long as no Event
of Default has occurred and is continuing, all actions to be taken with respect to the making,
settling and adjusting of claims under insurance policies may be taken by the Grantors without any
requirement of participation or consent from the Collateral Agent.



     SECTION 4.10. Certain Covenants and Provisions Regarding Patent, Trademark and Copyright
Collateral.



     (a) Each Grantor agrees that it will not, nor will it permit any of its licensees to, do any
act, or omit to do any act, whereby any Patent owned by such Grantor which is material to the
conduct of such Grantor’s business may become invalidated, unenforceable, or dedicated to the
public, and agrees that it shall use commercially reasonable efforts to continue to mark any
products covered by a Patent with the relevant patent number as necessary and sufficient to
establish and preserve its rights under applicable
patent laws; provided, however, that nothing in this Section 4.10(a) shall
prevent such Grantor from discontinuing the prosecution or maintenance of such Patent if, in the
reasonable business judgment of such Grantor, such Patent is no longer necessary or desirable in
the conduct of its business.



     (b) Each Grantor (either itself or through its licensees or its sublicenses) will, for each
Trademark material to the conduct of such Grantor’s business, use its commercially reasonable
efforts to (i) maintain each such registered Trademark in full force free from any claim of
abandonment or invalidity for nonuse, (ii) maintain the quality of products and services offered
under such Trademark, (iii) display such Trademark with notice of Federal or foreign registration
to the extent necessary and sufficient to establish and preserve its rights under applicable law
and (iv) not knowingly use or knowingly permit the use of such Trademark in violation of any third
party rights; provided, however, that nothing in this Section 4.10(b) shall prevent
such Grantor from discontinuing the use, prosecution, or maintenance of such Trademark, if such
discontinuance is, in the reasonable business judgment of such Grantor, no longer necessary or
desirable in the conduct of its business; provided, further, that nothing in this
Section 4.10(b) shall require providing notice in connection with office actions for pending
Patent, Trademark or Copyright applications.



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     (c) Intentionally omitted.



     (d) Each Grantor shall promptly notify the Collateral Agent upon such Grantor obtaining
knowledge of any Patent, Trademark or Copyright material to the conduct of its business which may
become abandoned, lost, unenforceable, invalidated, or dedicated to the public, or of any
materially adverse determination or development including the institution of, or any such
determination or development in, any proceeding in the United States Patent and Trademark Office or
United States Copyright Office (or any court or similar office of any country) regarding such
Grantor’s ownership of any Patent, Trademark or Copyright, or its right to register the same, or to
keep and maintain the same.



     (e) If any Grantor shall at any time after the date hereof (i) obtain any ownership or other
rights in and/or to any additional Intellectual Property (including trademark applications for
which evidence of the use of such trademarks in interstate commerce has been submitted to and
accepted by the United States Patent and Trademark Office pursuant to 15 U.S.C. Section 1060(a) (or
a successor provision)) or (ii) become entitled to the benefit of any additional Collateral
consisting of Intellectual Property or any renewal or extension thereof, including any reissue,
division, continuation, or continuation-in-part of any Collateral consisting of Intellectual
Property, or any improvement on any Collateral consisting of Intellectual Property, the provisions
of this Agreement shall automatically apply thereto and any such item described in the preceding
clause (i) or (ii) (other than any Excluded Property) shall automatically constitute Collateral as
if such would have constituted Collateral at the time of execution hereof and such Collateral
consisting of Intellectual Property (other than any Excluded Property) shall be subject to the Lien
and security interest created by this Agreement without further action by any party. Each Grantor
shall on a monthly basis with respect to Copyrights and on a quarterly basis with respect to
Patents and Trademarks provide to the Collateral Agent written notice of any of the foregoing
Collateral consisting of Intellectual Property owned by such Grantor which is the subject of a
registration or application in the United States and confirm the attachment of the Lien and
security interest created by this Agreement to any rights described in clauses (i) and (ii) above
by execution and delivery, within ten (10) days of providing such notice or such longer period as
may be determined by the Collateral Agent in its sole discretion of the acquisition by such Grantor
of such Intellectual Property, of an instrument in form and substance reasonably acceptable to the
Collateral Agent and the filing of any instruments or statements as shall be reasonably necessary
or requested by the Collateral Agent to create, record, preserve, protect or perfect the Collateral
Agent’s lien and security interest in such Intellectual Property.



     (f) Each Grantor will take all necessary steps in any proceeding before the United States
Patent and Trademark Office or United States Copyright Office, or any office or agency in any
political subdivision of the United States or in any other country or any political subdivision
thereof, to maintain and pursue each material application relating to the Patents, Trademarks
and/or Copyrights (and to obtain the relevant grant or registration) and to maintain each issued
Patent and each registration of the Trademarks or Copyrights owned by such Grantor that is material
to the conduct of any Grantor’s business, including timely filings of applications for renewal,
affidavits of use, affidavits of incontestability and payment of maintenance fees, and, if
consistent with commercially reasonable business judgment, to initiate opposition, interference and
cancellation proceedings against third parties; provided, however, that nothing in
this Section 4.10(f) shall prevent such Grantor from failing to maintain or pursue any such
Trademark or Patent if, in the reasonable business judgment of such Grantor, the likely costs of
such maintenance or pursuit are likely to outweigh the likely benefits of such maintenance or
pursuit and such failure could not reasonably be expected to have a Material Adverse Effect.



     (g) In the event that any Grantor has reason to believe that any Collateral consisting of a
material Patent, Trademark or Copyright has been or is about to be infringed, misappropriated or
diluted by a third party, such Grantor promptly shall notify the Collateral Agent and, if within
such Grantor’s good faith business judgment, the likely benefits outweigh the likely costs, shall
promptly sue for infringement,



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misappropriation or dilution and to recover any and all damages for
such infringement, misappropriation or dilution, and shall take such actions as are deemed by such
Grantor in its reasonable business judgment to be reasonably appropriate under the circumstances to
protect such Collateral.




     (h) For the purpose of enabling the Collateral Agent, during the continuance of an Event of
Default, to exercise rights and remedies under Article V hereof at such time as the
Collateral Agent shall be lawfully entitled to exercise such rights and remedies, and for no other
purpose, each Grantor hereby grants to the Collateral Agent an irrevocable, non-exclusive license
and, to the extent permitted under Intellectual Property Licenses granting such Grantor rights in
Intellectual Property, sublicense (in each case, exercisable without payment of royalties or other
compensation to such Grantor) to use, license or sublicense any of the Intellectual Property
included in the Collateral, wherever the same may be located. Such license shall include access to
all media in which any of the licensed items may be recorded or stored and to all computer programs
used for the compilation or printout hereof, to the extent permitted under license agreements
governing use of such computer programs. With respect to Trademarks owned by such Grantor, the
license granted hereunder shall be subject to sufficient rights of quality control and inspection
in favor of such Grantor to avoid the risk of invalidation of such Trademarks.



     (i) Unless there shall occur and be continuing any Event of Default, each Grantor shall have
the right to commence and prosecute in its own name, as the party in interest, for its own benefit
and at the sole cost and expense of the Grantors, such applications for protection of the
Intellectual Property and suits, proceedings or other actions to prevent the infringement,
misappropriation, counterfeiting, unfair competition, dilution, diminution in value or other damage
as are necessary to protect the Intellectual Property. Upon the occurrence and during the
continuance of any Event of Default, the Collateral Agent shall have the right but shall in no way
be obligated to file applications for protection of the Intellectual Property and/or bring suit in
the name of any Grantor, the Collateral Agent or the Secured Parties to enforce the Intellectual
Property and any license thereunder. In the event of such suit, each Grantor shall, at the
reasonable request of the Collateral Agent, do any and all lawful acts and execute any and all
documents requested by the Collateral Agent in aid of such enforcement and the Grantors shall
promptly reimburse and indemnify the Collateral Agent for all costs and expenses incurred by the
Collateral Agent in the exercise of its rights under this Section 4.10(i) in accordance with
Section 9.05 of the Credit Agreement. In the event that the Collateral Agent shall elect not to
bring suit to enforce the Intellectual Property, each Grantor agrees, at the reasonable request of
the Collateral Agent, to take all commercially reasonable actions necessary, whether by suit,
proceeding or other action, to prevent the infringement, coun
terfeiting, unfair competition, dilution, diminution in value of or other damage to any of the
Intellectual Property by any Person.



     SECTION 4.11. Certain Covenants and Provisions Regarding Receivables.



     (a) Each Grantor shall keep and maintain at its own cost and expense complete records of each
Receivable, in a manner consistent with prudent business practice, including records of all
payments received, all credits granted thereon, all merchandise returned and all other
documentation relating thereto. Each Grantor shall, at such Grantor’s sole cost and expense, upon
the Collateral Agent’s demand made at any time after the occurrence and during the continuance of
any Event of Default, deliver copies of evidence of Receivables, including copies of all documents
evidencing Receivables and any Books and Records relating thereto to the Collateral Agent or to its
representatives (original copies of which evidence and Books and Records may be retained by such
Grantor). Upon the occurrence and during the continuance of any Event of Default, the Collateral
Agent may transfer a full and complete copy of any Grantor’s books, records, credit information,
reports, memoranda and all other writings relating to the Receivables to and for the use by any
Person that has acquired or is contemplating acquisition of an interest in the Receivables or the
Collateral Agent’s security interest therein without the consent of any Grantor; provided,
that, the Collateral Agent may transfer such a copy to a Person engaged principally in the



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business of manufacture or sale of high performance chemical based products that is a competitor of
the Borrower or any of its Subsidiaries only upon the occurrence and during the continuance of any
Event of Default under Section 7.01(a) or 7.01(i) of the Credit Agreement.




     (b) No Grantor shall rescind or cancel any obligations evidenced by any Receivable or modify
any term thereof or make any adjustment, discount, credit, rebate or reduction with respect thereto
except in the ordinary course of business consistent with prudent business practice, or extend or
renew any such obligations except in the ordinary course of business consistent with prudent
business practice or compromise or settle any dispute, claim, suit or legal proceeding relating
thereto or sell any Receivable or interest therein without the prior written consent of the
Collateral Agent except for (i) Asset Sales permitted by Section 6.05(x) and 6.05(xi) of the Credit
Agreement and (ii) in the ordinary course of business consistent with prudent business practice.
Each Grantor shall timely fulfill all obligations on its part to be fulfilled under or in
connection with the Receivables except in the ordinary course of business consistent with prudent
business practice.



     (c) Each Grantor shall cause to be collected from the Account Debtor of each of the
Receivables, as and when due in the ordinary course of business (including Receivables that are
delinquent, such Receivables to be collected in accordance with generally accepted commercial
collection procedures), any and all amounts owing under or on account of such Receivable, and apply
promptly upon receipt thereof all such amounts as are so collected to the outstanding balance of
such Receivable, except that any Grantor may, with respect to a Receivable, allow in the ordinary
course of business (i) a refund or credit due as a result of returned or damaged or defective
merchandise and (ii) such extensions of time to pay amounts due in respect of Receivables and such
other modifications of payment terms or settlements in respect of Receivables as shall be
commercially reasonable in the circumstances, all in accordance with such Grantor’s ordinary course
of business consistent with its collection practices as in effect from time to time. The costs and
expenses (including reasonable attorneys’ fees) of collection, in any case, whether incurred by any
Grantor, the Collateral Agent or any Secured Party, shall be paid by the Grantors.



     SECTION 4.12. Inventory and Equipment.



     (a) Except as permitted by the Credit Agreement, the Grantors shall not move any Equipment or
Inventory (other than Equipment or Inventory in transit from a supplier or vendor to a permitted
location, between permitted locations, in transit to a customer, out for repair or
refurbishment, or in the possession of an employee for bona fide business purposes, or having
Dollar Equivalent fair market value not in excess of $500,000 (in the aggregate for all Grantors)
located at locations not identified on the relevant Schedules to the Perfection Certificate) to any
location, other than any location that is listed in the relevant Schedules to the Perfection
Certificate, unless (i) it shall have given the Collateral Agent at least 5 days’ (or such shorter
period as may be determined by the Collateral Agent in its sole discretion) prior written notice of
its intention so to do, clearly describing such new location and providing such other information
in connection therewith as the Collateral Agent may reasonably request and (ii) to the extent
applicable with respect to such new location, such Grantor shall have complied with Section
3.05(g); provided, that if a casualty occurs at a location at which a Grantor maintains
Equipment or Inventory, such Grantor shall not be required to give the Collateral Agent prior
notice as required by clause (i) above prior to moving the Collateral maintained at such location,
but shall be required to provide notice to the Collateral Agent promptly after moving such
Collateral, clearly describing the new location and providing such other information in connection
therewith as the Collateral Agent may reasonably request.



     (b) With respect to Inventory: (i) no Inventory (other than Inventory in transit from a
supplier or vendor to a permitted location, between permitted locations, in transit to a customer,
or in the possession of an employee for bona fide business purposes, or having Dollar Equivalent
fair market value not in excess of $500,000 (in the aggregate for all Grantors)) is now, or shall
at any time or times hereafter be




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stored at any other location not set forth in the Perfection Certificate except as
permitted by Section 4.12(a), (ii) the Grantors have good and valid title to such Inventory and
such Inventory is not subject to any Lien or security interest or document whatsoever except for
Permitted Liens, (iii) such Inventory is not subject to any Intellectual Property Licenses with any
third parties that would, upon sale or other disposition of such Inventory by the Collateral Agent
in accordance with the terms hereof, infringe or otherwise violate the Intellectual Property of
such third-party licensor, violate any contracts with such third-party licensor, or cause the
Collateral Agent to incur any liability with respect to payment of royalties other than royalties
incurred pursuant to sale of such Inventory under the current Intellectual Property Licenses
related thereto and (iv) the completion of manufacture, sale or other disposition of such Inventory
by the Collateral Agent upon the occurrence and during the continuance of any Event of Default
shall not require the consent of any person and shall not constitute a breach or default under any
contract or agreement to which any Grantor is a party or to which such Inventory is subject.




ARTICLE V




REMEDIES




     SECTION 5.01. Remedies upon Default. Upon the occurrence and during the continuance of any Event of
Default, the Collateral Agent may from time to time (alternatively, successively or concurrently on
any one or more occasions) exercise in respect of the Collateral, in addition to the other rights
and remedies provided for herein or otherwise available to it, the following remedies:



     (a) Personally, or by agents or attorneys, immediately take possession of the Collateral or
any part thereof, from any Grantor or any other Person who then has possession of any part thereof
with or without notice or process of law, and for that purpose may enter upon any Grantor’s
premises where any of the Collateral is located, remove such Collateral, remain present at such
premises to receive copies of all communications and remittances relating to the Collateral and use
in connection with such removal and possession any and all services, supplies, aids and other
facilities of any Grantor;



     (b) Demand, sue for, collect or receive any money or property at any time payable or
receivable in respect of the Collateral including, upon any Event of Default under Section 7.01(a)
or 7.01(i) of the Credit Agreement, instructing the obligor or obligors on any agreement,
instrument or other obligation constituting part of the Collateral to make any payment required by
the terms of such agreement, instrument or other obligation directly to the Collateral Agent, and
in connection with any of the foregoing, compromise, settle, extend the time for payment and make
other modifications with respect thereto; provided, however, that in the event that
any such payments are made directly to any Grantor, prior to receipt by any such obligor of such
instruction, such Grantor shall segregate all amounts received pursuant thereto in trust for the
benefit of the Collateral Agent and shall promptly (but in no event later than one Business Day
after receipt thereof) pay such amounts to the Collateral Agent;



     (c) Sell, assign, grant a license to use or otherwise liquidate, or direct any Grantor to
sell, assign, grant a license to use or otherwise liquidate and dispose of, any and all investments
made in whole or in part with the Collateral or any part thereof, and take possession of the
proceeds of any such sale, assignment, license, liquidation or disposition;



     (d) Take possession of the Collateral or any part thereof, by directing any Grantor in writing
to assemble all or part of the Collateral as directed by the Collateral Agent at a place reasonably
designated by the Collateral Agent. Each Grantor’s obligation to deliver the Collateral as
contemplated in this Section 5.01(d) is of the essence hereof. Upon application to a court of
equity having jurisdiction, the Collateral Agent shall be entitled to a decree requiring specific
performance by any Grantor of such obligation;



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     (e) Withdraw all moneys, instruments, securities and other property in any bank, financial
securities, deposit or other account of any Grantor constituting Collateral for application to the
Obligations as provided in Section 5.07 hereof;



     (f) Retain and apply the distributions to the Obligations as provided in Section 5.07 hereof;



     (g) Exercise any and all rights as beneficial and legal owner of the Collateral, including
perfecting assignment of and exercising any and all voting, consensual and other rights and powers
with respect to any Collateral;



     (h) In the Collateral Agent’s own name, in the name of a nominee of the Collateral Agent, or
in the name of any Grantor communicate (by mail, telephone, facsimile or otherwise) with the
Account Debtors and other obligors in respect of Receivables of such Grantor and parties to
contracts with such Grantor, to verify with such Persons, to the Collateral Agent’s satisfaction,
the existence, amount, terms of, and any other matter relating to, Accounts, Chattel Paper, Payment
Intangibles, General Intangibles, Instruments and other Receivables that are Collateral; and



     (i) Exercise all the rights and remedies of a secured party on default under the UCC, and the
Collateral Agent may also in its sole discretion, without notice except as specified in Section
5.02 hereof, sell, assign or grant a license to use the Collateral or any part thereof in one or
more parcels at public or private sale, at any exchange, broker’s board or at any of the Collateral
Agent’s offices or elsewhere, for cash, on credit or for future delivery, and at such price or
prices and upon such other terms as the Collateral Agent may deem commercially reasonable. The
Collateral Agent or any other Secured Party or any of their respective Affiliates may be the
purchaser, licensee, assignee or recipient of the Collateral or any part thereof at any such public
sale, and, to the extent permitted by applicable law, at any such private sale, and shall be
entitled, for the purpose of bidding and making settlement or payment of the purchase price for all
or any portion of the Collateral sold, assigned or licensed at such sale, to use and apply any of
the Obligations owed to such Person as a credit on account of the purchase price of the Collateral
or any part thereof payable by such Person at such sale. Each purchaser, assignee, licensee or
recipient at any such sale shall acquire the property sold, assigned or licensed absolutely free
from any claim or right on the part of any Grantor, and each Grantor hereby waives, to the fullest
extent permitted by law, all rights of redemption, stay and/or appraisal which it now has or may at
any time in the future have under any rule of law or statute now existing or hereafter enacted.
The Collateral Agent shall not be obligated to make any sale of the Collateral or any part thereof
regardless of notice of sale having been given. The Collateral Agent may adjourn any public or
private sale from time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so adjourned. Each
Grantor hereby waives, to the fullest extent permitted by law, any claims against the Collateral
Agent arising by reason of the fact that the price at which the Collateral or any part thereof may
have been sold, assigned or licensed at such a private sale was less than the price which might
have been obtained at a public sale, even if the Collateral Agent accepts the first offer received
and does not offer such Collateral to more than one offeree.



     SECTION 5.02.Notice of Sale. Each Grantor acknowledges and agrees that, to the extent notice of sale or
other disposition of the Collateral or any part thereof shall be required by law, 10 days’ prior
notice to such Grantor of the time and place of any public sale or of the time after which any
private sale or other intended disposition is to take place shall be commercially reasonable
notification of such matters. No notification need be given to any Grantor if it has signed, after
the occurrence of an Event of Default, a statement renouncing or modifying any right to
notification of sale or other intended disposition.



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     SECTION 5.03. Waiver of Notice and Claims. Each Grantor hereby waives, to the fullest extent permitted by
applicable law, notice or judicial hearing in connection with the Collateral Agent’s taking
possession or the Collateral Agent’s disposition of the Collateral or any part thereof, including
any and all prior notice and hearing for any prejudgment remedy or remedies and any such right
which such Grantor would otherwise have under law, and each Grantor hereby further waives, to the
fullest extent permitted by applicable law: (i) except to the extent arising out of gross
negligence, bad faith or willful misconduct on the part of the Collateral Agent, all damages
occasioned by such taking of possession, (ii) all other requirements as to the time, place and
terms of sale or other requirements with respect to the enforcement of the Collateral Agent’s
rights hereunder and (iii) all rights of redemption, appraisal, valuation, stay, extension or
moratorium now or hereafter in force under any applicable law. To the fullest extent permitted by
applicable law, the Collateral Agent shall not be liable for any incorrect or improper payment made
pursuant to this Article V in the absence of gross negligence or willful misconduct on the
part of the Collateral Agent. Any sale of, or the grant of options to purchase, or any other
realization upon, any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the applicable Grantor therein and thereto, and shall be a
perpetual bar both at law and in equity against such Grantor and against any and all Persons
claiming or attempting to claim the Collateral so sold, optioned or realized upon, or any part
thereof, from, through or under such Grantor.



     SECTION 5.04. Certain Sales of Collateral



     (a) Each Grantor recognizes that, by reason of certain prohibitions
contained in law, rules, regulations or orders of any Governmental Authority, the Collateral Agent
may be compelled, with respect to any sale of all or any part of the Collateral, to limit
purchasers to those who meet the requirements of such Governmental Authority. Each Grantor
acknowledges that any such sales may be at prices and on terms less favorable to the Collateral
Agent than those obtainable through a public sale without such restrictions, and, notwithstanding
such circumstances, agrees that any such restricted sale shall be deemed to have been made in a
commercially reasonable manner and that, except as may be required by applicable law, the
Collateral Agent shall have no obligation to engage in public sales.



     (b) Each Grantor recognizes that, by reason of certain prohibitions contained in the
Securities Act of 1933, and applicable state securities laws, the Collateral Agent may be
compelled, with respect to any sale of all or any part of the Investment Property, to limit
purchasers to Persons who will agree, among other things, to acquire such Investment Property for
their own account, for investment and not with a view to the distribution or resale thereof. Each
Grantor acknowledges that any such private sales may be at prices and on terms less favorable to
the Collateral Agent than those obtainable through a public sale without such restrictions
(including a public offering made pursuant to a registration statement under the Securities Act of
1933), and, notwithstanding such circumstances, agrees that any such private sale shall be deemed
to have been made in a commercially reasonable manner and that the Collateral Agent shall have no
obligation to engage in public sales and no obligation to delay the sale of any Investment Property
for the period of time necessary to permit the issuer thereof to register it for a form of public
sale requiring registration under the Securities Act of 1933 or under applicable state securities
laws, even if such issuer would agree to do so.



     (c) If the Collateral Agent determines to exercise its right to sell any or all of the
Securities Collateral or Investment Property, upon written request, the applicable Grantor shall
from time to time furnish to the Collateral Agent all such information as the Collateral Agent may
request in order to determine the number of securities included in the Securities Collateral or
Investment Property which may be sold by the Collateral Agent as exempt transactions under the
Securities Act and the rules of the Securities and Exchange Commission thereunder, as the same are
from time to time in effect.



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     (d) Each Grantor further agrees that a breach of any of the covenants contained in this
Section 5.04 will cause irreparable injury to the Collateral Agent and the other Secured Parties,
that the Collateral Agent and the other 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 5.04
shall be specifically enforceable against such Grantor, and such Grantor hereby waives and agrees
not to assert any defenses against an action for specific performance of such covenants except for
a defense that no Event of Default has occurred and is continuing.



     SECTION
5.05. No Waiver; Cumulative Remedies



     (a) No failure on the part of the Collateral Agent to exercise, no course of dealing with
respect to, and no delay on the part of the Collateral Agent in exercising, any right, power or
remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any
such right, power, privilege or remedy hereunder preclude any other or further exercise thereof or
the exercise of any other right, power, privilege or remedy; nor shall the Collateral Agent be
required to look first to, enforce or exhaust any other security, collateral or guaranties. All
rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies
provided by law or otherwise available.



     (b) In the event that the Collateral Agent shall have instituted any proceeding to enforce any
right, power, privilege or remedy under this Agreement or any other Loan Document by foreclosure,
sale, entry or otherwise, and such proceeding shall have been discontinued or abandoned for any
reason or shall have been determined adversely to the Collateral Agent, then and in every such
case, the Grantors, the Collateral Agent and each other Secured Party shall be restored to their
respective former positions and rights hereunder with respect to the Collateral, and all rights,
remedies, privileges and powers of the Collateral Agent and the other Secured Parties shall
continue as if no such proceeding had been instituted.



     SECTION
5.06. Certain Additional Actions Regarding Intellectual Property. If any Event of Default shall
have occurred and be continuing, upon the written demand of the Collateral Agent, each Grantor
shall execute and deliver to the Collateral Agent an assignment or assignments (in a form
satisfactory to the Collateral Agent) of such Grantor’s rights in the Intellectual Property, and,
with respect to those items of the Intellectual Property Collateral consisting of issued Patents,
registered Trademarks and/or registered Copyrights (or applications therefor) owned by such
Grantor, such assignment shall be in recordable form satisfactory to the Collateral Agent, and such
other documents as are necessary or appropriate to carry out the intent and purposes hereof.



     SECTION
5.07. Application of Proceeds. Subject to the terms of the Intercreditor Agreement, all Proceeds
received by the Collateral Agent in respect of any sale of, collection from or other realization
upon all or any part of the Collateral pursuant to the exercise by the Collateral Agent of its
remedies shall, to the extent available for distribution (it being understood that the Collateral
Agent may liquidate investments prior to maturity in order to make a distribution pursuant to this
Section 5.07), be distributed (subject to the provisions of Section 5.08) by the Collateral Agent
on each Distribution Date in the following order of priority:




     First: to the Collateral Agent for any unpaid Collateral Agent Fees;




     Second: without duplication of amounts applied pursuant to clause
First above, to any other Secured Party which has theretofore advanced or paid any
Collateral Agent Fees constituting administrative expenses allowable under Section 503(b) of
the Bankruptcy Code, an amount equal to the amount thereof so advanced or paid by such
Secured Party and for which such Secured Party has not been reimbursed prior to such
Distribution Date, and, if such moneys shall be insufficient to pay such amounts in full,
then ratably (without priority of any one over any other)



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to such Secured Parties in
proportion to the amounts of such Collateral Agent Fees advanced by the respective Secured
Parties and remaining unpaid on such Distribution Date;




     Third: without duplication of the amounts applied pursuant to clause
First and Second above, to any Secured Party which has theretofore advanced
or paid any Collateral Agent Fees other than such administrative expenses, an amount equal
to the amount thereof so advanced or paid by such Secured Party and for which such Secured
Party has not been reimbursed prior to such Distribution Date, and, if such moneys shall be
insufficient to pay such amounts in full, then ratably (without priority of any one over any
other) to such Secured Parties in proportion to the amounts of such Collateral Agent Fees
advanced by the respective Secured Parties and remaining unpaid on such Distribution Date;




     Fourth: without duplication of the amounts applied pursuant to clauses
First, Second and Third above, subject to the provisions of Section
2.11 of the Credit Agreement, to the Secured Parties, in an amount equal to all Obligations,
whether or not then due and payable, and, if such moneys shall be insufficient to pay such
amounts in full, then ratably (without priority of any one over any other) to such Secured
Parties in proportion to the unpaid amounts thereof on such Distribution Date; and




     Fifth, without duplication of the amounts applied pursuant to clauses
First, Second, Third and Fourth above, any surplus then
remaining shall be paid to the Grantors or their successors or assigns or to whomever may be
lawfully entitled to receive the same or as a court of competent jurisdiction may direct.



     In the event that any such proceeds are insufficient to pay in full the items described in
clauses First through Fourth of this Section 5.07, the Grantors shall remain liable
for any deficiency.


The term “unpaid” as used in this Section 5.07 refers:




     (a) in the absence of a bankruptcy proceeding with respect to the relevant Grantor(s), to all
amounts of the relevant Obligations (other than unasserted contingent indemnification obligations
not due and payable) outstanding as of a Distribution Date, and



     (b) during the pendency of a bankruptcy proceeding with respect to the relevant Grantor(s), to
all amounts allowed by the bankruptcy court in respect of the relevant Obligations as a basis for
distribution (including estimated amounts, if any, allowed in respect of contingent claims), to the
extent that prior distributions have not been made in respect thereof.



     SECTION 5.08.Collateral Agent’s Calculations. In making the determinations and allocations required by
Section 5.07, the Collateral Agent may conclusively rely upon information supplied by the
Administrative Agent as to the amounts of unpaid principal and interest and other amounts
outstanding with respect to any Obligations, and the Collateral Agent shall have no liability to
any of the Secured Parties for actions taken in reliance on such information; provided that
nothing in this sentence shall prevent any Grantor from contesting any amounts claimed by any
Secured Party in any information so supplied. In addition, for purposes of making the allocations
required by Section 5.07 with respect to any amount that is denominated in any currency other than
Dollars, the Collateral Agent shall, on the applicable Distribution Date, convert such amount into
an amount of Dollars based upon the relevant Spot Selling Rate. All distributions made by the
Collateral Agent pursuant to Section 5.07 shall be (subject to any decree of any court of competent
jurisdiction) final (absent manifest error), and the Collateral Agent shall have no duty to inquire
as to the application by the Administrative Agent of any amounts distributed to it for distribution
to any Lenders.



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ARTICLE VI




The Collateral Agent




     SECTION 6.01. General Authority of the Collateral Agent over the Collateral(a).



     (a) Until the termination of this Agreement pursuant to Section 7.11, subject to the
provisions herein, each Grantor hereby appoints the Collateral Agent as its true and lawful
attorney-in-fact for the purpose, during the continuance of an Event of Default, of taking any
action and executing any and all documents and instruments that the Collateral Agent may deem
necessary to carry out the terms of this Agreement and accomplish the purposes hereof and, without
limiting the generality of the foregoing, each Grantor hereby acknowledges that the Collateral
Agent shall have all powers and remedies set forth in the Security Documents. The foregoing grant
of authority is a power of attorney coupled with an interest and such appointment shall be
irrevocable for the term hereof.



     (b) By acceptance of the benefits of this Agreement and the Security Documents: each Secured
Party shall be deemed irrevocably (1) to consent to the appointment of the Collateral Agent as its
agent hereunder and under the other Security Documents, (2) to confirm that the Collateral Agent
shall have the authority to act as the exclusive agent of such Secured Party for enforcement of any
provisions of this Agreement and the other Security Documents against any Grantor or the exercise
of remedies hereunder or thereunder, (3) to agree that such Secured Party shall not take any action
to enforce any provisions of this Agreement or any other Security Document against any Grantor or
to exercise any remedy hereunder or thereunder and (4) to agree to be bound by the terms of this
Agreement and the other Security Documents.



     (c) The Collateral Agent hereby agrees that it holds and will hold all of its right, title and
interest in, to and under the Security Documents and the Collateral granted to the Collateral Agent
thereunder whether now existing or hereafter arising (all such right, title and interest being
hereinafter referred to as the “Collateral Estate”) under and subject to the conditions set
forth in this Agreement; and the Collateral Agent further agrees that it will hold such Collateral
Estate for the benefit of the Secured Parties, for the enforcement of the payment of all
Obligations (subject to the limitations and priorities set forth herein and in the respective
Security Documents) and as security for the performance of and compliance with the covenants and
conditions of this Agreement and each of the Security Documents.



     SECTION 6.02. Exercise of Powers. All of the powers, remedies and rights of the Collateral Agent as set
forth in this Agreement may be exercised by the Collateral Agent in respect of any Security
Document as though set forth in full therein and all of the powers, remedies and rights of the
Collateral Agent as set forth in any Security Document may be exercised from time to time as herein
and therein provided.



     SECTION 6.03. Remedies Not Exclusive(a).



     (a) No remedy conferred upon or reserved to the Collateral Agent herein or in the other
Security Documents is intended to be exclusive of any other remedy or remedies, but every such
remedy shall be cumulative and shall be in addition to every other remedy conferred herein or in
any other Security Document or now or hereafter existing at law or in equity or by statute.



     (b) No delay or omission by the Collateral Agent to exercise any right, remedy or power
hereunder or under any Security Document shall impair any such right, remedy or power or shall be
construed to be a waiver thereof, and every right, power and remedy given by this Agreement or any Security



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Document to the Collateral Agent may be exercised from time to time and as often as may be
deemed expedient by the Collateral Agent.




     (c) If the Collateral Agent shall have proceeded to enforce any right, remedy or power under
this Agreement or any Security Document and the proceeding for the enforcement thereof shall have
been discontinued or abandoned for any reason or shall have been determined adversely to the
Collateral Agent, then the Grantors, the Collateral Agent and the other Secured Parties shall,
subject to any determination in such proceeding, severally and respectively be restored to their
former positions and rights hereunder or thereunder with respect to the Collateral Estate and in
all other respects, and thereafter all rights, remedies and powers of the Collateral Agent shall
continue as though no such proceeding had been taken.



     SECTION 6.04. Waiver and Estoppel.



     (a) Each Grantor, to the extent it may lawfully do so, on behalf of itself and all who may
claim through or under it, including without limitation any and all subsequent creditors, vendees,
assignees and licensors, waives and releases all rights to demand or to have any marshaling of the
Collateral upon any sale, whether made under any power of sale granted herein or in any Security
Document or pursuant to judicial proceedings or upon any foreclosure or any enforcement of this
Agreement or any Security Document and consents and agrees that all the Collateral may at any such
sale be offered and sold as an entirety.



     (b) Each Grantor waives, to the extent permitted by applicable law, presentment, demand,
protest and any notice of any kind (except notices explicitly required hereunder or under any
Security Document) in connection with this Agreement and the Security Documents and any action
taken by the Collateral Agent with respect to the Collateral.



     SECTION 6.05. Limitation on Collateral Agent’s Duty in Respect of Collateral. Except as required by
applicable law, beyond its express duties specified in the Security Documents, the Collateral Agent
shall not have any duty to the Grantors or to the Secured Parties as to any Collateral in its
possession or control or in the possession or control of any of its agents or nominees, or any
income thereon or as to the preservation of rights against prior parties or any other rights
pertaining thereto.



     SECTION 6.06. Limitation by Law. All rights, remedies and powers provided in this Agreement or any Security
Document may be exercised only to the extent that the exercise thereof does not violate any
applicable provision of law, and all the provisions hereof are intended to be subject to all
applicable mandatory provisions of law which may be controlling and to be limited to the extent
necessary so that they will not render this Agreement invalid, unenforceable in whole or in part or
not entitled to be recorded, registered or filed under the provisions of any applicable law.



     SECTION 6.07. Rights of Secured Parties in Respect of Obligations. Notwithstanding any other provision of this Agreement or any Security Document, the right
of each Secured Party to receive payment of the Obligations held by such Secured Party when due
(whether at the stated maturity thereof, by acceleration or otherwise), as expressed in the
instruments evidencing or agreements governing such Obligations, or to institute suit for the
enforcement of such payment on or after such due date, shall not be impaired or affected without
the consent of such Secured Party given in the manner prescribed by the instruments evidencing or
agreements governing such Obligations.



     SECTION 6.08. Compensation and Expenses. Without limitation of its obligations under the other Loan
Documents, each Grantor agrees to pay to the Collateral Agent, from time to time upon written
demand, all of the reasonable out-of-pocket costs and expenses of the Collateral Agent (including,
without limitation, the reasonable fees and disbursements of its counsel) (i) arising in connection
with the



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administration of the Collateral, the preparation, execution, delivery, modification and
termination of this Agreement and each Security Document or the enforcement of any of the
provisions hereof or thereof or (ii) incurred or required to be advanced in connection with the
sale or other disposition of Collateral pursuant to any Security Document and the preservation,
protection or defense of the Collateral Agent’s rights under this Agreement and the Security
Documents and in and to the Collateral and the Collateral Estate, in each case, to the extent the
Borrower would be required to do so pursuant to Section 9.05 of the Credit Agreement. Such fees,
costs and expenses are intended to constitute expenses of administration under any bankruptcy law
relating to creditors’ rights generally.




     SECTION 6.09. Stamp and Other Similar Taxes. Each Grantor agrees to indemnify and hold harmless the
Collateral Agent, the Administrative Agent and each other Secured Party from any present or future
claim for liability for any stamp or any other similar tax, and any penalties or interest with
respect thereto, which may be assessed, levied or collected by any jurisdiction in connection with
this Agreement, any Security Document, the Collateral Estate or any Collateral. The obligations of
each Grantor under this Section 6.09 shall survive the termination of the other provisions of this
Agreement and the resignation or removal of the Collateral Agent hereunder.



     SECTION 6.10. Filing Fees, Excise Taxes, etc. Each Grantor agrees to pay or to reimburse the Collateral
Agent for any and all payments made by the Collateral Agent in respect of all search, filing,
recording and registration fees, taxes, excise taxes and other similar imposts which may be payable
or determined to be payable in respect of the execution and delivery of this Agreement and each
Security Document. The obligations of each Grantor under this Section 6.10 shall survive the
termination of the other provisions of this Agreement and the resignation or removal of the
Collateral Agent hereunder.



     SECTION 6.11. Indemnification. Without limitation of its indemnification obligations under the other Loan
Documents, each Grantor agrees to pay, and to save the Collateral Agent and the other Secured
Parties harmless from, any and all losses, claims, damages, liabilities and out-of-pocket expenses
(including reasonable counsel fees, charges and disbursements) arising out of, in any way connected
with, or as a result of the execution, delivery, enforcement, performance and administration of
this Agreement to the extent the Borrower would be required to do so pursuant to Section 9.05 of
the Credit Agreement.



ARTICLE VII




MISCELLANEOUS




     SECTION 7.01. Notices. All communications and notices hereunder shall (except as otherwise expressly
permitted herein) be in writing and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to any Subsidiary Guarantor shall be given to it c/o the
Borrower at the Borrower’s address as provided in Section 9.01 of the Credit Agreement, with a copy
to the Borrower.



     SECTION 7.02. Survival of Agreement. All covenants, agreements, representations and warranties made by any
Grantor herein and in the certificates or other instruments prepared or delivered in connection
with or pursuant to this Agreement or any other Loan Document shall be considered to have been
relied upon by the Collateral Agent and the other Secured Parties and shall survive the making by
the Lenders of the Loans, regardless of any investigation made by the Secured Parties or on their
behalf, and shall continue in full force and effect until this Agreement shall terminate.



     SECTION 7.03. Binding Effect. This Agreement shall be binding upon each Grantor and the Collateral Agent
and their respective successors and permitted assigns, and shall inure to the benefit of each
Grantor, the Collateral Agent and the other Secured Parties and their respective permitted
successors



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and assigns, except that no Grantor shall have the right to assign or transfer its
rights or obligations hereunder or any interest herein or in the Collateral (and any such
assignment or transfer shall be void) except as expressly permitted by this Agreement or the Credit
Agreement.




     SECTION 7.04. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK.



     SECTION 7.05. Waivers; Amendment; Several Agreement.



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



     (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except
pursuant to an agreement or agreements in writing entered into in accordance with Section 9.08 of
the Credit Agreement.



     (c) This Agreement shall be construed as a separate agreement with respect to each Grantor and
may be amended, modified, supplemented, waived or released with respect to any Grantor without the
approval of any other Grantor and without affecting the obligations of any other Grantor hereunder.



     SECTION 7.06. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS.



     SECTION 7.07. Severability. In the event any one or more of the provisions contained in this Agreement
should be held invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular provision in a particular
jurisdiction shall not in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of which comes as
close as possible to that of the invalid, illegal or unenforceable provisions. It is understood
and agreed among the parties that this Agreement shall create separate security interests in the
Collateral securing the Obligations as provided in Section 2.01, and that any determination by any
court with jurisdiction that the security interest securing any Obligation or class of Obligations
is invalid for any reason shall not in and of itself invalidate the Security Interests securing any
other Obligations hereunder.



     SECTION 7.08. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall
constitute an original, but all of which, when taken together, shall constitute a



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single contract
and shall become effective as provided in Section 7.03. Delivery of an executed signature page to
this Agreement by facsimile or other electronic transmission (e.g., “PDF” or “tif” via e-mail)
shall be effective as delivery of a manually executed counterpart hereof.




     SECTION 7.09. Headings. Article and Section headings used herein are for the purpose of reference only, are
not part of this Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.



     SECTION 7.10. Jurisdiction; Consent to Service of Process.



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



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



     (c) Each party to this Agreement irrevocably consents to service of process in the manner
provided for notices in Section 9.15 of the Credit Agreement. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other manner permitted by
law.



     SECTION 7.11. Termination.



     (a) This Agreement and the Security Interests (i) shall automatically terminate when (a) all
the Obligations (other than unasserted contingent indemnification obligations not due and payable)
have been paid in full and (b) the Lenders have no further commitment to lend under the Credit
Agreement (at which time the Collateral Agent shall execute and deliver to the Grantors, at the
Grantors’ expense, all UCC termination statements and other documents which the Grantors shall
reasonably request to evidence such termination) and (ii) shall continue to be effective or shall
be reinstated, as the case may be, if at any time any payment in respect of any Obligation is
rescinded or must otherwise be restored by any Secured Party upon any bankruptcy or reorganization
of any Grantor or otherwise. Any execution and delivery of termination statements or documents
pursuant to this Section 7.11(a) shall be without recourse to or warranty by the Collateral Agent.
A Subsidiary Guarantor shall automatically be released from its obligations hereunder and the
Security Interests in the Collateral of such Subsidiary Guarantor shall be automatically released
in the event that the Equity Interests of such Subsidiary Guarantor shall be sold, transferred or
otherwise disposed of pursuant to a transaction permitted under the Credit Agreement to a Person
that is not an Affiliate of Borrower such that such Person is no longer a Restricted Subsidiary of
Borrower.





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     (b) Upon any sale or other transfer by any Grantor of any Collateral to a Person that is not a
Loan Party that is permitted under the Credit Agreement or, upon the effectiveness of any written
consent to the release of the security interests granted hereby in any Collateral pursuant to
Section 9.08 of the Credit Agreement, security interests in such Collateral shall be automatically
released. In connection with such release, the Collateral Agent shall execute and deliver to any
Grantor, at such Grantor’s expense, all UCC termination statements and other documents that such
Grantor shall reasonably request to evidence such release. Any execution and delivery of UCC
termination statements and similar documents pursuant to this Section 7.11(b) shall be without
recourse to or warranty by the Collateral Agent.



     SECTION 7.12. Additional Grantors. To the extent any Subsidiary shall be required to become a
Grantor pursuant to any Loan Document, upon execution and delivery by the Collateral Agent and such
Subsidiary of an instrument in the form of Annex I hereto, such Subsidiary shall become a
Grantor hereunder with the same force and effect as if originally named as a Grantor herein. Each
such Subsidiary shall at such time deliver to the Collateral Agent a completed Perfection
Certificate. The execution and delivery of any such instrument shall not require the consent of
any other Grantor hereunder. The rights and obligations of each Grantor hereunder shall remain in
full force and effect notwithstanding the addition of any new Grantor as a party to this Agreement.



     SECTION 7.13. Financing Statements. Each Grantor hereby irrevocably authorizes the Collateral
Agent at any time and from time to time to file in any relevant jurisdiction (a) any filing with
the United States Patent and Trademark Office or United States Copyright Office (or any successor
office or any similar office in any other country), (b) any initial financing statements (including
fixture filings) and amendments thereto that contain the information required by Article 9 of the
Uniform Commercial Code of each applicable jurisdiction for the filing of any financing statement
or amendment relating to the Collateral, including (i) whether such Grantor is an organization, the
type of organization and any organizational identification number issued to such Grantor, (ii) any
financing or continuation statements or other documents without the signature of such Grantor where
permitted by law, and such financing statements may contain an indication or description of
Collateral that describes such property (x) in the same manner as described in this Agreement or
(z) in any other manner as the Collateral Agent may determine, in its sole discretion, is necessary
or prudent to ensure the perfection of the security interest in the Collateral granted to the
Collateral Agent in connection herewith, including, without limitation, describing such property as
“all personal property of the debtor now owned or hereafter acquired” (or using words of similar
import) and (iii) in the case of a financing statement filed as a fixture filing or covering
Collateral constituting minerals or the like to be extracted or timber to be cut, a sufficient
description of the real property to which such Collateral relates, and (c) any other documents for
the purpose of perfecting, confirming, continuing, enforcing or protecting the Security Interests
granted by each Grantor without the signature of any Grantor. Each Grantor agrees to provide all
information described in the immediately preceding sentence to the Collateral Agent promptly upon
written request. Each Grantor hereby ratifies its authorization for the Collateral Agent to file
in any relevant jurisdiction any financing statements relating to the Collateral if filed prior to
the date hereof.



     SECTION 7.14. Collateral Agent Appointed Attorney-in-Fact.
Each Grantor hereby appoints the Collateral Agent the attorney-in-fact of such Grantor for
the purpose of carrying out the provisions of this Agreement and taking any action and executing
any instrument that the Collateral Agent may deem necessary to accomplish the purposes hereof,
which appointment is irrevocable and coupled with an interest. Without limiting the generality of
the foregoing, the Collateral Agent shall have the right, upon the occurrence and during the
continuance of an Event of Default, with full power of substitution either in the Collateral
Agent’s name or in the name of such Grantor, (a) to receive, endorse, assign or deliver any and all
notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the
Collateral or any part thereof; (b) to demand, collect, receive payment of, give receipt for and
give discharges and releases of all or any of the Collateral; (c) to ask for, demand, sue for,
collect, receive and give acquit-



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tance for any and all moneys due or to become due under and by
virtue of any Collateral; (d) to sign the name of any Grantor on any invoice or bill of lading
relating to any of the Collateral; (e) to send verifications of Accounts to any Account Debtor;
(f) to commence and prosecute any and all suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect or otherwise realize on all or any of the Collateral or
to enforce any rights in respect of any Collateral; (g) to settle, compromise, compound, adjust or
defend any actions, suits or proceedings relating to all or any of the Collateral; (h) with at
least 2 days’ prior notice to the Grantor to notify, or to require any Grantor to notify Account
Debtors to make payment directly to the Collateral Agent; and (i) to use, sell, assign, transfer,
pledge, make any agreement with respect to or otherwise deal with all or any of the Collateral, and
to do all other acts and things necessary to carry out the purposes of this Agreement, as fully and
completely as though the Collateral Agent were the absolute owner of the Collateral for all
purposes; provided that nothing herein contained shall be construed as requiring or
obligating the Collateral Agent to make any commitment or to make any inquiry as to the nature or
sufficiency of any payment received by the Collateral Agent, or to present or file any claim or
notice, or to take any action with respect to the Collateral or any part thereof or the moneys due
or to become due in respect thereof or any property covered thereby. The Collateral Agent and the
other Secured Parties shall be accountable only for amounts actually received as a result of the
exercise of the powers granted to them herein, and neither they nor their officers, directors,
employees or agents shall be responsible to any Grantor for any act or failure to act hereunder,
except for their own gross negligence, willful misconduct or bad faith.



     SECTION 7.15. INTERCREDITOR AGREEMENT GOVERNS. NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY, THE LIEN AND SECURITY INTEREST GRANTED TO THE COLLATERAL AGENT, FOR THE BENEFIT OF THE
SECURED PARTIES, PURSUANT TO THIS AGREEMENT AND THE EXERCISE OF ANY RIGHT OR REMEDY BY THE
COLLATERAL AGENT AND THE OTHER SECURED PARTIES HEREUNDER ARE SUBJECT TO THE PROVISIONS OF THE
INTERCREDITOR AGREEMENT. IN THE EVENT OF ANY CONFLICT OR INCONSISTENCY BETWEEN THE PROVISIONS OF
THE INTERCREDITOR AGREEMENT AND THIS AGREEMENT, THE PROVISIONS OF THE INTERCREDITOR AGREEMENT SHALL
GOVERN AND CONTROL.



     SECTION 7.16. Delivery of Collateral. Prior to the Discharge of Revolving Credit Obligations,
to the extent any Grantor is required hereunder to deliver Current Asset Collateral to the
Collateral Agent for purposes of possession and control and is unable to do so as a result of
having previously delivered such Collateral to any of the Revolving Credit Facility Agents in
accordance with the terms of the Revolving Credit Facility Security Documents, such Grantor’s
obligations hereunder with respect to such delivery shall be deemed satisfied by the delivery to
such Revolving Credit Facility Agents, acting as a gratuitous bailee and/or sub-agent of the
Collateral Agent in accordance with the terms of the Intercreditor Agreement.



     SECTION 7.17. Mortgages. In the case of a conflict between this Agreement and the Mortgages
with respect to Collateral that is real property (including Fixtures), the Mortgages shall govern.
In all other conflicts between this Agreement and the Mortgages, this Agreement shall govern.



     SECTION 7.18. Conflicts. In the case of any conflict between this Agreement and the Credit
Agreement, the provisions of the Credit Agreement shall govern.



[Signature Pages Follow]




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



SOLUTIA INC.

BEAMER ROAD MANAGEMENT COMPANY

CPFILMS INC.

FLEXSYS AMERICA CO.

FLEXSYS AMERICA L.P.

      by FLEXSYS AMERICA CO.,

      its general partner

MONCHEM INTERNATIONAL, INC.

SOLUTIA BUSINESS ENTERPRISES INC.

SOLUTIA GREATER CHINA, INC.

SOLUTIA INTER-AMERICA, INC.

SOLUTIA OVERSEAS, INC.

SOLUTIA SYSTEMS, INC.




	 	 	 	 	 
	 	 	 
	 	By:  	                     /s/James A. Tichenor
 	 
	 	 	Name:  	James A. Tichenor 	 
	 	 	Title:  	Authorized Officer 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	CITIBANK, N.A.,

as Collateral Agent

 	 
	 	By:  	/s/Aaron Dannenberg
 	 
	 	 	Name:  	Aaron Dannenberg 	 
	 	 	Title:  	Vice President 	 
	 




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