Filed by Bowne Pure Compliance





Exhibit 10.4




 




PLEDGE AND SECURITY AGREEMENT




dated as of January 7, 2009




among




USG CORPORATION,

as Borrower,




The Other Grantors Party Hereto




and




JPMORGAN CHASE BANK, N.A.,

as Administrative Agent




 





 


 









 







TABLE OF CONTENTS




	 	 	 	 	 
	ARTICLE I
	 
	 
	 	 	 	 
	DEFINITIONS
	 
	 
	 	 	 	 
	SECTION 1.01. Terms Defined in Credit Agreement
	 	 	1	 
	SECTION 1.02. Terms Defined in UCC
	 	 	1	 
	SECTION 1.03. Definitions of Certain Terms Used Herein
	 	 	1	 
	 
	 	 	 	 
	ARTICLE II
	 
	 
	 	 	 	 
	GRANT OF SECURITY INTEREST
	 
	 
	 	 	 	 
	SECTION 2.01. Security Interest
	 	 	4	 
	 
	 	 	 	 
	ARTICLE III
	 
	 
	 	 	 	 
	REPRESENTATIONS AND WARRANTIES
	 
	 
	 	 	 	 
	SECTION 3.01. Title, Perfection and Priority
	 	 	5	 
	SECTION 3.02. Type and Jurisdiction of Organization, Organizational and Identification Numbers
	 	 	5	 
	SECTION 3.03. Principal Location
	 	 	5	 
	SECTION 3.04. Collateral Locations
	 	 	5	 
	SECTION 3.05. Deposit Accounts
	 	 	6	 
	SECTION 3.06. Exact Names
	 	 	6	 
	SECTION 3.07. Perfection Certificate
	 	 	6	 
	SECTION 3.08. Validity of Security Interest
	 	 	6	 
	SECTION 3.09. Security Interest as Security Only
	 	 	6	 
	SECTION 3.10. Accounts
	 	 	6	 
	SECTION 3.11. Inventory
	 	 	7	 
	SECTION 3.12. Intellectual Property
	 	 	7	 
	SECTION 3.13. Filing Requirements
	 	 	8	 
	SECTION 3.14. No Financing Statements, Security Agreements
	 	 	8	 
	 
	 	 	 	 
	ARTICLE IV
	 
	 
	 	 	 	 
	COVENANTS
	 
	 
	 	 	 	 
	SECTION 4.01. General
	 	 	8	 
	SECTION 4.02. Accounts
	 	 	10	 
	SECTION 4.03. Inventory
	 	 	11	 
	SECTION 4.04. Intellectual Property
	 	 	11	 
	SECTION 4.05. Collateral Access Agreements
	 	 	12	 
	SECTION 4.06. Change of Name or Location; Change of Fiscal Year
	 	 	12	 






 


 









 





	 	 	 	 	 
	ARTICLE V
	 
	 
	 	 	 	 
	REMEDIES
	 
	 
	 	 	 	 
	SECTION 5.01. Remedies
	 	 	13	 
	SECTION 5.02. Grantor’s Obligations Upon an Event of Default
	 	 	14	 
	SECTION 5.03. Grant of Intellectual Property License
	 	 	15	 
	 
	 	 	 	 
	ARTICLE VI
	 
	 
	 	 	 	 
	ACCOUNT VERIFICATION; ATTORNEY IN FACT; PROXY
	 
	 
	 	 	 	 
	SECTION 6.01. Account Verification
	 	 	15	 
	SECTION 6.02. Authorization for Secured Party to Take Certain Action
	 	 	15	 
	 
	 	 	 	 
	ARTICLE VII
	 
	 
	 	 	 	 
	COLLECTION AND APPLICATION OF COLLATERAL PROCEEDS; DEPOSIT ACCOUNTS
	 
	 
	 	 	 	 
	SECTION 7.01. Collection of Accounts
	 	 	17	 
	SECTION 7.02. Covenant Regarding New Deposit Accounts
	 	 	18	 
	SECTION 7.03. Cash Dominion Periods; Application of Proceeds
	 	 	19	 
	 
	 	 	 	 
	ARTICLE VIII
	 
	 
	 	 	 	 
	GENERAL PROVISIONS
	 
	 
	 	 	 	 
	SECTION 8.01. Waivers
	 	 	20	 
	SECTION 8.02. Limitation on Administrative Agent’s and Lenders’ Duty with Respect to the
Collateral
	 	 	20	 
	SECTION 8.03. Compromises and Collection of Collateral
	 	 	21	 
	SECTION 8.04. Secured Party Performance of Debtor Obligations
	 	 	21	 
	SECTION 8.05. Specific Performance of Certain Covenants
	 	 	22	 
	SECTION 8.06. Dispositions Not Authorized
	 	 	22	 
	SECTION 8.07. No Waiver; Amendments; Cumulative Remedies
	 	 	22	 
	SECTION 8.08. Limitation by Law; Severability of Provisions
	 	 	22	 
	SECTION 8.09. Reinstatement
	 	 	23	 
	SECTION 8.10. Benefit of Agreement
	 	 	23	 
	SECTION 8.11. Survival of Representations
	 	 	23	 
	SECTION 8.12. Headings
	 	 	23	 
	SECTION 8.13. Termination
	 	 	23	 
	SECTION 8.14. Additional Subsidiaries
	 	 	24	 
	SECTION 8.15. Right of Setoff
	 	 	24	 
	SECTION 8.16. Lien Absolute
	 	 	25	 
	SECTION 8.17. Release
	 	 	25	 
	SECTION 8.18. Entire Agreement
	 	 	26	 






 


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	SECTION 8.19. Governing Law; Jurisdiction; Consent to Service of Process
	 	 	26	 
	SECTION 8.20. WAIVER OF JURY TRIAL
	 	 	26	 
	SECTION 8.21. Taxes and Expenses; Indemnity
	 	 	27	 
	SECTION 8.22. Counterparts
	 	 	28	 
	 
	 	 	 	 
	ARTICLE IX
	 
	 
	 	 	 	 
	NOTICES
	 
	 
	 	 	 	 
	SECTION 9.01. Sending Notices
	 	 	28	 
	 
	 	 	 	 
	ARTICLE X
	 
	 
	 	 	 	 
	THE ADMINISTRATIVE AGENT
	 
	 
	 	 	 	 
	Schedule 1 Subsidiary Grantors
	 	 	 	 
	 
	 	 	 	 
	Exhibit A Information for each Grantor
	 	 	 	 
	 
	 	 	 	 
	Exhibit B Collateral Deposit Accounts
	 	 	 	 
	 
	 	 	 	 
	Exhibit C Financing Statement Filing Offices
	 	 	 	 
	 
	 	 	 	 
	Exhibit D Form of New Subsidiary Supplement
	 	 	 	 







 


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PLEDGE AND SECURITY AGREEMENT




THIS PLEDGE AND SECURITY AGREEMENT (this “Agreement”) is entered into as of January 7,
2009, among USG Corporation, a Delaware corporation (the “Borrower”), each Subsidiary
identified on Schedule I hereto and each other Subsidiary that becomes a party to this Agreement
after the Restatement Effective Date pursuant to Section 8.14 hereof (each such Subsidiary and the
Borrower, a “Grantor” and, collectively, the “Grantors”) and JPMorgan Chase Bank,
N.A., in its capacity as administrative agent (the “Administrative Agent”) for the lenders
party to the Credit Agreement referred to below.



PRELIMINARY STATEMENT




Reference is made to the Second Amended and Restated Credit Agreement dated as of the date
hereof (as amended, restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among the Borrower, the Lenders from time to time party thereto, the
Administrative Agent and Goldman Sachs Credit Partners, L.P., as syndication agent. Each Grantor
is entering into this Agreement in order to induce the Lenders to enter into and extend credit to
the Borrower under the Credit Agreement and to secure the Secured Obligations.



ACCORDINGLY, the Grantors and the Administrative Agent, on behalf of the Lenders, hereby agree
as follows:



ARTICLE I




DEFINITIONS




SECTION 1.01. Terms Defined in Credit Agreement. All capitalized terms used herein
and not otherwise defined shall have the meanings assigned to such terms in the Credit Agreement.



SECTION 1.02. Terms Defined in UCC. Terms defined in the UCC which are not otherwise
defined in this Agreement are used herein as defined in the UCC.



SECTION 1.03. Definitions of Certain Terms Used Herein. As used in this Agreement, in
addition to the terms defined in the preamble hereto and in the Preliminary Statement, the
following terms shall have the following meanings:



“Accounts” means all rights to payment, whether or not earned by performance, for the
sale or lease of goods or the rendition of services, in each case in the ordinary course of the
Grantors’ business, whether such rights constitute or are evidenced by any Account (as defined in
Article 9 of the UCC), Chattel Paper, Instrument or General Intangible.


 


 









 





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



“Cash Dominion Period” means any of (a) a period commencing on the date on which
Excess Availability shall have been less than the Threshold Amount for five (5) consecutive
Business Days and ending on the first date thereafter on which Excess Availability shall have been
equal to or greater than the Threshold Amount for thirty (30) consecutive calendar days and (b) a
period during which an Event of Default has occurred and is continuing. For purposes of clarity,
if, during the continuance of a Cash Dominion Period triggered by an event described in either
clause (a) or (b) of this definition, an event described in clause (a) or (b) of this definition
shall occur, then such Cash Dominion Period shall be deemed not to have terminated until such time
as a Cash Dominion Period would no longer exist under both clauses (a) and (b) of this definition.




“Cash Dominion Period Notice” shall have the meaning set forth in Section 7.03(a).



“Cash Dominion Termination Notice” shall have the meaning set forth in
Section 7.03(a).



“Cash Dominion Termination Period” shall have the meaning set forth in
Section 7.03(a).




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



“Collateral Access Agreement” means any landlord waiver or other agreement (as such
waiver or agreement may be amended, restated or otherwise modified from time to time), in form and
substance reasonably satisfactory to the Administrative Agent, pursuant to which a mortgagee or
lessor of real property on which Collateral is stored or otherwise located, or a bailee, consignee
or similar Person with respect to any warehouse, processor or converter facility or other location
where Collateral is stored or located, (a) acknowledges the Lien of the Administrative Agent, on
behalf of the Secured Parties, in respect of such Collateral, (b) waives or, in the reasonable
discretion of the Administrative Agent, subordinates on terms reasonably acceptable to the
Administrative Agent any Lien or other claim that such Person may assert against such Collateral
and (c) where applicable, grants to the Administrative Agent reasonable access to and use of such
real property or facility, as the case may be, following the occurrence and during the continuance
of an Event of Default, to assemble, complete and sell such Collateral.



“Collateral Access Agreement Deadline” means the date that is 90 days (or such longer
period as the Administrative Agent, in its sole discretion, may agree) after the Restatement
Effective Date.



“Collateral Deposit Account” means, with respect to each Grantor, any lockbox account
maintained by such Grantor to which any cash, checks or other similar payments constituting
payments made in respect of Accounts and/or proceeds of Inventory are or are to be remitted and all
Deposit Accounts maintained by such Grantor into which any such payments are directed to be
deposited, as well as any other Deposit
Accounts maintained by such Grantor into which any cash, checks or other similar payments
constituting payments made in respect of Accounts and/or proceeds of Inventory are or are to be
deposited.


 


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“Collateral Deposit Account Bank” means each bank or other financial institution at
which any Grantor maintains a Collateral Deposit Account.



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




“Collection Account” shall have the meaning set forth in Section 7.03(a).



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




“Control Agreement Deadline” shall have the meaning set forth in Section 7.01(a).



“Copyrights” means, with respect to any Person, all of such Person’s right, title and
interest in and to the following: (a) all copyrights, rights and interests in copyrights, works
protectable by copyright, copyright registrations, and copyright applications; (b) all renewals of
any of the foregoing; (c) all licenses of the foregoing; and (d) the rights corresponding to the
use or sublicense of any of the foregoing throughout the world.



“Deposit Account Control Agreement” means an agreement, in form and substance
reasonably satisfactory to the Administrative Agent, among any Grantor, a Collateral Deposit
Account Bank and the Administrative Agent with respect to Control of the Collateral Deposit
Accounts listed therein and the disposition of funds on deposit in such Collateral Deposit
Accounts.



“Exhibit” refers to a specific exhibit to this Agreement (as amended or supplemented
from time to time in accordance with this Agreement or any Supplement), unless another document is
specifically referenced.



“Financing Statement” means, with respect to any Grantor, each UCC financing statement
naming the Administrative Agent as secured party and such Grantor as debtor and describing the
Collateral in a manner consistent with the requirements set forth in Section 4.01(b).



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


 


3









 






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



“Patents” means, with respect to any Person, all of such Person’s right, title and
interest in and to: (a) any and all patents and patent applications; (b) all inventions and
improvements described and claimed therein; (c) all reissues, divisions, continuations, renewals,
extensions and continuations-in-part thereof; (d) all licenses of the foregoing; and (e) all rights
corresponding to the use or sublicense of any of the foregoing throughout the world.




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



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




“Security Interest” has the meaning assigned to such term in Section 2.01.



“Specified L&W Grantors” means, collectively, each of L & W Supply Corporation, a
Delaware corporation, California Wholesale Material Supply, LLC, a Delaware limited liability
company, Livonia Building Materials, LLC, a Michigan limited liability company, and River City
Materials, Inc., an Arkansas corporation, in each case for so long as such entity is required to be
a Grantor hereunder.




“Supplement” shall have the meaning set forth in Section 8.14.



“Trademarks” means, with respect to any Person, all of such Person’s right, title and
interest in and to the following: (a) all trademarks (including service marks), trade names, trade
dress and trade styles and the registrations and applications for registration thereof; (b) all
licenses of the foregoing, whether as licensee or licensor; (c) all renewals of the foregoing; and
(d) all rights corresponding to the use or sublicense of any of the foregoing throughout the world.



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



ARTICLE II




GRANT OF SECURITY INTEREST




SECTION 2.01. Security Interest. As security for the payment or performance, as the
case may be, in full of the Secured Obligations, each Grantor hereby pledges, assigns and grants to
the Administrative Agent, its successors and permitted assigns, on behalf of and for the benefit of
the Secured Parties, a security interest in all of such Grantor’s right, title and interest in (a)
Accounts, and Proceeds in respect thereof, whether now owned by or owing to, or hereafter acquired
by or arising in favor of, such Grantor (including under any trade name or derivations thereof),
and regardless of where located, (b) Inventory, and Proceeds in respect thereof, whether now owned
by, or hereafter acquired by, such Grantor (including under any trade name or derivations thereof),
and regardless of where located, and (c) all Collateral Deposit Accounts of such
Grantor (all of the assets referenced in the immediately preceding clauses (a), (b) and (c),
and all such right, title and interest therein, are collectively referred to as the
“Collateral”; the security interest in the Collateral granted pursuant to this Section 2.01
is referred to as the “Security Interest”).


 


4









 





ARTICLE III




REPRESENTATIONS AND WARRANTIES





Each Grantor represents, warrants and covenants to and with the Secured Parties that:



SECTION 3.01. Title, Perfection and Priority. Such Grantor has good and valid rights
in or the power to transfer the Collateral and title to the Collateral with respect to which it has
purported to grant the Security Interest hereunder, free and clear of all Liens except for Liens
permitted under Section 4.01(g), and has full power and authority to grant to the Administrative
Agent, for the benefit of the Secured Parties, the Security Interest pursuant hereto and to
execute, deliver and perform its obligations in accordance with the terms of this Agreement,
without the consent or approval of any other Person other than any consent or approval that has
been obtained, except such consents or approvals the failure of which to have been obtained will
not impair the Security Interest. When a properly completed Financing Statement has been filed in
the appropriate office against such Grantor in the applicable location listed on Exhibit C
(or, in the case of any Grantor that becomes a party hereto after the Restatement Effective Date,
in the jurisdiction of organization of such Grantor specified in Schedule I to the Supplement for
such Grantor) and any applicable filing fees or taxes are paid in connection with such filing, the
Administrative Agent will have a fully perfected first priority security interest in that
Collateral of such Grantor in which a security interest may be perfected by filing a UCC financing
statement, subject only to Liens permitted under Section 4.01(g).



SECTION 3.02. Type and Jurisdiction of Organization, Organizational and Identification
Numbers. The type of entity of such Grantor, its state of organization, the organizational
number issued to it by its state of organization and its federal employer identification number are
set forth on Exhibit A.



SECTION 3.03. Principal Location. The location of such Grantor’s place of business
(if it has only one) or its chief executive office (if it has more than one place of business) is
disclosed in Exhibit A. In addition, such Grantor has no other places of business where
books and records with respect to the Collateral are maintained, except those set forth in
Exhibit A.



SECTION 3.04. Collateral Locations. All of such Grantor’s locations where Collateral
is located are listed on Exhibit A. All of said locations are owned by such Grantor except
for locations (a) which are leased by the Grantor as lessee and designated in Exhibit A and
(b) at which Inventory is held in a public warehouse or is otherwise held by a bailee or on
consignment as designated in Exhibit A.


 


5









 





SECTION 3.05. Deposit Accounts. Exhibit B sets forth a complete list of the
Collateral Deposit Accounts of such Grantor, including, with respect to each such Collateral
Deposit Account, each depositary institution’s name and location and such Grantor’s account number.



SECTION 3.06. Exact Names. Such Grantor’s name, as set forth on Exhibit A, is
the exact name as it appears in such Grantor’s organizational documents, as amended, as filed with
such Grantor’s jurisdiction of organization. Such Grantor has not, during the past two years prior
to the Restatement Effective Date, been known by or used any other corporate or fictitious name, or
been a party to any merger or consolidation, or been a party to any acquisition, in each case
except as otherwise specified in the Perfection Certificate or any certificate delivered to the
Administrative Agent pursuant to Section 4.01(f).



SECTION 3.07. Perfection Certificate. The Perfection Certificate has been duly
prepared, completed and executed by the Borrower and the information set forth therein with respect
to each Grantor is correct and complete as of the Restatement Effective Date, and the Financing
Statements (including any amendments thereto) prepared by the Administrative Agent based upon the
information provided to the Administrative Agent in the Perfection Certificate for filing in each
governmental, municipal or other office specified in Section 2(d) to the Perfection Certificate (or
specified by notice from the Borrower to the Administrative Agent after the Restatement Effective
Date in the case of filings, recordings or registrations required by Section 5.10 of the Credit
Agreement or Sections 4.01 and 4.06 hereof) are all the filings, recordings and registrations that
are necessary to perfect a security interest in favor of the Administrative Agent (for the benefit
of the Secured Parties) in respect of all the Collateral in which the Security Interest may be
perfected by filing, recording or registering in the U.S. (or any political subdivision thereof),
and no further or subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary in any such jurisdiction, except as provided under applicable law with
respect to the filing of continuation statements.



SECTION 3.08. Validity of Security Interest. The Security Interest constitutes a
legal and valid security interest in all the Collateral securing the payment and performance of the
Secured Obligations.



SECTION 3.09. Security Interest as Security Only. The Security Interest granted by
such Grantor is granted as security only and shall not subject the Administrative 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.



SECTION 3.10. Accounts. (a) The names of the Account Debtors, amounts owing, due
dates and other information with respect to such Grantor’s Accounts are and will be complete, true
and correct in all material respects in the records of such Grantor relating thereto and in all
invoices and Collateral Reports with respect thereto furnished to the Administrative Agent pursuant
to the Loan Documents from time to time. As of the time when each Account arises, such Grantor
shall be deemed to have
represented and warranted that such Account and all records relating thereto are genuine and
in all respects what they purport to be.


 


6









 





(b) In addition, with respect to all of its Accounts, except as disclosed in the most recent
Collateral Report, (i) the amounts shown on all invoices, statements and Collateral Reports with
respect thereto are actually and absolutely owing to such Grantor as indicated thereon and are not
in any way contingent (other than with respect to discounts, rebates, billing errors, setoffs,
counterclaims and other Dilution Factors); (ii) no payments have been or shall be made thereon
except payments delivered or to be delivered to a Collateral Deposit Account as required pursuant
to Section 7.01; and (iii) to such Grantor’s knowledge, all Account Debtors relating to such
Accounts have the capacity to contract.



SECTION 3.11. Inventory. With respect to any of its Inventory represented as being
Eligible Inventory on the most recent Collateral Report, (a) as of the last day of the period
covered by such Collateral Report, such Inventory (other than Inventory in transit) is located at
one of such Grantor’s locations set forth on Exhibit A and such Inventory (other than
Inventory in transit and other than Inventory that has subsequently been sold, transferred or
otherwise disposed of by such Grantor (other than to another Grantor) in the ordinary course of
business) shall not be stored at any other location except as permitted by Section 4.01(j), (b)
other than any Inventory that has subsequently been sold, transferred or otherwise disposed of by
such Grantor (other than to another Grantor) in the ordinary course of business, such Grantor has
good and merchantable title to such Inventory and such Inventory is not subject to any Lien, except
for Liens permitted by Section 4.01(g), (c) except as specifically disclosed in such Collateral
Report (or in any notification provided to the Administrative Agent subsequent to the last day of
the period covered by such Collateral Report in accordance with Section 5.01(i) of the Credit
Agreement), such Inventory (except for de minimis portions of such Inventory) is Eligible Inventory
of good and merchantable quality, free from any defects, (d) such Inventory is not subject to any
licensing, patent, royalty, trademark, trade name or copyright agreements with any third parties
which would require any consent of any third party upon sale or disposition of that Inventory or
the payment of any monies to any third party upon such sale or other disposition (other than any
such consent that has already been obtained or any such payment obligation that has already been
waived), (e) such Inventory has been produced in accordance with the Federal Fair Labor Standards
Act of 1938, as amended, and all rules, regulations and orders thereunder and (f) the preparation
for sale, marketing or sale of such Inventory by the Administrative Agent after the occurrence and
during the continuance of an Event of Default shall not require the consent of any Person (except
as required by applicable law) and shall not constitute a breach or default under any contract or
agreement to which such Grantor is a party or to which such Inventory is subject.



SECTION 3.12. Intellectual Property. Such Grantor owns, or is licensed to use, all
Patents, Trademarks, Copyrights or other Intellectual Property material to its business, and the
use thereof by such Grantor does not infringe upon the rights of any other Person, except for any
such infringements that, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect, and no such
Intellectual Property is subject to any Lien or other restriction (other than any such Lien or
other restriction with respect to which a waiver or release has been obtained) that would
materially interfere with the exercise of the Administrative Agent’s rights with respect to such
Intellectual Property to prepare for sale, market and sell any Eligible Inventory under Section
5.03.


 


7









 





SECTION 3.13. Filing Requirements. None of the Collateral owned by it is of a type
for which security interests or liens may be perfected by filing under any Federal statute.
Notwithstanding anything in any Loan Document to the contrary, the Administrative Agent agrees that
the Grantors shall not be required to make filings under the Assignment of Claims Act of 1940, 31
U.S.C. §3727 and 41 U.S.C. § 15.



SECTION 3.14. No Financing Statements, Security Agreements. No financing statement or
security agreement describing all or any portion of the Collateral which has not lapsed or been
terminated naming such Grantor as debtor has been filed or is of record in any jurisdiction except
(a) for the Financing Statements and (b) as permitted under Section 4.01(g).



ARTICLE IV




COVENANTS




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



SECTION 4.01. General. (a) Collateral Records. Such Grantor will maintain
books and records with respect to the Collateral owned by it in accordance Section 5.07 of the
Credit Agreement, and furnish to the Administrative Agent, with sufficient copies for each of the
Lenders, such reports relating to such Collateral as the Administrative Agent may from time to time
reasonably request.



(b) Authorization to File Financing Statements; Ratification. Such Grantor hereby
authorizes the Administrative Agent to file, and if requested will deliver to the Administrative
Agent, all Financing Statements and other documents and take such other actions as may from time to
time be reasonably requested by the Administrative Agent in order to maintain, subject to any Liens
permitted under Section 4.01(g), a first priority perfected security interest in and, if applicable
and contemplated by the terms hereof, Control of, the Collateral owned by such Grantor. Any
Financing Statement (or amendment thereto) filed by the Administrative Agent shall (i) indicate
such Grantor’s Collateral by any description that reasonably approximates the description of such
Collateral contained in this Agreement and (ii) contain any other information required by part 5 of
Article 9 of the UCC for the sufficiency or filing office acceptance of such Financing Statement
(or amendment thereto). Such Grantor agrees to furnish any such information to the Administrative
Agent promptly upon request. Such Grantor also ratifies its authorization for the Administrative
Agent to have filed any initial Financing Statements if filed prior to the Restatement Effective
Date.


 


8









 





(c) Further Assurances. Such Grantor agrees to take any and all actions that it
shall reasonably deem necessary to defend title to the Collateral against all persons and to defend
the Security Interest of the Administrative Agent in its Collateral and the priority thereof
against any Lien not expressly permitted under Section 4.01(g).



(d) Disposition of Collateral. Such Grantor will not sell, lease or otherwise
dispose of the Collateral owned by it except for dispositions not otherwise prohibited by
Section 6.03 of the Credit Agreement.



(e) Maintaining Perfection of Security Interest. Each Grantor agrees, at its own
expense, to execute, acknowledge, deliver and cause to be duly filed all such further instruments
and documents and take all such actions as the Administrative Agent may from time to time
reasonably request to preserve, protect and perfect the Security Interest and the rights and
remedies created hereby, including the payment of any fees and taxes required in connection with
the execution and delivery of this Agreement, the granting of the Security Interest and the filing
of any Financing Statements or other documents in connection herewith or therewith. If any amount
payable under or in connection with any of the Collateral shall be or become evidenced by any
promissory note or other instrument (other than any promissory note or other instrument in an
aggregate principal amount of less than $500,000 owed to the applicable Grantor by any Person that
is not the Borrower or any Subsidiary, provided that the aggregate principal amount of
promissory notes that may be excluded from the delivery requirements of this paragraph (e) may not
exceed $2,000,000 at any one time), such note or instrument shall be immediately pledged and
delivered to the Administrative Agent, duly endorsed in a manner satisfactory to the Administrative
Agent.



(f) Annual Confirmation of Perfection Certificate. Each year, at the time of
delivery of annual financial statements with respect to the preceding fiscal year pursuant to
Section 5.01(a) of the Credit Agreement, the Borrower shall deliver to the Administrative Agent a
certificate executed by a Financial Officer (i) setting forth any changes to the information
required pursuant to the Perfection Certificate, or confirming that there has been no change in
such information, in each case since the date of the Perfection Certificate or the date of the most
recent certificate delivered pursuant to this Section 4.01(f) and (ii) certifying that all initial
UCC financing statements or other appropriate filings, recordings or registrations, including all
refilings, rerecordings, reregistrations and amendments to the initial UCC financing statements,
containing a description of the Collateral have been filed of record in each governmental,
municipal or other appropriate office in the jurisdiction identified pursuant to Section 4.06 to
the extent necessary to protect and perfect the Security Interest as of the date of such
certificate.



(g) Liens. Such Grantor will not create, incur, or suffer to exist any Lien on the
Collateral owned by it except Liens permitted under clauses (i) through (iv), (vi) and (xi) of
Section 6.02 of the Credit Agreement.



(h) Other Financing Statements. Such Grantor will not authorize the filing of any
financing statement naming it as debtor covering all or any portion of the Collateral owned by it,
except with respect to any Lien permitted under Section 4.01(g).
Such Grantor acknowledges that it is not authorized to file (i) any financing statement with
respect to the Collateral, except with respect to any Lien permitted under Section 4.01(g), without
providing prior written notice to the Administrative Agent or (ii) any amendment or termination
statement with respect to any Financing Statement filed in accordance with the terms hereof without
the prior written consent of the Administrative Agent, subject to such Grantor’s rights under
Section 9-509(d)(2) of the UCC.


 


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(i) Compliance with Terms. Such Grantor shall observe, perform and comply with all
obligations in respect of the Collateral owned by it (in each case, in a manner consistent with
past business practices of such Grantor), unless the failure to observe, perform or comply with
such obligations would not adversely affect the validity, perfection and priority of the Security
Interest.



(j) Locations. Such Grantor will not maintain any Collateral owned by it at any
location other than those locations listed on Exhibit A (or any other location with respect
to which advance written notice has been provided as contemplated by Section 4.05).



SECTION 4.02. Accounts. (a) Certain Agreements on Accounts. No Grantor will
make or agree to make any discount, credit, rebate or other reduction in the original amount owing
on an Account or accept in satisfaction of an Account less than the original amount thereof, except
that, for so long as no Event of Default is continuing, such Grantor may reduce the amount owing on
Accounts arising from the sale of Inventory in accordance with its past business practices.



(b) Collection of Accounts. Except as otherwise provided in this Agreement, each
Grantor will, consistent with its past business practices, collect and enforce, at no expense to
any Secured Party, all amounts due or hereafter due to such Grantor under the Accounts owned by it.



(c) Security Interest in Property to Satisfy Account Debt. 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, such Grantor shall promptly assign such security
interest to the Administrative Agent. Such assignment need not be filed of public record unless
necessary to continue the perfected status of the security interest against creditors of and
transferees from the Account Debtor or other Person granting the security interest.



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



(e) Disclosure of Material Reductions in Accounts. Such Grantor, promptly upon
obtaining knowledge of any event, circumstance or change that has occurred since the most recent
date on which a Borrowing Base Certificate was required to be delivered pursuant to Section 5.01(e)
of the Credit Agreement that would materially
reduce the aggregate amount of Eligible Accounts or result in a material portion of the
Eligible Accounts ceasing to be Eligible Accounts, shall cause the Borrower to promptly disclose
such fact to the Administrative Agent in writing.


 


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SECTION 4.03. Inventory. (a) Maintenance of Goods. Such Grantor will
maintain, preserve, protect and keep its Inventory in a manner consistent with its past business
practices.



(b) Returned Inventory. If an Account Debtor returns any Inventory to such Grantor
when no Event of Default exists, then such Grantor shall promptly determine the reason for such
return and, if reasonably deemed appropriate by such Grantor, shall issue a credit memorandum to
the Account Debtor in the appropriate amount and in a manner consistent with its past business
practices. Such Grantor shall promptly report to the Administrative Agent any return of Inventory
involving an amount in excess of $2,000,000. Each such report shall indicate each applicable
Account Debtor’s stated reasons for the returns and the locations and condition of the returned
Inventory. In the event any Account Debtor returns Inventory to such Grantor when an Event of
Default exists, such Grantor, upon the request of the Administrative Agent, shall: (i) hold the
returned Inventory in trust for the Administrative Agent; (ii) segregate all returned Inventory
from all of its other property; (iii) dispose of the returned Inventory solely according to the
Administrative Agent’s written instructions; and (iv) not issue any credits or allowances with
respect thereto without the Administrative Agent’s prior written consent. All returned Inventory
shall be subject to the Administrative Agent’s Liens thereon. Whenever any Inventory is returned,
the related Account shall be deemed not to be an Eligible Account to the extent of the amount owing
by the Account Debtor with respect to such returned Inventory.



(c) Inventory Count; Perpetual Inventory System. Such Grantor will conduct cycle
counts of its Inventory in a manner consistent with past business practices and reasonably
acceptable to such Grantor’s auditors. Upon the request of the Administrative Agent in connection
with any field examination conducted in accordance with Section 5.07(b) of the Credit Agreement,
such Grantor, at its own expense, shall deliver to the Administrative Agent the results of each
physical verification which such Grantor has made, or has caused any other Person to make on its
behalf, of all or any portion of its Inventory. Such Grantor will maintain a perpetual inventory
reporting system at all times.



SECTION 4.04. Intellectual Property. Such Grantor will use commercially reasonable
efforts to secure all consents, waivers and approvals necessary or appropriate to ensure the
ability of the Administrative Agent to fully exercise the rights granted to it in Section 5.03.


 


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SECTION 4.05. Collateral Access Agreements. Such Grantor shall use commercially
reasonable efforts to obtain a Collateral Access Agreement from the lessor of each leased property,
mortgagee of each owned property and bailee, consignee or similar Person with respect to any
warehouse, processor or converter facility or other location, in each case where Collateral is or
is to be stored or located as of the
Restatement Effective Date or at any time thereafter, provided that (a) no Grantor
shall be required to obtain a Collateral Access Agreement with respect to any location at which the
Inventory on-hand has a book value of less than $100,000 and (b) in accordance with Section 5.11(b)
of the Credit Agreement, no Collateral Access Agreement shall be required to be in effect prior to
the Collateral Access Agreement Deadline. For purposes of clarity, it is understood and agreed
that any Grantor’s failure, after having used commercially reasonable efforts, to obtain a
Collateral Access Agreement with respect to any such location where Collateral is stored or located
shall not constitute an Event of Default. With respect to any such location where Inventory is
stored or located as of the Restatement Effective Date or at any time thereafter, if the
Administrative Agent has not received a Collateral Access Agreement with respect to such location,
the Borrower’s Eligible Inventory at such location shall be subject to such Reserves as may be
established by the Administrative Agent in accordance with the terms of the Credit Agreement. Such
Grantor shall provide to the Administrative Agent reasonable (but in no event less than three
Business Days’) advance written notice of (i) any arrangement or agreement entered into by such
Grantor to lease or mortgage real property or any warehouse or similar location at which Collateral
is to be stored or located, unless a Collateral Access Agreement that would cover such Collateral
is in effect with respect to such location and (ii) any arrangement or agreement to ship or
otherwise transfer any Collateral to any mortgaged or leased real property, or to any warehouse,
processor or converter facility or other location, in each case unless a Collateral Access
Agreement that would cover such Collateral is in effect with respect to such location, and such
Grantor shall provide to the Administrative Agent prompt written notice of the termination of any
such existing arrangement or agreement with respect to any location at which Collateral is stored
or located at the time of such termination. Not later than the last day of the calendar quarter
during which any arrangement, agreement or termination referenced in the immediately preceding
sentence is established or occurs, the Borrower shall deliver to the Administrative Agent a
supplement to Exhibit A, setting forth the information with respect to the locations
applicable to any such new arrangement or agreement required therein or indicating the termination
of any such arrangement or agreement, as the case may be. Such Grantor shall timely and fully pay
and perform its obligations under all leases and other agreements with respect to each location
where any Collateral is or may be stored or located.



SECTION 4.06. Change of Name or Location; Change of Fiscal Year. Such Grantor shall
not (a) change its name as it appears in official filings in the state of its incorporation or
organization, (b) change its chief executive office, principal place of business or corporate
offices, or the location of its records concerning the Collateral as set forth in the Security
Agreement, (c) change the type of entity that it is, (d) change its organization identification
number, if any, issued by its state of incorporation or other organization or (e) change its state
of incorporation or organization, in each case, unless the Administrative Agent shall have received
at least ten days prior written notice of such change and such Grantor (or the Administrative Agent
on behalf of such Grantor) shall have taken all action reasonably requested by the Administrative
Agent to continue the validity, perfection and priority of any Liens in favor of the Administrative
Agent, on behalf of the Secured Parties, in any Collateral, provided that any new
jurisdiction of organization shall be in the U.S., any State thereof or the District of Columbia.
In connection with any such change permitted under this Section 4.06, Exhibit A hereto
shall be deemed to be amended to reflect such change (effective as of the date of such change).


 


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ARTICLE V




REMEDIES




SECTION 5.01. Remedies. (a) Upon the occurrence, and during the continuance, of an
Event of Default, the Administrative Agent may exercise any or all of the following rights and
remedies:




(i) those rights and remedies provided in this Agreement, the Credit Agreement or any
other Loan Document, provided that this Section 5.01(a) shall not be understood to
limit any rights or remedies available to the Secured Parties prior to an Event of Default;




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




(iii) institute a Cash Dominion Period as per the terms of Section 7.03; and




(iv) without notice (except as specifically provided in Section 8.01 or elsewhere
herein), demand or advertisement of any kind to any Grantor or any other Person, enter the
premises of any Grantor where any Collateral is located (through self-help and without
judicial process) to collect, receive, assemble, process, appropriate, sell, lease, assign,
grant an option or options to purchase or otherwise dispose of, deliver or realize upon,
the Collateral or any part thereof in one or more parcels at public or private sale or
sales (which sales may be adjourned or continued from time to time with or without notice
and may take place at any Grantor’s premises or elsewhere), for cash, on credit or for
future delivery without assumption of any credit risk, and upon such other terms as the
Administrative Agent may deem commercially reasonable.



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



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


 


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



(e) Notwithstanding the foregoing, no Secured Party shall be required to (i) make any demand
upon, or pursue or exhaust any of their rights or remedies against, any Grantor, any other obligor,
guarantor, pledgor or any other Person with respect to the payment of the Secured Obligations or to
pursue or exhaust any of their rights or remedies with respect to any Collateral therefor or any
direct or indirect guarantee thereof, (ii) marshal the Collateral or any guarantee of the Secured
Obligations or resort to the Collateral or any such guarantee in any particular order or (iii)
effect a public sale of any Collateral.



SECTION 5.02. Grantor’s Obligations Upon an Event of Default. Without limiting the
foregoing or any other inspection rights the Administrative Agent may have under the Loan
Documents, upon the request of the Administrative Agent after the occurrence and during the
continuance of an Event of Default, each Grantor will:



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



(b) permit the Administrative Agent, by the Administrative Agent’s representatives and
agents, to enter, occupy and use any premises where all or any part of the Collateral, or the books
and records relating thereto, or both, are located, to take possession of and/or remove all or any
part of the Collateral or make copies of the books and records relating thereto, or both, and to
conduct sales of the Collateral in accordance with the terms hereof, any applicable Collateral
Access Agreements and applicable law, without any obligation to pay the Grantor for such use and
occupancy; and



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


 


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SECTION 5.03. Grant of Intellectual Property License. Solely for the purpose of
enabling, and solely to the extent necessary to enable, the Administrative Agent to exercise the
rights and remedies to prepare for sale, market and sell Inventory under this Article V at such
time as the Administrative Agent shall be lawfully entitled to exercise such rights and remedies,
each Grantor hereby (a) grants to the Administrative Agent, for the benefit of the Secured Parties,
an irrevocable, nonexclusive license
(exercisable without payment of royalty or other compensation to any Grantor) to use, license
or sublicense any Intellectual Property now owned or hereafter acquired by such Grantor, and
wherever the same may be located, and including in such license access to all media in which any of
the licensed items may be recorded or stored and to all computer software and programs used for the
compilation or printout thereof and (b) irrevocably agrees that the Administrative Agent may sell
any of such Grantor’s Inventory directly to any person, and, in connection with any such sale or
other enforcement of the Administrative Agent’s rights under this Agreement, may sell Inventory
which bears any Trademark owned by or licensed to such Grantor and any Inventory that is covered by
any Copyright owned by or licensed to such Grantor, and the Administrative Agent may finish any
work in process using any Patent (or other Intellectual Property) owned by or licensed to such
Grantor and affix any appropriate Trademark owned by or licensed to such Grantor and sell such
Inventory as provided herein. The use of such license by the Administrative Agent may be
exercised, at the option of the Administrative Agent, only upon the occurrence and during the
continuance of an Event of Default, provided that any license, sublicense or other
transaction entered into by the Administrative Agent in accordance herewith shall be binding upon
the Grantors notwithstanding any subsequent cure of such Event of Default. All actions taken by the
Administrative Agent pursuant to this Article V, as well as the Administrative Agent’s use of any
trade secrets or other Intellectual Property pursuant to this Agreement, shall be subject to the
confidentiality restrictions set forth in Section 9.12 of the Credit Agreement.



ARTICLE VI




ACCOUNT VERIFICATION; ATTORNEY IN FACT; PROXY




SECTION 6.01. Account Verification. The Administrative Agent may at any time, in the
name of the applicable Grantor or, after the occurrence, and during the continuance, of an Event of
Default, in the Administrative Agent’s own name or in the name of a nominee of the Administrative
Agent, communicate (by mail, telephone, facsimile or otherwise) with the Account Debtors of any
such Grantor to verify with such Account Debtors, to the Administrative Agent’s reasonable
satisfaction, any information relating to the existence, amount, terms of, and any other material
matter relating to, the Accounts of such Account Debtors.



SECTION 6.02. Authorization for Secured Party to Take Certain Action. (a) Each
Grantor hereby appoints the Administrative 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 Administrative Agent may reasonably deem necessary or advisable to accomplish
the purposes hereof, which appointment is irrevocable and coupled with an interest. Without
limiting the generality of the foregoing, the Administrative Agent shall have the right with full
power of substitution either in the name of such Grantor or, after the occurrence, and during the
continuance, of an Event of Default, in the Administrative Agent’s name, to (i) file Financing
Statements necessary or desirable in the Administrative Agent’s sole discretion to perfect and to
maintain the perfection and priority of the Administrative Agent’s security interest in the
Collateral, (ii) endorse and collect any cash proceeds of the
Collateral of such Grantor,
(iii) file a carbon, photographic or other reproduction of this
Agreement or any Financing


 


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Statement as a financing statement and to file any other financing statement or amendment of a
financing statement (which does not add new collateral or add a debtor) in such offices as the
Administrative Agent in its sole discretion deems necessary or desirable to perfect and to maintain
the perfection and priority of the Security Interest, (iv) apply the proceeds of any Collateral of
such Grantor received by the Administrative Agent to the Secured Obligations as provided in
Section 2.09(b) or Section 2.17(b) of the Credit Agreement, as applicable, (v) discharge past due
taxes, assessments, charges, fees or Liens on the Collateral (except for such Liens as are
specifically permitted under Section 4.01(g)), (vi) contact the Account Debtors of such Grantor for
any reason, (vii) demand payment or enforce payment of the Accounts in the name of the
Administrative Agent or such Grantor, (viii) endorse any and all checks, drafts and other
instruments for the payment of money relating to the Accounts, (ix) sign such Grantor’s name on any
invoice or bill of lading relating to the Accounts, drafts against any Account Debtor or
assignments and verifications of Accounts, (x) exercise all of such Grantor’s rights and remedies
with respect to the collection of the Accounts and any other Collateral, (xi) settle, adjust,
compromise, extend or renew the Accounts or any legal proceedings brought to collect Accounts,
(xii) prepare, file and sign such Grantor’s name on a proof of claim in bankruptcy or similar
document against any Account Debtor of such Grantor, (xiii) prepare, file and sign such Grantor’s
name on any notice of Lien, assignment or satisfaction of Lien or similar document in connection
with the Accounts, (xiv) change the address for delivery of mail relating to the Accounts of such
Grantor to such address as the Administrative Agent may designate and to receive, open and dispose
of all such mail addressed to such Grantor, (xv) use, sell, assign, transfer, pledge, make any
agreement with respect to or otherwise deal with all or any of the Collateral and (xvi) do all
other acts and things necessary to carry out the purposes of this Agreement, as fully and
completely as though the Administrative Agent were the absolute owner of the Collateral for all
purposes, provided that (A) nothing herein contained shall be construed as requiring or
obligating the Administrative Agent to make any commitment or to make any inquiry as to the nature
or sufficiency of any payment received by the Administrative 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 and such Grantor agrees to
reimburse the Administrative Agent on demand for any payment made or any expense incurred by the
Administrative Agent in connection with any of the foregoing and (B) this authorization shall not
relieve such Grantor of any of its obligations under this Agreement or under the Credit Agreement.
The Administrative 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 or wilful misconduct.
Notwithstanding the foregoing, if the Administrative Agent or a Secured Party determines (after
being given notice of such) that any portion of a payment from an Account Debtor received by it
constitutes the excess portion of a joint remittance from such Account Debtor (which such portion
was not owed to a Grantor but paid to the joint order of a Grantor and a non-Affiliated
contractor or sub-contractor in respect of an Account), the Administrative Agent or other
Secured Party, as applicable, shall promptly remit such excess portion of the payment to the
Grantors.


 


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(b) All acts of said attorney or designee are hereby ratified and approved. The powers
conferred on the Administrative Agent, for the benefit of the Secured Parties, under this
Section 6.02 are solely to protect the Administrative Agent’s interests in the Collateral and shall
not impose any duty upon the Administrative Agent or any other Secured Party to exercise any such
powers. The Administrative Agent agrees that, except for the powers granted in
Sections 6.02(a)(i), (a)(iii) or (a)(v), it shall not exercise any power or authority granted to it
unless an Event of Default has occurred and is continuing, provided, however, that
the Administrative Agent may exercise the powers granted in Sections 6.02(a)(ii), (a)(iv) and
(a)(viii) at any time during the continuance of a Cash Dominion Period.



ARTICLE VII




COLLECTION AND APPLICATION OF COLLATERAL PROCEEDS; DEPOSIT ACCOUNTS




SECTION 7.01. Collection of Accounts. (a) Each Grantor shall execute and deliver to
the Administrative Agent (no later than the date (the “Control Agreement Deadline”)
specified in, or determined in accordance with, Section 5.11(a) of the Credit Agreement) Deposit
Account Control Agreements for each Collateral Deposit Account maintained by such Grantor as of the
Restatement Effective Date. After the Restatement Effective Date, each Grantor will comply with
the terms of Section 7.02.



(b) Within 45 days after the Restatement Effective Date, each Grantor shall direct all of its
Account Debtors to forward payments directly to one or more of the Collateral Deposit Accounts of
such Grantor; provided, however, that with respect to the Account Debtors of the
Specified L&W Grantors, the Specified L&W Grantors shall not be required to so direct such Account
Debtors (and, accordingly, shall not be deemed to have breached this Section 7.01(b)) so long as
the Specified L&W Grantors each deposit any cash, checks or other similar payments constituting
payments made with respect to any Account of such Account Debtors into a Collateral Deposit Account
in accordance with the last sentence of this Section 7.01(b). If any Grantor (other than a
Specified L&W Grantor) should refuse or neglect to notify any Account Debtor to forward payments
with respect to such Account Debtor’s Accounts directly to a Collateral Deposit Account following
its receipt of a written request to do so from the Administrative Agent, the Administrative Agent
shall, notwithstanding the language set forth in Section 6.02(b), be entitled to make such
notification directly to Account Debtor. If notwithstanding the foregoing instructions, any
Grantor receives any cash, checks or other similar payments constituting payments made with respect
to any Account, such Grantor shall receive such cash, checks or other similar payments as the
Administrative Agent’s trustee and shall promptly (but in no event later than two Business Days
after receipt thereof) deposit all such cash, checks or other similar payments into a Collateral
Deposit Account.


 


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SECTION 7.02. Covenant Regarding New Deposit Accounts. (a) No Grantor may open a
Collateral Deposit Account unless the bank or financial institution at which such Grantor seeks to
open such Collateral Deposit Account has entered into a Deposit Account Control Agreement in order
to give the Administrative Agent Control of such Collateral Deposit Account, provided that
(a) no such Deposit Account Control Agreement will be required to be effective prior to the Control
Agreement Deadline and (b) after the Control Agreement Deadline, the Administrative Agent may, in
its discretion, with respect to the Collateral Deposit Accounts of any Collateral Deposit Account
Bank that is not subject to a Deposit Account Control Agreement, (i) defer delivery of a Deposit
Account Control Agreement with respect to such Collateral Deposit Accounts and (ii) require such
Grantor to replace such Collateral Deposit Accounts with one or more new Collateral Deposit
Accounts opened and maintained with a bank or financial institution that is subject to an existing
Deposit Account Control Agreement (it being understood and agreed that, prior to the opening of
such new Collateral Deposit Accounts referenced in the immediately preceding clause (ii) (but only
after the Control Agreement Deadline), the Administrative Agent shall be entitled to establish a
Reserve with respect to those Collateral Deposit Account referenced in the immediately preceding
clause (i) for which a Deposit Account Control Agreement has not yet been executed and delivered).



(b) Promptly following a Grantor’s opening of any new Collateral Deposit Account in
accordance with this Section 7.02 or such Grantor’s closing of a Collateral Deposit Account, but in
each case no later than the end of the calendar quarter during which such Collateral Deposit
Account is opened or closed, as the case may be, the Borrower shall deliver to the Administrative
Agent a supplement to Exhibit B, setting forth the applicable information with respect to
such new Collateral Deposit Account required therein or indicating the closing of such Collateral
Deposit Account, as the case may be.



(c) In the case that any Grantor opens an additional Collateral Deposit Account with a
Collateral Deposit Account Bank that is already party to a Deposit Account Control Agreement or
such Grantor transfers or otherwise assigns any Collateral Deposit Account subject to an existing
Deposit Account Control Agreement to a different Grantor party to such Deposit Account Control
Agreement, the Borrower shall promptly notify the Administrative Agent thereof and the
Administrative Agent shall have the authority to enter into, on behalf of itself and the applicable
Grantor or Grantors, an amendment, supplement or other modification to such Deposit Account Control
Agreement to reflect the addition or change in ownership, as the case may be, of such Collateral
Deposit Account for the purpose of ensuring that such Collateral Deposit Account is subject to the
control arrangement evidenced thereby.



(d) In the case of Collateral Deposit Accounts maintained with any Lender, the terms of each
Deposit Account Control Agreement entered into with such Lender shall be subject to the provisions
of the Credit Agreement regarding setoff.


 


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SECTION 7.03. Cash Dominion Periods; Application of Proceeds. (a) Pursuant to each
Deposit Account Control Agreement entered into pursuant to
Section 7.01 or 7.02, the Administrative Agent shall have Control of the relevant Collateral
Deposit Account. The applicable Grantor may operate and transact business through its Collateral
Deposit Accounts in its normal fashion at all times (except as provided below), including making
withdrawals (whether via wire transfer, ACH transfer, check or otherwise), provided that
(i) upon the commencement and during the continuation of any Cash Dominion Period, the
Administrative Agent may (A) send a notice (a “Cash Dominion Period Notice”) to each
Collateral Deposit Account Bank instructing such Collateral Deposit Bank to cease complying with
any instructions originated by the applicable Grantor regarding the disposition of funds in the
related Collateral Deposit Account and to begin complying with instructions originated by the
Administrative Agent directing the sweep of available funds from the applicable Collateral Deposit
Account on a daily basis into a collection account maintained by the Borrower with the
Administrative Agent (such account, the “Collection Account”), without further consent of
the applicable Grantor and subject to the terms of the applicable Deposit Account Control Agreement
and (B) apply (and allocate) the funds in the Collection Account in accordance with Section 2.09(b)
or Section 2.17(b) of the Credit Agreement, as applicable, and (ii) except as otherwise provided
below, upon the termination of each Cash Dominion Period (the timing of such termination to be
determined by reference to the definition of the term “Cash Dominion Period” set forth in Section
1.03), the Administrative Agent shall send a notice to each Collateral Deposit Account Bank (a
“Cash Dominion Termination Notice”) terminating such Cash Dominion Period and commencing a
period (each such period, a “Cash Dominion Termination Period”) in which each Grantor may
again transact business through each Collateral Deposit Account in its normal fashion, including
making withdrawals from each Collateral Deposit Account (whether via wire transfer, ACH transfer,
check or otherwise); provided, however, that following (x) the commencement of the
first Cash Dominion Period occurring during the second Cash Dominion Termination Period, (y) the
termination of the Revolving Commitments as contemplated by Article VII of the Credit Agreement or
(z) a declaration, as contemplated by Article VII of the Credit Agreement, that the outstanding
Loans have become due and payable, the Administrative Agent shall not be required to give any
further Cash Dominion Termination Notices and shall be entitled to permanently maintain such Cash
Dominion Period and exercise the rights attendant thereto as set forth above.



(b) All amounts deposited in the Collection Account pursuant to this Section 7.03 shall be
deemed received by the Administrative Agent for purposes of Section 2.17(b) of the Credit
Agreement, provided that, notwithstanding the foregoing, if the Administrative Agent or a
Secured Party determines (after being given notice of such) that any portion of a payment from an
Account Debtor received by it constitutes the excess portion of a joint remittance from such
Account Debtor (which such portion was not owed to a Grantor but paid to the joint order of a
Grantor and a non-Affiliated contractor or sub-contractor in respect of an Account), the
Administrative Agent or other Secured Party, as applicable, shall promptly remit such excess
portion of the payment to the Grantors. The balance, if any, in the Collection Account after all
the Secured Obligations on any day during a Cash Dominion Period have been satisfied shall be
deposited by the Administrative Agent into the Borrower’s general operating account as instructed
by the Borrower. If, at the time any Cash Dominion Termination Period
commences, the Collection Account has a balance, such balance shall be deposited by the
Administrative Agent into the Borrower’s general operating account as instructed by the Borrower.


 


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(c) To the extent that the terms of any Deposit Account Control Agreement are inconsistent
with the terms of this Section 7.03 with respect to the rights of the Administrative Agent and the
Grantors, the terms of this Section 7.03 shall control.



ARTICLE VIII




GENERAL PROVISIONS




SECTION 8.01. Waivers. Each Grantor hereby waives notice of the time and place of any
public sale or the time after which any private sale or other disposition of all or any part of the
Collateral may be made. To the extent such notice may not be waived under applicable law, any
notice made shall be deemed reasonable if sent to the Grantors, addressed as set forth in Article
IX, at least ten (10) days prior to (a) the date of any such public sale or (b) the time after
which any such private sale or other disposition may be made. To the maximum extent permitted by
applicable law, each Grantor waives all claims, damages and demands against any Secured Party
arising out of the repossession, retention or sale of the Collateral, except as may arise solely
out of the gross negligence or wilful misconduct of such Secured Party as finally determined by a
court of competent jurisdiction. To the extent it may lawfully do so, each Grantor absolutely and
irrevocably waives and relinquishes the benefit and advantage of, and covenants not to assert
against any Secured Party, any valuation, stay, appraisal, extension, moratorium, redemption or
similar laws and any and all rights or defenses it may have as a surety now or hereafter existing
which, but for this provision, might be applicable to the sale of any Collateral made under the
judgment, order or decree of any court, or privately under the power of sale conferred by this
Agreement, or otherwise. Except as otherwise specifically provided herein, each Grantor hereby
waives presentment, demand, protest or any notice (to the maximum extent permitted by applicable
law) of any kind in connection with this Agreement or any Collateral.



SECTION 8.02. Limitation on Administrative Agent’s and Lenders’ Duty with Respect to the
Collateral. Except as imposed under applicable law, no Secured Party shall have any other duty
as to any Collateral in its possession or control or in the possession or control of any agent or
nominee of such Secured Party, or any income thereon or as to the preservation of rights against
prior parties or any other rights pertaining thereto. To the extent that applicable law imposes
duties on the Administrative Agent to exercise remedies in a commercially reasonable manner, each
Grantor acknowledges and agrees that it is commercially reasonable for the Administrative Agent (a)
to fail to incur expenses deemed significant by the Administrative Agent to prepare Collateral for
disposition or otherwise to transform raw material or work in process into finished goods or other
finished products for disposition, (b) to obtain or, if not required by other law, to fail to
obtain governmental or third party consents for the collection or disposition of Collateral to be
collected or disposed of, (c) to fail to exercise collection remedies against Account Debtors or
other Persons obligated on Collateral or to remove Liens on or any adverse claims against Collateral,


 


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(d) to exercise collection remedies against
Account Debtors and other Persons obligated on Collateral directly or through the use of collection
agencies and other collection specialists, (e) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the Collateral is of a specialized
nature, (f) to contact other Persons, whether or not in the same business as such Grantor, for
expressions of interest in acquiring all or any portion of such Collateral, (g) to hire one or more
professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral
is of a specialized nature, (h) to dispose of Collateral by utilizing internet sites that provide
for the auction of assets of the types included in the Collateral or that have the reasonable
capacity of doing so, or that match buyers and sellers of assets, (i) to dispose of assets in
wholesale rather than retail markets, (j) to disclaim disposition warranties, such as title,
possession or quiet enjoyment, (k) to purchase insurance or credit enhancements to insure the
Administrative Agent against risks of loss, collection or disposition of Collateral or to provide
to the Administrative Agent a guaranteed return from the collection or disposition of Collateral,
or (l) to the extent deemed appropriate by the Administrative Agent, to obtain the services of
other brokers, investment bankers, consultants and other professionals to assist the Administrative
Agent in the collection or disposition of any of the Collateral. Each Grantor acknowledges that
the purpose of this Section 8.02 is to provide non-exhaustive indications of what actions or
omissions by the Administrative Agent would be commercially reasonable in the Administrative
Agent’s exercise of remedies against the Collateral and that other actions or omissions by the
Administrative Agent shall not be deemed commercially unreasonable solely on account of not being
indicated in this Section 8.02. Without limitation upon the foregoing, nothing contained in this
Section 8.02 shall be construed to grant any rights to any Grantor or to impose any duties on the
Administrative Agent that would not have been granted or imposed by this Agreement or by applicable
law in the absence of this Section 8.02.



SECTION 8.03. Compromises and Collection of Collateral. The Grantors and the
Administrative Agent recognize that setoffs, counterclaims, defenses and other claims may be
asserted by obligors with respect to certain of the Accounts, that certain of the Accounts may be
or become uncollectible in whole or in part and that the expense and probability of success in
litigating a disputed Account may exceed the amount that reasonably may be expected to be recovered
with respect to an Account. In view of the foregoing, each Grantor agrees that the Administrative
Agent may at any time and from time to time, if an Event of Default has occurred and is continuing,
and subject to applicable law, compromise with the obligor on any Account, accept in full payment
of any Account such amount as the Administrative Agent in its sole discretion shall determine or
abandon any Account, and any such action by the Administrative Agent shall be commercially
reasonable so long as the Administrative Agent acts in good faith based on information known to it
at the time it takes any such action.



SECTION 8.04. Secured Party Performance of Debtor Obligations. Without having any
obligation to do so, and, except after the occurrence and during the continuance of an Event of
Default, after having made a request of a Grantor to do so and the Grantor having not complied with
such request to do so as promptly as practicable after receipt of such request, the Administrative
Agent may perform or pay any obligation
which any Grantor has agreed to perform or pay in this Agreement and the Grantors shall
reimburse the Administrative Agent for any amounts paid by the Administrative Agent pursuant to
this Section 8.04. The Grantors’ obligation to reimburse the Administrative Agent pursuant to the
preceding sentence shall be a Secured Obligation payable on demand.


 


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SECTION 8.05. Specific Performance of Certain Covenants. Each Grantor acknowledges
and agrees that a breach of any of the covenants contained in Sections 4.01(d), 4.01(e), 4.01(g),
4.05, 4.06, 5.02, or 8.07 or in Article VII will cause irreparable injury to the Secured Parties,
that the Secured Parties have no adequate remedy at law in respect of such breaches and therefore
agrees, without limiting the right of the Secured Parties to seek and obtain specific performance
of other obligations of the Grantors contained in this Agreement, that the covenants of the
Grantors contained in the Sections referred to in this Section 8.05 shall be specifically
enforceable against the Grantors.



SECTION 8.06. Dispositions Not Authorized. No Grantor is authorized to sell or
otherwise dispose of the Collateral except as set forth in Section 4.01(d) and notwithstanding any
course of dealing between any Grantor and the Administrative Agent or other conduct of the
Administrative Agent, no authorization to sell or otherwise dispose of the Collateral (except as
set forth in Section 4.01(d)) shall be binding upon the Secured Parties unless such authorization
is in writing signed by the Administrative Agent.



SECTION 8.07. No Waiver; Amendments; Cumulative Remedies. No failure, delay or
omission of any Secured Party to exercise any right or remedy granted under this Agreement shall
impair such right or remedy or be construed to be a waiver of any Default or an acquiescence
therein, and any single or partial exercise of any such right or remedy shall not preclude any
other or further exercise thereof or the exercise of any other right or remedy. No waiver,
amendment or other variation of the terms, conditions or provisions of this Agreement whatsoever
shall be valid unless in writing signed by the Administrative Agent with the concurrence or at the
direction of the Lenders required under Section 9.02 of the Credit Agreement and then only to the
extent in such writing specifically set forth. All rights and remedies contained in this Agreement
or by law afforded shall be cumulative and all shall be available to the Secured Parties until the
Secured Obligations have been paid and performed in full.



SECTION 8.08. Limitation by Law; Severability of Provisions. All rights, remedies and
powers provided in this Agreement may be exercised only to the extent that the exercise thereof
does not violate any applicable provision of law, and all the provisions of this Agreement are
intended to be subject to all applicable mandatory provisions of law that may be controlling and to
be limited to the extent necessary so that they shall not render this Agreement invalid,
unenforceable, illegal or not entitled to be recorded or registered, in whole or in part. Any
provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the
invalidity of a particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction.


 


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SECTION 8.09. Reinstatement. This Agreement shall remain in full force and effect and
continue to be effective should any petition be filed by or against any Grantor for liquidation or
reorganization, should any Grantor become insolvent or make an assignment for the benefit of any
creditor or creditors or should a receiver or trustee be appointed for all or any significant part
of any Grantor’s assets, and shall continue to be effective or be reinstated, as the case may be,
if at any time payment and performance of the Secured Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or
returned by any obligee of the Secured Obligations, whether as a “voidable preference”, “fraudulent
conveyance” or otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the
Secured Obligations shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.



SECTION 8.10. Benefit of Agreement. The terms and provisions of this Agreement shall
be binding upon and inure to the benefit of the Grantors, the Secured Parties and their respective
successors and assigns (including all persons who become bound as a debtor to this Agreement),
except that no Grantor shall have the right to assign its rights or delegate its obligations under
this Agreement or any interest herein, without the prior written consent of the Administrative
Agent. No sales of participations, assignments, transfers or other dispositions of any agreement
governing the Secured Obligations or any portion thereof or interest therein shall in any manner
impair the Lien granted to the Administrative Agent, for the benefit of the Secured Parties.



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



SECTION 8.12. Headings. The title of and section headings in this Agreement are for
convenience of reference only, and shall not govern the interpretation of any of the terms and
provisions of this Agreement.



SECTION 8.13. Termination. (a) Subject to Section 8.09, this Agreement shall
continue in effect (notwithstanding the fact that from time to time there may be no Secured
Obligations outstanding) until (i) the Credit Agreement has terminated pursuant to its express
terms and (ii) all of the Obligations (as distinguished from the Secured Obligations) have been
paid and performed in full and no commitments of the Administrative Agent or the Lenders which
would give rise to any Obligations are outstanding.



(b) A Grantor shall automatically be released from its obligations hereunder and the Security
Interest in the Collateral of such Grantor shall be automatically released upon the consummation of
any transaction permitted by, or that would not otherwise result in a Default under, the Credit
Agreement as a result of which
such Grantor ceases to be a wholly-owned Subsidiary, provided that the Required
Lenders shall have consented to such transaction (to the extent required by the Credit Agreement)
and the terms of such consent did not provide otherwise.


 


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(c) Upon any sale or other transfer by any Grantor of any Collateral that is permitted under
the Credit Agreement (other than a sale or other transfer to a Grantor), or upon the effectiveness
of any written consent to the release of the Security Interest granted hereby in any Collateral
pursuant to Section 9.02 of the Credit Agreement, the Security Interest in such Collateral shall be
automatically released.



(d) In connection with any termination or release pursuant to paragraph (a), (b) or (c) of
this Section 8.13, the Administrative Agent shall (i) execute and deliver to any Grantor, at such
Grantor’s expense, all documents that such Grantor shall reasonably request to evidence such
termination or release and (ii) with respect to any Collateral Deposit Account of any Grantor that
is so released from its obligations hereunder, deliver to each Collateral Deposit Account Bank that
has entered into a Deposit Account Control Agreement with respect to the Collateral Deposit
Accounts of such Grantor a written notice of termination of each such Deposit Account Control
Agreement in accordance with the terms of such Deposit Account Control Agreement. The
Administrative Agent hereby consents to the applicable Grantor filing all UCC termination
statements corresponding to any Collateral that is so released if the Administrative Agent has
failed to file such UCC termination statements within 5 Business Days of notice of such release
delivered by such Grantor to the Administrative Agent. Any execution and delivery of documents
pursuant to this Section 8.13 shall be without recourse to or warranty by the Administrative Agent.



SECTION 8.14. Additional Subsidiaries. Pursuant to the Credit Agreement, certain
Domestic Material Subsidiaries that were not in existence or not Domestic Material Subsidiaries as
of the Restatement Effective Date (as well as certain other Domestic Subsidiaries specified by the
Borrower) are required to enter into this Agreement as a Grantor upon becoming such a Domestic
Material Subsidiary (or upon such designation). Upon execution and delivery by the Administrative
Agent and a Subsidiary of an instrument in the form of Exhibit D hereto (each such
instrument, a “Supplement”), such Subsidiary shall become a Grantor hereunder with the same
force and effect as if originally named as a Grantor herein. The execution and delivery of any
such Supplement 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 8.15. Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender and each of their respective Affiliates is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final, in whatever currency) at any
time held and other obligations (in whatever currency) at any time owing by such Lender or any such
Affiliate to or for the credit or the account of any Grantor against any of and all obligations of
such Grantor now or hereafter existing under this Agreement held by such Lender, irrespective of
whether or not such
Lender shall have made any demand hereunder and although such obligations may be unmatured or
are owed to a branch or office of such Lender different from the branch or office holding such
deposit or obligation. The applicable Lender shall notify the Borrower and the Administrative
Agent of such set-off or application, provided that any failure to give or any delay in
giving such notice shall not affect the validity of any such set-off or application under this
Section 8.15. The rights of each Lender under this Section 8.15 are in addition to other rights
and remedies (including other rights of setoff) which such Lender may have.


 


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SECTION 8.16. Lien Absolute. All rights of the Administrative Agent hereunder, and
all obligations of each Grantor hereunder, shall be absolute and unconditional irrespective of:



(a) any lack of validity or enforceability of the Credit Agreement, any other Loan Document
or any other agreement or instrument governing or evidencing any Secured Obligations;



(b) any change in the time, manner or place of payment of, or in any other term of, all or
any part of the Secured Obligations, or any other amendment or waiver of or any consent to any
departure from the Credit Agreement, any other Loan Document or any other agreement or instrument
governing or evidencing any Secured Obligations;



(c) any exchange, release or non-perfection of any other Collateral, or any release or
amendment or waiver of or consent to departure from any guaranty, for all or any of the Secured
Obligations;




(d) the insolvency of any Person; or



(e) any other circumstance which might otherwise constitute a defense available to, or a
discharge of, any Grantor.



SECTION 8.17. Release. Each Grantor consents and agrees that the Administrative Agent
may at any time, or from time to time, in its discretion:



(a) as contemplated by the Credit Agreement and in conformance therewith, renew, extend or
change the time of payment, and/or the manner, place or terms of payment, of all or any part of the
Secured Obligations; and



(b) exchange, release and/or surrender all or any of the Collateral or any part thereof, by
whomsoever deposited, which is now or may hereafter be held by the Administrative Agent in
connection with all or any of the Secured Obligations; all in such manner and upon such terms as
the Administrative Agent may deem proper, and without notice to or further assent from any Grantor,
it being hereby agreed that each Grantor shall be and remain bound upon this Agreement,
irrespective of the value or condition of any of the Collateral, and notwithstanding any such
change, exchange, settlement, compromise, surrender, release, renewal or extension, and
notwithstanding also that the Secured Obligations may, at any time, exceed the aggregate principal
amount thereof set
forth in the Credit Agreement, or any other agreement governing any Secured Obligations.


 


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SECTION 8.18. Entire Agreement. This Agreement and the other Loan Documents embody
the entire agreement and understanding between the Grantors and the Administrative Agent relating
to the Collateral and supersede all prior agreements and understandings between the Grantors and
the Administrative Agent relating to the Collateral.




SECTION 8.19. Governing Law; Jurisdiction; Consent to Service of Process.



(a) This Agreement shall be construed in accordance with and governed by the law of the State
of New York.



(b) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and
its property, to the exclusive jurisdiction of the Supreme Court of the State of New York sitting
in New York County and of the United States District Court of the Southern District of New York,
and any appellate court from any thereof, in any action or proceeding arising out of or relating to
this Agreement or any other Loan Document, or for recognition or enforcement of any judgment, and
each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect
of any such action or proceeding may be heard and determined in such New York State or, to the
extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.



(c) Each of the parties hereto 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 any other Loan Document in any court referred to in paragraph (b) of this Section 8.19. Each of
the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any such court.



(d) Each party to this Agreement irrevocably consents to service of process in the manner
provided for notices in Section 9.01. Nothing in this Agreement or any other Loan Document will
affect the right of any party to this Agreement to serve process in any other manner permitted by
law.



SECTION 8.20. 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 ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.20.


 


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SECTION 8.21. Taxes and Expenses; Indemnity. (a) Any taxes (including income taxes
but excluding any Excluded Taxes) payable or ruled payable by Federal or State authority in respect
of this Agreement shall be paid by the Grantors, together with interest and penalties, if any. The
parties hereto agree that the Administrative Agent and each of the other Secured Parties shall be
entitled to reimbursement of its reasonable expenses incurred hereunder as provided in and subject
to the limitations set forth in Section 9.03(a) of the Credit Agreement.



(b) Without limitation of any of its indemnification obligations under the other Loan
Documents, each Grantor shall, jointly and severally with each other Grantor, indemnify each
Indemnitee against, and hold each Indemnitee harmless from, any and all out-of-pocket losses,
claims, damages, liabilities and related reasonable expenses, including the reasonable fees,
charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any
Indemnitee by any third party or by any Grantor arising out of, in connection with, or as a result
of (i) the execution and delivery of this Agreement or any other agreement or instrument
contemplated hereby, the performance by the parties hereto of their respective obligations
hereunder or the consummation of any transactions contemplated hereby or (ii) any actual or
prospective claim, litigation, investigation or proceeding relating to any of the foregoing or to
the Collateral, whether based on contract, tort or any other theory, whether brought by a third
party or by any Grantor and regardless of whether any Indemnitee is a party thereto,
provided that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses are determined by a court of
competent jurisdiction by final judgment to have resulted from the gross negligence or wilful
misconduct of such Indemnitee.



(c) Any amounts payable pursuant to this Section 8.21 shall be additional Secured Obligations
secured hereby and by the other Collateral Documents. The provisions of this Section 8.21 shall
remain operative and in full force and effect regardless of the termination of this Agreement or
any other Loan Document, the consummation of the transactions contemplated hereby, the repayment of
any of the Secured Obligations, the invalidity or unenforceability of any term or provision of this
Agreement or any other Loan Document or any investigation made by or on behalf of the
Administrative Agent or any other Secured Party. All amounts due under this Section 8.21 shall be
payable not later than three Business Days after written demand therefor setting forth the basis
for such claim in reasonable detail.


 


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SECTION 8.22. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and any of the parties
hereto may execute this Agreement by signing any such counterpart. Delivery of an executed
signature page to this Agreement by facsimile or other electronic transmission (including Adobe PDF
file) shall be as effective as delivery of a manually signed counterpart of this Agreement.



ARTICLE IX




NOTICES




SECTION 9.01. Sending Notices. Any notice required or permitted to be given under
this Agreement shall be made in accordance with, and deemed to be received pursuant to the terms
of, Section 9.01 of the Credit Agreement, in each case addressed to the Borrower (with respect to
notices to any Grantor) and to the Administrative Agent and the Lenders at the addresses set forth
in accordance with Section 9.01 of the Credit Agreement.



ARTICLE X




THE ADMINISTRATIVE AGENT




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



[Signature Page Follows]





 


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



	 	 	 	 	 
	 	USG CORPORATION,

 	 
	 	By:  	/s/ Karen L. Leets
 	 
	 	 	Name:  	Karen L. Leets 	 
	 	 	Title:  	Vice President and
Treasurer 	 
	 
	 	EACH OF THE SUBSIDIARIES LISTED ON SCHEDULE I HERETO,

 	 
	 	By:  	/s/ Karen L. Leets
 	 
	 	 	Name:  	Karen L. Leets 	 
	 	 	Title:  	In the capacity listed on Schedule I corresponding to
such Subsidiary 	 
	 
	 	JPMORGAN CHASE BANK, N.A., as

Administrative Agent

 	 
	 	By:  	/s/ Peter S. Predun
 	 
	 	 	Name:  	Peter S. Predun 	 
	 	 	Title:  	Executive Director