Document:

Exhibit 4.3

SECOND AMENDED AND RESTATED PLEDGE AGREEMENT

This SECOND AMENDED AND RESTATED  PLEDGE AGREEMENT (as amended, amended and restated or
otherwise modified from time to time, herein called this “Agreement”)
is dated as of June 14, 2006 between OWENS-ILLINOIS GROUP, INC.,
a Delaware corporation (“Company”)
and OWENS-BROCKWAY PACKAGING, INC.,
a Delaware corporation (“Packaging”)
(each a “Pledgor” and collectively, the “Pledgors”), DEUTSCHE
BANK TRUST COMPANY  AMERICAS (“DBTCA”), as Collateral Agent (in such
capacity herein called the “Collateral Agent”)
for the Lenders (as hereinafter defined), the trustees under the Existing
Holdings Senior Notes Indentures (as hereinafter defined) (each, including any
successor, an “Existing Holdings Senior Notes
Trustee” and collectively, the “Existing
Holdings Senior Notes Trustees”), the Other Permitted Credit
Exposure Holders (as hereinafter defined), the New Senior Debt Representatives
(as hereinafter defined) including the trustees for the several series of
Existing Owens-Brockway Senior Secured Notes (each, an “Existing Owens-Brockway Senior Secured Notes Trustee”
and collectively, the “Existing
Owens-Brockway Senior Secured Notes Trustees”), the Refinancing
Senior Debt Representatives (as hereinafter defined) and the New Junior Debt
Representatives (as hereinafter defined). Initially capitalized terms used
herein without definition are defined in the Credit Agreement (as hereinafter
defined).

R E C I T A L S

1.             Certain lenders entered into a
Secured Credit Agreement dated as of April 23, 2001 (as amended through
the fourth amendment thereto, the “Original
Credit Agreement”) with Company and certain of its subsidiaries.

2.             In connection with the Original
Credit Agreement, the prior lender agent and Collateral Agent executed a
certain Intercreditor Agreement dated as of April 23, 2001 (as amended
through the first amendment thereto and as supplemented by various
acknowledgments thereto, the “Original
Intercreditor Agreement”) and the Pledgors and Collateral Agent executed
a certain Pledge Agreement dated as of April 23, 2001 (as amended through
the first amendment thereto, the “Original
Pledge Agreement”).

3.             After the execution of the Original
Pledge Agreement, Owens-Brockway issued the following series of senior secured
notes constituting New Senior Debt under the Original Credit Agreement and the
Original Intercreditor Agreement (collectively, the “Existing
Owens-Brockway Senior Secured Notes”): the 8 7/8% Senior Secured
Notes due 2009 in the original aggregate principal amount of $1,000,000,000,
the 7 3/4% Senior Secured Notes due 2011 in the original aggregate principal
amount of $450,000,000 and the 8 3/4% Senior Secured Notes due 2012 in the
original aggregate principal amount of $625,000,000. In connection with such
issuances, the Existing Owens-Brockway Senior Secured Notes Trustees, as New
Senior Debt Representatives, executed acknowledgments to the Original
Intercreditor Agreement, which acknowledgments were acknowledged by Borrowers’
Agent and delivered to Collateral Agent, and by virtue of such execution,
acknowledgment and delivery, the obligations in respect of the Existing
Owens-Brockway Senior Secured Notes became secured by the Original Pledge
Agreement as and to the extent set forth therein and, in the case of those
certain 8 3/4% Owens-Brockway Senior Secured Notes due 2012 and those certain 7
3/4% Owens-Brockway Senior

 

Secured Notes due 2011,
as and to the extent set forth in the acknowledgment to the Original
Intercreditor Agreement delivered to Collateral Agent with respect thereto.

4.             Pursuant to the Original
Intercreditor Agreement and the Original Pledge Agreement, upon the execution
by the Existing Holdings Senior Notes Trustees of an acknowledgment to the
Original Intercreditor Agreement, acknowledgment of such acknowledgment by
Borrowers’ Agent and delivery of such acknowledgment to Collateral Agent,
certain Existing Holdings Senior Notes (as defined below) issued by
Owens-Illinois, Inc., a Delaware corporation (“Holdings”) under certain Indentures dated as of May 15,
1997 and May 20, 1998 (each as amended, supplemented or otherwise modified
from time to time, an “Existing Holdings
Senior Notes Indenture” and collectively, the “Existing Holdings Senior Notes Indentures”)
entered into with the Existing Holdings Senior Notes Trustees were guarantied
by Company and Packaging on a subordinated basis (the “Existing Holdings Senior Notes Subordinated Guaranty”)
and such guaranty and the Existing Holdings Senior Notes were secured by
certain Domestic Collateral on a subordinated, second-lien basis pursuant to
the Original Pledge Agreement. “Existing
Holdings Senior Notes” means the following senior notes and
debentures of Holdings: (i) the 8.10% Senior Notes due 2007 in the
original aggregate principal amount of $300,000,000; (ii) the 7.35% Senior
Notes due 2008 in the original aggregate principal amount of $250,000,000; (iii) the
7.50% Senior Debentures due 2010 in the original aggregate principal amount of
$250,000,000; and (iv) the 7.80% Senior Debentures due 2018 in the
original aggregate principal amount of $250,000,000. Such acknowledgments have
been so executed, delivered and acknowledged with respect to the Existing
Holdings Senior Notes.

5.             Certain lenders and DBTCA as agent
and representative thereof then entered into a certain First Amended and
Restated Secured Credit Agreement as of June 13, 2003 with the Borrowers
named therein, Company and Borrowers’ Agent (as amended through the first
amendment thereto, the “First Amended and Restated
Credit Agreement”)
which amended and restated the Original Credit Agreement in its entirety.

6.             In connection with the First
Amended and Restated Credit Agreement, the Pledgors and Collateral Agent
executed a certain Amended and Restated Pledge Agreement dated as of June 13,
2003 (as amended through the second amendment thereto, the “Amended and Restated Pledge Agreement”),
and prior lender agent and Collateral Agent executed a certain Amended and
Restated Intercreditor Agreement dated as of June 13, 2003 (as amended
through the second amendment thereto and as supplemented by various
acknowledgments thereto, the “Amended and
Restated Intercreditor Agreement”).

7.             The lenders and DBTCA as agent and
representative thereof then entered into a certain Second Amended and Restated
Secured Credit Agreement dated as of March 15, 2004 with the Borrowers
named therein, Company and Borrowers’ Agent (as amended through the first
amendment thereto, the “Second Amended and
Restated Credit Agreement”)
which amended and restated the First Amended and Restated Credit Agreement in
its entirety, and then entered into a certain Third Amended and Restated
Secured Credit Agreement dated as of October 7, 2004 with the Borrowers
named therein, Company and Borrowers’ Agent (as amended through the first
amendment thereto, the “Third Amended and Restated
Credit

 2
 

 

Agreement”)
which amended and restated the Second Amended and Restated Credit Agreement in
its entirety.

8.             The lenders and Deutsche Bank AG
New York Branch, as agent and representative thereof (in such capacity, “Lender Agent”) have entered into a certain
Credit Agreement dated as of June 14, 2006 with the Borrowers named
therein, Company and Borrowers’ Agent (as amended, amended and restated,
supplemented, or otherwise modified from time to time, the “Credit Agreement”, which term shall also
include and refer to any successor or replacement facility of Company and/or
its Subsidiaries designated in writing as such by Borrowers’ Agent with
Collateral Agent’s consent and acknowledgement of the termination of the
predecessor Credit Agreement by an agent to the lenders thereunder). The Credit
Agreement refinances and replaces the Third Amended and Restated Credit
Agreement in its entirety, has been designated in writing as such by the
Borrowers’ Agent, and Collateral Agent has consented thereto and acknowledged
the termination of the predecessor Third Amended and Restated Credit Agreement
by DBTCA, in its capacity as administrative agent to the lenders thereunder. Initially
capitalized terms used herein without definition are defined in the Credit
Agreement.

9.             After the execution of the Original
Intercreditor Agreement, certain holders of Other Permitted Credit Exposure (as
defined below), executed acknowledgments thereto or to the Amended and Restated
Intercreditor Agreement, as applicable, which acknowledgments were acknowledged
by Borrowers’ Agent and delivered to Collateral Agent, pursuant to which such
persons agreed to be bound by the terms of the Original Intercreditor Agreement
or to the Amended and Restated Intercreditor Agreement, as applicable, and by
virtue of such execution, acknowledgment and delivery, the obligations held by
such holders became secured by the Original Pledge Agreement and/or the Amended
and Restated Pledge Agreement.

10.           In connection with the Credit
Agreement, Company, Packaging and Collateral Agent desire to amend and restate
the Amended and Restated Pledge Agreement in its entirety as set forth herein.

11.           Company has guarantied all
Obligations (as defined below) pursuant to Section 9 of the Credit
Agreement.

12.           Packaging and the other Subsidiary
Guarantors have guarantied all Obligations as defined in and now or hereafter
existing under the Credit Agreement (collectively, the “Obligations”) pursuant to a certain Second
Amended and Restated Subsidiary Guaranty dated as of June 14, 2006 (as
amended, amended and restated or otherwise modified from time to time, the “Subsidiary Guaranty”).

13.           Company is the legal and beneficial
owner of (i) the shares of stock described in Part I of Schedule
I hereto (the “Company Pledged Shares”) issued by the corporations named therein,
which shares constitute the percentage of all of the issued and outstanding
shares of all classes of capital stock of such companies identified in Part I
of said Schedule I, and (ii) the indebtedness described in Part II
of said Schedule I (the “Company Pledged Debt”) issued by the obligors named therein.
Packaging is the legal and beneficial owner of (i) the shares of stock
described in Part I of Schedule II hereto (the “Packaging Pledged Shares”) issued by the

 3
 

 

corporation named
therein, which shares constitute the percentage of all of the issued and
outstanding shares of all classes of capital stock of such company identified
in Part I of said Schedule II, and (ii) the
indebtedness described in Part II of said Schedule II (the “Packaging Pledged Debt”) issued by the
obligor named therein (collectively, the Company Pledged Shares and the
Packaging Pledged Shares are referred to herein as the “Pledged Shares,” and the Company Pledged
Debt and the Packaging Pledged Debt are referred to herein as the “Pledged Debt”).

14.           Subsidiaries and Joint Ventures of
Company have incurred, and it is contemplated that, from time to time in the
future, Subsidiaries and Joint Ventures of Company may incur, obligations to
Lenders or affiliates of Lenders arising out of loans, advances, overdrafts,
interest rate, currency or hedge products and other derivative exposures
(including under Interest Rate Agreements and Currency Agreements) or
extensions of credit to the extent permitted under the Credit Agreement (“Other Permitted Credit Exposure”). Company
and Packaging have guarantied such Other Permitted Credit Exposure pursuant,
and subject, to Section 9 of the Credit Agreement and the Subsidiary
Guaranty, respectively. Each Holder of any such Other Permitted Credit
Exposure, including those holders of Other Permitted Credit Exposure set forth
on Exhibit I to the Intercreditor Agreement (as defined below) is
referred to herein as an “Other Permitted
Credit Exposure Holder” and, collectively, all such Holders are
referred to as “Other Permitted Credit
Exposure Holders”. The documents and instruments evidencing or
relating to any such Other Permitted Credit Exposure (including the foregoing
guaranties) are referred to as the “Other
Permitted  Credit Exposure
Documents.”

15.           Company and/or Packaging or
Owens-Brockway and/or the other Subsidiary Guarantors have issued and/or
guarantied, and it is contemplated that, from time to time in the future to the
extent permitted by the Credit Agreement, Company and/or Packaging or
Owens-Brockway and/or the other Subsidiary Guarantors may issue and/or
guaranty, certain New Senior Debt (as defined in the Credit Agreement). Any
indenture, debenture, note, guaranty or other document executed by Company or
Packaging or Owens-Brockway and/or the other Subsidiary Guarantors in
connection with the issuance of any such New Senior Debt, including those
executed in connection with the Existing Owens-Brockway Senior Secured Notes,
is referred to herein as a “New Senior Debt
Document” individually and the “New
Senior Debt Documents” collectively. Any trustee or like
representative of the holders of any such New Senior Debt acting in such
capacity for the benefit of the holders of New Senior Debt, including the
Existing Owens-Brockway Senior Secured Notes Trustees, is referred to herein as
a “New Senior Debt Representative.”  For the avoidance of doubt, the term “New
Senior Debt” as used herein shall not include the Existing Owens-Brockway
Senior Unsecured Notes.

16.           It is contemplated that, from time to
time to the extent permitted by the Credit Agreement, Holdings may issue on a
senior basis, and Company and/or Packaging may issue and/or guaranty on a subordinated
basis, certain Refinancing Senior Debt (as defined in the Credit Agreement). Any
indenture, debenture, note, guaranty or other document executed by Holdings,
Company or Packaging in connection with the issuance of any such Refinancing
Senior Debt is referred to herein as a “Refinancing
Senior Debt Document” individually and the “Refinancing Senior Debt Documents”
collectively. Any trustee or like representative of the holders of any such
Refinancing Senior Debt acting in such capacity for the benefit of the

 4
 

 

holders of Refinancing
Senior Debt is referred to herein as a “Refinancing
Senior Debt Representative.”

17.           It is contemplated that, from time to
time to the extent permitted by the Credit Agreement, Holdings, Company and/or
Packaging may issue and/or guaranty certain New Junior Debt (as defined in the
Credit Agreement). Any indenture, debenture, note, guaranty or other document
executed by Holdings, Company or Packaging in connection with the issuance of
any such New Junior Debt is referred to herein as a “New Junior Debt Document” individually and the “New Junior Debt Documents” collectively. Any
trustee or like representative of the holders of any such New Junior Debt
acting in such capacity for the benefit of the holders of New Junior Debt is referred
to herein as a “New Junior Debt
Representative.”

18.           The Pledgors wish to confirm the
making and continuation of the pledge and grant of security interests in the
Pledged Collateral in favor of Collateral Agent for the benefit of the Lenders,
the Other Permitted Credit Exposure Holders and the holders of any New Senior
Debt and the New Senior Debt Representatives (collectively, the “Senior Secured Parties”), for the benefit of the
Refinancing Senior Debt Representatives and the holders of the Existing
Holdings Senior Notes and the Existing Holdings Senior Notes Trustees
(collectively, the “Second Priority Secured Parties”) and for the benefit of the holders of any
New Junior Debt and the New Junior Debt Representatives (the “Third Priority Secured Parties”; the Senior
Secured Parties, the Second Priority Secured Parties and the Third Priority
Secured Parties being collectively referred to herein as the “Secured Parties”).

19.           Concurrently herewith, Collateral
Agent, the Lender Agent, the current Other Permitted Credit Exposure Holders
and the Existing Owens-Brockway Senior Secured Notes Trustees have entered into
a Second Amended and Restated Intercreditor Agreement dated as of June 14,
2006 (such Second Amended and Restated Intercreditor Agreement as it may
hereafter be amended, amended and restated or otherwise modified from time to
time being the “Intercreditor Agreement”) which
provides for, inter  alia, the appointment of Collateral Agent to
administer the Pledged Collateral. Any New Senior Debt Representative,
Refinancing Senior Debt Representative, New Junior Debt Representative and any
Other Permitted Credit Exposure Holder shall only be entitled to the benefits
of this Agreement, and shall only be a Secured Party hereunder, if such Person
(or the representative thereof) has prior to the date hereof executed and
delivered to Collateral Agent an acknowledgment to the Original Intercreditor
Agreement or the Amended and Restated Intercreditor Agreement acknowledged by
the Pledgors or Borrowers’ Agent, as applicable, or from and after the date
hereof executes and delivers to Collateral Agent an acknowledgment to the
Intercreditor Agreement (in the form attached thereto) acknowledged by the
Pledgors or Borrowers’ Agent, as applicable. Notwithstanding anything to the
contrary herein, the Existing Owens-Brockway Senior Secured Notes Trustees, as
New Senior Debt Representatives, and the holders of the Existing Owens-Brockway
Senior Secured Notes, as holders of New Senior Debt, are entitled to the
benefits of this Agreement and shall be Senior Secured Parties hereunder.

NOW,
THEREFORE, in consideration of the premises the parties
hereto agree that the Amended and Restated Pledge Agreement is amended and
restated in its entirety as follows:

 5
 

 

SECTION 1.                       PLEDGES.

1.1           Senior Pledge

A.            By Company.
Company hereby pledges to Collateral Agent and grants to Collateral Agent for
the ratable benefit of the Senior Secured Parties a first priority security
interest in the following (the “Company
Pledged Collateral”) to secure the Senior Secured Obligations (as
defined in Section 2):

(a)           the Company Pledged Shares and the
certificates representing the Company Pledged Shares and any interest of
Company in the entries on the books of any financial intermediary pertaining to
the Company Pledged Shares, and, subject to Section 6, all
dividends, cash, options, warrants, rights, instruments and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Company Pledged Shares;

(b)           all additional shares of stock of any
issuer of the Company Pledged Shares from time to time acquired by Company in
any manner (which shares shall be deemed to be part of the Company Pledged
Shares), and the certificates representing such additional shares and any
interest of Company in the entries on the books of any financial intermediary
pertaining to such additional shares, and, subject to Section 6,
all dividends, cash, options, warrants, rights, instruments and other property
or proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such shares;

(c)           the Company Pledged Debt and the
instruments evidencing the Pledged Debt, and all interest, cash instruments and
other property from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of the Company Pledged Debt; and

(d)           all proceeds of any of the foregoing.

For avoidance of doubt, the Company Pledged Collateral
shall not include any stock or indebtedness issued by OI General FTS, Inc.

B.            By Packaging.
Packaging hereby pledges to Collateral Agent and grants to Collateral Agent for
the ratable benefit of the
Senior Secured Parties a first priority security interest in the following (the
“Packaging Pledged Collateral”) to
secure the Senior Secured Obligations:

(a)           the Packaging Pledged Shares and the
certificates representing the Packaging Pledged Shares and any interest of
Packaging in the entries on the books of any financial intermediary pertaining
to the Packaging Pledged Shares, and, subject to Section 6, all
dividends, cash options, warrants, rights, instruments and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Packaging Pledged Shares;

 6
 

 

(b)           all additional shares of stock of any
issuer of the Packaging Pledged Shares from time to time acquired by Packaging
in any manner (which shares shall be deemed to be part of the Packaging Pledged
Shares), and the certificates representing such additional shares and any
interest of Packaging in the entries on the books of any financial intermediary
pertaining to such additional shares, and, subject to Section 6,
all dividends, cash, options, warrants, rights, instruments and other property
or proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such shares;

(c)           the Packaging Pledged Debt and the
instruments evidencing the Pledged Debt, and all interest, cash instruments and
other property from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of the Packaging Pledged Debt; and

(d)           all proceeds of
any of the foregoing.

The Company Pledged
Collateral and the Packaging Pledged Collateral is referred to herein
collectively as the “Pledged Collateral.”

The foregoing
pledges and grants of security interests confirm the pledges and grants of
first priority security interests in the Pledged Collateral to secure the
Senior Secured Obligations made in the Original Pledge Agreement and the
Amended and Restated Pledge Agreement and continue in all respects the pledges
and grants therein without in any way causing any interruption in continuity
from such original pledges and grants.

1.2           Second Priority Pledge.
The Pledgors hereby pledge to Collateral Agent and grant to Collateral Agent
for the ratable benefit of the Second Priority Secured Parties a second
priority security interest in the Pledged Collateral to secure the Second
Priority Secured Obligations (as defined in Section 2).

The foregoing pledges and grants of security interests
confirm the pledges and grants of second priority security interests in the
Pledged Collateral to secure the Second Priority Secured Obligations made in
the Original Pledge Agreement and the Amended and Restated Pledge Agreement and
continue in all respects the pledges and grants therein without in any way
causing any interruption in continuity from such original pledges and grants.

1.3           Third
Priority Pledge. The Pledgors hereby pledge to Collateral
Agent and grant to Collateral Agent for the ratable benefit of the Third
Priority Secured Parties a third priority security interest in the Pledged
Collateral to Secure the Third Priority Secured Obligations (as defined in Section 2).

The foregoing pledges and grants of security interests
confirm the pledges and grants of third priority security interests in the
Pledged Collateral to secure the Third Priority Secured Obligations made in the
Original Pledge Agreement and the Amended and Restated Pledge Agreement and
continue in all respects the pledges and grants therein without in any way
causing any interruption in continuity from such original pledges and grants.

 7
 

 

SECTION 2.                                                    SECURED OBLIGATIONS; PRIORITY.

2.1           Senior
Secured Obligations. This Agreement secures, and the Pledged
Collateral is collateral security for, the prompt payment or performance in
full when due, whether at stated maturity, by acceleration or otherwise
(including the payment of amounts which would become due but for the operation
of the automatic stay under Section 362(a) of the Bankruptcy
Code, 11 U.S.C. § 362(a)), of all Obligations, all obligations of the
Pledgors under any Other Permitted Credit Exposure Documents and all
obligations of either Pledgor or other permitted obligor under any New Senior
Debt Documents, in each case whether for principal, premium or interest
(including, without limitation, interest which, but for the filing of a
petition in a bankruptcy, reorganization or other similar proceeding with
respect to the Pledgor, would accrue on such obligations), payments for early
termination, payments for settlement of amounts due under any such agreement,
fees, expenses or otherwise and all obligations of either Pledgor or other
permitted obligor now or hereafter existing under this Agreement (all such
obligations being the “Senior Secured
Obligations”); provided, that, the pledge made and
security interest granted in Section 1 and any other provisions of
this Agreement shall be effective as to any obligations in respect of any Other
Permitted Credit Exposure Documents or New Senior Debt Documents only if the
holders of such obligations or their representatives shall have executed and
delivered to Collateral Agent an acknowledgment to the Original Intercreditor
Agreement, the Amended and Restated Intercreditor Agreement or the
Intercreditor Agreement (in the form attached thereto) acknowledged by the
Pledgors or Borrowers’ Agent, as applicable (it being acknowledged that such
execution, acknowledgment and delivery has been completed with respect to the
obligations in respect of the Existing Owens-Brockway Senior Secured Notes and
with respect to those other obligations set forth on Exhibit I to
the Intercreditor Agreement and all of the foregoing are and continue to be
secured hereunder. For purposes of determining the amount of Senior Secured
Obligations relating to any obligation with respect to which a Person other
than a Pledgor is the direct or primary obligor and with respect to which a
Pledgor is a guarantor (including by way of providing security), the total
amount of such Senior Secured Obligations shall be calculated without
duplication of the amount of such direct or primary obligation secured by the
Pledged Collateral and the related guaranty obligations of the Pledgors secured
by the Pledged Collateral.

2.2           Second
Priority Secured Obligations. This Agreement secures, and the
Pledged Collateral is collateral security for, the prompt payment in full when
due, whether at stated maturity, by acceleration or otherwise (including
amounts which would become due but for the operation of the automatic stay
under Section 362(a) of the Bankruptcy Code, 11 U.S.C.
§ 362(a)), of all obligations of the Pledgors now or hereafter existing
under the Existing Holdings Senior Notes Subordinated Guaranty and all
obligations under the Existing Holdings Senior Notes Indentures and the
Existing Holdings Senior Notes issued thereunder and all obligations of either
Pledgor or other permitted obligor under any Refinancing Senior Debt Documents
in each case whether for principal, premium, interest (including, without
limitation, interest which, but for the filing of a petition in a bankruptcy,
reorganization or other similar proceeding with respect to a Pledgor, would
accrue on such obligations), fees, expenses or otherwise, and all obligations
of the Pledgors now or hereafter existing under this Agreement (all such
obligations being the “Second Priority Secured
Obligations”); provided that the pledge made and security interest
granted in Section 1 and any other provisions of this Agreement
shall be effective as to any obligations in respect of any Refinancing Senior
Debt only if the holders of

 8
 

 

such obligation or a Refinancing Senior Debt
Representative shall have executed and delivered to Collateral Agent an
acknowledgment to the Intercreditor Agreement (in the form attached thereto)
acknowledged by the Pledgors or Borrowers’ Agent, as applicable (it being
acknowledged that the obligations of the Pledgors now or hereafter existing
under the Existing Holdings Senior Notes Subordinated Guaranty and all
obligations under the Existing Holdings Senior Notes Indentures and the
Existing Holdings Senior Notes issued thereunder are and continue to be secured
hereunder). For purposes of determining the amount of Second Priority Secured
Obligations relating to any obligation with respect to which a Pledgor is a
guarantor (including by way of providing security), the total amount of such
Second Priority Secured Obligations shall be calculated without duplication of
the amount of such direct or primary obligation secured by the Pledged
Collateral and the related guaranty obligations of the Pledgors secured by the
Pledged Collateral.

2.3           Third
Priority Secured Obligations. This Agreement secures, and the
Pledged Collateral is collateral security for, the prompt payment in full when
due, whether at stated maturity, by acceleration or otherwise (including
amounts which would become due but for the operation of the automatic stay
under Section 362(a) of the Bankruptcy Code, 11 U.S.C.
§ 362(a)), of all obligations of the Pledgors or other permitted obligors
now or hereafter existing under any New Junior Debt Documents, whether for
principal, premium, interest (including, without limitation, interest which,
but for the filing of a petition in a bankruptcy, reorganization or other
similar proceeding with respect to a Pledgor, would accrue on such
obligations), fees, expenses or otherwise, and all obligations of the Pledgors
now or hereafter existing under this Agreement (all such obligations being the “Third Priority Secured Obligations”); provided,
that, the pledge made and the security interest granted in Section 1
and any other provisions of this Agreement shall be effective as to any
obligations in respect of New Junior Debt only if the holders of any such
obligation or an applicable New Junior Debt Representative shall have executed
and delivered to Collateral Agent a counterpart of the Intercreditor Agreement
or an acknowledgment to the Intercreditor Agreement (in the form attached
thereto) acknowledged by the Pledgors. For purposes of determining the amount
of Third Priority Secured Obligations relating to any obligation with respect
to which a Pledgor is a guarantor (including by way of providing security), the
total amount of such Third Priority Secured Obligations shall be calculated
without duplication of the amount of such direct or primary obligation secured
by the Pledged Collateral and the related guaranty obligations of the Pledgors
secured by the Pledged Collateral. The Senior Secured Obligations, the Second
Priority Secured Obligations and the Third Priority Secured Obligations
collectively are referred to herein as the “Secured
Obligations”.

2.4           Rights
in Pledged Collateral. Notwithstanding anything to the contrary
contained in the Credit Agreement, any Other Permitted Credit Exposure
Document, New Senior Debt Document, Existing Holdings Senior Notes Indenture,
Existing Holdings Senior Notes Subordinated Guaranty, Refinancing Senior Debt
Document or New Junior Debt Document, and irrespective of:

(a)   the time, order or method of attachment or
perfection of the security interests created hereby;

 9
 

 

(b)   the time or order of filing or recording of
financing statements or other documents filed or recorded to perfect security
interests in any Pledged Collateral, and

(c)   the rules for determining priority under
the Uniform Commercial Code or any other law or rule governing the relative
priorities of secured creditors,

any security interest in
any Pledged Collateral heretofore or hereafter granted to secure any Senior
Secured Obligation has and shall have priority, to the extent of any unpaid
Senior Secured Obligations, over any security interest in such Pledged
Collateral granted to secure the Second Priority Secured Obligations or the
Third Priority Secured Obligations, and any security interest in any Pledged
Collateral heretofore or hereafter granted to secure any Second Priority
Secured Obligation has and shall have priority, to the extent of any unpaid
Second Priority Secured Obligations, over any security interest in such Pledged
Collateral granted to secure the Third Priority Secured Obligations.

SECTION 3.                                                    DELIVERY OF PLEDGED COLLATERAL.

3.1           All certificates or instruments
representing or evidencing the Pledged Collateral shall be delivered to and
held by or on behalf of Collateral Agent pursuant hereto and shall be in
suitable form for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to Collateral Agent. Collateral Agent shall have the
right, at any time upon or after the occurrence of an Event of Default (as
defined in Section 11) and without notice to either Pledgor, to
transfer to or to register in the name of Collateral Agent or any of its
nominees any or all of the Pledged Collateral. In addition, Collateral Agent
shall have the right at any time to exchange certificates or instruments
representing or evidencing Pledged Collateral for certificates or instruments
of smaller or larger denominations. Collateral Agent expressly acknowledges
(including in accordance with Section 8-301(a)(3) and Section 9-313(c) of
the New York Uniform Commercial Code) that, in addition to holding the Pledged
Collateral as agent for the benefit of the Senior Secured Parties, it holds the
Pledged Collateral as agent for the benefit of each of the Second Priority
Secured Parties and the Third Priority Secured Parties.

SECTION 4.                                                    REPRESENTATIONS
AND WARRANTIES

4.1           By
Company. Company hereby represents and warrants to Collateral
Agent and each Secured Party as follows:

(a)   Company is, and at the time of delivery of
any Company Pledged Collateral to Collateral Agent pursuant to Section 3
will be, the legal and beneficial owner of the Company Pledged Collateral free
and clear of any Lien except for the liens and security interests created by
this Agreement.

(b)   Company has full power, authority and legal
right to pledge all the Company Pledged Collateral pursuant to this Agreement.

(c)   No consent of any other party (including,
without limitation, stockholders or creditors of Company) and no consent,
authorization, approval or other action by, and no notice to or filing with,
any governmental authority or regulatory body is required either

 10
 

 

(x) for the pledge
by Company of the Company Pledged Collateral pursuant to this Agreement or for
the execution, delivery or performance of this Agreement by Company or (y) for
the exercise by Collateral Agent of the voting or other rights provided for in
this Agreement or the remedies in respect of the Company Pledged Collateral
pursuant to this Agreement; except (a) for foreign governmental actions,
notices or filings required for actions referred to in clauses (x) and (y) as
to Company Pledged Shares issued by corporations which own, directly or
indirectly, the stock of Foreign Entities and (b) as may be required in
connection with such disposition by laws affecting the offering and sale of
securities generally.

(d)   All of the Company Pledged Shares have been
duly authorized and validly issued and are fully paid and non-assessable. The
Company Pledged Debt has been duly authorized, authenticated or issued and
delivered, and is the legal, valid and binding obligation of the issuers
thereof, and is not in default.

(e)   The pledge of the Company Pledged Shares and
the Company Pledged Debt pursuant to this Agreement, together with delivery of
the shares and notes, accompanied by duly executed instruments of transfer or
assignment in blank and an effective endorsement, creates a valid and perfected
first priority security interest in the Company Pledged Shares and the Company
Pledged Debt securing the payment of the Senior Secured Obligations, a valid
and perfected second priority security interest in the Company Pledged Shares
and the Company Pledged Debt securing the payment of the Second Priority
Secured Obligations, and a valid and perfected third priority security interest
in the Company Pledged Shares and the Company Pledged Debt securing the payment
of the Third Priority Secured Obligations.

(f)    As of the date hereof, the Company Pledged
Shares consisting of capital stock of the Persons identified in Part I
of Schedule I annexed hereto constitute the percentage of the issued and
outstanding shares of stock of such Persons as identified in Part I
of Schedule I annexed hereto. The Company Pledged Debt constitutes all
of the issued and outstanding debt obligations owing to Company as of the date
specified therein by the Persons identified in Part II of Schedule
I annexed hereto.

(g)   Except as otherwise permitted by the Credit
Agreement, the Company at all times will be sole beneficial owner of the
Company Pledged Collateral.

(h)   The pledge of the Company Pledged Collateral
pursuant to this Agreement does not violate Regulations T, U or X of the
Federal Reserve Board.

4.2           By
Packaging. Packaging hereby represents and warrants to
Collateral Agent and each Secured Party as follows:

(a)   Packaging is, and at the time of delivery of
any Packaging Pledged Collateral to Collateral Agent pursuant to Section 3
will be, the legal and beneficial owner of the Packaging Pledged Collateral
free and clear of any Lien except for the lien and security interest created by
this Agreement.

 11

 

(b)   Packaging has full power, authority and legal
right to pledge all the Packaging Pledged Collateral pursuant to this
Agreement.

(c)   No consent of any other party (including,
without limitation, stockholders or creditors of Packaging) and no consent, authorization,
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required either (x) for the pledge by
Packaging of Packaging Pledged Collateral pursuant to this Agreement or for the
execution, delivery or performance of this Agreement by Packaging or (y) for
the exercise by Collateral Agent of the voting or other rights provided for in
this Agreement or the remedies in respect of the Packaging Pledged Collateral
pursuant to this Agreement; except (a) for foreign governmental actions,
notices or filings required for actions referred to in clauses (x) and (y) as
to Packaging Pledged Shares issued by corporations which own, directly or
indirectly, the stock of Foreign Entities and (b) as may be required in
connection with such disposition by laws affecting the offering and sale of
securities generally.

(d)   All of the Packaging Pledged Shares have been
duly authorized and validly issued and are fully paid and non-assessable. The
Packaging Pledged Debt has been duly authorized, authenticated or issued and
delivered, and is the legal, valid and binding obligation of the issuers
thereof, and is not in default.

(e)   The pledge of the Packaging Pledged Shares
and the Packaging Pledged Debt pursuant to this Agreement, together with
delivery of shares and notes, accompanied by duly executed instruments of
transfer of assignment in blank and an effective endorsement, creates a valid
and perfected first priority security interest in the Packaging Pledged Shares
and the Packaging Pledged Debt securing the payment of the Senior Secured
Obligations, a valid and perfected second priority security interest in the
Packaging Pledged Shares and the Packaging Pledged Debt securing the payment of
the Second Priority Secured Obligations and a valid and perfected third
priority security interest in the Packaging Pledged Shares and the Packaging
Pledged Debt securing the payment of the Third Priority Secured Obligations.

(f)    As of the date hereof, the Packaging Pledged
Shares consisting of capital stock of the Persons identified in Part I
of Schedule II annexed hereto constitute the percentage of the issued
and outstanding shares of stock of such Persons as identified in Part I
of Schedule II annexed hereto. The Packaging Pledged Debt constitutes
all of the issued and outstanding Debt Obligations owing to Packaging as of the
date hereof by the Persons identified in Part II of Schedule II
annexed hereto.

(g)   Except as otherwise permitted by the Credit
Agreement, Packaging at all times will be sole beneficial owner of the
Packaging Pledged Collateral.

(h)   The pledge of the Packaging Pledged
Collateral pursuant to this Agreement does not violate Regulations T, U or X of
the Federal Reserve Board.

 12
 

 

 

SECTION 5.                                                    SUPPLEMENTS,
FURTHER ASSURANCES.

5.1           Each Pledgor agrees that at any time
and from time to time, at the expense of such Pledgor, such Pledgor will
promptly execute and deliver all further instruments and documents, and take
all further action, that may be necessary or that Collateral Agent may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable Collateral Agent to
exercise and enforce its rights and remedies hereunder with respect to any
Pledged Collateral.

5.2           Each Pledgor further agrees that it
will, upon obtaining any shares of any Person required to be pledged pursuant
to Section 1.1A(b) or 1.1(B)(b), promptly (and in any
event within five (5) Business Days) deliver to Collateral Agent a pledge
amendment, duly executed by the Pledgor, in substantially the form of Schedule
III hereto (a “Pledge Amendment”),
in respect of the additional Pledged Shares which are to be pledged pursuant to
this Agreement. Each Pledgor hereby authorizes Collateral Agent to attach each
Pledge Amendment to this Agreement and agrees that all Pledged Shares listed on
any Pledge Amendment delivered to Collateral Agent shall for all purposes
hereunder be considered Pledged Collateral; provided, that, the
failure of a Pledgor to execute a Pledge Amendment with respect to any
additional Pledged Shares pursuant to this Agreement shall not impair the
security interest of Collateral Agent therein or otherwise adversely affect the
rights and remedies of Collateral Agent hereunder with respect thereto.

SECTION 6.                                                    VOTING RIGHTS; DIVIDENDS; ETC.

6.1           As long as no Event of Default (as
defined in Section 11) shall have occurred and be continuing:

(a)   Pledgors shall be entitled to exercise any
and all voting and other consensual rights pertaining to the Pledged Collateral
or any part thereof for any purpose not inconsistent with the terms of this
Agreement and the Credit Agreement; provided, however, that
each Pledgor shall give Collateral Agent at least five (5) days’ prior
written notice of the manner in which it intends to exercise any such right; provided,
further, however, that neither (i) the voting by a Pledgor
of any Pledged Shares for, or a Pledgor’s consent to, the election of directors
at a regularly scheduled annual or other meeting of stockholders or with
respect to incidental matters at any such meeting nor (ii) a Pledgor’s
consent to or approval of any action otherwise permitted under this Agreement
and the Credit Agreement shall be deemed inconsistent with the terms of this
Agreement or the Credit Agreement (including, without limitation, impairing in
any material manner the Pledged Collateral or the material rights of any of the
Secured Parties), within the meaning of this Section 6.1(a), and no
notice of any such voting or consent need be given to Collateral Agent.

(b)   The Pledgors shall be entitled to receive and
retain, and to utilize free and clear of the Lien of this Agreement, any and
all dividends, distributions, principal and interest paid in respect of the
Pledged Collateral; provided, however, that any and all
dividends and other distributions in equity securities shall be, and shall be
forthwith delivered to Collateral Agent to hold as, Pledged Collateral and
shall, if received by a 

 13
 

 

Pledgor, be received in
trust for the benefit of Collateral Agent, be segregated from the other
property or funds of such Pledgor, and be forthwith delivered to Collateral
Agent as Pledged Collateral in the same form as so received (with any necessary
endorsement).

(c)   In order to permit the Pledgors to exercise
the voting and other rights which they are entitled to exercise pursuant to Section 6.1(a) above
and to receive the dividends, distributions, principal or interest payments
which they are authorized to receive and retain pursuant to Section 6.1(b) above,
Collateral Agent shall, if necessary, upon written request of a Pledgor, from
time to time execute and deliver (or cause to be executed and delivered) to
such Pledgor all such proxies, dividend payment orders and other instruments as
such Pledgor may reasonably request.

(d)   Upon the occurrence and during the
continuance of an Event of Default:

(i)            Upon written notice from Collateral
Agent to a Pledgor, all rights of such Pledgor to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise pursuant to Section 6.1(a) above
shall cease, and all such rights shall thereupon become vested in Collateral
Agent which shall thereupon have the sole right to exercise such voting and
other consensual rights during the continuance of such Event of Default.

(ii)           Other than amounts to be used by a
Pledgor to directly or indirectly make Holdings Ordinary Course Payments
permitted to be paid pursuant to subsection 6.5 of the Credit Agreement,
all rights of a Pledgor to receive the dividends, distributions, principal and
interest payments which it would otherwise be authorized to receive and retain
pursuant to Section 6.1(b) above shall cease and all such
rights shall thereupon become vested in Collateral Agent who shall thereupon
have the sole right to receive and hold as Pledged Collateral such dividends,
distributions, principal and interest payments during the continuance of such
Event of Default.

(e)   In order to permit Collateral Agent to
receive all dividends and other distributions to which it may be entitled under
Section 6.1(d) above, to exercise the voting and other
consensual rights which it may be entitled to exercise pursuant to Section 6.1(d) above,
and to receive all dividends, distributions, principal and interest payments
and other distributions which it may be entitled to receive under Section 6.1(b) above,
each Pledgor shall, if necessary, upon written notice from Collateral Agent,
from time to time execute and deliver to Collateral Agent appropriate proxies,
dividend payment orders and other instruments as Collateral Agent may
reasonably request.

(f)    All dividends, distributions, principal and
interest payments which are received by either Pledgor contrary to the
provisions of Section 6.1(d) above shall be received in trust
for the benefit of Collateral Agent, shall be segregated from other funds of
such Pledgor and shall be forthwith paid over to Collateral Agent as Pledged
Collateral in the same form as so received (with any necessary endorsement).

 14
 

 

SECTION 7.                                                    TRANSFERS AND OTHER LIENS; ADDITIONAL SHARES.

7.1           Transfers
and Other Liens. Each Pledgor agrees that it will not, except as
permitted by the Credit Agreement, (i) sell or otherwise dispose of, or
grant any option or warrant with respect to, any of the Pledged Collateral, (ii) create
or permit to exist any Lien upon or with respect to any of the Pledged
Collateral, except for the liens and security interests under this Agreement,
or (iii) permit any issuer of Pledged Shares to merge or consolidate
unless all the outstanding capital stock of the surviving or resulting
corporation is, upon such merger or consolidation, pledged hereunder and no
cash, securities or other property is distributed in respect of the outstanding
shares of any other constituent corporation; provided, however, that
in the event of an Asset Sale permitted by the Credit Agreement wherein the
assets subject to such Asset Sale are Pledged Shares, Collateral Agent shall
release the Pledged Shares that are the subject of such Asset Sale to the
applicable Pledgor free and clear of the lien and security interest under this
Agreement (a) so long as any Obligations remain outstanding under the
Intercreditor Agreement, concurrently with the receipt of advice from the
Lender Agent thereunder that arrangements satisfactory to it have been made for
delivery to it of the Net Asset Sale Proceeds of such Asset Sale to which the
Lenders, New Senior Debt holders and Other Permitted Credit Exposure Holders
are entitled under the Credit Agreement and the Intercreditor Agreement, (b) after
such time as all Obligations under the Credit Agreement have been paid in full
and the Credit Agreement and the Letters of Credit have terminated, in the
event that any other Secured Parties are entitled to receive any portion of the
proceeds of such Asset Sale, concurrently with the receipt of advice from the
agent or trustee for such Secured Parties that arrangements satisfactory to it
have been made for delivery to it of the amounts required to be paid to such
Secured Parties out of the proceeds of such Asset Sale, and (c) in the
event no Secured Party is entitled to receive any portion of the proceeds of
such Asset Sale, concurrently with the consummation of such Asset Sale; and provided,
further, that notwithstanding anything herein to the contrary, (x) Collateral
Agent shall release Pledged Shares or other Pledged Collateral from the liens
and security interests of this Agreement as may be specified by the Lender
Agent upon the approval of the release of such Pledged Shares or other Pledged
Collateral by the requisite percentage of Lenders under the Credit Agreement,
and (y) Collateral Agent shall release Pledged Shares or other Pledged
Collateral from the liens and security interests of this Agreement, upon
satisfaction of the conditions set forth in, and in accordance with, Section 18,
below.

7.2           Additional
Shares. Company agrees that it will (i) cause each issuer
of Company Pledged Shares not to issue any stock or other securities in
addition to or in substitution for the Company Pledged Shares issued by such
issuer, except to Company or as otherwise consented to by Requisite Lenders,
and (ii) pledge hereunder, immediately upon its acquisition (directly or
indirectly) thereof, any and all additional shares of stock or other equity
securities of each issuer of Company Pledged Shares. Packaging agrees that it
will (i) cause each issuer of Packaging Pledged Shares not to issue any
stock or other securities in addition to or in substitution for the Packaging
Pledged Shares issued by such issuer, except to Packaging or as otherwise
consented to by Requisite Lenders and (ii) pledge hereunder, immediately
upon its acquisition (directly or indirectly) thereof, any and all additional
shares of stock or other equity securities of each issuer of Packaging Pledged
Shares.

 15
 

 

SECTION 8.                                                    COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT.

Each Pledgor
hereby appoints Collateral Agent such Pledgor’s attorney-in-fact, with full
authority in the place and stead of such Pledgor and in the name of such Pledgor
or otherwise, from time to time in Collateral Agent’s discretion to take any
action and to execute any instrument which Collateral Agent may reasonably deem
necessary or advisable to accomplish the purposes of this Agreement, including,
without limitation, to receive, endorse and collect all instruments made
payable to such Pledgor representing any dividend, interest payment or other
distribution in respect of such Pledged Collateral or any part thereof and to
give full discharge for the same.

SECTION 9.                                                    COLLATERAL AGENT MAY PERFORM.

If either Pledgor
fails to perform any agreement contained herein after receipt of a written
request to do so from Collateral Agent, Collateral Agent may itself perform, or
cause performance of, such agreement, and the reasonable expenses of Collateral
Agent, including the reasonable fees and expenses of its counsel, incurred in
connection therewith shall be payable by the Pledgors under Section 13
hereof.

SECTION 10.                                             REASONABLE
CARE.

Collateral Agent
shall be deemed to have exercised reasonable care in the custody and
preservation of the Pledged Collateral in its possession if the Pledged
Collateral is accorded treatment substantially equivalent to that which
Collateral Agent, in its individual capacity, accords its own property
consisting of negotiable securities, it being understood that neither
Collateral Agent nor any other Secured Party shall have responsibility for (i) ascertaining
or taking action with respect to calls, conversions, exchanges, maturities,
tenders or other matters relative to any Pledged Collateral, whether or not
Collateral Agent or any other Secured Party has or is deemed to have knowledge
of such matters, or (ii) taking any necessary steps (other than steps
taken in accordance with the standard of care set forth above to maintain
possession of the Pledged Shares and Pledged Debt) to preserve rights against
any Person with respect to any Pledged Collateral.

SECTION 11.                                             REMEDIES UPON DEFAULT; DECISIONS RELATING TO EXERCISE
OF REMEDIES.

11.1         Remedies Upon Default.
Subject to Sections 11.2 and 11.3, (i) if any Event of
Default under and as defined in the Credit Agreement, or (ii) after such
time as all Obligations shall have been paid in full and the Credit Agreement
and the Letters of Credit have terminated, and provided, that,
the Pledged Collateral then secures the payment and performance of any
obligations under any New Senior Debt Documents or any obligations under any
Other Permitted Credit Exposure Documents, if any event of default under (A) any
New Senior Debt Documents which are secured by the Pledged Collateral or (B) any
Other Permitted Credit Exposure Documents which are secured by the Pledged
Collateral, as the case may be, or (iii) after such time as all Senior
Secured Obligations shall have been indefeasibly paid in full, and provided,
that, the Pledged Collateral then secures the payment and performance of
the Second Priority Secured Obligations, if any event of default under any
Existing Holdings Senior 

 16
 

 

Notes Indenture or any
obligations under any Refinancing Senior Debt Documents which are secured by
the Pledged Collateral, or (iv) after such time as all Senior Secured
Obligations and all Second Priority Secured Obligations have been indefeasibly
paid in full, and provided, that, the Pledged Collateral then
secures the payment and performance of the Third Priority Secured Obligations,
if any event of default under any New Junior Debt Document (each of the events
of default described in the foregoing clauses (i) through (iv) (subject
to any provisos set forth therein) being referred to herein as an “Event of Default”) shall have occurred and be continuing:

(a)   Collateral Agent may exercise in respect of
the Pledged Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a secured
party on default under the Uniform Commercial Code (the “Code”) in effect in the State of New York
at that time, and Collateral Agent may also in its sole discretion, without
notice except as specified below, sell the Pledged Collateral or any part
thereof in one or more parcels at public or private sale, at any exchange,
broker’s board or at any of Collateral Agent’s offices or elsewhere, for cash,
on credit or for future delivery, and at such price or prices and upon such
other terms as Collateral Agent may deem commercially reasonable, irrespective
of the impact of any such sales on the market price of the Pledged Collateral. Collateral
Agent or any other Secured Party may be the purchaser of any or all of the
Pledged Collateral at any such sale but, except for Collateral Agent, shall not
be entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Pledged Collateral sold at such
sale, to use and apply any of the Secured Obligations owed to such Person as a
credit on account of the purchase price of any Pledged Collateral payable by
such Person at such sale. Each purchaser at any such sale shall hold the
property sold absolutely free from any claim or right on the part of either
Pledgor, and each Pledgor hereby waives (to the extent permitted by law) all
rights of redemption, stay and/or appraisal which it now has or may at any time
in the future have under any rule of law or statute now existing or
hereafter enacted. Each Pledgor agrees that, to the extent notice of sale shall
be required by law, at least ten (10) days’ notice to such Pledgor of the
time and place of any public sale or the time after which any private sale is
to be made shall constitute reasonable notification. Collateral Agent shall not
be obligated to make any sale of Pledged Collateral regardless of notice of
sale having been given. Collateral Agent may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to which
it was so adjourned. Each Pledgor hereby waives any claims against Collateral
Agent arising by reason of the fact that the price at which any Pledged
Collateral may have been sold at such a private sale was less than the price
which might have been obtained at a public sale, even if Collateral Agent
accepts the first offer received and does not offer such Pledged Collateral to more
than one offeree.

(b)   Each Pledgor recognizes that, by reason of
certain prohibitions contained in the Securities Act of 1933, as amended (the “Securities Act”), and applicable state
securities laws, Collateral Agent may be compelled, with respect to any sale of
all or any part of the Pledged Collateral, to limit purchasers to those who
will agree, among other things, to acquire the Pledged Collateral for their own
account, for investment and not with a view to the distribution or resale
thereof. Each Pledgor acknowledges that any 

 17
 

 

such private sales may be
at prices and on terms less favorable to Collateral Agent than those obtainable
through a public sale without such restrictions (including, without limitation,
a public offering made pursuant to a registration statement under the
Securities Act), and, notwithstanding such circumstances, agrees that any
private sale shall be deemed to have been made in a commercially reasonable
manner and that Collateral Agent shall have no obligation to engage in public
sales and no obligation to delay the sale of any Pledged Collateral for the
period of time necessary to permit the issuer thereof to register it for a form
of public sale requiring registration under the Securities Act or under
applicable state securities laws, even if such Pledgor would agree to do so.

(c)   If Collateral Agent determines to exercise
its right to sell any or all of the Pledged Collateral, upon written request,
each Pledgor shall and shall cause each issuer of any Pledged Shares to be sold
hereunder from time to time to furnish to Collateral Agent all such information
as Collateral Agent may request in order to determine the number of shares and
other instruments included in the Pledged Collateral which may be sold by
Collateral Agent as exempt transactions under the Securities Act and the rules of
the Securities and Exchange Commission thereunder, as the same are from time to
time in effect.

11.2         Decisions Relating to
Exercise of Remedies. Notwithstanding anything in this Agreement
to the contrary, as provided in the Intercreditor Agreement, Collateral Agent
shall exercise, or shall refrain from exercising, any remedy provided for in Section 11
in accordance with the instructions of Requisite Obligees (as defined in the
Intercreditor Agreement) and any Other Permitted Credit Exposure Holders, the
holders of any New Senior Debt or any New Senior Debt Representative, the
holders of the Existing Holdings Senior Notes and any Existing Holdings Senior
Notes Trustee, the holders of any Refinancing Senior Debt and any Refinancing
Senior Debt Representative and the holders of any New Junior Debt and any New
Junior Debt Representative shall be bound by such instructions; and the sole
rights of the Other Permitted Credit Exposure Holders, the holders of any New
Senior Debt and any New Senior Debt Representative with respect thereto,
holders of the Existing Holdings Senior Notes and the Existing Holdings Senior
Notes Trustees, the holders of any Refinancing Senior Debt, and the holders of
any New Junior Debt and their respective representatives under this Agreement
shall be to be secured by the Pledged Collateral and to receive the payments
provided for in Section 12 hereof.

11.3         Limitations on Exercise of
Remedies. Notwithstanding anything in this Agreement to the
contrary, as provided in the Intercreditor Agreement, (i) Collateral Agent
shall not exercise any remedy provided for in Section 11 for the
purpose of realizing value on the Pledged Collateral to be applied to the
payment of the Second Priority Secured Obligations unless (a) such remedy
is concurrently being exercised for the purpose of realizing value on the
Pledged Collateral to be applied to the payment of the Senior Secured
Obligations or (b) all Senior Secured Obligations shall have been indefeasibly
paid in full, and (ii) Collateral Agent shall not exercise any remedy
provided for in Section 11 for the purpose of realizing value on
the Pledged Collateral to be applied to the payment of the Third Priority
Secured Obligations unless (a) such remedy is concurrently being exercised
for the purpose of realizing value on the Pledged Collateral to be applied to
the payment of the Senior Secured Obligations and the Second 

 18
 

 

Priority Secured
Obligations or (b) all Senior Secured Obligations and all Second Priority
Secured Obligations shall have been indefeasibly paid in full.

11.4         No Impairment of
Subordination in Right of Payments. The Intercreditor Agreement
sets forth and any New Junior Debt Documents may set forth certain agreements
of the Pledgors, and the holders of the New Junior Debt may be subject to
certain obligations, which subordinate the right of payment of such New Junior
Debt to the prior payment of “Senior Indebtedness” or terms of similar import. Notwithstanding
anything in this Agreement to the contrary, such agreements and obligations of
the Pledgors and the holders of the New Junior Debt shall not be impaired in
any manner by the pledge of the Pledged Collateral, the security interests
granted by this Agreement or the exercise of rights provided hereunder, and the
rights of the holders of such “Senior Indebtedness” shall not be impaired in
any manner by any such action.

SECTION 12.                                             APPLICATION OF PROCEEDS.

After and during
the continuance of an Event of Default, any cash held by Collateral Agent as
Pledged Collateral and all cash proceeds received by Collateral Agent (all such
cash being “Proceeds”) in respect of any sale
of, collection from, or other realization upon all or any part of the Pledged
Collateral pursuant to the exercise by Collateral Agent of its remedies as a
secured creditor as provided in Section 11 of this Agreement shall
be applied promptly from time to time by Collateral Agent as follows:

First,
to the payment of the costs and expenses of such sale, collection or other
realization, including reasonable compensation to Collateral Agent and its
agents and counsel, and all expenses, liabilities and advances made or incurred
by Collateral Agent in connection therewith;

Second,
to the payment of the Senior Secured Obligations (including any Aggregate
Available Amount (as defined in the Security Agreement) deposits into the L/C
Collateral Account for outstanding Letters of Credit, provided that if such
Letters of Credit expire without being fully drawn, then at that time, such
excess amounts shall be applied as provided in this Section 12 to
then outstanding Senior Secured Obligations) for the ratable benefit of the
holders thereof; provided, that, in making such application in
respect of outstanding obligations under New Senior Debt Documents, Collateral
Agent shall be entitled to deduct from the share of such Proceeds otherwise
payable to the New Senior Debt Representatives the New Senior Debt holders’ pro
rata share of all amounts that Collateral Agent has been paid by the Paying
Indemnifying Parties (such term being used in this Section 12 as
defined in Section 7(c) of the Intercreditor Agreement)
pursuant to Section 7(c) of the Intercreditor Agreement;

Third,
only after payment in full of all Senior Secured Obligations, to the payment of
the Second Priority Secured Obligations for the ratable benefit of the holders
thereof; provided, that, that in making such application to the
Existing Holdings Senior Notes Trustees, Collateral Agent shall be entitled to
deduct from the share of such Proceeds otherwise payable to the holders of the
Existing Holdings Senior Notes such holders’ pro rata share of all amounts that
Collateral Agent has been paid by the Paying Indemnifying 

 19
 

 

Parties pursuant to Section 7(c) of
the Intercreditor Agreement, provided, further, that in
making such application in respect of obligations outstanding under Refinancing
Senior Debt Documents, Collateral Agent shall be entitled to deduct from the
share of such Proceeds otherwise payable to the Refinancing Senior Debt
Representatives such Refinancing Senior Debt holders’ pro rata share of all
amounts that Collateral Agent has been paid by the Paying Indemnifying Parties
pursuant to Section 7(c) of the Intercreditor Agreement;

Fourth,
only after payment in full of all Senior Secured Obligations and all Second
Priority Secured Obligations, to the payment of the Third Priority Secured
Obligations for the ratable benefit of the holders thereof; provided, that,
in making such application in respect of obligations outstanding under New
Junior Debt Documents, Collateral Agent shall be entitled to deduct from the
share of such Proceeds otherwise payable to the New Junior Debt Representatives
such New Junior Debt holders’ pro rata share of all amounts that Collateral Agent
has been paid by the Paying Indemnifying Parties pursuant to Section 7(c) of
the Intercreditor Agreement; and

Fifth,
after payment in full of all Secured Obligations, to applicable Pledgor, or its
successors or assigns, or to whomsoever may be lawfully entitled to receive the
same or as a court of competent jurisdiction may direct, of any surplus then
remaining from such Proceeds.

At the time of any
application of Proceeds by Collateral Agent pursuant to this Section 12,
Collateral Agent shall provide the Existing Holdings Senior Notes Trustees and
any Other Permitted Credit Exposure Holder, New Senior Debt Representative,
Refinancing Senior Debt Representative and/or New Junior Debt Representative
with a certificate setting forth the total amount paid to Collateral Agent
pursuant to Section 7(c) of the Intercreditor Agreement and a
calculation of the amounts, if any, deducted from Proceeds paid to Existing
Holdings Senior Notes Trustees, Other Permitted Credit Exposure Holders, New
Senior Debt Representatives, Refinancing Senior Debt Representatives or New
Junior Debt Representatives, as the case may be.

SECTION 13.                                             EXPENSES.

The Pledgors will
upon demand pay to Collateral Agent the amount of any and all reasonable
expenses, including the reasonable fees and expenses of its counsel and of any
experts and agents, which Collateral Agent may incur in connection with (i) the
administration of this Agreement, (ii) the custody or preservation of, or
the sale of, collection from, or other realization upon, any of the Pledged
Collateral, (iii) the exercise or enforcement of any of the rights of
Collateral Agent or any other Secured Party hereunder or (iv) the failure
by any Pledgor to perform or observe any of the provisions hereof. The Pledgors’
obligations under this Section 13 shall be joint and several.

SECTION 14.                                             NO
WAIVER.

No failure on the
part of Collateral Agent to exercise, and no course of dealing with respect to,
and no delay in exercising, any right, power or remedy hereunder shall operate
as 

 20
 

 

a waiver thereof; nor
shall any single or partial exercise by Collateral Agent of any right, power or
remedy hereunder preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies herein provided are to the
fullest extent permitted by law cumulative and are not exclusive of any
remedies provided by law.

SECTION 15.                                             COLLATERAL
AGENT.

Collateral Agent
has been appointed as Collateral Agent hereunder pursuant to the Intercreditor
Agreement by the Lender Agent, the Existing Holdings Senior Notes Trustees, the
Existing Owens-Brockway Senior Secured Notes Trustees, the holders of the other
obligations described on Exhibit I to the Intercreditor Agreement,
and, in the event that any future Other Permitted Credit Exposure, future New
Senior Debt, Refinancing Senior Debt, or New Junior Debt are secured hereby, by
each future Other Permitted Credit Exposure Holder, future New Senior Debt
Representative, each Refinancing Senior Debt Representative and each New Junior
Debt Representative executing an acknowledgment to the Intercreditor Agreement
and Collateral Agent shall be entitled to the benefits of the Intercreditor
Agreement. Collateral Agent shall be obligated, and shall have the right,
hereunder to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking action (including,
without limitation, the release or substitution of Pledged Collateral) solely
in accordance with this Agreement and the Intercreditor Agreement. Collateral
Agent may resign and a successor collateral agent may be appointed in the
manner provided in the Intercreditor Agreement. Upon the acceptance of any
appointment as a collateral agent by a successor collateral agent, that
successor collateral agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring collateral agent
under this Agreement, and the retiring collateral agent shall thereupon be
discharged from its duties and obligations under this Agreement and shall
deliver any Pledged Collateral in its possession to the successor collateral
agent. After any retiring collateral agent’s resignation, the provisions of
this Agreement shall inure to its benefit as to any actions taken or omitted to
be taken by it under this Agreement while it was Collateral Agent. Anything
contained in this Agreement to the contrary notwithstanding, in the event of
any conflict between the express terms and provisions of this Agreement and the
express terms and provisions of the Intercreditor Agreement, such terms and
provisions of the Intercreditor Agreement shall control.

SECTION 16.                                             INDEMNIFICATION.

Each Pledgor
hereby agrees to indemnify Collateral Agent for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against Collateral Agent in any way
relating to or arising out of this Agreement, the Intercreditor Agreement, the
Credit Agreement, the Subsidiary Guaranty, the Other Permitted Credit Exposure
Documents, the Existing Holdings Senior Notes, the Existing Holdings Senior
Notes Indentures, any Existing Holdings Senior Notes Subordinated Guaranty, New
Senior Debt Documents, Refinancing Senior Debt Documents or New Junior Debt
Documents or any other documents contemplated by or referred to therein or the
transactions contemplated thereby or the enforcement of any of the terms hereof
or of any such other documents or otherwise arising or relating in any manner
to the pledges, dispositions of Pledged Collateral or proceeds of Pledged
Collateral, or other actions of any nature with respect to the Pledged
Collateral contemplated 

 21
 

 

hereunder and under the
Intercreditor Agreement to secure the payment of the Secured Obligations; provided,
however, that, the Pledgor shall not be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of Collateral Agent or failure by Collateral Agent to exercise
reasonable care in the custody and preservation of the Pledged Collateral as
provided in Section 10.

SECTION 17.                                             AMENDMENTS,
ETC.

Prior to such time
as all Senior Secured Obligations shall have been indefeasibly paid in full and
the Credit Agreement has terminated and all Letters of Credit have been
cancelled, this Agreement may not be amended, modified or waived except with
the written consent of the Pledgors, Collateral Agent and the Lender Agent and,
solely with respect to an amendment of Section 12, the relative
ranking or the priority of the security interests granted in Section 1,
this Section 17, or the release of Pledged Collateral except as
herein provided, with the written consent of each Other Permitted Credit
Exposure Holder (if the Pledged Collateral then secures such Other Permitted
Credit Exposure), any New Senior Debt Representative (if the Pledged Collateral
then secures New Senior Debt), the Existing Holdings Senior Notes Trustees (if
the Pledged Collateral then secures the Existing Holdings Senior Notes) and any
Refinancing Senior Debt Representative (if the Pledged Collateral then secures
Refinancing Senior Debt), in each case to the extent such Secured Party is
affected thereby in a manner adverse to such party;  provided, that, the written
consent of the Lender Agent shall not be required if the Obligations have been
indefeasibly paid in full and the Credit Agreement has terminated and all
Letters of Credit have been cancelled; provided, further, that,
if the Obligations have been indefeasibly paid in full and the Credit Agreement
has terminated and all Letters of Credit have been cancelled, the written
consent of the holders of a majority of the outstanding New Senior Debt which
is secured by the Pledged Collateral shall be required for any amendment,
modification or waiver of this Agreement; provided, further, that,
during such time as the Pledged Collateral secures only the payment of the
Second Priority Secured Obligations and Third Priority Secured Obligations,
this Agreement may not be amended, modified or waived except with the written
consent of the Pledgors, Collateral Agent, the Existing Holdings Senior Notes
Trustees (if the Pledged Collateral then secures the Existing Holdings Senior
Notes) and any Refinancing Senior Debt Representative (if the Pledged
Collateral then secures Refinancing Senior Debt), provided, further,
that, during such time as the Pledged Collateral secures only the
payment of the Third Priority Secured Obligations, this Agreement may not be
amended, modified or waived except with the written consent of the Pledgors,
Collateral Agent, and any New Junior Debt Representative (if the Pledged
Collateral then secures New Junior Debt); provided, however, that,
notwithstanding the foregoing, no such written consent of any party (other than
the Lender Agent) shall be required with respect to amendments, modifications
or waivers necessary to permit the incurrence of additional Indebtedness
(including any successor or replacement facility to the Credit Agreement)
secured by the Pledged Collateral and entitled to the benefits hereof insofar
as the foregoing is not prohibited by the applicable documents governing or
evidencing the Secured Obligations, including without limitation any
amendments, modifications or waivers for the purpose of adding appropriate
references to additional parties in, and according such parties the benefits
of, any of the provisions hereof and designating such parties as Senior Secured
Parties (and the related obligations as Senior Secured Obligations), Second
Priority Secured Parties (and the related obligations as Second Priority
Secured Obligations) or Third 

 22
 

 

Priority Secured Parties
(and the related obligations as Third Priority Secured Obligations), as
applicable, in connection with the incurrence of such indebtedness.

SECTION 18.                                             TERMINATION.

Upon the earlier
to occur of (a) payment in full in cash of all Senior Secured Obligations
(excluding the Other Permitted Credit Exposure and obligations under or in
respect of the New Senior Debt Documents), the cancellation or termination of
the Commitments and the cancellation or expiration of all outstanding Letters
of Credit, and upon the written election of Pledgors, and (b) the first
date on which the Pledged Collateral no longer secures the Obligations and upon
written election of Pledgors, the security interests granted hereby and this
Agreement shall terminate and all rights to the Pledged Collateral shall revert
to the applicable Pledgors, and Collateral Agent shall, upon the request and at
the expense of the Pledgors, forthwith assign, transfer and deliver, against
receipt and without recourse to Collateral Agent, such of the Pledged
Collateral as shall not have been sold or otherwise applied pursuant to the
terms hereof to or on the order of the Pledgors.

Notwithstanding
anything herein (including Section 20) to the contrary, if all the
Obligations have either been paid in full in cash or are no longer secured by
any of the Pledged Collateral, this Agreement shall be terminable at the
election of the Pledgors and upon the delivery of written notice of such
election to Collateral Agent, this Agreement shall terminate and Collateral
Agent shall, at the expense of the Pledgors, forthwith assign, transfer and
deliver against receipt and without recourse to Collateral Agent, such Pledged
Collateral as shall not have been sold or otherwise applied pursuant to the
terms hereof to or on the order of the Pledgors.

SECTION 19.                                             ADDRESSES
FOR NOTICES.

All notices and
other communications provided for hereunder shall be in writing (including
telegraphic or telecopy communication) and mailed, telegraphed, telecopied or
delivered, if to a Pledgor, addressed to it at the address set forth on the
signature page of this Agreement, if to Collateral Agent, addressed to it
at the address set forth on the signature page of this Agreement, if to
the Lender Agent, addressed to it at the address set forth on the signature page of
the Credit Agreement, or as to any party at such other address as shall be
designated by such party in a written notice to each other party complying as
to delivery with the terms of this Section 19. All such notices and
other communications shall be effective when received.

SECTION 20.                                             CONTINUING
SECURITY INTEREST; TRANSFER OF NOTES.

Subject
to Section 18, this Agreement shall create a continuing security
interest in the Pledged Collateral and shall (i) remain in full force and
effect until indefeasible payment in full in cash of all Secured Obligations, (ii) be
binding upon the Pledgor, its successors and assigns, and (iii) inure,
together with the rights and remedies of Collateral Agent hereunder, to the
benefit of Collateral Agent and each other Secured Party and each of their
respective successors, transferees and assigns. Without limiting the generality
of the foregoing clause (iii), (A) but subject to the provisions of subsection
10.2 of the Credit Agreement, any Lender may assign or otherwise transfer
any Loans held by it to any other Person, and such other Person shall 

 23
 

 

thereupon become vested
with all the benefits in respect thereof granted to Lenders as Secured Parties
herein or otherwise, (B) any Other Permitted Credit Exposure Holder may
assign or otherwise transfer any Other Permitted Credit Exposure to any other
Lender or Affiliate of  Lender in
accordance with the applicable Other Permitted Credit Exposure Documents and
such other permitted assignee shall thereupon become vested with all the
benefits in respect thereof granted to such Other Permitted Credit Exposure Holder
as a Secured Party herein or otherwise and (C) any holder of any Existing
Holdings Senior Notes, New Senior Debt, Refinancing Senior Debt or New Junior
Debt may assign or otherwise transfer any Existing Holdings Senior Notes, New
Senior Debt, Refinancing Senior Debt or New Junior Debt to any other Person in
accordance with the applicable Existing Holdings Senior Notes Indentures, New
Senior Debt Documents, Refinancing Senior Debt Documents or New Junior Debt
Documents and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such holder (or its representative) as a
Secured Party herein or otherwise.

SECTION 21.                                             GOVERNING LAW; TERMS.

THIS AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF
THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), EXCEPT AS REQUIRED BY
MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE CODE REQUIRES
THAT THE PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER,
IN RESPECT OF ANY PARTICULAR PLEDGED COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise defined herein
or in the Credit Agreement, terms defined in Articles 8 and 9 of the Code are
used herein as therein defined.

SECTION 22.                                             CONSENT
TO JURISDICTION AND SERVICE OF PROCESS.

All judicial
proceedings brought against either Pledgor with respect to this Agreement may
be brought in any state or federal court of competent jurisdiction in the State
of New York and by execution and delivery of this Agreement, each Pledgor
accepts for itself and in connection with its properties, generally and
unconditionally, the nonexclusive jurisdiction of the aforesaid courts, and
irrevocably agrees to be bound by any judgment rendered thereby in connection
with this Agreement. The Pledgors designate and appoint C T Corporation
System, The Corporation Trust Company, 1633 Broadway, New York, New York 10019
and such other Persons as may hereafter be selected by the Pledgors,
irrevocably agreeing in writing to so serve, as its agent to receive on its
behalf service of all process in any such proceedings in any such court, such
service being hereby acknowledged by each Pledgor to be effective and binding
service in every respect. A copy of any such process so served shall be mailed
by registered mail to the Pledgors at their addresses referred to in Section 19,
except that unless otherwise provided by applicable law, any failure to mail
such copy shall not affect the validity of service of process. If any agent
appointed by the Pledgors refuses to accept service, each Pledgor hereby agrees
that service upon it by mail shall constitute sufficient notice. Nothing herein
shall affect the right to serve process in any other manner permitted by law or
shall limit the right of Collateral Agent to bring proceedings against a
Pledgor in the courts of any other jurisdiction.

 24

 

 

SECTION 23.                                             SECURITY INTEREST ABSOLUTE.

All rights of
Collateral Agent and security interests hereunder, and all obligations of the
Pledgors, hereunder shall be absolute and unconditional irrespective of, and
Pledgors hereby waive any and all defenses that they may now or in the future
have arising out of:

(a)   any lack of validity or enforceability of any
of the Credit Agreement, any Other Permitted Credit Exposure Guaranty, any of
the Existing Holdings Senior Notes, any Existing Holdings Senior Notes Indenture,
the Existing Holdings Senior Notes Subordinated Guaranty, any New Senior Debt
Document, any Refinancing Senior Debt Document, any New Junior Debt Document,
or any other agreement or instrument relating thereto;

(b)    any change in the time, manner or place of
payment of, or in any other term of, all or any of the Secured Obligations, or
any other amendment or waiver of or any consent to any departure from any of
the Credit Agreement, Subsidiary Guaranty, any Other Permitted Credit Exposure
Document, the Existing Holdings Senior Notes, any Existing Holdings Senior
Notes Indenture, any Existing Holdings Senior Notes Subordinated Guaranty, any
New Senior Debt Document, any Refinancing Senior Debt Document, or any New
Junior Debt Document;

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

(d)   any
other circumstance which might otherwise constitute a defense available to, or
a discharge of, either Pledgor.

SECTION 24.                                             WAIVER
OF JURY TRIAL.

EACH PLEDGOR AND
COLLATERAL AGENT HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The
scope of this waiver is intended to be all encompassing of any and all disputes
that may be filed in any court and that relate to the subject matter of this
transaction, including without limitation, contract claims, tort claims, breach
of duty claims, and all other common law and statutory claims. Each Pledgor and
Collateral Agent acknowledge that this waiver is a material inducement for each
Pledgor and Collateral Agent to enter into a business relationship, that each
Pledgor and Collateral Agent have already relied on this waiver in entering
into this Agreement and that each will continue to rely on this waiver in their
related future dealings. Each Pledgor and Collateral Agent further warrant and
represent that each has reviewed this waiver with its legal counsel, and that
each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT
BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER
SPECIFICALLY REFERRING TO THIS SECTION 24 AND EXECUTED BY EACH OF
THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR 

25

 

MODIFICATIONS TO THIS
AGREEMENT. In the event of litigation, this Agreement may be filed as a written
consent to a trial by the court.

SECTION 25.                                             COUNTERPARTS.

This Agreement may
be executed in one or more counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be deemed
an original, but all such counterparts together shall constitute but one and
the same instrument; signature pages may be detached from multiple
separate counterparts and attached to a single counterpart so that all
signature pages are physically attached to the same document.

[Remainder of page intentionally left blank]

26

 

 

IN
WITNESS WHEREOF, the Pledgors have caused this Agreement to
be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.

 

 

	
  

  	
  Pledgor

  
	
   

  	
   

  	
   

  
	
   

  	
  OWENS-ILLINOIS
  GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Notice
  Address:

  
	
   

  	
   

  	
  One Seagate

  Toledo, Ohio  43666

  Attention:  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  Pledgor

  
	
   

  	
   

  	
   

  
	
   

  	
  OWENS-BROCKWAY
  PACKAGING, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Notice
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  One Seagate

  Toledo, Ohio  43666

  Attention:  Treasurer

  

27

 

 

IN WITNESS WHEREOF,
Collateral Agent has caused this Agreement to be duly executed and delivered by
its officer thereunto duly authorized as of the date first above written.

 

	
  

  	
  Collateral Agent

  
	
   

  	
   

  
	
  

  	
  DEUTSCHE BANK TRUST COMPANY

  AMERICAS,

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Deutsche Bank Trust Company Americas

  90 Hudson Street

  MS JCY050-199

  Jersey City, New Jersey 07302

  Attention:  Commercial Loan Division

  
	
   

  	
   

  	
   

  
	
   

  	
  With a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Deutsche Bank Trust Company Americas

  222 South Riverside Plaza

  MS CHI105-2900

  Chicago, Illinois  60606

  Attention: Marla Heller and Linda Stahulak

  

 

 

 

SCHEDULE
III

To the Second
Amended Restated Pledge Agreement

PLEDGE AMENDMENT

This Pledge Amendment,
dated as of _________, 20__, is delivered pursuant to Section 5 of the
Pledge Agreement referred to below. The undersigned hereby agrees that this
Pledge Amendment may be attached to the Second Amended Restated Pledge
Agreement dated as of June 14, 2006, between the undersigned and Deutsche
Bank Trust Company Americas, as Collateral Agent (the “Pledge
Agreement”; capitalized terms defined therein being used as therein
defined), and that the Pledged Shares listed on this Pledge Amendment shall be
deemed to be part of the Pledged Shares and shall become part of the Pledged
Collateral and shall secure all Senior Secured Obligations and Second Secured
Obligations as provided in the Pledge Agreement.

	
   

  	
  [PLEDGOR]

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
  Name: 

  	
   

  	
   

  
	
   

  	
  Title: 

  	
   

  	
   

  

 

	
  

  	
   

  	
  Class

  	
   

  	
  Stock

  	
   

  	
   

  	
   

  	
  Number

  	
   

  	
  Percentage of

  
	
   

  	
   

  	
  of

  	
   

  	
  Certificate

  	
   

  	
  Par

  	
   

  	
  of

  	
   

  	
  All Capital

  
	
  Stock Issuer

  	
   

  	
  Stock

  	
   

  	
  No(s).

  	
   

  	
  Value

  	
   

  	
  Shares

  	
   

  	
  Stock Owned

  

 

 Sch. III

 

TABLE OF CONTENTS

	
  

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  SECTION 1.

  	
  PLEDGES

  	
  6

  
	
   

  	
   

  	
   

  
	
  SECTION 2.

  	
  SECURED OBLIGATIONS;
  PRIORITY

  	
  8

  
	
   

  	
   

  	
   

  
	
  SECTION 3.

  	
  DELIVERY OF PLEDGED
  COLLATERAL

  	
  10

  
	
   

  	
   

  	
   

  
	
  SECTION 4.

  	
  REPRESENTATIONS AND
  WARRANTIES

  	
  10

  
	
   

  	
   

  	
   

  
	
  SECTION 5.

  	
  SUPPLEMENTS, FURTHER
  ASSURANCES

  	
  13

  
	
   

  	
   

  	
   

  
	
  SECTION 6.

  	
  VOTING RIGHTS;
  DIVIDENDS; ETC

  	
  13

  
	
   

  	
   

  	
   

  
	
  SECTION 7.

  	
  TRANSFERS AND OTHER
  LIENS; ADDITIONAL SHARES

  	
  15

  
	
   

  	
   

  	
   

  
	
  SECTION 8.

  	
  COLLATERAL AGENT
  APPOINTED ATTORNEY-IN-FACT

  	
  16

  
	
   

  	
   

  	
   

  
	
  SECTION 9.

  	
  COLLATERAL AGENT MAY PERFORM

  	
  16

  
	
   

  	
   

  	
   

  
	
  SECTION 10.

  	
  REASONABLE CARE

  	
  16

  
	
   

  	
   

  	
   

  
	
  SECTION 11.

  	
  REMEDIES UPON DEFAULT;
  DECISIONS RELATING TO

  	
  16

  
	
   

  	
   

  	
   

  
	
  SECTION 12.

  	
  APPLICATION OF PROCEEDS

  	
  19

  
	
   

  	
   

  	
   

  
	
  SECTION 13.

  	
  EXPENSES

  	
  20

  
	
   

  	
   

  	
   

  
	
  SECTION 14.

  	
  NO WAIVER

  	
  21

  
	
   

  	
   

  	
   

  
	
  SECTION 15.

  	
  COLLATERAL AGENT

  	
  21

  
	
   

  	
   

  	
   

  
	
  SECTION 16.

  	
  INDEMNIFICATION

  	
  21

  
	
   

  	
   

  	
   

  
	
  SECTION 17.

  	
  AMENDMENTS, ETC

  	
  22

  
	
   

  	
   

  	
   

  
	
  SECTION 18.

  	
  TERMINATION

  	
  23

  
	
   

  	
   

  	
   

  
	
  SECTION 19.

  	
  ADDRESSES FOR NOTICES

  	
  23

  
	
   

  	
   

  	
   

  
	
  SECTION 20.

  	
  CONTINUING SECURITY
  INTEREST; TRANSFER OF NOTES

  	
  24

  
	
   

  	
   

  	
   

  
	
  SECTION 21.

  	
  GOVERNING LAW; TERMS

  	
  24

  
	
   

  	
   

  	
   

  
	
  SECTION 22.

  	
  CONSENT TO JURISDICTION
  AND SERVICE OF PROCESS

  	
  24

  
	
   

  	
   

  	
   

  
	
  SECTION 23.

  	
  SECURITY INTEREST
  ABSOLUTE

  	
  25

  
	
   

  	
   

  	
   

  
	
  SECTION 24.

  	
  WAIVER OF JURY TRIAL

  	
  25

  
	
   

  	
   

  	
   

  
	
  SECTION 25.

  	
  COUNTERPARTS

  	
  26

  

 

 

 iExhibit 4.4

SECOND AMENDED AND RESTATED

SECURITY AGREEMENT

dated
as of June 14, 2006

among

OWENS-ILLINOIS
GROUP, INC.,

O-I
HEALTH CARE HOLDING CORP., OI GENERAL FINANCE INC.,

SPECIALTY PACKAGING LICENSING COMPANY,

OWENS-ILLINOIS CLOSURE INC., PRODUCT DESIGN & ENGINEERING, INC.,

OI BRAZIL CLOSURE INC., OWENS-ILLINOIS PRESCRIPTION PRODUCTS INC.,

OI MEDICAL INC., OI GENERAL FTS INC., OI PLASTIC PRODUCTS FTS INC.,

OWENS-ILLINOIS SPECIALTY PRODUCTS PUERTO RICO, INC.,

OI AUSTRALIA INC., ACI AMERICA HOLDINGS INC.,

OI CASTALIA STS INC., OWENS-ILLINOIS HEALTHCARE PACKAGING INC.,

OI LEVIS PARK STS INC., OI AID STS INC., OWENS-ILLINOIS GENERAL INC.,

O-I HOLDING COMPANY, INC., UNIVERSAL MATERIALS, INC.,

OWENS-BROCKWAY PACKAGING, INC.,

OWENS-BROCKWAY GLASS CONTAINER INC.,

BROCKWAY REALTY CORPORATION, BROCKWAY RESEARCH, INC.,

NHW AUBURN, LLC, OI AUBURN INC.,

SEAGATE, INC., SEAGATE II, INC., SEAGATE III, INC.,

OWENS-BROCKWAY GLASS CONTAINER TRADING COMPANY,

OB CAL SOUTH INC., OVERSEAS FINANCE COMPANY, OIB PRODUVISA INC.,

OI CONSOL STS INC., OI CALIFORNIA CONTAINERS INC., OI PUERTO RICO

STS INC., OI EUROPE & ASIA INC.,

and OI INTERNATIONAL HOLDINGS INC.

ADDITIONAL
GRANTORS

and

DEUTSCHE
BANK TRUST COMPANY AMERICAS

 

 

TABLE OF CONTENTS

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
  Section 1.

  	
   

  	
  Grant of Security

  	
   

  	
  4

  
	
  Section 2.

  	
   

  	
  Security for
  Obligations

  	
   

  	
  9

  
	
  Section 3.

  	
   

  	
  Grantors Remain Liable

  	
   

  	
  11

  
	
  Section 4.

  	
   

  	
  Representations and
  Warranties

  	
   

  	
  11

  
	
  Section 5.

  	
   

  	
  Further Assurances

  	
   

  	
  13

  
	
  Section 6.

  	
   

  	
  Certain Covenants of
  Grantors

  	
   

  	
  14

  
	
  Section 7.

  	
   

  	
  Omitted

  	
   

  	
  14

  
	
  Section 8.

  	
   

  	
  Special Covenants with
  respect to Accounts and Related Contracts

  	
   

  	
  14

  
	
  Section 9.

  	
   

  	
  Special Covenants With
  Respect to the Securities Collateral

  	
   

  	
  15

  
	
  Section 10.

  	
   

  	
  Special Covenants With
  Respect to the Intellectual Property Collateral

  	
   

  	
  17

  
	
  Section 11.

  	
   

  	
  Omitted

  	
   

  	
  18

  
	
  Section 12.

  	
   

  	
  Collateral Account.

  	
   

  	
  18

  
	
  Section 13.

  	
   

  	
  Secured Party Appointed
  Attorney-in-Fact

  	
   

  	
  19

  
	
  Section 14.

  	
   

  	
  Collateral Agent May
  Perform

  	
   

  	
  20

  
	
  Section 15.

  	
   

  	
  Standard of Care

  	
   

  	
  20

  
	
  Section 16.

  	
   

  	
  Remedies

  	
   

  	
  20

  
	
  Section 17.

  	
   

  	
  Additional Remedies for
  Intellectual Property Collateral

  	
   

  	
  23

  
	
  Section 18.

  	
   

  	
  Application of Proceeds

  	
   

  	
  24

  
	
  Section 19.

  	
   

  	
  Indemnity and Expenses

  	
   

  	
  25

  
	
  Section 20.

  	
   

  	
  Continuing Security
  Interest; Transfer of Loans; Termination and Release

  	
   

  	
  25

  
	
  Section 21.

  	
   

  	
  Collateral Agent as
  Agent.

  	
   

  	
  27

  
	
  Section 22.

  	
   

  	
  Additional Grantors

  	
   

  	
  27

  
	
  Section 23.

  	
   

  	
  Amendments; Etc.

  	
   

  	
  27

  
	
  Section 24.

  	
   

  	
  Notices

  	
   

  	
  28

  
	
  Section 25.

  	
   

  	
  Failure or Indulgence
  Not Waiver; Remedies Cumulative

  	
   

  	
  28

  
	
  Section 26.

  	
   

  	
  Severability

  	
   

  	
  28

  
	
  Section 27.

  	
   

  	
  Headings

  	
   

  	
  28

  
	
  Section 28.

  	
   

  	
  Governing Law; Terms;
  Rules of Construction

  	
   

  	
  28

  
	
  Section 29.

  	
   

  	
  Consent to Jurisdiction
  and Service of Process

  	
   

  	
  29

  

 

 i
 

 

 

	
  Section 30.

  	
   

  	
  Waiver of Jury Trial

  	
   

  	
  29

  
	
  Section 31.

  	
   

  	
  Counterparts

  	
   

  	
  30

  

 

 ii

 

SCHEDULES

Schedule 1(e)(i) to Security Agreement

Schedule 1(e)(ii) to Security Agreement

Schedule 1(f)(iii) to Security Agreement

Schedule 4(d) to Security Agreement

Schedule 4(e) to Security Agreement

Schedule 4(h) to Security Agreement

 

EXHIBITS

	
  Exhibit I

  	
   

  	
  Form of Counterpart

  
	
   

  	
   

  	
   

  
	
  Exhibit II

  	
   

  	
  Form of Pledge Amendment

  

 

 

SECOND
AMENDED AND RESTATED SECURITY AGREEMENT

This SECOND AMENDED AND
RESTATED SECURITY AGREEMENT (this “Agreement”) is dated as of June 14, 2006 and entered into by and among
OWENS-ILLINOIS GROUP, INC., a Delaware  corporation (“Company”), each of THE UNDERSIGNED DIRECT AND
INDIRECT SUBSIDIARIES of Company (each of such undersigned
Subsidiaries being a “Subsidiary Grantor” and collectively “Subsidiary Grantors”),
each ADDITIONAL GRANTOR that may become a
party hereto after the date hereof in accordance with Section 22
hereof (each of the Company, each Subsidiary Grantor, and each Additional
Grantor being a “Grantor” and collectively the “Grantors”), DEUTSCHE BANK
TRUST COMPANY AMERICAS (“DBTCA”),
as Collateral Agent for the lenders (“Lenders”)
party to the Credit Agreement referred to below, the Other Permitted Credit
Exposure Holders (as hereinafter defined), U.S. BANK NATIONAL ASSOCIATION, as trustee for the holders
of each of the several series of Existing Owens-Brockway Senior Secured Notes
(defined below) (in such capacity, with respect to any individual series, an “Existing Owens-Brockway Senior Secured Notes Trustee”
and collectively, the “Existing
Owens-Brockway Senior Secured Notes Trustees”), and the other New
Senior Debt Representatives (as hereinafter defined).

RECITALS

1.             Certain
lenders entered into a Secured Credit Agreement dated as of April 23, 2001
(as amended through the fourth amendment thereto, the “Original Credit Agreement”) with Company
and certain of its subsidiaries.

2.             In
connection with the Original Credit Agreement, Company, the other grantors
named therein, and Collateral Agent executed a certain Security Agreement dated
as of April 23, 2001 (as amended through the first amendment thereto, the “Original Security Agreement”), and Collateral
Agent and predecessor lender agent executed a certain Intercreditor Agreement
dated as of April 23, 2001 (as amended through the first amendment thereto
and as supplemented by various acknowledgments thereto, the “Original Intercreditor Agreement”).

3.             After
the execution of the Original Security Agreement, Owens-Brockway issued the
following series of senior secured notes constituting New Senior Debt under the
Original Credit Agreement and the Original Intercreditor Agreement
(collectively, the “Existing Owens-Brockway
Senior Secured Notes”): the 8 7/8% Senior Secured Notes due 2009 in
the original aggregate principal amount of $1,000,000,000, the 7 3/4% Senior
Secured Notes due 2011 in the original aggregate principal amount of
$450,000,000 and the 8 3/4% Senior Secured Notes due 2012 in the original
aggregate principal amount of $625,000,000. In connection with such issuances,
the Existing Owens-Brockway Senior Secured Notes Trustees, as New Senior Debt
Representatives, executed acknowledgments to the Original Intercreditor
Agreement, which acknowledgments were acknowledged by Borrowers’ Agent and
delivered to Collateral Agent, pursuant to which such persons agreed to be
bound by the terms of the Original Intercreditor Agreement, and by virtue of
such execution, acknowledgment and delivery, the obligations in respect of the
Existing Owens-Brockway Senior Secured Notes became secured by the Original
Security Agreement as and to the extent set forth therein and, in the case of
those

 

 

certain 8 3/4% Owens-Brockway Senior Secured Notes due
2012 and those certain 7 3/4% Owens-Brockway Senior Secured Notes due 2011, as
and to the extent set forth in the acknowledgment to the Original Intercreditor
Agreement delivered to the Collateral Agent with respect thereto.

4.             Certain
lenders and DBTCA as agent and representative thereof then entered into a
certain First Amended and Restated Secured Credit Agreement dated as of June 13,
2003 with the Borrowers named therein, Company and Borrowers’ Agent (as amended
through the first amendment thereto, the “First Amended and Restated
Credit Agreement”)
which amended and restated the Original Credit Agreement in its entirety.

5.             In
connection with the First Amended and Restated Credit Agreement, Company, the
other grantors named therein, and Collateral Agent executed a certain Amended
and Restated Security Agreement dated as of June 13, 2003 (as amended
through the second amendment thereto, the “Amended
and Restated Security Agreement”), and Collateral Agent and predecessor
lender agent executed a certain Amended and Restated Intercreditor Agreement
dated as of June 13, 2003 (as amended through the second amendment thereto
and as supplemented by various acknowledgments thereto, the “Amended and Restated Intercreditor Agreement”).

6.             The
lenders and DBTCA as agent and representative thereof then entered into a
certain Second Amended and Restated Secured Credit Agreement dated as of March 15,
2004 with the Borrowers named therein, Company and Borrowers’ Agent (as amended
through the first amendment thereto, the “Second Amended and
Restated Credit Agreement”)
which amended and restated the First Amended and Restated Credit Agreement in
its entirety, and then entered into a certain Third Amended and Restated
Secured Credit Agreement dated as of October 7, 2004 with the Borrowers
named therein, Company and Borrowers’ Agent (as amended through the first
amendment thereto, the “Third Amended and Restated
Credit Agreement”)
which amended and restated the Second Amended and Restated Credit Agreement in
its entirety.

7.             The
lenders and Deutsche Bank AG, New York Branch as agent and representative
thereof (in such capacity, “Lender Agent”)
have entered into a certain Credit Agreement dated as of June 14, 2006
with the Borrowers named therein, Company and Borrowers’ Agent (as amended,
amended and restated, supplemented, or otherwise modified from time to time,
the “Credit Agreement”, which term
shall also include and refer to any successor or replacement facility of
Company and/or its Subsidiaries designated in writing as such by Borrowers’
Agent with Collateral Agent’s consent and acknowledgement of the termination of
the predecessor Credit Agreement by an agent to the lenders thereunder). The
Credit Agreement refinances and replaces the Third Amended and Restated Credit
Agreement in its entirety, has been designated in writing as such by the
Borrowers’ Agent, and Collateral Agent has consented thereto and acknowledged
the termination of the predecessor Third Amended and Restated Credit Agreement
by DBTCA, in its capacity as administrative agent to the lenders thereunder. Initially
capitalized terms used herein without definition are defined in the Credit
Agreement.

8.             After
the execution of the Original Intercreditor Agreement, certain holders of Other
Permitted Credit Exposure (as hereinafter defined), executed acknowledgments 

 2
 

 

thereto or to the Amended
and Restated Intercreditor Agreement, as applicable, which acknowledgments were
acknowledged by Borrowers’ Agent and delivered to Collateral Agent, pursuant to
which such persons agreed to be bound by the terms of the Original
Intercreditor Agreement or to the Amended and Restated Intercreditor Agreement,
as applicable, and by virtue of such execution, acknowledgment and delivery,
the obligations held by such holders became secured by the Original Security
Agreement and/or by the Amended and Restated Security Agreement.

9.             Pursuant
to the Credit Agreement, the parties desire to amend and restate the Amended
and Restated Security Agreement in its entirety as set forth herein.

10.           Owens-Brockway
has guaranteed (A) all Offshore Loans made to, and all other Obligations
of, the Offshore Borrowers and (B) the Other Lender Guarantied
Obligations, all pursuant to a Second Amended and Restated Domestic Borrowers’
Guaranty dated as of June 14, 2006 (as it may hereafter be amended,
restated, supplemented or otherwise modified from time to time, being the “Domestic Borrowers’ Guaranty”).

11.           Company
has guarantied the Obligations of the Borrowers under the Credit Agreement as
well as certain Other Permitted Credit Exposure (as defined below) pursuant to Section 9
of the Credit Agreement.

12.           Subsidiary
Grantors (other than the Domestic Borrower) have executed and delivered that
certain Second Amended and Restated Subsidiary Guaranty dated as of June 14,
2006 (as it may hereafter be amended, restated, supplemented or otherwise
modified from time to time, being the “Subsidiary Guaranty”)
in favor of the Collateral Agent for the benefit of the Lenders and the Other
Permitted Credit Exposure Holders (as defined below), pursuant to which each
such Subsidiary Grantor has guarantied the prompt payment and performance when
due of all Obligations of Borrowers under the Credit Agreement, as well as
certain Other Permitted Credit Exposure.

13.           Subsidiaries
and Joint Ventures of Company have, and it is contemplated that, from time to
time in the future, Subsidiaries and Joint Ventures of Company may incur
obligations to Lenders or affiliates of Lenders arising out of loans, advances,
overdrafts, interest rate, currency or hedge products and other derivative
exposures (including under Interest Rate Agreements and Currency Agreements) or
extensions of credit to the extent permitted under the Credit Agreement,
including those set forth on Exhibit I to the Intercreditor
Agreement (as defined below) (“Other
Permitted Credit Exposure”) in favor of the holders thereof (each,
including those holders of Other Permitted Credit Exposure set forth on Exhibit I
to the Intercreditor Agreement (as defined below), an “Other Permitted Credit Exposure Holder”
and, collectively, the “Other Permitted
Credit Exposure Holders”). The documents and instruments evidencing
or relating to any such Other Permitted Credit Exposure are referred to as the “Other Permitted  Credit Exposure Documents.”

14.           Grantors
have issued and/or guarantied, and it is contemplated that, from time to time
in the future to the extent permitted by the Credit Agreement, Grantors may
issue and/or guaranty, certain New Senior Debt. Any indenture, debenture, note,
guaranty or other document executed by a Grantor in connection with the
issuance of any such New Senior Debt, including those executed in connection
with the Existing Owens-Brockway Senior Secured 

 3
 

 

 

Notes, is referred to herein as a “New Senior Debt Document” individually and
the “New Senior Debt Documents”
collectively. Any trustee or like representative of the holders of any such New
Senior Debt acting in such capacity for the benefit of the holders of New
Senior Debt, including the Existing Owens-Brockway Senior Secured Notes
Trustees, is referred to herein as a “New
Senior Debt Representative.” 
For the avoidance of doubt, the term “New Senior Debt” as used herein
shall not include the Existing Owens-Brockway Senior Unsecured Notes. The
Collateral Agent, the Lenders, the Other Permitted Credit Exposure Holders and
the holders of any New Senior Debt and the New Senior Debt Representatives,
collectively, are referred to herein as the “Secured
Parties”.

15.           Concurrently
herewith, the Collateral Agent, the Lender Agent and the Existing
Owens-Brockway Senior Secured Notes Trustees have entered into a Second Amended
and Restated Intercreditor Agreement dated as of June 14, 2006 (as
amended, amended and restated or otherwise modified from time to time in
accordance with its terms, the “Intercreditor Agreement”)
which provides for, inter, alia, the appointment of the
Collateral Agent to administer the Collateral (defined below). Any New Senior
Debt Representative, and any holder of New Senior Debt represented by such New
Senior Debt Representative, and any Other Permitted Credit Exposure Holder
shall only be entitled to the benefits of this Agreement, and shall only be a
Secured Party hereunder, if such Person (or the representative thereof) has
prior to the date hereof executed and delivered to Collateral Agent an
acknowledgment to the Original Intercreditor Agreement or the Amended and
Restated Intercreditor Agreement and Borrowers’ Agent duly executed and
delivered an acknowledgement to such acknowledgement or from and after the date
hereof executes and delivers to Collateral Agent an acknowledgement to the
Intercreditor Agreement (in the form attached thereto) and the Borrowers’ Agent
has duly executed and delivered an acknowledgement to such acknowledgement. Notwithstanding
anything to the contrary herein, the Existing Owens-Brockway Senior Secured
Notes Trustees, as New Senior Debt Representatives, and the holders of the
Existing Owens-Brockway Senior Secured Notes, as holders of New Senior Debt,
are entitled to the benefits of this Agreement and are Secured Parties
hereunder.

16.           It
is a condition precedent to the Credit Agreement that Grantors listed on the
signature pages hereof shall have granted the security interests set forth
herein in favor of the Collateral Agent for the benefit of the Secured Parties
and undertaken the obligations contemplated by this Agreement.

NOW, THEREFORE, in consideration
of the premises the parties hereto agree that the Amended and Restated Security
Agreement is amended and restated in its entirety as follows:

SECTION 1.         Grant
of Security.

 

Each Grantor hereby assigns to Collateral Agent, and
hereby grants to Collateral Agent, for the ratable benefit of the Secured
Parties (subject to Section 2 below with respect to the Existing
Owens-Brockway Senior Secured Notes and any Specified New Senior Debt (as
defined in the Intercreditor Agreement)) a security interest in all of such
Grantor’s right, title and interest in and to the following, in each case
whether now or hereafter existing, whether tangible or intangible, or in which
such Grantor now has or hereafter acquires an interest and wherever 

 4
 

 

the same may be located, excluding, however, any of
the following constituting Pledged Collateral under the Pledge Agreement
(subject to such exclusion, the “Collateral”):

(a)           all equipment in all of its forms,
all parts thereof and all accessions thereto (any and all such equipment, parts
and accessions being the “Equipment”);

(b)           all inventory in all of its forms,
including but not limited to (i) all goods held by such Grantor for sale
or lease or to be furnished under contracts of service or so leased or
furnished, (ii) all raw materials, work in process, finished goods, and
materials used or consumed in the manufacture, packing, shipping, advertising,
selling, leasing, furnishing or production of such inventory or otherwise used
or consumed in such Grantor’s business, (iii) all goods in which such
Grantor has an interest in mass or a joint or other interest or right of any
kind, and (iv) all goods which are returned to or repossessed by such
Grantor and all accessions thereto and products thereof (collectively the “Inventory”) and all negotiable and non-negotiable documents
of title (including, without limitation, documents, warehouse receipts, dock
receipts and bills of lading) issued by any Person covering any Inventory (any
such negotiable document of title being a “Negotiable Document of
Title”);

(c)           all accounts, contract rights,
chattel paper, documents, instruments, letter-of-credit rights and other rights
and obligations of any kind owned by or owing to such Grantor and all rights
in, to and under all security agreements, leases and other contracts securing
or otherwise relating to any such accounts, contract rights, chattel paper,
documents, instruments, letter-of-credit rights or other rights and obligations
(but excluding, solely for the purposes of this clause (c) any items that
are, or would (but for stated exclusions) constitute, Pledged Debt (as defined
herein)) (subject to the foregoing exclusion, any and all such accounts,
contract rights, chattel paper, documents, instruments, letter-of-credit rights
and other rights and obligations being the “Accounts”, and
any and all such security agreements, leases and other contracts being the “Related Contracts”);

(d)           other than any deposit accounts and
amounts deposited therein that are subject to a securitization permitted under
the Credit Agreement, all deposit accounts, together with (i) all amounts
on deposit from time to time in such deposit accounts and (ii) all
interest, cash, instruments, securities and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the foregoing (“Deposit Accounts”);

(e)           the “Securities
Collateral”, which term means:

(i)            the shares of stock,  partnership interests, interests in joint
ventures, limited liability company interests and all other equity interests in
a Person that is owned on the date hereof and described on Schedule 1(e)(i) or,
after the date hereof, becomes, a direct Subsidiary of such Grantor, solely to
the extent such equity interests are required to be pledged pursuant to the
Credit Agreement, including all securities convertible into, and rights,
warrants, options and other rights to purchase or otherwise acquire, any of the
foregoing now or hereafter owned by such Grantor, and the certificates or other
instruments representing any of  the
foregoing and any interest of such Grantor in the entries on the books of any
securities intermediary pertaining thereto, excluding, however, (A) any
of the foregoing with respect to OI Advisors, Inc. (f/k/a 

 5
 

 

Harbor Capital Advisors, Inc.),
OI Securities, Inc. (f/k/a HCA Securities, Inc.) and OI Transfer, Inc.
(f/k/a Harbor Transfer, Inc.) (collectively, the “Harbor Capital Companies”), (B) any of
the foregoing with respect to OI General FTS, Inc., (C), in the case
of Company and Packaging, any of the foregoing pledged thereby as Pledged
Collateral pursuant to the Pledge Agreement, including, without limitation, the
Company Pledged Shares and the Packaging Pledged Shares (each as defined in the
Pledge Agreement) and (D) any of the foregoing with respect to any direct
Subsidiary of such Grantor existing on the date hereof that is not listed on
Schedule 1(e)(i) unless and until the same are required to be pledged
pursuant to the Credit Agreement (subject to such exclusions, the “Pledged Shares”), and all dividends, distributions,
returns of capital, cash, warrants, options, rights, instruments, rights to
vote or manage the business of such Person pursuant to organizational documents
governing the rights and obligations of the stockholders, partners, members or
other owners thereof and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such Pledged Shares; provided, that if the issuer of any of such Pledged
Shares is a controlled foreign corporation (used hereinafter as such term is
defined in Section 957(a) or a successor provision of the
Internal Revenue Code) (such Pledged Shares, are referred to herein as “Foreign Pledged Shares”), notwithstanding
anything herein to the contrary, in no event shall the Secured Parties be
entitled to realize on, foreclose against or otherwise have recourse to Foreign
Pledged Shares in excess of the number of shares or other equity interests of
such issuer possessing up to but not exceeding 65% of the voting power of all
classes of capital stock or other equity interests entitled to vote of such
issuer, and all dividends, cash, warrants, rights, instruments and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such Pledged Shares
in connection with or on account of the satisfaction of any Domestic
Obligations and such excess shares or other equity interests shall not be
deemed to be Pledged Shares for purposes of the security pledged for the
Domestic Obligations; provided, further, however, that
there shall be no limitations on the realization, foreclosure against or other
recourse of the Secured Parties against the Foreign Pledged Shares in
connection with or on account of the satisfaction of any Foreign Obligations. As
used herein, “Domestic Obligations”
means the obligations of Owens-Brockway consisting of Term Loans, Revolving
Loans, Letters of Credit for the account of Owens-Brockway, the Domestic
Overdraft Agreement, any obligations of any Loan Party under other Loan
Documents and Other Permitted Credit Exposure Documents and New Senior Debt
Documents (other than the Existing Owens-Brockway Senior Secured Notes or other
Specified New Senior Debt), in each case which are not obligations of Offshore
Borrowers or any Foreign Subsidiary, and “Foreign
Obligations” means the obligations of the Offshore Borrowers and
their Foreign Subsidiaries consisting of Term Loans and Revolving Loans to such
Offshore Borrowers, Letters of Credit for the account of Offshore Borrowers,
the Offshore Overdraft Agreements and any obligations under the other Loan
Documents which are not obligations of a domestic entity, including Grantors
(it being understood that the intent of the foregoing definitions and provisos
is to avoid a situation in which a pledge of Foreign Pledged Shares and a
realization on, foreclosure against or recourse to such Foreign Pledged Shares
would constitute an investment of earnings in United States property under Section 956
(or a successor provision) of the Internal Revenue Code which would trigger an
increase in the gross income of a United States shareholder of any 

 6
 

 

issuer of Foreign Pledged
Shares pursuant to Section 951 (or a successor provision) of the
Internal Revenue Code);

(ii)           the indebtedness from time to time
owed to such Grantor by any obligor that is, or becomes, a direct or indirect
Subsidiary of such Grantor, or by any obligor of which such Grantor is a direct
or indirect subsidiary, including the indebtedness described on Schedule 1(e)(ii) and
issued by the obligors named therein, and the instruments evidencing such
indebtedness excluding, however, (A) any such indebtedness
owing to or from any of the Harbor Capital Companies, (B) any such
indebtedness owing from OI General FTS, Inc., and (C) in the case of
Company and Packaging, any of the foregoing pledged thereby as Pledged
Collateral pursuant to the Pledge Agreement, including without limitation the
Company Pledged Debt and the Packaging Pledged Debt (as defined in the Pledge
Agreement) (subject to such exclusions, the “Pledged Debt”), and all interest, cash,
instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the Pledged Debt; and

(iii)          all other investment property of such
Grantor (unless expressly excluded in clauses (i) and (ii) above)
provided that no other enforceable restrictions exist on the pledging or
hypothecation thereof;

(f)            the “Intellectual
Property Collateral”, which term means:

(i)            all rights, title and interest
(including rights acquired pursuant to a license or otherwise) in and to all
trademarks, service marks, designs, logos, indicia, tradenames, trade dress,
corporate names, company names, business names, fictitious business names,
trade styles and/or other source and/or business identifiers and applications
pertaining thereto, owned by such Grantor, or hereafter adopted and used, in
its business (collectively, the “Trademarks”),
all registrations that have been or may hereafter be issued or applied for
thereon in the United States and any state thereof and in foreign countries
(the “Trademark
Registrations”), all
common law and other rights in and to the Trademarks in the United States and
any state thereof and in foreign countries (the “Trademark Rights”), and all goodwill of such Grantor’s
business symbolized by the Trademarks and associated therewith (the “Associated Goodwill”):

(ii)           all rights, title and interest
(including rights acquired pursuant to a license or otherwise) in and to all
patents and patent applications and rights and interests in patents and patent
applications under any domestic or foreign law that are presently, or in the
future may be, owned or held by such Grantor and all patents and patent applications
and rights, title and interests in patents and patent applications under any
domestic or foreign law that are presently, or in the future may be, owned by
such Grantor in whole or in part all rights corresponding thereto (including,
without limitation, the right, exercisable only upon the occurrence and during
the continuation of an Event of Default, to sue for past, present and future
infringements in the name of such Grantor or in the name of Collateral Agent or
the Secured Parties), and all re-issues, divisions, continuations, renewals,
extensions and continuations-in-part thereof (all of the foregoing being
collectively referred to as the “Patents”); it
being understood that the rights and interests included in the Intellectual
Property Collateral hereby shall include, without 

 7
 

 

limitation, all rights
and interests pursuant to licensing or other contracts in favor of such Grantor
pertaining to patent applications and patents presently or in the future owned
or used by third parties but, in the case of third parties which are not
Affiliates of such Grantor, only to the extent permitted by such licensing or
other contracts and, if not so permitted, only with the consent of such third
parties; and

(iii)          all rights, title and interest
(including rights acquired pursuant to a license or otherwise) under copyrights
in various published and unpublished works of authorship including, without
limitation, computer programs, computer data bases, other computer software,
layouts, trade dress, drawings, designs, writings, and formulas owned by such
Grantor (collectively, the “Copyrights”),
all copyright registrations issued to such Grantor and applications for
copyright registration that have been or may hereafter be issued or applied for
thereon by such Grantor in the United States and any state thereof and in
foreign countries (including, without limitation, any registrations listed on Schedule
1(f)(iii)) (collectively, the “Copyright Registrations”),
all common law and other rights in and to the Copyrights in the United States
and any state thereof and in foreign countries including all copyright licenses
(but with respect to such copyright licenses, only to the extent permitted by
such licensing arrangements) (the “Copyright Rights”),
including, without limitation, each of the Copyrights, rights, titles and
interests in and to the Copyrights, all derivative works and other works
protectable by copyright, which are presently, or in the future may be, owned,
created (as a work for hire for the benefit of such Grantor), authored (as a
work for hire for the benefit of such Grantor), or acquired by such Grantor, in
whole or in part, and all Copyright Rights with respect thereto and all
Copyright Registrations therefor, heretofore or hereafter granted or applied
for, and all renewals and extensions thereof, throughout the world, including
all proceeds thereof (such as, by way of example and not by limitation, license
royalties and proceeds of infringement suits), the right to renew and extend
such Copyright Registrations and Copyright Rights and to register works
protectable by copyright and the right to sue for past, present and future
infringements of the Copyrights and Copyright Rights;

(g)           all information used or useful or
arising from the business of such Grantor including all goodwill, trade
secrets, trade secret rights, know-how, customer lists, processes of
production, ideas, confidential business information, techniques, processes,
formulas, and all other proprietary information;

(h)           to the extent not included or
expressly excluded in any other paragraph of this Section 1, all
general intangibles, including, without limitation, tax refunds, payment
intangibles, other rights to payment or performance, choses in action, software and judgments taken on any rights or
claims included in the Collateral;

(i)            all plant fixtures, business
fixtures and other fixtures and storage and office facilities, and all
accessions thereto and products thereof, to the extent a part of, used in
connection with, or appurtenant to a Mortgaged Property;

(j)            all books, records, ledger cards,
files, correspondence, computer programs, tapes, disks and related data
processing software that at any time evidence or contain information relating
to any of the Collateral or are otherwise necessary or helpful in the
collection thereof or realization thereupon; and

 

 8

 

 

(k)           all proceeds, products, rents and
profits of or from any and all of the foregoing Collateral and, to the extent
not otherwise included, all payments under insurance (whether or not Collateral
Agent or a Secured Party is the loss payee thereof), or any indemnity, warranty
or guaranty, payable by reason of loss or damage to or otherwise with respect
to any of the foregoing Collateral. For purposes of this Agreement, the term “proceeds” includes whatever is receivable or received when
Collateral or proceeds are sold, exchanged, collected or otherwise disposed of,
whether such disposition is voluntary or involuntary.

Notwithstanding anything herein to the contrary, in no
event shall the Collateral include, and no Grantor shall be deemed to have
granted a security interest in (i) any of such Grantor’s rights or
interests in any license, contract or agreement to which such Grantor is a
party or any of its rights or interests thereunder to the extent, but only to
the extent, that such a grant would, under the terms of such license, contract
or agreement or otherwise, result in a breach of the terms of, or constitute a
default under any license, contract or agreement to which such Grantor is a
party or is bound (other than to the extent that any such term would be
rendered ineffective pursuant to the Uniform Commercial Code, as it exists on
the date of this Agreement or as it may hereafter be amended, in the State of
New York (the “UCC”) or any other applicable law
(including the Bankruptcy Code) or principles of equity); provided, that
immediately upon the ineffectiveness, lapse or termination of any such
provision, the Collateral shall include, and such Grantor shall be deemed to
have granted a security interest in, all such rights and interests as if such
provision had never been in effect, or (ii) any real property leasehold,
unless a Grantor has executed a leasehold mortgage or leasehold deed of trust
covering such real property leasehold.

Each item of Collateral listed in this Section 1
that is defined in Articles 8 or 9 of the UCC shall have the meaning set forth
in the UCC, as it exists on the date of this Agreement or as it may hereafter
be amended, it being the intention of the Grantors that the description of the
Collateral set forth above be construed to include the broadest possible range
of assets, except for assets expressly excluded as set forth above.

The foregoing pledges and grants of security interests
confirm the pledges and grants of first priority security interests in the
Collateral to secure the Secured Obligations made in the Original Security
Agreement and the Amended and Restated Security Agreement and continue in all
respects the pledges and grants therein without in any way causing any
interruption in continuity from such original pledges and grants.

SECTION 2.         Security
for Obligations.

 

Subject to the limited exclusion set forth below with
respect to the Existing Owens-Brockway Senior Secured Notes and any Specified
New Senior Debt, this Agreement secures, and the Collateral assigned by each
Grantor is collateral security for, the prompt payment or performance in full
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including without limitation the payment of
amounts that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code), of all Secured
Obligations of such Grantor, provided that in no event shall more than 65% of
the Foreign Pledged Shares of any Person be security for or be assigned or
pledged on account of any Domestic Obligations and provided, further,
that, the Securities Collateral described in clauses (e)(i) and (e)(ii) of
the definition thereof (other than any such 

 9
 

 

Securities Collateral directly owned by or owed to Company
or Packaging) (such Securities Collateral, including, for the avoidance of
doubt, any documents, instruments or certificates evidencing same and any
proceeds of such Securities Collateral being the “Excluded Securities Collateral”) shall not be security for or
be assigned or pledged on account of the Existing Owens-Brockway Senior Secured
Notes or any Specified New Senior Debt and such Excluded Securities Collateral
shall not be held by Collateral Agent for the benefit of any holder thereof or
any New Senior Debt Representative with respect thereto. “Secured
Obligations” means:

(a)           all obligations and liabilities of
every nature of:

(i)            Company, now or hereafter existing
under or arising out of or in connection with the Credit Agreement and the
other Loan Documents and all obligations of Company under any New Senior Debt
Documents;

(ii)           Owens-Brockway, now or hereafter
existing under or arising out of or in connection with the Credit Agreement,
the Domestic Borrowers’ Guaranty and all obligations of Owens-Brockway under
any New Senior Debt Documents;

(iii)          each Subsidiary Guarantor, now or
hereafter existing under or arising out of or in connection with the Subsidiary
Guaranty and all obligations of each such Subsidiary Guarantor under any New
Senior Debt Documents; and

(iv)          each Subsidiary of Company, now or
hereafter existing under or arising out of or in connection with Other
Permitted Credit Exposure and each Other Permitted Credit Exposure Document in
each case held by any Lender or Affiliate of any Lender;

in each case whether for
principal, premium or interest (including, without limitation, interest which,
but for the filing of a petition in a bankruptcy, reorganization or other
similar proceeding with respect to a Grantor, would accrue on such obligations),
payments for early termination, payments for settlement of amounts due under
any such agreements, fees, indemnities, expenses or otherwise, whether
voluntary or involuntary, direct or indirect, absolute or contingent,
liquidated or unliquidated, whether or not jointly owed with others, and
whether or not from time to time decreased or extinguished and later increased,
created or incurred, and all or any portion of such obligations or liabilities
that are paid, to the extent all or any part of such payment is avoided or
recovered directly or indirectly from a Secured Party, any Lender or Other
Permitted Credit Exposure Holder as a preference, fraudulent transfer or
otherwise, and all obligations of every nature of Grantors now or hereafter
existing under this Agreement; provided, however, that the pledge
made and security interest granted in Section 1 and any other
provisions of this Agreement shall be effective as to any obligations in
respect of any New Senior Debt or Other Lender Guarantied Obligations only if
the holders of such obligations or their representatives (A) shall have
executed and delivered to the Collateral Agent prior to the date hereof a
counterpart of the Original Intercreditor Agreement, the Amended and Restated
Intercreditor Agreement or the Intercreditor Agreement or an acknowledgment to
the Original Intercreditor Agreement or the Amended and Restated Intercreditor
Agreement or, from and after the date hereof, the Intercreditor Agreement (in
the form attached thereto) and the Borrowers’ Agent has duly 

 10
 

 

executed and delivered an
acknowledgement to such acknowledgement and (B) in the case of Other
Lender Guarantied Obligations shall have released, in form and substance
satisfactory to Collateral Agent and Borrowers’ Agent, Holdings from any
pre-existing guaranty obligations in connection with such Other Lender
Guaranteed Obligations. The foregoing requirements have been met as of the date
hereof with respect to the obligations in respect of the Existing
Owens-Brockway Senior Secured Notes and with respect to the Other Lender
Guarantied Obligations described on Exhibit I to the Intercreditor
Agreement, and all such obligations are and continue to be secured hereunder. For
purposes of determining the amount of Secured Obligations relating to any
obligation with respect to which a Person other than a Grantor is the direct or
primary obligor and with respect to which a Grantor is a guarantor (including
by way of providing security), the total amount of such Secured Obligations
shall be calculated without duplication of the amount of such direct or primary
obligation secured by the Collateral and the related guaranty obligations of
the Grantor secured by the Collateral.

SECTION 3.         Grantors
Remain Liable.

 

Anything contained herein to the contrary
notwithstanding, (a) each Grantor shall remain liable under any contracts
and agreements included in the Collateral, to the extent set forth therein, to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by Collateral Agent
of any of its rights hereunder shall not release any Grantor from any of its
duties or obligations under the contracts and agreements included in the
Collateral, and (c) neither Collateral Agent nor any Secured Party shall
have any obligation or liability under any contracts, licenses, and agreements
included in the Collateral by reason of this Agreement, nor shall Collateral
Agent or any Secured Party be obligated to perform any of the obligations or
duties of any Grantor thereunder or to take any action to collect or enforce
any claim for payment assigned hereunder, except to the extent Collateral Agent
or Secured Party expressly assumes any obligations thereunder.

SECTION 4.         Representations
and Warranties.

 

Each Grantor represents and warrants as follows:

(a)           Ownership of Collateral. Except
as expressly permitted by the Credit Agreement and except for the security
interest created by this Agreement, such Grantor owns the Collateral owned by
such Grantor free and clear of any Lien. Except as expressly permitted by the
Credit Agreement and except such as may have been filed in favor of the Secured
Parties relating to this Agreement, no effective financing statement or other
instrument similar in effect covering all or any part of the Collateral is on
file in any filing or recording office.

(b)           Omitted.

(c)           Omitted.

(d)           Office Locations; Type and
Jurisdiction of Organization. The office where such Grantor keeps
its records regarding the Accounts and all originals of all chattel paper that
evidence Accounts are, as of the date hereof, or, in the case of an Additional
Grantor, the date of the applicable Counterpart, located at the locations set
forth on Schedule 4(d); the type 

 11
 

 

(i.e. corporation, limited partnership, etc.) and
jurisdiction of organization of such Grantor as of the date hereof are listed
on Schedule 4(d).

(e)           Names. No
Grantor (or predecessor by merger or otherwise of such Grantor) has, within the
four month period preceding the date hereof, or, in the case of an Additional
Grantor, the date of the applicable Counterpart, had a different name from the
name of such Grantor listed or the signature pages hereof, except the
names listed in Schedule 4(e) annexed hereto. Each Grantor’s
federal taxpayer identification number and corporate identification number is
set forth on Schedule 4(e).

(f)            Delivery of Certain
Collateral. Except as set forth on Schedule 1(e)(i), all
certificates or instruments (excluding checks) evidencing, comprising or
representing the Collateral constituting Pledged Shares (other than
uncertificated Pledged Shares) and Pledged Debt as of the date hereof have been
delivered to Collateral Agent duly endorsed or accompanied by duly executed
instruments of transfer or assignment in blank. With respect to certificates
described on Schedule 1(e)(i) which have not been delivered because
such certificates are not readily removable from their jurisdiction of
issuance, upon request by the Collateral Agent such certificates shall be
delivered by the applicable Grantor to the Collateral Agent in the jurisdiction
of issuance, duly endorsed or accompanied by duly executed instruments of
transfer or assignment in blank.

(g)           Securities Collateral. (i) All
of the Pledged Debt described on Schedule 1(e)(ii) has been
duly authorized, authenticated or issued, and delivered and is the legal, valid
and binding obligation of the issuers thereof and is not in default; (ii) except
as set forth on Schedule 1(e)(i), as of the date hereof, the Pledged
Shares constitute all of the issued and outstanding shares of stock or other
equity interests of each issuer thereof (other than Pledged Shares under and as
defined in the Pledge Agreement) and there are no outstanding warrants, options
or other rights to purchase, or other agreements outstanding with respect to,
or property that is now or hereafter convertible into, or that requires the
issuance or sale of, any Pledged Shares to any Person not a Grantor; (iii) the
Pledged Debt constitutes all of the issued and outstanding intercompany
indebtedness evidenced by a promissory note of the respective issuers thereof
owing to such Grantor as of the date hereof (subject to the proviso to Section 1(e)(ii) with
respect to debt pledged pursuant to the Pledge Agreement); (iv) Schedule
1(e)(i) sets forth all of the Pledged Shares in the entities set forth
thereon owned by each Grantor on the date hereof; and (v) Schedule 1(e)(ii) sets
forth all of the Pledged Debt in existence on the date hereof.

(h)           Perfection. The
security interests in the Collateral granted to Collateral Agent for the
ratable benefit of the Secured Parties hereunder constitute valid security
interests in the Collateral, securing the payment of the Secured Obligations. By
virtue of (i) the filing of UCC financing statements (other than fixture
filings) naming each Grantor as “debtor”, naming Collateral Agent as “secured party” for the benefit of the Secured Parties and describing the
Collateral in the filing offices with respect to such Grantor set forth on Schedule 4(h) (to
the extent a security interest in such collateral can be perfected by filing a
financing statement in each relevant filing office under the provisions of the
applicable UCC) and (ii) in the case of the Pledged Shares (other than
uncertificated Pledged Shares constituting general intangibles) and Pledged
Debt, delivery of such Pledged Shares and Pledged Debt to Collateral Agent, in
each case duly endorsed or accompanied by duly executed instruments of
assignment or transfer in 

 12
 

 

blank, and (iii) in the case of the Intellectual
Property Collateral consisting of Copyright Registrations, the filing of a
Grant of Copyright Security Interest with the United States Copyright Office
(each such Grant of Copyright Security Interest being referred to herein as a “Grant”), in each case pursuant to this
Agreement, the security interests in the Collateral granted to Collateral Agent
for the benefit of the Secured Parties constitute perfected First Priority
security interests therein and all filings (other than fixture filings) and
other actions heretofore necessary or desirable to perfect and protect such
security interests have been duly made or taken.

SECTION 5.         Further
Assurances.

 

(a)           Generally. Each
Grantor agrees that from time to time, at the expense of Grantors, such Grantor
will promptly execute and deliver all further instruments and documents, and
take all further action, that may be necessary or desirable, or that Collateral
Agent may request, in order to perfect and protect any security interest granted
or purported to be granted hereby or to enable Collateral Agent to exercise and
enforce its rights and remedies hereunder with respect to any Collateral. Without
limiting the generality of the foregoing, each Grantor will:  (i) execute or authorize and cause to be
filed such financing or continuation statements, or amendments thereto,
agreements establishing that Collateral Agent has control of specified items of
Collateral as required by this Agreement or the Credit Agreement and such other
instruments or notices, as may be necessary or desirable, or as Collateral
Agent may request, in order to perfect and preserve the security interests
granted or purported to be granted hereby, (ii) furnish to Collateral
Agent from time to time statements and schedules further identifying and
describing the Collateral as required herein and such other reports in
connection with the Collateral as Collateral Agent may reasonably request, all
in reasonable detail, (iii) at any reasonable time, upon request by
Collateral Agent, exhibit the Collateral to and allow inspection of the
Collateral by Collateral Agent, or persons designated by Collateral Agent, (iv) at
Collateral Agent’s request, appear in and defend any action or proceeding that
may affect such Grantor’s title to or Collateral Agent’s security interest in
all or any material part of the Collateral, and (v) use commercially
reasonable efforts to obtain any necessary consents of third parties to the
assignment and perfection of a security interest to Collateral Agent with
respect to any material Collateral, except with respect to Permitted
Encumbrances. Each Grantor hereby authorizes Collateral Agent to file one or
more financing or continuation statements, and amendments thereto, relative to
all or any part of the Collateral without the signature of any Grantor and
agrees that any such financing statement or amendment thereto may describe the
collateral as “all assets of the debtor.” 
Each Grantor agrees that a carbon, photographic or other reproduction of
this Agreement or of a financing statement authorized hereby or signed by such
Grantor (if necessary) shall be sufficient as a financing statement and may be
filed as a financing statement in any and all jurisdictions.

(b)           Securities Collateral. Without
limiting the generality of the foregoing Section 5(a), each Grantor
agrees that it will, upon obtaining any additional shares of stock or other
securities consisting of Pledged Shares or Pledged Debt required to be pledged
hereunder or under subsection 5.9 of the Credit Agreement, promptly (and
in any event within five Business Days) deliver to Collateral Agent a Pledge
Amendment, duly executed by such Grantor, in substantially the form of Exhibit II
(a “Pledge Amendment”), in respect of the
additional Pledged Shares or Pledged Debt to be pledged pursuant to this
Agreement. Upon each 

 13
 

 

delivery of a Pledge Amendment to Collateral Agent,
the representations and warranties contained in clauses (i)-(iii) of
Section 4(g) hereof shall be deemed to have been made by such Grantor
as to the Securities Collateral described in such Pledge Amendment as of the
date thereof. Each Grantor hereby authorizes Collateral Agent to attach each
Pledge Amendment to this Agreement and agrees that all Pledged Shares or
Pledged Debt of such Grantor listed on any Pledge Amendment shall for all
purposes hereunder be considered Collateral of such Grantor; provided, the
failure of any Grantor to execute a Pledge Amendment with respect to any
additional Pledged Shares or Pledged Debt pledged pursuant to this Agreement
shall not impair the security interest of the Secured Parties therein or
otherwise adversely affect the rights and remedies of Collateral Agent
hereunder with respect thereto.

SECTION 6.         Certain
Covenants of Grantors.

 

Each Grantor shall:

(a)           not use or permit any Collateral to
be used unlawfully or in violation of any provision of this Agreement or any
applicable statute, regulation or ordinance or any policy of insurance covering
the Collateral where such use or violation would have a Material Adverse
Effect;

(b)           notify Collateral Agent of any change
in such Grantor’s name, identity or corporate structure within 30 days of such
change; and

(c)           give Collateral Agent 30 days’ prior
written notice of any change in such Grantor’s jurisdiction of organization or
the office where such Grantor keeps its records regarding the Accounts and all
originals of all chattel paper that evidence Accounts or a reincorporation,
reorganization or other action that results in a change of the jurisdiction of
organization of such Grantor.

SECTION 7.         Omitted.

 

SECTION 8.         Special
Covenants with respect to Accounts and Related Contracts.

 

(a)           Each Grantor shall keep its office
where it keeps its records concerning the Accounts and Related Contracts, and
all originals of all chattel paper that evidence Accounts, at the locations
therefor set forth on Schedule 4(d), or upon 30 days’ prior written
notice to Collateral Agent, at such other location in a jurisdiction where all
action that may be necessary or desirable, or that Collateral Agent may
request, in order to perfect and protect any security interest granted or
purported to be granted hereby, or to enable Collateral Agent to exercise and
enforce its rights and remedies hereunder, with respect to such Accounts and
Related Contracts shall have been taken.

(b)           Except as otherwise provided in this subsection (b),
each Grantor shall continue to collect, at its own expense, all amounts due or
to become due to such Grantor under the Accounts and Related Contracts. In connection
with such collections, each Grantor may take (and, upon the occurrence and
during the continuance of an Event of Default at Collateral Agent’s direction,
shall take) such action as such Grantor may deem necessary or advisable to
enforce collection of amounts due or to become due under the Accounts; provided,
however, that 

 14
 

 

Collateral Agent shall have the right at any time,
upon the occurrence and during the continuation of an Event of Default and upon
written notice to such Grantor of its intention to do so, to notify the account
debtors or obligors under any Accounts of the assignment of such Accounts to
Collateral Agent and to direct such account debtors or obligors to make payment
of all amounts due or to become due to such Grantor thereunder directly to
Collateral Agent, to notify each Person maintaining a lockbox or similar
arrangement to which account debtors or obligors under any Accounts have been
directed to make payment to remit all amounts representing collections on
checks and other payment items from time to time sent to or deposited in such
lockbox or other arrangement directly to Collateral Agent and, upon such
notification and at the expense of Grantors, to enforce collection of any such
Accounts and to adjust, settle or compromise the amount or payment thereof, in
the same manner and to the same extent as such Grantor might have done. After
receipt by such Grantor of the notice from Collateral Agent referred to in the
proviso to the preceding sentence and for so long as such Event of Default
continues, (i) all amounts and proceeds (including checks and other
instruments) received by such Grantor in respect of the Accounts and the
Related Contracts shall be received in trust for the benefit of Collateral
Agent hereunder, shall be segregated from other funds of such Grantor and shall
be forthwith paid over or delivered to Collateral Agent in the same form as so
received (with any necessary endorsement) to be held as cash Collateral and
applied as provided by Section 18, and (ii) except in the
ordinary course of business consistent with past practice, such Grantor shall
not adjust, settle or compromise the amount or payment of any Account, or
release wholly or partly any account debtor or obligor thereof, or allow any
credit or discount thereon.

SECTION 9.         Special
Covenants With Respect to the Securities Collateral.

 

(a)           Delivery. Each
Grantor agrees that all certificates or instruments representing or evidencing
the Pledged Shares (except as otherwise contemplated by Section 4(f))
and the Pledged Debt, to the extent not already delivered and held by
Collateral Agent pursuant hereto, shall be delivered to and held by or on
behalf of Collateral Agent pursuant hereto and shall be in suitable form for
transfer by delivery or, as applicable, shall be accompanied by such Grantor’s
endorsement, where necessary, or duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to Collateral Agent.
Collateral Agent shall have the right at any time to exchange certificates or
instruments representing or evidencing Pledged Shares or Pledged Debt for
certificates or instruments of smaller or larger denominations.

(b)           Covenants. Each
Grantor shall (i) except for any merger or consolidation which constitutes
a sale, transfer or other disposition permitted by the Credit Agreement where
the Credit Agreement does not require the pledge of the capital stock or other
equity interests of the surviving or resulting corporation, pledge hereunder
all the outstanding capital stock or other equity interests of the surviving or
resulting person in any merger or consolidation involving securities pledged
hereunder, (ii) cause each issuer of Pledged Shares not to issue any
stock, other equity interests or other securities in addition to or in
substitution for the Pledged Shares issued by such issuer, except to such
Grantor or as otherwise permitted under the Credit Agreement; (iii) pledge
hereunder, in accordance with subsection 5.9 of the Credit
Agreement, any and all additional shares of stock, other equity interests or
other securities of each issuer of Pledged Shares; (iv) pledge hereunder,
promptly upon its acquisition (directly or indirectly) 

 15
 

 

thereof, any and all shares of stock or other equity
interests of any Person that, after the date of this Agreement, becomes, as a
result of any occurrence, a direct Subsidiary of such Grantor, to the extent
required by subsection 5.9 of the Credit Agreement; (v) pledge
hereunder, promptly upon their issuance, any and all instruments or other
evidences of additional indebtedness from time to time owed to such Grantor by
any obligor on the Pledged Debt; (vi) pledge hereunder, promptly upon
their issuance, any and all instruments or other evidences of indebtedness
which constitute Pledged Debt from time to time owed to such Grantor by any
Person that after the date of this Agreement becomes, as a result of any
occurrence, a direct or indirect Subsidiary of such Grantor; provided,
that the foregoing covenant shall exclude any such instruments or evidences of
indebtedness issued by any of the Harbor Capital Companies or any such
instruments or evidences of indebtedness required to be pledged under the
Pledge Agreement; (vii) promptly deliver to Collateral Agent all material
written notices received by it with respect to the Securities Collateral; and (viii) at
the request of Collateral Agent, promptly execute and deliver to Collateral
Agent an agreement providing for the control, as that term is defined in the
UCC, by Collateral Agent of all securities entitlements and securities accounts
of such Grantor not otherwise subject to Permitted Encumbrances and provided
that no other enforceable restrictions exist on the pledging or the
hypothecation thereof.

(c)           Voting and Distributions. So
long as no Event of Default shall have occurred and be continuing,

(i) each
Grantor shall be entitled to exercise any and all voting and other consensual
rights pertaining to the Securities Collateral or any part thereof for any
purpose not inconsistent with the terms of this Agreement or the Credit
Agreement; provided, however, that neither (i) the voting by a Grantor of
any Pledged Shares for, or a Pledgor’s consent to, the election of directors at
a regularly scheduled annual or other meeting of stockholders or with respect
to incidental matters at any such meeting nor (ii) a Pledgor’s consent to
or approval of any action otherwise permitted under this Agreement and the
Credit Agreement shall be deemed inconsistent with the terms of this Agreement
or the Credit Agreement (including, without limitation, impairing in any
material manner the Pledged Shares or the material rights of any of the Secured
Parties), within the meaning of this Section 9(c).

(ii) each
Grantor shall be entitled to receive and retain, and to utilize free and clear
of the lien of this Agreement, any and all dividends, other distributions and
interest paid in respect of the Securities Collateral; provided, that,
any and all (A) dividends, distributions and interest paid or payable
other than in cash in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in exchange for, any
Securities Collateral, and (B) dividends and other distributions paid or
payable in cash in respect of any Securities Collateral in connection with a
partial or total liquidation or dissolution or in connection with a reduction
of capital, capital surplus or paid-in-surplus, shall forthwith be delivered to
Collateral Agent to hold as, Securities Collateral and shall, if received by
such Grantor, be received in trust for the benefit of Collateral Agent, be
segregated from the other property or funds of such Grantor and be forthwith
delivered to Collateral Agent as Securities Collateral in the same form as so
received (with all necessary endorsements).

 16
 

 

 

Upon the occurrence and during the continuation of an
Event of Default, (x) upon written notice from Collateral Agent to any
Grantor, all rights of such Grantor to exercise the voting and other consensual
rights which it would otherwise be entitled to exercise pursuant hereto shall
cease, and all such rights shall thereupon become vested in Collateral Agent
who shall thereupon have the sole right to exercise such voting and other
consensual rights during the continuation of such Event of Default; (y) all
rights of such Grantor to receive the dividends, other distributions and
interest payments which it would otherwise be authorized to receive and retain
pursuant hereto shall cease, and all such rights shall thereupon become vested in
Collateral Agent who shall thereupon have the sole right to receive and hold as
Securities Collateral such dividends, other distributions and interest payments
during the continuation of such Event of Default, provided that nothing herein
shall restrict or limit the right of a Grantor to directly or indirectly make
or receive dividends, distributions, principal or interest payments for the
purpose of making such amounts available to Company to make Holdings Ordinary
Course Payments permitted to be paid pursuant to subsection 6.5 of the
Credit Agreement; and (z) all dividends, principal, interest payments and
other distributions which are received by such Grantor contrary to the
provisions of clause (ii) of the immediately preceding paragraph or clause
(y) above shall be received in trust for the benefit of Collateral Agent,
shall be segregated from other funds of such Grantor and shall forthwith be
paid over to Collateral Agent as Securities Collateral in the same form as so
received (with any necessary endorsements).

In order to permit Collateral Agent to exercise the
voting and other consensual rights which it may be entitled to exercise
pursuant hereto and to receive all dividends and other distributions which it
may be entitled to receive hereunder, (I) upon the occurrence and during
the existence of an Event of Default, each Grantor shall promptly execute and
deliver (or cause to be executed and delivered) to Collateral Agent all such
proxies, dividend payment orders and other instruments as Collateral Agent may
from time to time reasonably request, and (II) without limiting the effect
of clause (I) above, each Grantor hereby grants to Collateral Agent
an irrevocable proxy to vote the Pledged Shares and to exercise all other
rights, powers, privileges and remedies to which a holder of the Pledged Shares
would be entitled (including giving or withholding written consents of
shareholders or other holders of equity interests, calling special meetings of
shareholders or other holders of equity interests and voting at such meetings),
which proxy shall be effective, automatically and without the necessity of any
action (including any transfer of any Pledged Shares on the record books of the
issuer thereof) by any other Person (including the issuer of the Pledged Shares
or any officer or agent thereof), upon the occurrence and during the existence
of an Event of Default and which proxy shall only terminate upon (i) the
payment in full of the Secured Obligations and the termination of the related
agreements and the cancellation of any outstanding Letters of Credit or (ii) the
cure of the Event of Default.

SECTION 10.       Special
Covenants With Respect to the Intellectual Property Collateral.

 

(a)           Except as otherwise provided in this Section 10,
each Grantor shall continue to collect, at its own expense, all amounts due or
to become due to such Grantor in respect of the Intellectual Property
Collateral or any portion thereof. In connection with such collections, each
Grantor may take (and, after the occurrence and during the continuance of any
Event of Default at Collateral Agent’s reasonable direction, shall take) such
action as such Grantor or Collateral Agent may deem reasonably necessary or
advisable to enforce collection of 

 17
 

 

such amounts; provided, Collateral Agent shall have
the right at any time, upon the occurrence and during the continuation of an
Event of Default and upon written notice to such Grantor of its intention to do
so, to notify the obligors with respect to any such amounts of the existence of
the security interest created hereby and to direct such obligors to make
payment of all such amounts directly to Collateral Agent, and, upon such
notification and at the expense of such Grantor, to enforce collection of any
such amounts and to adjust, settle or compromise the amount or payment thereof,
in the same manner and to the same extent as such Grantor might have done. After
receipt by any Grantor of the notice from Collateral Agent referred to in the
proviso to the preceding sentence and during the continuation of any Event of
Default, (i) all amounts and proceeds (including checks and other
instruments) received by each Grantor in respect of amounts due to such Grantor
in respect of the Intellectual Property Collateral or any portion thereof shall
be received in trust for the benefit of Collateral Agent hereunder, shall be
segregated from other funds of such Grantor and shall be forthwith paid over or
delivered to Collateral Agent in the same form as so received (with any
necessary endorsement) to be held as cash Collateral and applied as provided by
Section 18, and (ii) such Grantor shall not, without the
consent of the Collateral Agent, adjust, settle or compromise the amount or
payment of any such amount or release wholly or partly any obligor with respect
thereto or allow any credit or discount thereon.

(b)           In addition to, and not by way of
limitation of, the granting of a security interest in the Collateral pursuant
hereto, each Grantor, effective upon the occurrence and during the continuation
of an Event of Default (but only to the extent to do so would not breach a
contract binding on such Grantor), hereby assigns, transfers and conveys to
Collateral Agent the nonexclusive right and license to use all trademarks,
tradenames, copyrights, patents or technical processes (including, without
limitation, the Intellectual Property Collateral) owned or used by such Grantor
that relate to the Collateral and any other collateral granted by such Grantor
as security for the Secured Obligations, together with any goodwill associated
therewith, all to the extent necessary to enable Collateral Agent to realize on
the Collateral in accordance with this Agreement and to enable any transferee
or assignee of the Collateral to enjoy the benefits of the Collateral. This
right shall inure to the benefit of all successors, assigns and transferees of
Collateral Agent and its successors, assigns and transferees, whether by
voluntary conveyance, operation of law, assignment, transfer, foreclosure, deed
in lieu of foreclosure or otherwise. Such right and license shall be granted
free of charge, without requirement that any monetary payment whatsoever be
made to such Grantor. If and to the extent that any Grantor licenses the
Intellectual Property Collateral, upon such Grantor’s request and provided no
Event of Default then exists, Collateral Agent shall promptly enter into a non-disturbance
agreement or other similar arrangement, at such Grantor’s request and expense,
with such Grantor and any licensee of any Intellectual Property Collateral
permitted hereunder in form and substance reasonably satisfactory to Collateral
Agent pursuant to which (i) Collateral Agent shall agree not to disturb or
interfere with such licensee’s rights under its license agreement with such
Grantor so long as such licensee is not in default thereunder, and (ii) such
licensee shall acknowledge and agree that the Intellectual Property Collateral
licensed to it is subject to the security interest created in favor of
Collateral Agent and the other terms of this Agreement.

 18

 

 

SECTION 11.       Omitted.

 

SECTION 12.       Collateral
Account.

 

Collateral Agent is
hereby authorized to establish and maintain at its office at 60 Wall Street,
New York, New York, a blocked account in the name of the Grantors and under the
sole dominion and control of Collateral Agent and such blocked account will be
a restricted deposit account designated “OI
L/C Collateral Account”. The “OI
L/C Collateral Account” is referred to herein as the “L/C Collateral Account”. All amounts at any
time held in the L/C Collateral Account shall be beneficially owned by Grantors
but shall be held in the name of Collateral Agent hereunder, for the benefit of
Secured Parties, as collateral security for the Secured Obligations upon the
terms and conditions set forth herein and as provided in the Intercreditor
Agreement. Grantors shall have no right to withdraw, transfer or, except as
expressly set forth herein, otherwise receive any funds deposited into the L/C
Collateral Account. Anything contained herein to the contrary notwithstanding,
the L/C Collateral Account shall be subject to such applicable laws, and such
applicable regulations of the Board of Governors of the Federal Reserve System
and of any other appropriate banking or Governmental Authority, as may now or
hereafter be in effect. All deposits of funds in the L/C Collateral Account
shall be made by wire transfer (or, if applicable, by intra-bank transfer from
another account of a Grantor) of immediately available funds, in each case
addressed in accordance with instructions of Collateral Agent. Each Grantor
shall, promptly after initiating a transfer of funds to the L/C Collateral
Account, give notice to Collateral Agent by telefacsimile of the date, amount
and method of delivery of such deposit. Cash held by Collateral Agent in the
L/C Collateral Account shall not be invested by Collateral Agent but instead
shall be maintained as a cash deposit in the L/C Collateral Account pending
application thereof as elsewhere provided in this Agreement. To the extent
permitted under Regulation Q of the Board of Governors of the Federal Reserve
System, any cash held in the L/C Collateral Account shall bear interest at the
standard rate paid by Collateral Agent to its customers generally for deposits
of like amounts and terms. Subject to Collateral Agent’s rights hereunder, any
interest earned on deposits of cash in the L/C Collateral Account shall be
deposited directly in, and held in the L/C Collateral Account.

SECTION 13.       Secured
Party Appointed Attorney-in-Fact.

 

Each Grantor hereby irrevocably appoints Collateral
Agent as such Grantor’s attorney-in-fact, with full authority in the place and
stead of such Grantor and in the name of such Grantor, Collateral Agent or
otherwise, from time to time in Collateral Agent’s discretion to take any
action and to execute any instrument that Collateral Agent may deem necessary
or advisable to accomplish the purposes of this Agreement, including without
limitation:

(a)           upon the occurrence and during the
continuance of an Event of Default, to obtain and adjust insurance required to
be maintained by such Grantor or paid to Collateral Agent pursuant to the
Credit Agreement;

(b)           upon the occurrence and during the
continuance of an Event of Default, to ask for, demand, collect, sue for,
recover, compound, receive and give acquittance and receipts for moneys due and
to become due under or in respect of any of the Collateral;

 19
 

 

 

(c)           upon the occurrence and during the
continuance of an Event of Default, to receive, endorse and collect any drafts
or other instruments, documents and chattel paper in connection with clauses (a) and
(b) above;

(d)           upon the occurrence and during the
continuance of an Event of Default, to file any claims or take any action or
institute any proceedings that Collateral Agent may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce the rights
of Collateral Agent with respect to any of the Collateral;

(e)           upon the occurrence and during the
continuance of an Event of Default, to pay or discharge taxes or Liens (other
than Liens permitted under this Agreement or the Credit Agreement) levied or
placed upon or threatened against the Collateral, the legality or validity
thereof and the amounts necessary to discharge the same to be determined by
Collateral Agent in its sole discretion, any such payments made by Collateral
Agent to become obligations of such Grantor to Collateral Agent, due and
payable immediately without demand;

(f)            upon the occurrence and during the
continuance of an Event of Default, to sign and endorse any invoices, freight
or express bills, bills of lading, storage or warehouse receipts, drafts
against debtors, assignments, verifications and notices in connection with
Accounts and other documents relating to the Collateral; and

(g)           upon the occurrence and during the
continuance of an Event of Default, generally to sell, transfer, pledge, make
any agreement with respect to or otherwise deal with any of the Collateral as
fully and completely as though Collateral Agent were the absolute owner thereof
for all purposes, and to do, at Collateral Agent’s option and Grantors’
expense, at any time or from time to time, all acts and things that Collateral
Agent deems necessary to protect, preserve or realize upon the Collateral and
Collateral Agent’s security interest therein in order to effect the intent of
this Agreement, all as fully and effectively as such Grantor might do.

SECTION 14.       Collateral
Agent May Perform.

 

If any Grantor fails to
perform any agreement contained herein, upon the occurrence and during the
continuance of an Event of Default, Collateral Agent may itself perform, or
cause performance of, such agreement, and the expenses of Collateral Agent
incurred in connection therewith shall be payable by Grantors under Section 19(b).

SECTION 15.       Standard
of Care.

 

The powers conferred on Collateral Agent hereunder are
solely to protect its interest in the Collateral and shall not impose any duty
upon it to exercise any such powers. Except for the exercise of reasonable care
in the custody of any Collateral in its possession and the accounting for
moneys actually received by it hereunder, Collateral Agent shall have no duty
as to any Collateral or as to the taking of any necessary steps to preserve
rights against prior parties or any other rights pertaining to any Collateral. Collateral
Agent shall be deemed to have exercised reasonable care in the custody and
preservation of Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which Collateral Agent accords its own
property.

 20
 

 

 

SECTION 16.       Remedies.

 

(a)           Generally. If (i) any
“Event of Default” under and as defined in the Credit Agreement has occurred
and is continuing, or (ii) after such time as all Obligations shall have
been indefeasibly paid in full, and provided, that, the
Collateral then secures the payment and performance of any obligations under
any New Senior Debt Documents or any Other Permitted Credit Exposure Documents,
if any event of default under (A) any obligations under any New Senior
Debt Documents which are secured by Collateral, or (B) any obligations
under any Other Permitted Credit Exposure Documents which are secured by
Collateral, as the case may be (either such occurrence being an “Event of Default” for purposes of this Agreement) shall have
occurred and be continuing, Collateral Agent may exercise in respect of the
Collateral, in addition to all other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party on default
under the UCC (whether or not the UCC applies to the affected Collateral), and
also may (i) require each Grantor to, and each Grantor hereby agrees that
it will at its expense and upon request of Collateral Agent forthwith, assemble
such of the Collateral as may reasonably be assembled as directed by Collateral
Agent and make it available to Collateral Agent at a place or places to be
designated by Collateral Agent and reasonably convenient to both parties, (ii) enter
onto the property where any Collateral is located and take possession thereof
with or without judicial process, (iii) prior to the disposition of the
Collateral, store, process, repair or recondition the Collateral or otherwise
prepare the Collateral for disposition in any manner to the extent Collateral
Agent deems appropriate, (iv) take possession of any Grantor’s premises or
place custodians in exclusive control thereof, remain on such premises and use
the same and any of such Grantor’s equipment for the purpose of completing any
work in process, taking any actions described in the preceding clause (iii) and
collecting any Secured Obligation, (v) without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at public
or private sale, at Collateral Agent’s offices or elsewhere, for cash, on
credit or for future delivery, at such time or times and at such price or
prices and upon such other terms as Collateral Agent may deem commercially
reasonable, (vi) exercise dominion and control over and refuse to permit
further withdrawals from any Deposit Account maintained with Collateral Agent
or any Lender constituting a part of the Collateral and (vii) without
notice to any Grantor, transfer to or to register in the name of Collateral
Agent or any of its nominees any or all of the Securities Collateral. The
Collateral Agent or any other Secured Party other than the Collateral Agent may
be the purchaser of any or all of the Collateral at any such sale but no
Secured Party (other than the Collateral Agent on behalf of Secured Parties)
shall be entitled, for the purpose of bidding and making settlement or payment
of the purchase price for all or any portion of the Collateral sold at such
sale, to use and apply any of the Secured Obligations owed to such Person as a
credit on account of the purchase price of any Collateral payable by such
Person at such sale. Each purchaser at any such sale shall hold the property
sold absolutely free from any claim or right on the part of any Grantor, and
each Grantor hereby waives (to the extent permitted by applicable law) all
rights of redemption, stay and/or appraisal which it now has or may at any time
in the future have under any rule of law or statute now existing or
hereafter enacted. Each Grantor agrees that, to the extent notice of sale shall
be required by law, at least ten days’ notice to such Grantor of the time and
place of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification. Collateral Agent shall not be obligated
to make any sale of Collateral regardless of notice of sale having been given. Collateral
Agent may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such 

 21
 

 

sale may, without further notice, be made at the time
and place to which it was so adjourned. Each Grantor hereby waives any claims
against Collateral Agent arising by reason of the fact that the price at which
any Collateral may have been sold at such a private sale was less than the price
which might have been obtained at a public sale, even if Collateral Agent
accepts the first offer received and does not offer such Collateral to more
than one offeree. Each Grantor further agrees that a breach of any of the
covenants contained in this Section 16 will cause irreparable
injury to Collateral Agent, that Collateral Agent has no adequate remedy at law
in respect of such breach and, as a consequence, that each and every covenant
contained in this Section 16 shall be specifically enforceable against
such Grantor, and each Grantor hereby waives and agrees not to assert any
defenses against an action for specific performance of such covenants except
for a defense that no default has occurred or is continuing giving rise to the
Secured Obligations becoming due and payable prior to their stated maturities.

(b)           Securities Collateral. Each
Grantor recognizes that, by reason of certain prohibitions contained in the
Securities Act and applicable state securities laws, Collateral Agent may be
compelled, with respect to any sale of all or any part of the Securities
Collateral conducted without prior registration or qualification of such
Securities Collateral under the Securities Act and/or such state securities
laws, to limit purchasers to those who will agree, among other things, to
acquire the Securities Collateral for their own account, for investment and not
with a view to the distribution or resale thereof. Each Grantor acknowledges
that any such private sales may be at prices and on terms less favorable than
those obtainable through a public sale without such restrictions (including a
public offering made pursuant to a registration statement under the Securities
Act) and, notwithstanding such circumstances, each Grantor agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
manner and that Collateral Agent shall have no obligation to engage in public
sales and no obligation to delay the sale of any Securities Collateral for the
period of time necessary to permit the issuer thereof to register it for a form
of public sale requiring registration under the Securities Act or under
applicable state securities laws, even if such issuer would, or should, agree
to so register it. If Collateral Agent determines to exercise its right to sell
any or all of the Securities Collateral, upon written request, each Grantor
shall and shall cause each issuer of any Pledged Shares to be sold hereunder
from time to time to furnish to Collateral Agent all such information as
Collateral Agent may request in order to determine the number of shares and
other instruments included in the Securities Collateral which may be sold by
Collateral Agent in exempt transactions under the Securities Act and the rules and
regulations of the Securities and Exchange Commission thereunder, as the same
are from time to time in effect.

(c)           L/C
Collateral Account. (i) If an
Event of Default has occurred and is continuing in accordance with Section 7
of the Credit Agreement, or (ii) if any Proceeds (as defined in the
Intercreditor Agreement) derived from the Collateral remain after application
thereof to prepayment of the Loans as required under the Credit Agreement and
as provided in the Intercreditor Agreement, Borrowers must pay to Collateral
Agent an amount (the “Aggregate Available Amount”)
equal to the maximum amount that may at any time be drawn under all Letters of
Credit then outstanding, and Borrowers shall deliver funds in such an amount
for deposit in the L/C Collateral Account. If for any reason the aggregate
amount delivered by Borrowers for deposit in the L/C Collateral Account as
aforesaid is less than the Aggregate Available Amount, the aggregate amount so
delivered by Borrowers shall be apportioned among all outstanding Letters of
Credit for purposes of this Section 16 in accordance with the ratio
of 

 22
 

 

the maximum amount available for drawing under each
such Letter of Credit (as to such Letter of Credit, the “Maximum
Available Amount”) to the Aggregate Available Amount. Upon any
drawing under any outstanding Letter of Credit in respect of which Borrowers
have deposited in the L/C Collateral Account any amounts described above,
Collateral Agent shall apply such amounts to reimburse the Issuing Lender for
the amount of such drawing. In the event of cancellation or expiration of any
Letter of Credit in respect of which Company has deposited in the L/C
Collateral Account any amounts described above, or in the event of any
reduction in the Maximum Available Amount under such Letter of Credit, Collateral
Agent shall apply the amount then on deposit in the L/C Collateral Account in
respect of such Letter of Credit (less, in the case of such a reduction, the
Maximum Available Amount under such Letter of Credit immediately after such
reduction) (A) first, to the payment of any amounts payable to Collateral
Agent pursuant to Section 18 hereof, (B) second, to the extent
of any excess, to the cash collateralization pursuant to the terms of this
Agreement of any outstanding Letters of Credit in respect of which Borrowers
have failed to pay all or a portion of the amounts described above (such cash
collateralization to be apportioned among all such Letters of Credit in the
manner described above), and (C) third, to the extent of any further
excess, as provided in Section 3(a)(ii) of the Intercreditor
Agreement.

SECTION 17.       Additional
Remedies for Intellectual Property Collateral.

 

(a)           Anything contained herein to the
contrary notwithstanding, upon the occurrence and during the continuation of an
Event of Default, (i) Collateral Agent shall have the right (but not the
obligation) to bring suit, in the name of any Grantor, Collateral Agent or
otherwise, to enforce its rights with respect to any Intellectual Property
Collateral, in which event each Grantor shall, at the request of Collateral
Agent, do any and all lawful acts and execute any and all documents required by
Collateral Agent in aid of such enforcement and each Grantor shall promptly,
upon demand, reimburse and indemnify Collateral Agent as provided in subsections
10.3 and 10.4 of the Credit Agreement and Section 19
hereof, as applicable, in connection with the exercise of its rights under this
Section 17, and, to the extent that Collateral Agent shall elect
not to bring suit to enforce any Intellectual Property Collateral as provided
in this Section 17, each Grantor agrees to use all commercially
reasonable measures, whether by action, suit, proceeding or otherwise, to
prevent the infringement of any material Intellectual Property Collateral by
others and for that purpose agrees to use its commercially reasonable judgment
in maintaining any action, suit or proceeding against any Person so infringing
reasonably necessary to prevent such infringement; (ii) upon written
demand from Collateral Agent, each Grantor shall execute and deliver to
Collateral Agent an assignment or assignments of the Intellectual Property
Collateral and such other documents as are necessary or appropriate to carry
out the intent and purposes of this Agreement; (iii) each Grantor agrees
that such an assignment and/or recording shall be applied to reduce the Secured
Obligations outstanding only to the extent that Collateral Agent (or any
Lender) receives cash proceeds in respect of the sale of, or other realization
upon, the Intellectual Property Collateral; and (iv) within five Business
Days after written notice from Collateral Agent, each Grantor shall make
available to Collateral Agent, to the extent within such Grantor’s power and
authority, such personnel in such Grantor’s employ on the date of such Event of
Default as Collateral Agent may reasonably designate, by name, title or job
responsibility, to permit such Grantor to continue, directly or indirectly, to
produce, advertise and sell the products and services sold or delivered by such
Grantor under or in connection with the Trademarks, Trademark Registrations and
Trademark Rights, such 

 23
 

 

persons to be available to perform their prior
functions on Collateral Agent’s behalf and to be compensated by Collateral
Agent at such Grantor’s expense on a per diem, pro-rata basis consistent
with the salary and benefit structure applicable to each as of the date of such
Event of Default.

(b)           If (i) an Event of Default shall
have occurred and, by reason of cure, waiver, modification, amendment or otherwise,
no longer be continuing, (ii) no other Event of Default shall have
occurred and be continuing, (iii) an assignment to Collateral Agent of any
rights, title and interests in and to the Intellectual Property Collateral
shall have been previously made, and (iv) the Secured Obligations shall
not have become immediately due and payable, upon the written request of any
Grantor on behalf of itself and/or any other Grantor, Collateral Agent shall
promptly execute and deliver to each such Grantor such assignments as may be
necessary to reassign to each such Grantor any such rights, title and interests
as may have been assigned to Collateral Agent as aforesaid, subject to any
disposition thereof that may have been made by Collateral Agent; provided,
that, after giving effect to such reassignment, Collateral Agent’s
security interest granted pursuant hereto, as well as all other rights and
remedies of Collateral Agent granted hereunder, shall continue to be in full
force and effect; and provided, further, that, the rights,
title and interests so reassigned shall be free and clear of all Liens other
than Liens (if any) encumbering such rights, title and interest at the time of
their assignment to Collateral Agent and Permitted Encumbrances.

SECTION 18.       Application
of Proceeds.

 

Except as
expressly provided elsewhere in this Agreement, all Proceeds received by
Collateral Agent in respect of any sale of, collection from, other realization
upon, or any distribution on account of all or any part of the Collateral shall
be applied in the following order of priority; provided, that,
Net Asset Sale Proceeds, Net Insurance/Condemnation Proceeds arising from
destruction, damage or condemnation of Collateral and Net Debt Securities
Proceeds arising from issuance of Receivables Sales Indebtedness shall be
applied as provided in the Credit Agreement and the Intercreditor Agreement:

FIRST:  To the payment of all costs and expenses of
such sale, collection or other realization, including reasonable compensation
to Collateral Agent and its agents and counsel, and all other expenses,
liabilities and advances made or incurred by Collateral Agent in connection
therewith, and all amounts for which Collateral Agent is entitled to
indemnification hereunder and all advances made by Collateral Agent hereunder
for the account of Grantors, and to the payment of all costs and expenses paid
or incurred by Collateral Agent in connection with the exercise of any right or
remedy hereunder;

SECOND:  To the ratable payment of all other Secured
Obligations for the ratable benefit of the holders thereof (including any
Aggregate Available Amount deposited into the L/C Collateral Account for
outstanding Letters of Credit, provided that if such Letters of Credit expire
without being fully drawn, then at that time, such excess amounts shall be
applied as provided in this Section 18 to then outstanding Secured
Obligations) and, as to obligations arising under the Credit Agreement, as
provided in the Credit Agreement, provided, that, no Proceeds
received by Collateral Agent in respect of any sale of, collection from, other
realization upon, or any distribution on account of all or any part of the
Excluded Securities Collateral shall be applied toward payment of obligations
in

 24
 

 

respect
of the Existing Owens-Brockway Senior Secured Notes or Specified New Senior
Debt (and neither the holders thereof nor the New Senior Debt Representative in
respect thereof shall be entitled to any increased portion of any Proceeds of
any other Collateral due to such exclusion); provided, further, that,
in making such application in respect of outstanding obligations under New
Senior Debt Documents, the Collateral Agent shall be entitled to deduct from
the share of such Proceeds otherwise payable to the New Senior Debt
Representatives the New Senior Debt holders’ pro rata share of all amounts that
the Collateral Agent has been paid by the Paying Indemnifying Parties (such
term being used in this Section 18 as defined in Section 7(c) of
the Intercreditor Agreement) pursuant to Section 7(c) of the
Intercreditor Agreement; and

THIRD:  To the payment to or upon the order of the
applicable Grantor, or to whosoever may be lawfully entitled to receive the
same or as a court of competent jurisdiction may direct, of any surplus then
remaining from such proceeds.

SECTION 19.       Indemnity and Expenses.

(a)           Grantors jointly and severally agree
to indemnify Collateral Agent, each Secured Party, including each Lender, each
other Permitted Credit Exposure Holder, each holder of New Senior Debt and each
New Senior Debt Representative from and against any and all claims, losses and
liabilities in any way relating to, growing out of or resulting from this
Agreement and the transactions contemplated hereby (including without
limitation enforcement of this Agreement), except to the extent such claims,
losses or liabilities result solely from Collateral Agent’s or such Secured
Party’s, Lender’s, Other Permitted Credit Exposure Holder’s or New Senior Debt
Representative’s or holder’s gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction or from any failure on the part
of Collateral Agent to file any continuation statements with respect to the
Collateral.

(b)           Grantors jointly and severally agree
to pay to Collateral Agent upon demand the amount of any and all costs and
expenses, including the reasonable fees and expenses of its counsel and of any
experts and agents, that Secured Party may incur in connection with (i) the
administration of this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any
of the Collateral, (iii) the exercise or enforcement of any of the rights
of Secured Party hereunder, or (iv) the failure by any Grantor to perform
or observe any of the provisions hereof.

(c)           The obligations of Grantors in this Section 19
shall (i) survive the termination of this Agreement and the discharge of
Grantors’ other obligations under this Agreement, the Other Permitted Credit
Exposure Documents, the Credit Agreement and the other Loan Documents and (ii),
as to any Grantor that is a party to the Subsidiary Guaranty, be subject to the
provisions thereof regarding contribution among such Grantors.

SECTION 20.       Continuing
Security Interest; Transfer of Loans; Termination and Release.

(a)           This Agreement shall create a
continuing security interest in the Collateral and shall (i) remain in
full force and effect until the earlier to occur of (A) termination of the
security interest granted hereby pursuant to Section 20(b), and (B) the
payment in full of the 

 25
 

 

Secured Obligations (excluding the Other Permitted
Credit Exposure and obligations under or in respect of the New Senior Debt
Documents), the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, (ii) be
binding upon Grantors and their respective successors and assigns, and (iii) inure,
together with the rights and remedies of Collateral Agent hereunder, to the
benefit of Collateral Agent and its successors, and permitted transferees and
assigns. Without limiting the generality of the foregoing clause (iii), (A) but
subject to the provisions of subsection 10.2 of the Credit Agreement,
any Lender may assign or otherwise transfer any Loans held by it to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to Lenders as Secured Parties herein or
otherwise, (B) any Other Permitted Credit Exposure Holder may assign or
otherwise transfer any Other Permitted Credit Exposure to any other Lender or
Affiliate of  Lender in accordance with
the applicable Other Permitted Credit Exposure Documents and such other
permitted assignee shall thereupon become vested with all the benefits in
respect thereof granted to such Other Permitted Credit Exposure Holder as a
Secured Party herein or otherwise and (C) any holder of any New Senior
Debt may assign or otherwise transfer any New Senior Debt to any other Person
in accordance with the applicable New Senior Debt Documents and such other
Person shall thereupon become vested with all the benefits in respect thereof
granted to such holder (or its representative) as a Secured Party herein or
otherwise.

(b)           Upon the earlier to occur of (i) payment
in full of all Secured Obligations (excluding the Other Permitted Credit
Exposure and obligations under or in respect of the New Senior Debt Documents),
the cancellation or termination of the Commitments and the cancellation or
expiration of all outstanding Letters of Credit, and (ii) the first date
on which the Collateral no longer secures the Obligations and upon election of
Grantors, the security interest granted hereby shall terminate and all rights
to the Collateral shall revert to the applicable Grantors. Upon any such
termination Collateral Agent will, at Grantors’ expense, execute and deliver to
Grantors such documents as Grantors shall reasonably request to evidence such
termination. Upon the proposed sale, transfer or other disposition of any
Collateral by a Grantor or of a Grantor in accordance with the Credit Agreement
(including pursuant to the Specified Restructuring) for which such Grantor
desires to obtain a security interest release from Collateral Agent, such
Grantor shall deliver an Officer’s Certificate (x) stating that the
Collateral subject to such disposition is being sold, transferred or otherwise
disposed of in compliance with the terms of the Credit Agreement and (y) specifying
the Collateral being sold, transferred or otherwise disposed of in the proposed
transaction. In addition, the Lenders hereby agree to the release of the
Collateral Agent’s security interest in a Deposit Account in which such Grantor
has granted a security interest as permitted under subsection 6.2A(x) of
the Credit Agreement, upon delivery by such Grantor of an Officer’s Certificate
(x) specifying the applicable Deposit Account, and (y) stating that
the applicable Deposit Account is being pledged as permitted by subsection
6.2A(x) of the Credit Agreement. Upon the receipt of such Officer’s
Certificate, Collateral Agent shall, at Grantor’s expense, so long as
Collateral Agent has no reason to believe that the Officer’s Certificate
delivered by such Grantor with respect to such sale is not true and correct
(and, with respect to a requested release of a Deposit Account, so long as no
Event of Default has occurred and is continuing, execute and deliver such
releases of its security interest in such Collateral which is to be so sold,
transferred or disposed of or, in the case of a Deposit Account that is to be
subjected to a lien permitted under subsection 6.2A(x) of the
Credit Agreement, as may be reasonably requested by such Grantor. If Requisite
Lenders under the Credit Agreement, or if required, all Lenders, consent to the
release or reconveyance of any of the Collateral, 

 26
 

 

Collateral Agent shall release, and at Grantors’
expense execute and deliver any necessary releases of, its security interest in
such Collateral in connection therewith and all such reconveyances or transfers
shall be without recourse to the Collateral Agent or the Secured Parties and
without representation or warranty of any kind.

SECTION 21.       Collateral
Agent as Agent.

 

(a)           Pursuant to the Intercreditor
Agreement, Collateral Agent has been appointed to act as Collateral Agent
hereunder by the Secured Parties and, by such appointment, Lenders, Other
Permitted Credit Exposure Holders and New Senior Debt Representatives shall be
obligated, and shall have the right hereunder, to make demands, to give
notices, to exercise or refrain from exercising any rights, and to take or
refrain from taking any action (including without limitation the release or
substitution of Collateral), solely in accordance with this Agreement and the
Intercreditor Agreement; provided that Collateral Agent shall exercise, or
refrain from exercising, any remedies provided for in Section 16 in
accordance with the instructions of Requisite Obligees (as defined in the
Intercreditor Agreement). In furtherance of the foregoing provisions of this Section 21(a),
each Lender, Other Permitted Credit Exposure Holder and New Senior Debt
Representative, by its acceptance of the benefits hereof, agrees that it shall
have no right individually to realize upon any of the Collateral hereunder, it
being understood and agreed by each such Lender, Other Permitted Credit
Exposure Holder and New Senior Debt Representative that all rights and remedies
hereunder may be exercised solely by Collateral Agent for the benefit of
Secured Parties, in accordance with the terms of this Section 21(a).

(b)           Collateral Agent shall not be deemed
to have any duty whatsoever with respect to any Other Permitted Credit Exposure
Holder or New Senior Debt Representative until it shall have received written
notice in form and substance satisfactory to Collateral Agent from a Grantor,
or such Other Permitted Credit Exposure Holder or New Senior Debt
Representative as to the existence and terms of the applicable Other Permitted
Credit Exposure Documents or New Senior Debt Documents, as the case may be.

SECTION 22.       Additional
Grantors.

 

The initial Subsidiary Grantors hereunder shall be
such of the Subsidiaries of Company as are signatories hereto on the date
hereof. From time to time subsequent to the date hereof, additional
Subsidiaries of Company may become parties hereto as additional Grantors (each
an “Additional Grantor”), by executing a
Counterpart substantially in the form of Exhibit I annexed hereto. Upon
delivery of any such Counterpart to Collateral Agent, notice of which is hereby
waived by Grantors, each such Additional Grantor shall be a Grantor and shall
be as fully a party hereto as if such Additional Grantor were an original
signatory hereto. Each Grantor expressly agrees that its obligations arising
hereunder shall not be affected or diminished by the addition or release of any
other Grantor hereunder, nor by any election of Collateral Agent not to cause
any Subsidiary of Company to become an Additional Grantor hereunder. This
Agreement shall be fully effective as to any Grantor that is or becomes a party
hereto regardless of whether any other Person becomes or fails to become or
ceases to be a Grantor hereunder.

 27

 

 

SECTION 23.       Amendments;
Etc.

 

No amendment, modification, termination or waiver of
any provision of this Agreement, and no consent to any departure by any Grantor
therefrom, shall in any event be effective unless the same shall be in writing
and signed by Collateral Agent and, in the case of any such amendment or
modification, by Grantors; provided, that, this Agreement may be
modified by the execution of a Counterpart by an Additional Grantor in
accordance with Section 22 and Grantors hereby waive any requirement
of notice of or consent to any such amendment. Any such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which it was given.

SECTION 24.       Notices.

 

Any notice or other communication herein required or
permitted to be given shall be in writing and may be personally served, telexed
or sent by telefacsimile or United States mail or courier service and shall be
deemed to have been given when delivered in person or by courier service, upon
receipt of telefacsimile, or three Business Days after depositing it in the
United States mail with postage prepaid and properly addressed; provided,
that, notices to Collateral Agent shall not be effective until received.
For the purposes hereof, the address of each Grantor shall be c/o Borrowers’
Agent at the address set forth therefor in the Credit Agreement and the address
of each other party hereto shall be as provided in the Credit Agreement or as
set forth under such party’s name on the signature pages hereof or such
other address as shall be designated by such party in a written notice
delivered to the other parties hereto.

SECTION 25.       Failure
or Indulgence Not Waiver; Remedies Cumulative.

 

No failure or delay on the part of Collateral Agent in
the exercise of any power, right or privilege hereunder shall impair such
power, right or privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial exercise of any such
power, right or privilege preclude any other or further exercise thereof or of
any other power, right or privilege. All rights and remedies existing under
this Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.

SECTION 26.       Severability.

 

In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.

SECTION 27.       Headings.

 

Section and subsection headings in this Agreement
are included herein for convenience of reference only and shall not constitute
a part of this Agreement for any other purpose or be given any substantive
effect.

 28
 

 

 

SECTION 28.       Governing
Law; Terms; Rules of Construction.

 

THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK) WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT
TO THE EXTENT THAT THE UCC PROVIDES THAT
THE PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN
RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN THE STATE OF NEW YORK. Unless otherwise defined herein or in the
Credit Agreement, terms used in Articles 8 and 9 of the UCC are used herein as
therein defined. The rules of construction set forth in subsection 1.3
of the Credit Agreement shall be applicable to this Agreement mutatis mutandis.

SECTION 29.       Consent
to Jurisdiction and Service of Process.

 

ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GRANTOR
ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE,
COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH
GRANTOR, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE
NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II) WAIVES
ANY DEFENSE OF FORUM NON CONVENIENS; (III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL,
RETURN RECEIPT REQUESTED, TO SUCH GRANTOR AT ITS ADDRESS PROVIDED IN ACCORDANCE
WITH SECTION 24; (IV) AGREES THAT
SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL
JURISDICTION OVER SUCH GRANTOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND
OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; (V) AGREES THAT COLLATERAL AGENT RETAINS THE RIGHT
TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS
AGAINST SUCH GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION; AND (VI) AGREES THAT THE PROVISIONS OF THIS SECTION 29
RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE
FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402
OR OTHERWISE.

SECTION 30.       Waiver of
Jury Trial.

 

EACH GRANTOR AND COLLATERAL AGENT HEREBY AGREE TO
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be all encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. Each 

 29
 

 

Grantor and Collateral Agent acknowledge that this
waiver is a material inducement for each Grantor and Collateral Agent to enter
into a business relationship, that each Grantor and Collateral Agent have
already relied on this waiver in entering into this Agreement and that each
will continue to rely on this waiver in their related future dealings. Each
Grantor and Collateral Agent further warrant and represent that each has
reviewed this waiver with its legal counsel, and that each knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SECTION 30 AND EXECUTED BY EACH OF THE PARTIES
HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of litigation,
this Agreement may be filed as a written consent to a trial by the court.

SECTION 31.       Counterparts.

 

This Agreement may be executed in one or more
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and
attached to a single counterpart so that all signature pages are
physically attached to the same document.

 

 30

 

 

IN
WITNESS WHEREOF, the Parties hereto have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.

	
  

  	
  On behalf of each entity named on Schedule A
  

  annexed hereto, in the capacity set forth for such

  entity on such Schedule A

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  

 

 

 S-1

 

 

	
  

  	
  DEUTSCHE BANK TRUST COMPANY AMERICAS,

  
	
   

  	
  as Collateral Agent

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Deutsche Bank Trust Company Americas

  90 Hudson Street

  MS JCY050-199

  Jersey City, New Jersey 07302

  Attention:  Commercial Loan Division

  
	
   

  	
   

  	
   

  
	
   

  	
  With a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Deutsche Bank Trust Company Americas

  222 South Riverside Plaza

  MS CHI105-2900

  Chicago, Illinois  60606

  Attention: Marla Heller and Linda Stahulak

  

 

 

EXHIBIT I TO

SECOND AMENDED AND RESTATED

SECURITY AGREEMENT

[FORM OF COUNTERPART]

COUNTERPART (this “Counterpart”),
dated _________, 20__, is delivered pursuant to Section 22 of the
Security Agreement referred to below. The undersigned hereby agrees that this
Counterpart may be attached to the Second Amended and Restated Security
Agreement, dated as of June 14, 2006 (as it may be from time to time
amended, modified or supplemented, the “Security Agreement”;
capitalized terms used herein not otherwise defined herein shall have the
meanings ascribed therein), among [Insert Company Name], the other Grantors
named therein, and Deutsche Bank Trust Company Americas, as Collateral Agent.
The undersigned by executing and delivering this Counterpart hereby becomes a Grantor
under the Security Agreement in accordance with Section 22 thereof
and agrees to be bound by all of the terms thereof. Without limiting the
generality of the foregoing, the undersigned hereby:

(i)              authorizes the Collateral Agent to
add the information set forth on the Schedules to this Agreement to the
correlative Schedules attached to the Security Agreement;

(ii)              agrees that all Collateral of the
undersigned, including the items of property described on the Schedules hereto,
shall become part of the Collateral and shall secure all Secured Obligations;
and

(iii)            makes the representations and
warranties set forth in the Security Agreement, as amended hereby, to the
extent relating to the undersigned.

	
   

  	
  [NAME OF ADDITIONAL GRANTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 I-1

 

EXHIBIT II TO

SECOND AMENDED AND RESTATED

SECURITY AGREEMENT

PLEDGE AMENDMENT

This Pledge Amendment, dated _________, 20__, is
delivered pursuant to the Second Amended and Restated Security Agreement, dated
June 14, 2006 between __________ ____________________, a _______________ (“Grantor”), the other Grantors named therein, and Collateral
Agent (as it may be from time to time amended, modified or supplemented, the “Security Agreement”). Capitalized terms used herein not
otherwise defined herein shall have the meanings ascribed thereto in the
Security Agreement.

Grantor hereby agrees that the [Pledged Shares]
[Pledged Debt] listed on the schedule attached hereto shall be deemed to be
part of the [Pledged Shares] [Pledged Debt] and shall become part of the Securities
Collateral and shall secure all Secured Obligations.

IN WITNESS WHEREOF, Grantor has caused this Pledge
Amendment to be duly executed and delivered by its duly authorized officer as
of _______________.

	
   

  	
  [GRANTOR]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 II-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00105-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00105-of-00352.parquet"}]]