Document:

Exhibit 10.9

 

 

EXECUTION COPY

 

 

PRIORITY LIEN DEBT

 

PLEDGE AND SECURITY AGREEMENT

 

 

dated as of May 2, 2005

 

 

between

 

 

EACH OF THE GRANTORS PARTY HERETO

 

 

and

 

THE BANK OF NEW YORK

 

as Priority Lien Collateral Trustee

 

 

TABLE OF CONTENTS

 

	
  SECTION
  1. DEFINITIONS; GRANT OF SECURITY

  	
   

  
	
  1.1

  	
  General Definitions

  	
   

  
	
  1.2

  	
  Definitions; Interpretation

  	
   

  
	
   

  
	
  SECTION
  2. GRANT OF SECURITY

  	
   

  
	
  2.1

  	
  Grant of Security

  	
   

  
	
  2.2

  	
  Certain Limited Exclusions

  	
   

  
	
  2.3

  	
  Intercreditor Agreement

  	
   

  
	
   

  
	
  SECTION
  3. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE

  	
   

  
	
  3.1

  	
  Security for Obligations

  	
   

  
	
  3.2

  	
  Continuing Liability Under Collateral

  	
   

  
	
   

  
	
  SECTION
  4. REPRESENTATIONS AND WARRANTIES AND COVENANTS

  	
   

  
	
  4.1

  	
  Generally

  	
   

  
	
  4.2

  	
  Equipment and Inventory

  	
   

  
	
  4.3

  	
  Receivables

  	
   

  
	
  4.4

  	
  Investment Related Property

  	
   

  
	
  4.5

  	
  Material Contracts

  	
   

  
	
  4.6

  	
  Letter of Credit Rights

  	
   

  
	
  4.7

  	
  Intellectual
  Property

  	
   

  
	
  4.8

  	
  Commercial Tort Claims

  	
   

  
	
   

  
	
  SECTION
  5. ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES; ADDITIONAL GRANTORS

  	
   

  
	
  5.1

  	
  Access; Right of Inspection

  	
   

  
	
  5.2

  	
  Further Assurances

  	
   

  
	
  5.3

  	
  Additional Grantors

  	
   

  
	
   

  
	
  SECTION
  6. COLLATERAL TRUSTEE APPOINTED ATTORNEY-IN-FACT

  	
   

  
	
  6.1

  	
  Power of Attorney

  	
   

  
	
  6.2

  	
  No Duty on the Part of Priority Lien
  Collateral Trustee or Secured Parties

  	
   

  
	
   

  
	
  SECTION
  7. REMEDIES

  	
   

  
	
  7.1

  	
  Generally

  	
   

  
	
  7.2

  	
  Application of Proceeds

  	
   

  
	
  7.3

  	
  Sales on Credit

  	
   

  
	
  7.4

  	
  Deposit Accounts

  	
   

  
	
  7.5

  	
  Investment
  Related Property

  	
   

  
	
  7.6

  	
  Intellectual
  Property

  	
   

  
	
   

  
	
  SECTION
  8. COLLATERAL TRUSTEE

  	
   

  
	
   

  
	
  SECTION
  9. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS

  	
   

  
	
   

  
	
  SECTION
  10. STANDARD OF CARE; COLLATERAL TRUSTEE MAY PERFORM

  	
   

  

 

i

 

	
  SECTION
  11. MISCELLANEOUS

  	
   

  
	
   

  
	
  SCHEDULE 4.1 — GENERAL INFORMATION

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 4.2 — LOCATION OF EQUIPMENT AND INVENTORY

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 4.4 — INVESTMENT RELATED PROPERTY

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 4.5 — MATERIAL CONTRACTS

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 4.6 — DESCRIPTION OF LETTERS OF CREDIT

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 4.7 — INTELLECTUAL PROPERTY - EXCEPTIONS

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 4.8 — COMMERCIAL TORT CLAIMS

  	
   

  
	
   

  	
   

  
	
  EXHIBIT A — PLEDGE SUPPLEMENT

  	
   

  
	
   

  	
   

  
	
  EXHIBIT B — UNCERTIFICATED SECURITIES CONTROL AGREEMENT

  	
   

  
	
   

  	
   

  
	
  EXHIBIT C — SECURITIES ACCOUNT CONTROL AGREEMENT

  	
   

  
	
   

  	
   

  
	
  EXHIBIT D — DEPOSIT ACCOUNT CONTROL AGREEMENT

  	
   

  
	
   

  	
   

  
	
  EXHIBIT E — TRADEMARK SECURITY AGREEMENT

  	
   

  
	
   

  	
   

  
	
  EXHIBIT F — COPYRIGHT SECURITY AGREEMENT

  	
   

  
	
   

  	
   

  
	
  EXHIBIT G — PATENT SECURITY AGREEMENT

  	
   

  

 

ii

 

This PRIORITY LIEN DEBT  PLEDGE
AND SECURITY AGREEMENT, dated as of May 2, 2005 (this “Agreement”), between EACH OF THE UNDERSIGNED, whether as an
original signatory hereto or as an Additional Grantor (as herein defined)
(each, a “Grantor”), and THE BANK OF NEW YORK, a New York banking corporation, as
collateral trustee for the Secured Parties (as herein defined) (in such
capacity as collateral trustee, the “Priority
Lien Collateral Trustee”).

 

RECITALS:

 

WHEREAS,
reference is made to that certain Term Loan Credit and Guaranty Agreement,
dated as of the date hereof (as it may be amended, restated, supplemented or
otherwise modified from time to time, the “Credit
Agreement”), by and among NEWPAGE
CORPORATION, a Delaware
corporation, as Borrower (“NewPageCo”), NEWPAGE HOLDING CORPORATION, a Delaware corporation, and
CERTAIN SUBSIDIARIES OF NEWPAGECO,
as Guarantors, the various
lenders party thereto from time to time (the “Lenders”),
GOLDMAN SACHS CREDIT PARTNERS, L.P.,
as Joint Lead Arranger, Joint
Bookrunner and Co-Syndication Agent, GOLDMAN
SACHS CREDIT PARTNERS L.P., as Administrative Agent, and UBS
SECURITIES LLC, as Joint Lead Arranger, Joint Bookrunner and
Co-Syndication Agent;

 

WHEREAS,
subject to the terms and conditions of the Credit Agreement, certain Grantors
may enter into one or more Hedge Agreements with one or more Lender
Counterparties;

 

WHEREAS,
in consideration of the extensions of credit and other accommodations of
Lenders and Lender Counterparties as set forth in the Credit Agreement and the
Hedge Agreements, respectively, each Grantor has agreed to secure such Grantor’s
obligations under the Credit Documents and the Hedge Agreements as set forth
herein;

 

WHEREAS,
reference is made to that certain Collateral Trust Agreement (the “Collateral Trust Agreement”) dated as of May 2, 2005 by and
among The Bank of New York, as Collateral Trustee, the Revolving Credit
Collateral Agent, the Senior Secured Floating Rate Notes Trustee under the
Senior Secured Floating Rate Notes, the Senior Secured Fixed Rate Notes Trustee
under the Senior Secured Fixed Rate Notes, and the Administrative Agent under
the Credit Agreement; and

 

WHEREAS,
in addition to the obligations under the Credit Agreement and the Hedge
Agreements referred to above, the Grantors may incur additional “Priority Lien Obligations” (as defined in the Collateral
Trust Agreement) and each Grantor has agreed to secure such Grantor’s Priority
Lien Obligations as set forth herein.

 

NOW,
THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, each Grantor and the
Priority Lien Collateral Trustee agree as follows:

 

SECTION 1.   DEFINITIONS; GRANT OF SECURITY.

 

1.1          General Definitions.  In this Agreement, the following terms shall
have the following meanings:

 

 

“Account Debtor”
shall mean each Person who is obligated on a Receivable or any Supporting
Obligation related thereto.

 

“Accounts”
shall mean all “accounts” as defined in Article 9 of the UCC, including
Health-Care Insurance Receivables.

 

“Additional Grantors”
shall have the meaning assigned in Section 5.3.

 

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

 

“Assigned Agreements”
shall mean, as to each Grantor, all agreements and contracts to which such
Grantor is a party as of the date hereof, or to which such Grantor becomes a
party after the date hereof, including, without limitation, each Material
Contract, as each such agreement may be amended, supplemented or otherwise
modified from time to time.

 

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

 

“Cash Proceeds”
shall have the meaning assigned in Section 7.7.

 

“Chattel Paper”
shall mean all “chattel paper” as defined in Article 9 of the UCC, including,
without limitation, “electronic chattel paper” or “tangible chattel paper”, as
each term is defined in Article 9 of the UCC.

 

“Closing Date” shall
mean the date of this Agreement.

 

“Collateral”
shall have the meaning assigned in Section 2.1.

 

“Collateral Account”
shall mean any account established by the Priority Lien Collateral Trustee.

 

“Collateral Trust Agreement” shall have the
meaning set forth in the recitals.

 

“Collateral Records”
shall mean books, records, ledger cards, files, correspondence, customer lists,
blueprints, technical specifications, manuals, computer software, computer
printouts, tapes, disks and related data processing software and similar items
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.

 

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

 

“Commercial Tort
Claims” shall mean all “commercial tort claims” as
defined in Article 9 of the UCC, including, without limitation, all commercial
tort claims listed on Schedule 4.8 (as such schedule may be amended or
supplemented from time to time).

 

“Commodities Accounts”
(i) shall mean all “commodity accounts” as defined in Article 9 of the UCC and
(ii) shall include, without limitation, all of the accounts listed on Schedule
4.4 under the heading “Commodities
Accounts” (as such schedule may be amended or supplemented from time to
time).

 

2

 

“Controlled Foreign
Corporation” shall mean “controlled foreign
corporation” as defined in the Tax Code.

 

“Copyright Licenses”
shall mean any and all written agreements containing the express grant of any
right in or to Copyrights (whether such Grantor is licensee or licensor
thereunder) including, without limitation, each agreement referred to in
Schedule 4.7(B) (as such schedule may be amended or supplemented from time to
time).

 

“Copyrights” shall mean all
United States, and foreign copyrights (including European Union Community
designs), including but not limited to copyrights in software and databases,
whether registered or unregistered, and, with respect to any and all of the
foregoing: (i) all registrations and applications therefor including, without
limitation, the registrations and applications referred to in Schedule 4.7(A)
(as such schedule may be amended or supplemented from time to time), (ii) all
extensions and renewals thereof, (iii) all rights corresponding thereto
throughout the world, (iv) all rights to sue for past, present and future infringements
thereof, and (v) all Proceeds of the foregoing, including, without limitation,
licenses, royalties, income, payments, claims, damages and proceeds of suit.

 

“Credit Agreement”
shall have the meaning set forth in the recitals.

 

“Deposit Account Control
Agreement”
shall have the meaning assigned in Section 4.4.4(c).

 

“Deposit Accounts”
(i) shall mean all “deposit accounts” as defined in Article 9 of the UCC and
(ii) shall include, without limitation, all of the accounts listed on Schedule
4.4 under the heading “Deposit Accounts” (as such schedule may be amended or
supplemented from time to time).

 

“Discharge of Priority Lien Obligations”
shall have the meaning set forth in the Collateral Trust Agreement.

 

“Documents”
shall mean all “documents” as defined in Article 9 of the UCC.

 

“Equipment”
shall mean:  (i) all “equipment” as
defined in Article 9 of the UCC, (ii) all machinery, manufacturing equipment,
data processing equipment, computers, office equipment, furnishings, furniture,
appliances, fixtures and tools (in each case, regardless of whether
characterized as equipment under the UCC) and (iii) all accessions or additions
thereto, all parts thereof, whether or not at any time of determination
incorporated or installed therein or attached thereto, and all replacements
therefor, wherever located, now or hereafter existing, including any fixtures.

 

“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended from time
to time, and any successor thereto.

 

“Event of Default”
means an “Event of Default” as defined in the Credit Agreement or any other
Priority Lien Documents which is no longer subject to any cure or notice
period.

 

“General Intangibles”
(i) shall mean all “general intangibles” as defined in Article 9 of the UCC,
including “payment intangibles” also as defined in Article 9 of the UCC and
(ii) shall include, without limitation, all interest rate or currency
protection or hedging

 

3

 

arrangements, all tax refunds, all licenses,
permits, concessions and authorizations, all Assigned Agreements and all
Intellectual Property (in each case, regardless of whether characterized as
general intangibles under the UCC).

 

“Goods”
(i) shall mean all “goods” as defined in Article 9 of the UCC and (ii) shall
include, without limitation, all Inventory and Equipment (in each case,
regardless of whether characterized as goods under the UCC).

 

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

 

“Health-Care
Insurance Receivable” shall mean all “health-care-insurance
receivable” as defined in Article 9 of the UCC.

 

“Instruments”
shall mean all “instruments” as defined in Article 9 of the UCC.

 

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

 

“Intellectual
Property” shall mean, collectively, the Copyrights,
the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks, the
Trademark Licenses, the Trade Secrets, and the Trade Secret Licenses.

 

“Intercreditor Agreement”
means the Intercreditor Agreement dated as of the date hereof, among NewPageCo,
the Guarantors thereunder, the Collateral Agent, and The Bank of New York, as
Collateral Trustee, as it may be amended, supplemented or otherwise modified
from time to time.

 

“Inventory”
shall mean (i) all “inventory” as defined in Article 9 of the UCC and (ii) all
goods held for sale or lease or to be furnished under contracts of service or
so leased or furnished, 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 any Grantor’s business; all such goods in which any Grantor has
an interest in mass or a joint or other interest or right of any kind; and all
such goods which are returned to or repossessed by any Grantor, all computer
programs embedded in any such goods and all accessions thereto and products
thereof (in each case, regardless of whether characterized as inventory under
the UCC).

 

“Investment Accounts”
shall mean the Collateral Account, Securities Accounts, Commodities Accounts and Deposit Accounts.

 

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

 

“Lenders”
shall have the meaning set forth in the recitals.

 

“Letter of Credit”
shall mean “letter of credit” as defined in Article 9 of the UCC.

 

4

 

“Letter of Credit
Rights” shall mean “letter-of-credit right” as defined
in Article 9 of the UCC.

 

“Money”
shall mean “money” as defined in the UCC.

 

“NewPageCo” shall
have the meaning set forth in the recitals.

 

“Non-Assignable Contract”
shall mean any agreement, contract or license to which any Grantor is a party
that by its terms purports to restrict or prevent the assignment or granting of
a security interest therein (either by its terms or by any federal or state
statutory prohibition or otherwise irrespective of whether such prohibition or
restriction is enforceable under Sections 9-406 through 409 of the UCC).

 

“Patent Licenses”
shall mean all written agreements containing the express grant of any right in
or to Patents (whether such Grantor is licensee or licensor thereunder)
including, without limitation, each agreement referred to in Schedule 4.7(D)
(as such schedule may be amended or supplemented from time to time).

 

“Patents” shall mean all United States and foreign
patents and certificates of invention, or similar industrial property rights,
and applications for any of the foregoing, including, but not limited to: (i)
each patent and patent application referred to in Schedule 4.7(C) hereto (as
such schedule may be amended or supplemented from time to time), (ii) all
reissues, divisions, continuations, continuations-in-part, extensions,
renewals, and reexaminations thereof, (iii) all rights corresponding thereto
throughout the world, (iv) all inventions and improvements described therein,
(v) all rights to sue for past, present and future infringements thereof, (vi)
all licenses, claims, damages, and proceeds of suit arising therefrom, and
(vii) all Proceeds of the foregoing, including, without limitation, licenses,
royalties, income, payments, claims, damages, and proceeds of suit.

 

 “Person” shall mean and include natural
persons, corporations, limited partnerships, general partnerships, limited
liability companies, limited liability partnerships, joint stock companies,
joint ventures, associations, companies, trusts, banks, trust companies, land
trusts, business trusts or other organizations, whether or not legal entities,
and Governmental Authorities.

 

“Pledge Supplement”
shall mean any supplement to this agreement in substantially the form of
Exhibit A.

 

“Pledged Debt”
shall mean all Indebtedness owed to such Grantor, including, without
limitation, all Indebtedness described on Schedule 4.4(A) under the heading “Pledged
Debt” (as such schedule may be amended or supplemented from time to time),
issued by the obligors named therein, the instruments evidencing such
Indebtedness, 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 such Indebtedness.

 

“Pledged Equity
Interests” shall mean all Pledged Stock, Pledged LLC
Interests, Pledged Partnership Interests and Pledged Trust Interests.

 

“Pledged LLC
Interests” shall mean all interests in any limited
liability company including, without limitation, all limited liability company
interests listed on Schedule 4.4(A) under the heading “Pledged LLC Interests”
(as such schedule may be amended or

 

5

 

supplemented from time to time) and the
certificates, if any, representing such limited liability company interests and
any interest of such Grantor on the books and records of such limited liability
company or on the books and records of any securities intermediary pertaining
to such interest and all dividends, distributions, cash, warrants, rights,
options, instruments, securities 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 limited liability company interests.

 

“Pledged Partnership
Interests” shall mean all interests in any general
partnership, limited partnership, limited liability partnership or other
partnership including, without limitation, all partnership interests listed on
Schedule 4.4(A) under the heading “Pledged Partnership Interests” (as such
schedule may be amended or supplemented from time to time) and the
certificates, if any, representing such partnership interests and any interest
of such Grantor on the books and records of such partnership or on the books
and records of any securities intermediary pertaining to such interest and all
dividends, distributions, cash, warrants, rights, options, instruments,
securities 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 partnership interests.

 

“Pledged Stock”
shall mean all shares of capital stock owned by such Grantor, including,
without limitation, all shares of capital stock described on Schedule 4.4(A)
under the heading “Pledged Stock” (as such schedule may be amended or
supplemented from time to time), and the certificates, if any, representing
such shares and any interest of such Grantor in the entries on the books of the
issuer of such shares or on the books of any securities intermediary pertaining
to such shares, and all dividends, distributions, cash, warrants, rights,
options, instruments, securities 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.

 

“Pledged Trust
Interests” shall mean all interests in a Delaware
business trust or other trust including, without limitation, all trust
interests listed on Schedule 4.4(A) under the heading “Pledged Trust Interests”
(as such schedule may be amended or supplemented from time to time) and the
certificates, if any, representing such trust interests and any interest of
such Grantor on the books and records of such trust or on the books and records
of any securities intermediary pertaining to such interest and all dividends,
distributions, cash, warrants, rights, options, instruments, securities 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 trust
interests.

 

“Priority Lien
Collateral Trustee” shall have the meaning set forth
in the preamble.

 

“Priority Lien Documents”
shall have the meaning set forth in the Intercreditor Agreement.

 

“Priority Lien Obligations”
shall mean, without duplication, (i) all Priority Lien Obligations (as defined
in the Collateral Trust Agreement), and (ii) all Obligations (as defined in the
Credit Agreement).

 

“Priority Lien Representative”
shall have the meaning set forth in the Collateral Trust Agreement.

 

6

 

“Proceeds”
shall mean:  (i) all “proceeds” as
defined in Article 9 of the UCC, (ii) payments or distributions made with
respect to any Investment Related Property and (iii) whatever is receivable or
received when Collateral or proceeds are sold, exchanged, collected or
otherwise disposed of, whether such disposition is voluntary or involuntary.

 

“Receivables”
shall mean all rights to payment, whether or not earned by performance, for
goods or other property sold, leased, licensed, assigned or otherwise disposed
of, or services rendered or to be rendered, including, without limitation all
such rights constituting or evidenced by any Account, Chattel Paper,
Instrument, General Intangible or Investment Related Property, together with
all of Grantor’s rights, if any, in any goods or other property giving rise to
such right to payment and all Collateral Support and Supporting Obligations
related thereto and all Receivables Records.

 

“Receivables Records”
shall mean (i) all original copies of all documents, instruments or other
writings or electronic records or other Records evidencing the Receivables,
(ii) all books, correspondence, credit or other files, Records, ledger sheets
or cards, invoices, and other papers relating to Receivables, including,
without limitation, all tapes, cards, computer tapes, computer discs, computer
runs, record keeping systems and other papers and documents relating to the Receivables,
whether in the possession or under the control of Grantor or any computer
bureau or agent from time to time acting for Grantor or otherwise, (iii) all
evidences of the filing of financing statements and the registration of other
instruments in connection therewith, and amendments, supplements or other
modifications thereto, notices to other creditors or secured parties, and
certificates, acknowledgments, or other writings, including, without
limitation, lien search reports, from filing or other registration officers,
(iv) all credit information, reports and memoranda relating thereto and (v) all
other written or nonwritten forms of information related in any way to the
foregoing or any Receivable.

 

“Record”
shall have the meaning specified in Article 9 of the UCC.

 

“Secured Obligations”
shall have the meaning assigned in Section 3.1.

 

“Secured Parties”
shall mean each holder of a Priority Lien Obligations, including, without
limitation, Priority Lien Representatives, the Agents, Lenders and the Lender
Counterparties and shall include, without limitation, all former Agents,
Lenders and Lender Counterparties to the extent that any Priority Lien
Obligations owing to such Persons were incurred while such Persons were Agents,
Lenders or Lender Counterparties and such Priority Lien Obligations have not
been paid or satisfied in full.

 

“Securities”
shall mean any stock, shares, partnership interests, voting trust certificates,
certificates of interest or participation in any profit-sharing agreement or
arrangement, options, warrants, bonds, debentures, notes, or other evidences of
indebtedness, secured or unsecured, convertible, subordinated or otherwise, or
in general any instruments commonly known as “securities” or any certificates
of interest, shares or participations in temporary or interim certificates for
the purchase or acquisition of, or any right to subscribe to, purchase or
acquire, any of the foregoing.

 

“Securities Accounts”
(i) shall mean all “securities accounts” as defined in Article 8 of the UCC and
(ii) shall include, without limitation, all of the accounts listed on Schedule
4.4(A) under the heading “Securities Accounts” (as such schedule may be amended
or supplemented from time to time).

 

7

 

“Supporting
Obligation” shall mean all “supporting obligations” as
defined in Article 9 of the UCC.

 

“Tax Code”
shall mean the United States Internal Revenue Code of 1986, as amended from
time to time.

 

“Trademark Licenses”
shall mean any and all written agreements containing express grant of any right
in or to Trademarks (whether such Grantor is licensee or licensor thereunder)
including, without limitation, each agreement referred to in Schedule 4.7(F)
(as such schedule may be amended or supplemented from time to time).

 

“Trademarks”
shall mean all United States, and foreign trademarks, trade names, corporate
names, company names, business names, fictitious business names, Internet
domain names, service marks, certification marks, collective marks, logos, other
source or business identifiers, designs and general intangibles of a like
nature, all registrations and applications for any of the foregoing including,
but not limited to: (i) the registrations and applications referred to in
Schedule 4.7(E) (as such schedule may be amended or supplemented from time to
time), (ii) all extensions or renewals of any of the foregoing, (iii) all of
the goodwill of the business connected with the use of and symbolized by the
foregoing, (iv) the right to sue for past, present and future infringement or
dilution of any of the foregoing or for any injury to goodwill, and (v) all
Proceeds of the foregoing, including, without limitation, licenses, royalties,
income, payments, claims, damages, and proceeds of suit.

 

“Trade Secret
Licenses” shall mean any and all written agreements
containing the express grant of any right in or to Trade Secrets (whether such
Grantor is licensee or licensor thereunder) including, without limitation, each
agreement referred to in Schedule 4.7(G) (as such schedule may be amended or
supplemented from time to time).

 

“Trade Secrets”
shall mean all trade secrets and all other confidential or proprietary
information and know-how whether or not such trade secret has been reduced to a
writing or other tangible form, including all documents and things embodying,
incorporating, or referring in any way to such trade secret, including but not
limited to: (i) the right to sue for past, present and future misappropriation
or other violation of any Trade Secret, and (ii) all Proceeds of the foregoing,
including, without limitation, licenses, royalties, income, payments, claims,
damages, and proceeds of suit.

 

“UCC”
shall mean the Uniform Commercial Code as in effect from time to time in the
State of New York or, when the context implies, the Uniform Commercial Code as
in effect from time to time in any other applicable jurisdiction.

 

“United States”
shall mean the United States of America.

 

1.2          Definitions;
Interpretation.  All capitalized terms used herein (including
the preamble and recitals hereto) and not otherwise defined herein shall have
the meanings ascribed thereto in the Credit Agreement as in effect on the date
hereof without giving effect to any amendments or modifications thereto or, if
not defined therein, in the UCC. 
References to “Sections,” “Exhibits” and “Schedules” shall be to
Sections, Exhibits and Schedules, as the case may be, of this Agreement unless
otherwise specifically provided.  Section
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.  Any of
the terms defined herein may, unless the context otherwise requires, be used in
the singular or the plural,

 

8

 

depending on
the reference.  The use herein of the
word “include” or “including”, when following any general statement, term or
matter, shall not be construed to limit such statement, term or matter to the
specific items or matters set forth immediately following such word or to
similar items or matters, whether or not nonlimiting language (such as “without
limitation” or “but not limited to” or words of similar import) is used with
reference thereto, but rather shall be deemed to refer to all other items or
matters that fall within the broadest possible scope of such general statement,
term or matter.  If any conflict or
inconsistency exists between this Agreement and any Priority Lien Document,
with respect to the parties thereto only, the Priority Lien Document shall
govern.  All references herein to
provisions of the UCC shall include all successor provisions under any
subsequent version or amendment to any Article of the UCC.

 

SECTION 2.   GRANT OF SECURITY.

 

2.1          Grant of Security.  Each Grantor hereby
grants to the Priority Lien Collateral Trustee a security interest in and
continuing lien on all of such Grantor’s right, title and interest in, to and
under all personal property of such Grantor, subject to the limitations set
forth in Section 2.2, including, but not limited to the following, in each case
whether now owned or existing or hereafter acquired or arising and wherever
located (all of which being hereinafter collectively referred to as the “Collateral”):

 

(a)           Accounts;

 

(b)           Chattel Paper;

 

(c)           Documents;

 

(d)           General Intangibles;

 

(e)           Goods;

 

(f)            Instruments;

 

(g)           Insurance;

 

(h)           Intellectual Property;

 

(i)            Investment Related Property;

 

(j)            Letters of Credit and Letter of Credit Rights;

 

(k)           Money;

 

(l)            Receivables and Receivable Records;

 

(m)          Commercial Tort Claims;

 

(n)           to the extent not otherwise included above, all
Collateral Records, Collateral Support and Supporting Obligations relating to
any of the foregoing; and

 

(o)           to the extent not otherwise included above, all
Proceeds, products, accessions, rents and profits of or in respect of any of
the foregoing.

 

9

 

Notwithstanding
anything herein to the contrary, in no event shall any Priority Lien Obligations
that constitutes a “security” for purposes of the Securities Act of 1933, as
amended, be secured by any Separate Collateral.

 

2.2          Certain Limited
Exclusions.  Notwithstanding anything herein to the
contrary, in no event shall the Collateral include or the security interest
granted under Section 2.1 hereof attach to (a) any lease, license, contract,
Intellectual Property, property rights or agreement to which any Grantor is a
party or any of its rights or interests thereunder if and for so long as the
grant of such security interest shall constitute or result in (i) the
abandonment, invalidation or unenforceability of any right, title or interest
of any Grantor therein or (ii) in a breach or termination pursuant to the terms
of, or a default under, any such lease, license, contract, property rights or
agreement (other than to the extent that any such term would be rendered
ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or
any successor provision or provisions) of any relevant jurisdiction or any
other applicable law (including the Bankruptcy Code) or principles of equity),
provided however that the Collateral shall include and such security interest
shall attach immediately at such time as the condition causing such abandonment,
invalidation or unenforceability shall be remedied and to the extent severable,
shall attach immediately to any portion of such lease, license, contract,
property rights or agreement that does not result in any of the consequences
specified in (i) or (ii) above; or (b) any of the outstanding capital stock of
a Controlled Foreign Corporation in
excess of 65% of the voting power of all classes of capital stock of such
Controlled Foreign Corporation entitled to vote; provided that
immediately upon the amendment of the Tax Code to allow the pledge of a greater
percentage of the voting power of capital stock in a Controlled Foreign
Corporation without adverse tax consequences, the Collateral shall include, and
the security interest granted by each Grantor shall attach to, such greater
percentage of capital stock of each Controlled Foreign Corporation.

 

2.3          Intercreditor Agreement. 
Notwithstanding anything herein to the contrary, the lien and security
interest granted to the Priority Lien Collateral Trustee pursuant to this
Agreement and the exercise of any right or remedy by the Priority Lien
Collateral Trustee hereunder are subject to the provisions of the Intercreditor
Agreement.  In the event of any conflict
between the terms of the Intercreditor Agreement and this Agreement, the terms
of the Intercreditor Agreement shall govern and control.  Any reference in this Agreement to a “first
priority lien” or words of similar effect in describing the security interests
created hereunder shall be understood to refer to such priority as set forth in
the Intercreditor Agreement.  All
representations, warranties and covenants in this Agreement shall be subject to
the provisions and qualifications set forth in this Section 2.3

 

SECTION 3.   SECURITY FOR OBLIGATIONS; GRANTORS REMAIN
LIABLE.

 

3.1          Security for
Obligations.  This Agreement secures, and the Collateral is
collateral security for, the prompt and complete payment or performance in full
when due, whether at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise (including the payment of amounts that 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) (and any successor provision thereof)), of
all Priority Lien Obligations with respect to every Grantor (the “Secured Obligations”).

 

3.2          Continuing
Liability Under Collateral.  Notwithstanding anything herein to the
contrary, (i) each Grantor shall
remain liable for all obligations under the Collateral and nothing contained
herein is intended or shall be a delegation of duties to the Priority Lien
Collateral

 

10

 

Trustee or any
Secured Party, (ii) each Grantor shall remain liable under each of the
agreements included in the Collateral, including, without limitation, any
agreements relating to Pledged Partnership Interests or Pledged LLC Interests,
to perform all of the obligations undertaken by it thereunder all in accordance
with and pursuant to the terms and provisions thereof and neither the Priority
Lien Collateral Trustee nor any Secured Party shall have any obligation or
liability under any of such agreements by reason of or arising out of this
Agreement or any other document related thereto nor shall the Priority Lien
Collateral Trustee nor any Secured Party have any obligation to make any
inquiry as to the nature or sufficiency of any payment received by it or have
any obligation to take any action to collect or enforce any rights under any
agreement included in the Collateral, including, without limitation, any
agreements relating to Pledged Partnership Interests or Pledged LLC Interests,
and (iii) the exercise by the Priority Lien Collateral Trustee 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.

 

SECTION 4.   REPRESENTATIONS AND WARRANTIES AND
COVENANTS.

 

4.1          Generally.

 

(a)           Representations and Warranties. 
Each Grantor hereby represents and warrants, on the Closing Date, that:

 

(i)            it owns the Collateral purported to be owned by it or
otherwise has the rights it purports to have in each item of Collateral free
and clear of any and all Liens, rights or claims of all other Persons other
than Permitted Liens;

 

(ii)           it has indicated on Schedule 4.1(A)(as such schedule
may be amended or supplemented from time to time): (w) the type of organization
of such Grantor, (x) the jurisdiction of organization of such Grantor, (y) its
organizational identification number and (z) the jurisdiction where the chief
executive office or its sole place of business is, and for the one-year period
preceding the date hereof has been, located.

 

(iii)          the full legal name of such Grantor is as set forth on
Schedule 4.1(A) and it has not done in the last five (5) years, and does not
do, business under any other name (including any trade-name or fictitious
business name) except for those names set forth on Schedule 4.1(B) (as such
schedule may be amended or supplemented from time to time);

 

(iv)          except as provided on Schedule 4.1(C), it has not
changed its name, jurisdiction of organization, chief executive office or sole
place of business (or principal residence if such Grantor is a natural person)
or its corporate structure in any way (e.g., by merger, consolidation, change
in corporate form or otherwise) within the past five (5) years;

 

(v)           other than in connection with Permitted Liens, it has
not within the last five (5) years become bound (whether as a result of merger
or otherwise) as debtor under a security agreement entered into by another
Person, which has not heretofore been terminated other than the agreements
identified on Schedule 4.1(D) hereof (as such schedule may be amended or
supplemented from time to time);

 

11

 

(vi)          with respect to each agreement identified on Schedule
4.1(D), it has indicated on Schedule 4.1 (A) and Schedule 4.1(B) the
information required pursuant to Section 4.1(a)(ii), (iii) and (iv) with
respect to the debtor under each such agreement;

 

(vii)         (u) upon the filing of all UCC financing statements
naming each Grantor as “debtor” and the Priority Lien Collateral Trustee as “secured
party” and describing the Collateral in the filing offices set forth opposite such
Grantor’s name on Schedule 4.1(E) hereof (as such schedule may be amended or
supplemented from time to time) and other filings delivered by each Grantor,
(v) upon delivery of all Instruments, Chattel Paper and certificated Pledged
Equity Interests and Pledged Debt, (w) upon sufficient identification of
Commercial Tort Claims, (x) upon execution of a control agreement establishing
the Priority Lien Collateral Trustee’s “control” (within the meaning of Section
8-106, 9-106 or 9-104 of the UCC, as applicable) with respect to any Investment
Account, (y) upon consent of the issuer with respect to Letter of Credit
Rights, and (z) to the extent not solely subject to Article 9 of the UCC, upon
recordation of the security interests granted hereunder in Patents, Trademarks
and registered Copyrights in the applicable intellectual property registries,
including but not limited to the United States Patent and Trademark Office and
the United States Copyright Office, the security interests granted to the
Priority Lien Collateral Trustee hereunder constitute valid and perfected first
priority Liens (subject in the case of priority only to Permitted Liens and to
the rights of the United States government (including any agency or department
thereof) with respect to United States government Receivables) on all of the
Collateral;

 

(viii)        after giving effect to the actions described in
subsection (vii) above, except as may be required, in connection with the
disposition of any Investment Related Property, by laws generally affecting the
offering and sale of Securities, all actions and consents, including all
filings, notices, registrations and recordings necessary or desirable for the
exercise by the Priority Lien Collateral Trustee of the voting or other rights
provided for in this Agreement or the exercise of remedies in respect of the
Collateral have been made or obtained;

 

(ix)           other than the financing statements filed in favor of
the Priority Lien Collateral Trustee, no effective UCC financing statement,
fixture filing or other instrument similar in effect under any applicable law
covering all or any part of the Collateral is on file in any filing or
recording office except for (x) financing statements for which proper
termination statements have been delivered to the Priority Lien Collateral
Trustee for filing and (y) financing statements filed in connection with
Permitted Liens;

 

(x)            no authorization, approval or other action by, and no
notice to or filing with, any Governmental Authority or regulatory body (other
than those which have been obtained) is required for either (i) the pledge or
grant by any Grantor of the Liens purported to be created in favor of the
Priority Lien Collateral Trustee hereunder or (ii) the exercise by Priority
Lien Collateral Trustee of any rights or remedies in respect of any Collateral
(whether specifically granted or created hereunder or created or provided for
by applicable law), except (A) for the filings contemplated by clause (vii)
above and (B) as may be required, in connection with the disposition of any
Investment Related Property, by laws generally affecting the offering and sale
of Securities;

 

12

 

(xi)           all written information supplied by any Grantor with
respect to any of the Collateral (in each case taken as a whole with respect to
any particular Collateral) is accurate and complete in all material respects;

 

(xii)          none of the Collateral constitutes, or is the Proceeds
of, “farm products” (as defined in the UCC);

 

(xiii)         it does not own any “As-extracted collateral” (as
defined in the UCC) or any timber to be cut other than the “As-extracted
collateral” and the timber located on the Real Property as described on
Schedule 4.1(F) hereof;

 

(xiv)        except as described on Schedule 4.1(D), such Grantor has not become bound as a
debtor, either by contract or by operation of law, by a security agreement
previously entered into by another Person; and

 

(xv)         such Grantor has been duly organized as an entity of
the type as set forth opposite such Grantor’s name on Schedule 4.1(A) solely
under the laws of the jurisdiction as set forth opposite such Grantor’s name on
Schedule 4.1(A) and remains duly existing as such.  Such Grantor has not filed any certificates
of domestication, transfer or continuance in any other jurisdiction.

 

(b)           Covenants and Agreements. 
Each Grantor hereby covenants and agrees that:

 

(i)            except for the security interest created by this
Agreement, it shall not create or suffer to exist any Lien upon or with respect
to any of the Collateral, except Permitted Liens, and such Grantor shall defend
the Collateral against all Persons at any time claiming any interest therein;

 

(ii)           it shall not produce, 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 if such violation could reasonably be expected to have a
Material Adverse Effect;

 

(iii)          it shall not change such Grantor’s name, identity,
corporate structure (e.g., by merger, consolidation, change in corporate form
or otherwise), sole place of business, chief executive office, type of
organization or jurisdiction of organization or establish any trade names
unless it shall have (a) notified the Priority Lien Collateral Trustee in
writing, by executing and delivering to the Priority Lien Collateral Trustee a
completed Pledge Supplement, substantially in the form of Exhibit A attached
hereto, together with all Supplements to Schedules thereto, at least fifteen
(15) days prior to any such change or establishment, identifying such new
proposed name, identity, corporate structure, sole place of business, chief
executive office or jurisdiction of organization or trade name and providing
such other information in connection therewith as the Priority Lien Collateral
Trustee may reasonably request and (b) taken all actions necessary or advisable
to maintain the continuous validity, perfection and the same or better priority
of the Priority Lien Collateral Trustee’s security interest in the Collateral
intended to be granted and agreed to hereby;

 

(iv)          if the Priority Lien Collateral Trustee or any other
Secured Party gives value to enable Grantor to acquire rights in or the use of
any Collateral, it

 

13

 

shall
use such value for such purposes and such Grantor further agrees that repayment
of any Obligation shall apply on a “first-in, first-out” basis so that the
portion of the value used to acquire rights in any Collateral shall be paid in
the chronological order such Grantor acquired rights therein;

 

(v)           it shall pay promptly when due all property and other
taxes, assessments and governmental charges or levies imposed upon, and all
claims (including claims for labor, materials and supplies) against, the
Collateral, except to the extent the validity thereof is being contested in
good faith and as otherwise provided in the Priority Lien Documents; provided,
such Grantor shall in any event pay such taxes, assessments, charges, levies or
claims not later than five (5) days prior to the date of any proposed sale
under any judgment, writ or warrant of attachment entered or filed against such
Grantor or any of the Collateral as a result of the failure to make such payment;

 

(vi)          upon such Grantor or any Senior Officer of such
Grantor obtaining actual knowledge thereof, it shall promptly notify the
Priority Lien Collateral Trustee in writing of any event that would reasonably
be expected to have a Material Adverse Effect on the value of the Collateral or
any material portion thereof, the ability of any Grantor or the Priority Lien
Collateral Trustee to dispose of the Collateral or any material portion
thereof, or the rights and remedies of the Priority Lien Collateral Trustee in
relation thereto, including, without limitation, the levy of any legal process
against the Collateral or any portion thereof;

 

(vii)         it shall not take or permit any action which would
reasonably be expected to materially impair the Priority Lien Collateral
Trustee’s rights in the Collateral; and

 

(viii)        it shall not sell, transfer or assign (by operation of
law or otherwise) any Collateral except as otherwise permitted in accordance
with each of the Priority Lien Documents.

 

4.2          Equipment
and Inventory.

 

(a)           Representations and Warranties. 
Each Grantor represents and warrants, on the Closing Date, that:

 

(i)            all of the Equipment and Inventory (other than
Equipment and Inventory in transit) included in the Collateral is kept for the
past four (4) years only at the locations specified in Schedule 4.2 (as
such schedule may be amended or supplemented from time to time);

 

(ii)           any Goods now or hereafter produced by any Grantor
included in the Collateral have been and will be produced in compliance with
the requirements of the Fair Labor Standards Act, as amended; and

 

(iii)          except as set forth in Schedule 4.2, none of the
Inventory or Equipment is in the possession of an issuer of a negotiable
document (as defined in Section 7-104 of the UCC) therefor or otherwise in the
possession of a bailee or a warehouseman.

 

14

 

(b)           Covenants and Agreements. 
Each Grantor covenants and agrees that:

 

(i)            other than Inventory and Equipment in transit or sold
to customers in the ordinary course of business, it shall keep the Equipment,
Inventory and any Documents evidencing any Equipment and Inventory in the
locations specified on Schedule 4.2 (as such schedule may be amended or
supplemented from time to time) unless, with respect to any location at which
Equipment or Inventory having a value in excess of $500,000 is located, it
shall have (a) notified the Priority Lien Collateral Trustee in writing, by
executing and delivering to the Priority Lien Collateral Trustee an Officer’s
Certificate, and a completed Pledge Supplement, substantially in the form of
Exhibit A attached hereto, together with all Supplements to Schedules thereto,
at least fifteen (15) days prior to any change in locations, identifying such
change in the location of and the new location of such Collateral, and
providing such other information in connection therewith as the Priority Lien
Collateral Trustee may reasonably request and (b) taken all actions necessary
or advisable to maintain the continuous validity, perfection and the same or
better priority of the Priority Lien Collateral Trustee’s security interest in
the Collateral intended to be granted and agreed to hereby, or to enable the
Priority Lien Collateral Trustee to exercise and enforce its rights and remedies
hereunder, with respect to such Equipment and Inventory;

 

(ii)           it shall keep correct and accurate records of the
Inventory, as is customarily maintained under similar circumstances by Persons
of established reputation engaged in a similar business, and in any event in
conformity with GAAP;

 

(iii)          it shall not deliver any Document evidencing any
Equipment and Inventory to any Person other than the issuer of such Document
(or to a shipper or freight forwarder acting on such Grantor’s behalf in the ordinary
course of business) to claim the Goods evidenced therefor or the Priority Lien
Collateral Trustee;

 

(iv)          if any Equipment or Inventory having a value in excess
of $500,000 in the aggregate is in possession or control of any third party
(other than Equipment and Inventory in transit and customers purchasing
inventory in the ordinary course of business), each Grantor shall join with the
Priority Lien Collateral Trustee in notifying the third party of the Priority
Lien Collateral Trustee’s security interest and obtaining an acknowledgment
from the third party that it is holding the Equipment and Inventory for the
benefit of the Priority Lien Collateral Trustee; and

 

(v)           with respect to any item of Equipment having a value
in excess of $100,000 individually or any items of Equipment having a value in
excess of $500,000 in the aggregate, which is covered by a certificate of title
under a statute of any jurisdiction under the law of which indication of a
security interest on such certificate is required as a condition of perfection
thereof, upon the reasonable request of the Priority Lien Collateral Trustee,
(A) provide information with respect to any such Equipment, (B) execute and
file with the registrar of motor vehicles or other appropriate authority in such
jurisdiction an application or other document requesting the notation or other
indication of the security interest created hereunder on such certificate of
title, and (C) deliver to the Priority Lien Collateral Trustee copies of
all such applications or other documents filed during such calendar quarter and
copies of all such certificates of title issued during such calendar quarter
indicating the security interest created hereunder in the items of Equipment
covered thereby.

 

15

 

4.3          Receivables.

 

(a)           Representations and Warranties. 
Each Grantor represents and warrants, on the Closing Date, that:

 

(i)            each Receivable (a) is the legal, valid and binding
obligation of the Account Debtor in respect thereof, representing an
unsatisfied obligation of such Account Debtor, (b) is enforceable in accordance
with its terms except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws, (c) is not subject to any
setoffs, defenses, taxes or counterclaims that have not been disclosed to the
Priority Lien Collateral Trustee (except with respect to refunds, returns and
allowances in the ordinary course of business) and (d) is in compliance in all
material respects with all applicable laws, whether federal, state, local or
foreign;

 

(ii)           none of the Account Debtors in respect of any
Receivable in excess of $500,000 individually or $1,000,000 in the aggregate is
the government of the United States, any agency or instrumentality thereof, any
state or municipality or any foreign sovereign; and

 

(iii)          no Receivable is evidenced by, or constitutes, an
Instrument or Chattel Paper which has not been delivered to, or otherwise
subjected to the control of, the Priority Lien Collateral Trustee to the extent
required by, and in accordance with Section 4.3(c).

 

(b)           Covenants and Agreements: 
Each Grantor hereby covenants and agrees that:

 

(i)            it shall keep and maintain at its own cost and expense
satisfactory and complete records of the Receivables, including, but not
limited to, the originals of all documentation with respect to all Receivables
and records of all payments received and all credits granted on the
Receivables, all merchandise returned and all other dealings therewith;

 

(ii)           it shall mark conspicuously, in form and manner
reasonably satisfactory to the Priority Lien Collateral Trustee, all Chattel
Paper and Instruments (other than any delivered to the Priority Lien Collateral
Trustee as provided herein), as well as the Receivables Records with an
appropriate reference to the fact that the Priority Lien Collateral Trustee has
a security interest therein;

 

(iii)          it shall perform in all material respects all of its
obligations with respect to the Receivables, except to the extent being
contested in good faith, so long as adequate reserve or other appropriate
provision, as shall be required in conformity with GAAP, shall have been made
therefor;

 

(iv)          other than in the ordinary course of business as
generally conducted by it on and prior to the date hereof, and except as
otherwise provided in subsection (v) below, following an Event of Default, such
Grantor shall not (w) grant any extension or renewal of the time of payment of
any Receivable, (x) compromise or settle any dispute, claim or legal proceeding
with respect to any Receivable for less than the total unpaid balance thereof,
(y) release, wholly or partially, any Person liable for the payment thereof, or
(z) allow any credit or discount thereon;

 

16

 

(v)           except as otherwise provided in this subsection, each
Grantor shall continue to collect all amounts due or to become due to such
Grantor under the Receivables and any Supporting Obligation and diligently
exercise each material right it may have under any Receivable any Supporting
Obligation or Collateral Support, in each case, at its own expense, and in
connection with such collections and exercise, such Grantor shall take such
action as such Grantor may deem necessary or advisable.  Notwithstanding the foregoing, the Priority
Lien Collateral Trustee shall have the right following an Event of Default to
notify, or require any Grantor to notify, any Account Debtor of the Priority
Lien Collateral Trustee’s security interest in the Receivables and any
Supporting Obligation and, in addition, at any time following the occurrence
and during the continuation of an Event of Default, the Priority Lien
Collateral Trustee may:  (1) direct the
Account Debtors under any Receivables to make payment of all amounts due or to
become due to such Grantor thereunder directly to the Priority Lien Collateral
Trustee; (2) notify, or require any Grantor to notify, each Person maintaining
a lockbox or similar arrangement to which Account Debtors under any Receivables
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 the Priority Lien
Collateral Trustee; and (3) enforce, at the expense of such Grantor, collection
of any such Receivables 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.  If the Priority Lien
Collateral Trustee notifies any Grantor that it has elected to collect the
Receivables in accordance with the preceding sentence, any payments of
Receivables received by such Grantor shall be forthwith (and in any event
within two (2) Business Days) deposited by such Grantor in the exact form
received, duly indorsed by such Grantor to the Priority Lien Collateral Trustee
if required, in the Collateral Account maintained under the sole dominion and
control of the Priority Lien Collateral Trustee, and until so turned over, all
amounts and proceeds (including checks and other instruments) received by such
Grantor in respect of the Receivables, any Supporting Obligation or Collateral
Support shall be received in trust for the benefit of the Priority Lien
Collateral Trustee hereunder and shall be segregated from other funds of such
Grantor and such Grantor shall not adjust, settle or compromise the amount or
payment of any Receivable, or release wholly or partly any Account Debtor or
obligor thereof, or allow any credit or discount thereon; and

 

(vi)          it shall use its best efforts to keep in full force
and effect any Supporting Obligation or Collateral Support relating to any
Receivable.

 

(c)           Delivery and Control of Receivables. 
With respect to any Receivables in excess of $100,000 individually or
$500,000 in the aggregate that is evidenced by, or constitutes, Chattel Paper
or Instruments, each Grantor shall cause each originally executed copy thereof
to be delivered to the Priority Lien Collateral Trustee (or its agent or
designee) appropriately indorsed to the Priority Lien Collateral Trustee or
indorsed in blank:  (i) with respect to
any such Receivables in existence on the date hereof, on or prior to the date
hereof and (ii) with respect to any such Receivables hereafter arising, within
ten (10) days of such Grantor acquiring rights therein.  With respect to any Receivables in excess of
$100,000 individually or $500,000 in the aggregate which would constitute “electronic
chattel paper” under Article 9 of the UCC, each Grantor shall take all steps
necessary to give the Priority Lien Collateral Trustee control over such
Receivables (within the meaning of Section 9-105 of the UCC):  (i) with respect to any such Receivables in
existence on the date hereof, on or prior to the date hereof and (ii) with
respect to any such Receivables hereafter arising, within ten (10) days of
such Grantor acquiring rights therein. 
Any Receivable not otherwise required to be delivered or subjected to
the control of the

 

17

 

Priority Lien Collateral Trustee in
accordance with this subsection (c) shall be delivered or subjected to such
control upon request of the Priority Lien Collateral Trustee.

 

4.4          Investment Related
Property.

 

4.4.1       Investment Related Property Generally

 

(a)           Covenants and Agreements. 
Each Grantor hereby covenants and agrees that:

 

(i)            in the event it acquires rights in any Investment
Related Property after the date hereof, it shall deliver to the Priority Lien
Collateral Trustee a completed Pledge Supplement, substantially in the form of
Exhibit A attached hereto, together with all Supplements to Schedules thereto,
reflecting such new Investment Related Property and all other Investment
Related Property.  Notwithstanding the
foregoing, it is understood and agreed that the security interest of the
Priority Lien Collateral Trustee shall attach to all Investment Related
Property immediately upon any Grantor’s acquisition of rights therein and shall
not be affected by the failure of any Grantor to deliver a supplement to
Schedule 4.4 as required hereby;

 

(ii)           except as provided in the next sentence, in the event
such Grantor receives any dividends, interest or distributions on any
Investment Related Property, or any securities or other property upon the
merger, consolidation, liquidation or dissolution of any issuer of any
Investment Related Property, then (a) such dividends, interest or distributions
and securities or other property shall be included in the definition of
Collateral without further action and (b) such Grantor shall immediately take
all steps, if any, necessary or advisable to ensure the validity, perfection,
priority and, if applicable, control of the Priority Lien Collateral Trustee
over such Investment Related Property (including, without limitation, delivery
thereof to the Priority Lien Collateral Trustee) and pending any such action
such Grantor shall be deemed to hold such dividends, interest, distributions,
securities or other property in trust for the benefit of the Priority Lien
Collateral Trustee and shall segregate such dividends, distributions,
Securities or other property from all other property of such Grantor.  Notwithstanding the foregoing, so long as no
Event of Default shall have occurred and be continuing, the Priority Lien
Collateral Trustee authorizes each Grantor to retain all ordinary cash
dividends and distributions paid by the issuer and all scheduled payments of
interest and principal; and

 

(iii)          each Grantor consents to the grant by each other
Grantor of a Security Interest in all Investment Related Property to the
Priority Lien Collateral Trustee.

 

(b)           Delivery and Control.

 

(i)            Unless prohibited by the Organizational Documents of
the Issuer of any Investment Related Property with respect to a joint venture
of such Grantor, each Grantor agrees that with respect to any Investment
Related Property in which it currently has rights it shall comply with the
provisions of this Section 4.4.1(b) on or before the Closing Date and with
respect to any Investment Related Property hereafter acquired by such Grantor
it shall comply with the provisions of this Section 4.4.1(b) promptly upon
acquiring rights therein, in each case in form and substance satisfactory to
the Priority Lien Collateral Trustee. 
With respect to any Investment Related Property in

 

18

 

a
principal amount in excess of $5,000 individually that is represented by a
certificate or that is an “instrument” (other than any Investment Related
Property credited to a Securities Account), subject to the terms of the
Intercreditor Agreement, it shall cause such certificate or instrument to be
delivered to the Priority Lien Collateral Trustee, indorsed in blank by an “effective
indorsement” (as defined in Section 8-107 of the UCC), regardless of
whether such certificate constitutes a “certificated security” for purposes of
the UCC.  With respect to any Investment
Related Property that is an “uncertificated security” for purposes of the UCC
(other than any “uncertificated securities” credited to a Securities Account),
it shall cause the issuer of such uncertificated security to either, subject to
the terms of the Intercreditor Agreement, (i) register the Priority Lien
Collateral Trustee as the registered owner thereof on the books and records of
the issuer or (ii) execute an agreement substantially in the form of Exhibit B
hereto, pursuant to which such issuer agrees to comply with the Priority Lien
Collateral Trustee’s instructions with respect to such uncertificated security
without further consent by such Grantor.

 

(c)           Voting and Distributions.

 

(i)            So long as no Event of Default shall have occurred and
be continuing:

 

(1)                                  except as otherwise provided under
the covenants and agreements relating to Investment Related Property in this
Agreement or elsewhere herein or in the Priority Lien Documents, each Grantor
shall be entitled to exercise or refrain from exercising any and all voting and
other consensual rights pertaining to the Investment Related Property or any
part thereof for any purpose not inconsistent with the terms of this Agreement
or the Priority Lien Documents; provided, no Grantor shall exercise or refrain
from exercising any such right if the Priority Lien Collateral Trustee shall
have notified such Grantor that, in the Priority Lien Collateral Trustee’s
reasonable judgment, such action would have a Material Adverse Effect on the
value of the Investment Related Property or any part thereof; and provided
further, such Grantor shall give the Priority Lien Collateral Trustee at least
five (5) Business Days prior written notice of the manner in which it intends
to exercise, or the reasons for refraining from exercising, any such right; it
being understood, however, that neither the voting by such Grantor of any Pledged
Stock for, or such Grantor’s consent to, the election of directors (or similar
governing body) at a regularly scheduled annual or other meeting of
stockholders or with respect to routine matters at any such meeting, nor such
Grantor’s consent to or approval of any action otherwise permitted under this
Agreement and the Priority Lien Documents, shall be deemed inconsistent with
the terms of this Agreement or the Priority Lien Documents within the meaning
of this Section 4.4(c)(i)(1), and no notice of any such voting or consent need
be given to the Priority Lien Collateral Trustee; and

 

(2)                                  the Priority Lien Collateral Trustee
shall promptly execute and deliver (or cause to be executed and delivered) to
each Grantor all proxies, and other instruments as such Grantor may from time
to time reasonably request for the purpose of enabling such Grantor to exercise
the voting and other consensual rights when and to the extent which it is
entitled to exercise pursuant to clause (1) above;

 

19

 

(3)                                  Upon the occurrence and during the
continuation of an Event of Default and any Grantors’ receipt of notice of
exercise by the Priority Lien Collateral Trustee of any powers, rights,
privileges and remedies available upon the occurrence and during the
continuance of an Event of Default, subject to the terms of the Intercreditor
Agreement:

 

(A)                              all
rights of each Grantor to exercise or refrain from exercising 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 the Priority Lien Collateral Trustee who shall thereupon have the sole right
to exercise such voting and other consensual rights; and

 

(B)                                in
order to permit the Priority Lien Collateral Trustee 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: (1) each Grantor shall promptly execute and deliver (or
cause to be executed and delivered) to the Priority Lien Collateral Trustee all
proxies, dividend payment orders and other instruments as the Priority Lien
Collateral Trustee may from time to time reasonably request and (2) each
Grantor acknowledges that the Priority Lien Collateral Trustee may utilize the
power of attorney set forth in Section 6.1.

 

4.4.2       Pledged Equity Interests

 

(a)           Representations and Warranties. 
Each Grantor hereby represents and warrants, on the Closing Date and
after giving effect to the Paper Business Acquisitions, and on each Credit
Date, that:

 

(i)            Schedule 4.4(A) (as such schedule may be amended or
supplemented from time to time) sets forth under the headings “Pledged Stock, “Pledged
LLC Interests,” “Pledged Partnership Interests” and “Pledged Trust Interests,”
respectively, all of the Pledged Stock, Pledged LLC Interests, Pledged
Partnership Interests and Pledged Trust Interests owned by any Grantor and such
Pledged Equity Interests constitute the percentage of issued and outstanding
shares of stock, percentage of membership interests, percentage of partnership
interests or percentage of beneficial interest of the respective issuers
thereof indicated on such Schedule;

 

(ii)           except as set forth on Schedule 4.4(B), it has not
acquired any equity interests of another entity or substantially all the assets
of another entity within the past five (5) years;

 

(iii)          it is the record and beneficial owner of the Pledged
Equity Interests free of all Liens, rights or claims of other Persons other
than Permitted Liens and there are no outstanding warrants, options or other
rights to purchase, or shareholder, voting trust or similar agreements
outstanding with respect to, or property that is convertible into, or that
requires the issuance or sale of, any Pledged Equity Interests;

 

20

 

(iv)          without limiting the generality of Section 4.1(a)(v),
no consent of any Person including any other general or limited partner, any
other member of a limited liability company, any other shareholder or any other
trust beneficiary is necessary or desirable in connection with the creation,
perfection or first priority status of the security interest of the Priority
Lien Collateral Trustee in any Pledged Equity Interests or the exercise by the
Priority Lien Collateral Trustee of the voting or other rights provided for in
this Agreement or the exercise of remedies in respect thereof;

 

(v)           none of the Pledged LLC Interests nor Pledged
Partnership Interests are or represent interests in issuers that: (a) are
registered as investment companies or (b) are dealt in or traded on securities
exchanges or markets; and

 

(vi)          except as otherwise set forth on Schedule 4.4(C), all
of the Pledged LLC Interests and Pledged Partnership Interests are or represent
interests in issuers that have opted to be treated as securities under the
uniform commercial code of any jurisdiction.

 

(b)           Covenants and Agreements. 
Each Grantor hereby covenants and agrees that:

 

(i)            without the prior written consent of the Priority Lien
Collateral Trustee, it shall not vote to enable or take any other action to:
(a) amend or terminate any partnership agreement, limited liability company
agreement, certificate of incorporation, by-laws or other organizational
documents in any way that materially changes the rights of such Grantor with
respect to any Investment Related Property or adversely affects the validity,
perfection or priority of the Priority Lien Collateral Trustee’s security
interest, (b) permit any issuer of any Pledged Equity Interest to issue any
additional stock, partnership interests, limited liability company interests or
other equity interests of any nature or to issue securities convertible into or
granting the right of purchase or exchange for any stock or other equity
interest of any nature of such issuer, except to another Grantor who has caused
such property to become subjected to a perfected Lien thereon in favor of the
Priority Lien Collateral Trustee, and except as otherwise permitted under the
Priority Lien Documents, (c) other than as permitted under the Priority Lien
Documents, permit any issuer of any Pledged Equity Interest to dispose of all
or a material portion of their assets, (d) waive any default under or breach of
any terms of organizational document relating to the issuer of any Pledged
Equity Interest or the terms of any Pledged Debt, or (e) cause any issuer of
any Pledged Partnership Interests or Pledged LLC Interests which are not
securities (for purposes of the UCC) on the date hereof to elect or otherwise
take any action to cause such Pledged Partnership Interests or Pledged LLC
Interests to be treated as securities for purposes of the UCC; provided,
however, notwithstanding the foregoing, if any issuer of any Pledged
Partnership Interests or Pledged LLC Interests takes any such action in
violation of the foregoing in this clause (e), such Grantor shall promptly
notify the Priority Lien Collateral Trustee in writing of any such election or action
and, in such event, shall take all steps necessary or advisable to establish
the Priority Lien Collateral Trustee’s “control” thereof;

 

(ii)           it shall comply with all of its obligations under any
partnership agreement or limited liability company agreement relating to
Pledged Partnership Interests or Pledged LLC Interests except to the extent
being contested in good faith, so long as adequate reserve or other appropriate
provision, as shall be required

 

21

 

in GAAP, shall have
been made therefore, and shall enforce all of its material rights with respect
to any Investment Related Property;

 

(iii)          unless otherwise permitted under the Priority Lien
Documents, without the prior written consent of the Priority Lien Collateral
Trustee, it shall not permit any issuer of any Pledged Equity Interest to merge
or consolidate unless (i) such issuer creates a security interest that is
perfected by a filed financing statement (that is not effective solely under
section 9-508 of the UCC) in collateral in which such new debtor has or
acquires rights, and (ii) all the outstanding Capital Stock or other equity
interests of the surviving or resulting corporation, limited liability company,
partnership or other entity owned by a Grantor is, upon such merger or
consolidation, pledged hereunder and no cash, securities or other property is
distributed in respect of the outstanding equity interests of any other
constituent Grantor; provided that if the surviving or resulting issuer upon
any such merger or consolidation is a Controlled Foreign Corporation, then such
Grantor shall only be required to pledge equity interests in accordance with
Section 2.2; and

 

(iv)          each Grantor consents to the grant by each other
Grantor of a security interest in all Investment Related Property to the
Priority Lien Collateral Trustee and, without limiting the foregoing, consents
to the transfer of any Pledged Partnership Interest and any Pledged LLC
Interest to the Priority Lien Collateral Trustee or its nominee following an
Event of Default and to the substitution of the Priority Lien Collateral
Trustee or its nominee as a partner in any partnership or as a member in any
limited liability company with all the rights and powers related thereto.

 

4.4.3       Pledged Debt

 

(a)           Representations and Warranties. 
Each Grantor hereby represents and warrants, on the date of this
Agreement, that Schedule 4.4 (as such schedule may be amended or supplemented
from time to time) sets forth under the heading “Pledged Debt” all of the
Pledged Debt owned by any Grantor (other than Pledged Debt owned by another
Grantor or one of its Subsidiaries), all of such 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;

 

(b)           Covenants and Agreements. 
Each Grantor hereby covenants and agrees that it shall notify the
Priority Lien Collateral Trustee of any default under any Pledged Debt that has
caused, either in any individual case or in the aggregate, a Material Adverse
Effect.

 

4.4.4       Investment Accounts

 

(a)           Representations and Warranties. Each Grantor hereby represents and
warrants, on the Closing Date, that:

 

(i)            Schedule 4.4 hereto (as such schedule may be amended
or supplemented from time to time) sets forth under the headings “Securities
Accounts” and “Commodities Accounts,” respectively, all of the Securities
Accounts and Commodities Accounts in which each Grantor has an interest.  Each Grantor is the sole entitlement holder
of each such Securities Account and Commodity Account on Schedule 4.4,
and such Grantor has not consented to, and is not otherwise aware of, any
Person (other than the Priority Lien Collateral Trustee pursuant hereto or the
Revolving Credit Collateral Agent) having “control” (within the meanings of
Sections 8-106 and 9-106 of the UCC)

 

22

 

over,
or any other interest in, any such Securities Account or Commodity Account or
securities or other property credited thereto;

 

(ii)           Schedule 4.4 hereto (as such schedule may be amended
or supplemented from time to time) sets forth under the heading “Deposit
Accounts” all of the Deposit Accounts in which each Grantor has an
interest.  Each Grantor is the sole account
holder of each such Deposit Account on Schedule 4.4 and such Grantor has
not consented to, and is not otherwise aware of, any Person (other than the
Priority Lien Collateral Trustee pursuant hereto or the Revolving Credit
Collateral Agent) having either sole dominion and control (within the meaning
of common law) or “control” (within the meanings of Section 9-104 of the UCC)
over, or any other interest in, any such Deposit Account or any money or other
property deposited therein; and

 

(iii)          Each Grantor has taken all actions necessary or
desirable, including those specified in Section 4.4.4(c), to: (a) establish
Priority Lien Collateral Trustee’s “control” (within the meanings of Sections
8-106 and 9-106 of the UCC) over any portion of the Investment Related Property
constituting Certificated Securities, Uncertificated Securities, Securities
Accounts, Securities Entitlements or Commodities Accounts (each as defined in
the UCC); (b) establish the Priority Lien Collateral Trustee’s “control”
(within the meaning of Section 9-104 of the UCC) over all Deposit Accounts
(other than those Deposit Accounts not subject to such requirement under
Section 4.4.4(c)); and (c) deliver all Instruments to the Priority Lien
Collateral Trustee.

 

(b)           Covenants and Agreements. 
Each Grantor hereby covenants and agrees with the Priority Lien
Collateral Trustee and each other Secured Party that it shall not close or
terminate any Investment Account without prior notice to the Priority Lien
Collateral Trustee or establish any additional Investment Accounts unless a
control agreement has been entered into by the appropriate Grantor, Priority
Lien Collateral Trustee and securities intermediary or depository institution
at which such additional account is to be maintained in accordance with the
provisions of Section 4.4.4(c).

 

(c)           Delivery and Control

 

(i)            With respect to any Investment Related Property
consisting of Securities Accounts or Securities Entitlements, it shall cause
the securities intermediary maintaining such Securities Account or Securities
Entitlement to enter into an agreement substantially in the form of Exhibit C
hereto (or otherwise reasonably acceptable to the Priority Lien Collateral
Trustee) pursuant to which it shall agree to comply with the Priority Lien Collateral
Trustee’s “entitlement orders” without further consent by such Grantor.  With respect to any Investment Related
Property that is a “Deposit Account,” it shall cause the depositary institution
maintaining such account to enter into an agreement substantially in the form
of Exhibit D hereto (or otherwise reasonably acceptable to the Priority Lien
Collateral Trustee) (a “Deposit Account Control
Agreement”), pursuant to which the Priority Lien Collateral Trustee
shall have both sole dominion and control over such Deposit Account (within the
meaning of the common law), subject to the terms of the Intercreditor
Agreement, and “control” (within the meaning of Section 9-104 of the UCC)
over such Deposit Account; provided that the Grantors shall not be required to
comply with this sentence with respect to Deposit Accounts that (A) are used
exclusively to fund payroll or (B) have an aggregate balance for all such
Deposit Accounts of $2,500,000 or less. 
Subject to the proviso to the immediately preceding sentence, each
Grantor shall have entered into such control

 

23

 

agreement
or agreements with respect to: (i) any Securities Accounts, Securities
Entitlements or Deposit Accounts that exist on the Closing Date, as of or prior
to the Closing Date and (ii) any Securities Accounts, Securities Entitlements
or Deposit Accounts that are created or acquired after the Closing Date, as of
or prior to the deposit or transfer of any such Securities Entitlements or
funds, whether constituting moneys or investments, into such Securities
Accounts or Deposit Accounts.  If any
Grantor fails to comply with this covenant with respect to Deposit Accounts,
such Grantor shall have ten (10) days to either (x) transfer funds in an amount
sufficient to bring such Grantor into compliance with this covenant from
Deposit Accounts not covered by Deposit Account Control Agreements to Deposit
Accounts covered by Deposit Account Control Agreements or (y) enter into one or
more Deposit Account Control Agreements with the Priority Lien Collateral
Trustee and the depository institutions at which such Deposit Accounts are not
covered by Deposit Account Control Agreements maintained in accordance with the
provisions of this Section 4.4.4(c) such that Grantors will then be in
compliance with this covenant.  Failure
to comply within such ten (10) day period shall constitute an Event of Default.

 

(ii)           In addition to the foregoing, if any issuer of any
Investment Related Property is located in a jurisdiction outside of the United
States, each Grantor shall take such additional actions, including, without
limitation, causing the issuer to register the pledge on its books and records
or making such filings or recordings, in each case as may be necessary or advisable,
under the laws of such issuer’s jurisdiction to insure the validity, perfection
and priority of the security interest of the Priority Lien Collateral Trustee,
unless the Priority Lien Collateral Trustee, in its reasonable judgment,
determines that the cost of such actions is excessive relative to the value of
such Investment Related Property or that such actions would materially
interfere with the Grantor’s ability to use a Securities Account or Deposit
Account in the ordinary course of business. 
Upon the occurrence and during the continuation of an Event of Default,
the Priority Lien Collateral Trustee shall have the right, without notice to
any Grantor, to transfer all or any portion of the Investment Related Property
to its name or the name of its nominee or agent.  In addition, the Priority Lien Collateral
Trustee shall have the right at any time, without notice to any Grantor, to
exchange any certificates or instruments representing any Investment Related
Property for certificates or instruments of smaller or larger denominations.

 

4.5          Material
Contracts.

 

(a)           Representations and Warranties. 
Each Grantor hereby represents and warrants, on the Closing Date, that:

 

(i)            Schedule 4.5 (as such schedule may be amended or
supplemented from time to time) sets forth all of the Material Contracts to
which such Grantor has rights;

 

(ii)           the Material Contracts, true and complete copies
(including any amendments or supplements thereof) of which have been furnished
to the Priority Lien Collateral Trustee, have been duly authorized, executed
and delivered by Grantors and all other parties thereto, are in full force and
effect and are binding upon and enforceable against all parties thereto in
accordance with their respective terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or

 

24

 

other
similar laws.  There exists no material
default under any Material Contract by any Grantor or any other party thereto
and neither such Grantor, nor to its knowledge, any other Person party thereto
is likely to become in default thereunder and no Person party thereto has any
defenses, counterclaims or right of set-off with respect to any Material
Contract; and

 

(iii)          no Material Contract prohibits assignment or requires
consent of or notice to any Person in connection with the assignment to the
Priority Lien Collateral Trustee hereunder, except such as has been given or
made or which such Grantor is using its
commercially reasonable efforts to obtain.

 

(b)           Covenants and Agreements. 
Each Grantor hereby covenants and agrees that:

 

(i)            After the occurrence and during the continuance of an
Event of Default, in addition to any rights under the Section of this Agreement
relating to Receivables, the Priority Lien Collateral Trustee may at any time
notify, or require any Grantor to so notify, the counterparty on any Material
Contract of the security interest of the Priority Lien Collateral Trustee
therein and may upon written notice to the applicable Grantor, notify, or
require any Grantor to notify, the counterparty to make all payments under the
Material Contracts directly to the Priority Lien Collateral Trustee;

 

(ii)           each Grantor shall deliver promptly to the Priority
Lien Collateral Trustee a copy of each material demand or notice received by it
relating in any way to any Material Contract which involves any claim, event or
other circumstance the consequences of which could reasonably be expected to
have a Material Adverse Effect;

 

(iii)          each Grantor shall deliver promptly to the Priority
Lien Collateral Trustee, after (1) any Material Contract of such Grantor is
terminated or amended in a manner that is materially adverse to such Grantor or
(2) any new Material Contract is entered into by such Grantor, notice thereof
as required by Section 5.1 of the Credit Agreement;

 

(iv)          it shall perform in all material respects all of its
obligations with respect to the Material Contracts except to the extent
contested in good faith, so long as adequate reserve or other appropriate
provision, as shall be required in conformity with GAAP, shall have been made
therefor;

 

(v)           it shall promptly and diligently exercise each
material right it may have under any Material Contract, any Supporting
Obligation or Collateral Support, in each case, at its own expense, and in
connection with such collections and exercise, such Grantor shall take such
action as such Grantor may deem necessary or advisable; and

 

(vi)          it shall use its best efforts to keep in full force
and effect any Supporting Obligation or Collateral Support relating to any
Material Contract, except where, in its business judgment, it concludes that
loss or relinquishment will not have a Material Adverse Effect.

 

25

 

4.6          Letter of
Credit Rights.

 

(a)           Representations and Warranties. 
Each Grantor hereby represents and warrants, on the Closing Date, that:

 

(i)            all material letters of credit to which such Grantor
has rights are listed on Schedule 4.6 (as such schedule may be amended or
supplemented from time to time) hereto; and

 

(ii)           it has obtained the consent of each issuer of any
letter of credit in an undrawn face amount of $250,000 or more in the aggregate
to the assignment of the proceeds of the letter of credit to the Priority Lien
Collateral Trustee.

 

(b)           Covenants and Agreements. 
Each Grantor hereby covenants and agrees that with respect to any letter
of credit hereafter arising in an undrawn face amount of $250,000 or more in
the aggregate it shall obtain the consent of the issuer thereof to the
assignment of the proceeds of the letter of credit to the Priority Lien
Collateral Trustee and shall deliver to the Priority Lien Collateral Trustee a
completed Pledge Supplement, substantially in the form of Exhibit A attached
hereto, together with all Supplements to Schedules thereto.

 

4.7          Intellectual
Property.

 

(a)           Representations and Warranties. 
Except as disclosed in Schedule 4.7(H) (as such schedule may be amended
or supplemented from time to time), each Grantor hereby represents and
warrants, on the Closing Date, that:

 

(i)            Schedule 4.7 (as such schedule may be amended or
supplemented from time to time) sets forth a true and complete list of (i) all
United States, state and foreign registrations of and applications for Patents,
Trademarks, and Copyrights owned by each Grantor and (ii) all Patent Licenses,
Trademark Licenses, Trade Secret Licenses and Copyright Licenses material to
the business of such Grantor;

 

(ii)           it is the sole and exclusive owner of the entire right,
title, and interest in and to all Intellectual Property listed on Schedule
4.7(a)(i) (as such schedule may be amended or supplemented from time to time),
and owns or has the valid right to use all other Intellectual Property
necessary to conduct its business, free and clear of all Liens, claims,
encumbrances and licenses, except for Permitted Liens and the licenses set
forth on Schedule 4.7(B), (D), (F) and (G) (as each may be amended or
supplemented from time to time);

 

(iii)          all Intellectual Property that is material to the
conduct of the business of any Grantor is subsisting and has not been adjudged
invalid or unenforceable, in whole or in part, and each Grantor has performed
all acts and has paid all renewal, maintenance, and other fees and taxes
required to maintain each and every registration and application of Copyrights,
Patents and Trademarks in full force and effect;

 

(iv)          to the best of Grantor’s knowledge, all Intellectual
Property that is material to the conduct of the business of any Grantor is
valid and enforceable; no holding, decision, or judgment has been rendered in
any action or proceeding to which a Grantor is a party before any court or
administrative authority challenging the validity of, such Grantor’s right to
register, or such Grantor’s rights to own or use, any such Intellectual
Property and no such action or proceeding is pending or, to the best of such
Grantor’s knowledge, threatened in writing;

 

26

 

(v)           as of the execution of this Agreement, the
registrations and applications for the Copyrights, Patents and Trademarks that
are material to the conduct of the business of any Grantor are standing in the
name of the party listed on Schedule 4.7(a)(i) as the record owner thereof, and
none of the Trademarks, Patents, Copyrights or Trade Secrets owned by or
licensed to a Grantor has been licensed by any Grantor to any Affiliate or
third party, except as disclosed in Schedule 4.7(B), (D), (F), or (G) (as each
may be amended or supplemented from time to time);

 

(vi)          except as could not reasonably be expected to have a
Material Adverse Effect, each Grantor has been using appropriate statutory
notice of registration in connection with its use of registered Trademarks,
proper marking practices in connection with the use of Patents, and appropriate
notice of copyright in connection with the publication of Copyrights material
to the business of such Grantor;

 

(vii)         each Grantor uses adequate standards of quality in the
manufacture, distribution, and sale of all products sold and in the provision
of all services rendered under or in connection with all Trademark Collateral
and has taken all commercially reasonable action necessary to insure that all
licensees of the Trademark Collateral owned by such Grantor use such adequate
standards of quality;

 

(viii)        to the best of each Grantor’s knowledge, the conduct
of such Grantor’s business does not infringe upon or otherwise violate in any
material respect any trademark, patent, copyright, trade secret or other
intellectual property right owned or controlled by a third party; no written
claim has been received by a Grantor asserting that the use of any Intellectual
Property owned or used by Grantor (or any of its respective licensees) violates
the asserted rights of any third party;

 

(ix)           to the best of each Grantor’s knowledge, no third
party is infringing upon or otherwise violating any rights in any material
Intellectual Property owned or used by such Grantor, or any of its respective
licensees in any material respect;

 

(x)            no settlement or consents, covenants not to sue,
nonassertion assurances, or releases have been entered into by Grantor or to
which Grantor is bound that adversely affect Grantor’s rights to own or use any
material Intellectual Property; and

 

(xi)           no Grantor has made a previous assignment, sale,
transfer or agreement constituting a present or future assignment, sale or
transfer of any Intellectual Property that has not been terminated or
released.  There is no effective
financing statement or other document or instrument now executed, or on file or
recorded in any public office, granting a security interest in or otherwise
encumbering any part of the Intellectual Property, other than in favor of the
Priority Lien Collateral Trustee.

 

(b)           Covenants and Agreements. 
Each Grantor hereby covenants and agrees as follows:

 

(i)            it shall (a) within thirty (30) days of the Closing
Date, file with the United States Patent and Trademark Office, the United
States Copyright Office and the Canadian counterpart of such offices documents
sufficient to ensure that all U.S. and Canadian registrations and applications
for Copyrights, Patents and Trademarks listed on Schedule 4.7(a)(i) stand in
the name of a Grantor and shall immediately provide the Priority Lien
Collateral Trustee with copies of such filings; and (b) within one

 

27

 

hundred
eight (180) days of the Closing Date, file with all other foreign counterparts
to the United States Patent and Trademark Office and the United States
Copyright Office documents sufficient to ensure that all other foreign
registrations and applications for Copyrights, Patents and Trademarks listed on
Schedule 4.7(a)(i) stand in the name of a Grantor and shall immediately provide
Priority Lien Collateral Trustee with copies of such filings;

 

(ii)           it shall not do any act or omit to do any act whereby
any Intellectual Property owned by a Grantor which is material to the business
of a Grantor could reasonably be expected to lapse, or become abandoned,
dedicated to the public, or unenforceable, or which would adversely affect the
validity, grant, or enforceability of the security interest granted therein;

 

(iii)          it shall not, with respect to any Trademarks owned by
or licensed to a Grantor which are material to the business of any Grantor,
cease the use of any of such Trademarks or fail to maintain the level of the
quality of products sold and services rendered under any of such Trademark at a
level at least substantially consistent with the quality of such products and
services as of the date hereof, and each Grantor shall take such commercially
reasonable steps as are necessary to insure that licensees of such Trademarks
use the standards of quality set by such Grantor;

 

(iv)          within thirty (30) days of the date hereof with
respect to any Copyrights set forth on Schedule 4.7(i) that were not standing
in the name of any Grantor upon the effectiveness of the Closing Date and, in
all other cases, within sixty (60) days of the creation or acquisition by a
Grantor of any Copyrightable work which is material to the business of Grantor,
apply to register the Copyright in the United States Copyright Office and
record therein all documents necessary to effectuate such acquisition;

 

(v)           it shall promptly notify the Priority Lien Collateral
Trustee if it knows or has reason to know that any item of Intellectual
Property owned by or licensed to a Grantor that is material to the business of
any Grantor may become (a) abandoned or dedicated to the public or placed in
the public domain, (b) invalid or unenforceable, or (c) subject to any adverse
determination or development (including the institution of proceedings) in any
action or proceeding in the United States Patent and Trademark Office, the United
States Copyright Office, any state registry, any foreign counterpart of the
foregoing, or any court;

 

(vi)          it shall take commercially reasonable steps in the
United States Patent and Trademark Office, the United States Copyright Office,
any state registry or any foreign counterpart of the foregoing, to pursue any
application and maintain any registration of each Trademark, Patent, and
Copyright owned by any Grantor and material to its business which is now or
shall become included in the Intellectual Property including, but not limited
to, those items on Schedule 4.7(A), (C) and (E) (as each may be amended or
supplemented from time to time);

 

(vii)         in the event that any material Intellectual Property
owned by or exclusively licensed to any Grantor is infringed, or
misappropriated by a third party and Grantor becomes aware of such infringement
or misappropriation, such Grantor shall promptly take all commercially
reasonable actions to stop such infringement or misappropriation and protect
its rights in such Intellectual Property including, but not limited to, the
initiation of a suit for injunctive relief and to recover damages;

 

28

 

(viii)        it shall promptly (but in no event more than thirty
(30) days after any Grantor obtains knowledge thereof) report to the Priority
Lien Collateral Trustee the filing by or on behalf of a Grantor of any
application to register any Intellectual Property with the United States Patent
and Trademark Office, the United States Copyright Office, or any state registry
or foreign counterpart of the foregoing (whether such application is filed by
such Grantor or through any agent, employee, licensee, or designee thereof);

 

(ix)           it shall promptly (but in no event more than thirty
(30) days after any Grantor obtains knowledge thereof) report to the Priority
Lien Collateral Trustee the registration by or on behalf of a Grantor of any
Intellectual Property by any such office, in each case by executing and
delivering to the Priority Lien Collateral Trustee a completed Pledge
Supplement, substantially in the form of Exhibit A attached hereto,
together with all Supplements to Schedules thereto;

 

(x)            it shall, promptly upon the reasonable request of the
Priority Lien Collateral Trustee, execute and deliver to the Priority Lien
Collateral Trustee any document required to acknowledge, confirm, register,
record, or perfect the Priority Lien Collateral Trustee’s interest in any part
of the Intellectual Property, whether now owned or hereafter acquired;

 

(xi)           except with the prior consent of the Priority Lien
Collateral Trustee or as permitted under the each of the Priority Lien
Documents, each Grantor shall not execute, and there will not be on file in any
public office, any financing statement or other document or instruments, except
financing statements or other documents or instruments filed or to be filed in
favor of the Priority Lien Collateral Trustee and each Grantor shall not sell,
assign, transfer, license, grant any option, or create or suffer to exist any
Lien upon or with respect to the Intellectual Property, except for the Lien
created by and under this Agreement and the other Credit Documents and
Permitted Liens;

 

(xii)          it shall hereafter use reasonable best efforts so as
not to permit the inclusion in any contract to which it hereafter becomes a
party of any provision that could or might in any way materially impair or
prevent the creation of a security interest in, or the assignment of, such
Grantor’s rights and interests in any property included within the definitions
of any Intellectual Property acquired under such contracts;

 

(xiii)         it shall take commercially reasonable steps to protect
the secrecy of all Trade Secrets;

 

(xiv)        it shall use proper statutory notice in connection
with its use of any of the material Intellectual Property owned by a Grantor;
and

 

(xv)         it shall continue to collect, at its own expense, all
amounts due or to become due to such Grantor in respect of the Intellectual
Property owned by a Grantor or any portion thereof.  In connection with such collections, each
Grantor may take (and, at the Priority Lien Collateral Trustee’s reasonable
direction, shall take) such action as such Grantor or the Collection Agent may
deem reasonably necessary or advisable to enforce collection of such
amounts.  Notwithstanding the foregoing,
the Priority Lien Collateral Trustee shall have the right at any time after an
Event of Default

 

29

 

has
occurred and is continuing, to notify, or require any Grantor to notify, any
obligors with respect to any such amounts of the existence of the security
interest created hereby, and following and during the continuation of an Event
of Default, may take such action as the Priority Lien Collateral Trustee may
deem reasonably necessary to enforce collection of such amounts.

 

(c)           Certain Limited Exclusions. 
Notwithstanding anything herein to the contrary, so long as no Event of
Default has occurred and is continuing, no Grantor shall have an obligation to
use or to maintain any Trademark, Patent or Copyright (A) that relates
solely to any product, brand or work that in such Grantor’s reasonable business
judgment has been, or is in the process of being, discontinued, abandoned or
terminated, (B) that is being replaced with a Trademark, Patent or Copyright
substantially similar to the Trademark, Patent or Copyright that may be
abandoned or otherwise become invalid, so long as the failure to use or
maintain such Trademark, Patent or Copyright does not materially adversely
affect the validity of such replacement Trademark, Patent or Copyright, and so
long as such replacement Trademark, Patent or Copyright, is subject to the Lien
and security interest created by this Agreement, (C) that is substantially the
same as another Trademark, Patent or Copyright, that is in full force, so long
as the failure to use or maintain such Trademark, Patent or Copyright does not
materially adversely affect the validity of such other Trademark, Patent or
Copyright, and so long as such other Trademark, Patent or Copyright is subject
to the Lien and security interest created by this Agreement or (D) that is
or becomes the subject of any formal or informal dispute and/or any
administrative or legal proceeding (whether ex parte or inter partes) or other
circumstances such that the Grantors, using good faith business judgment,
reasonably determine it to be imprudent to maintain or continue use of such
Trademark, Patent or Copyright.

 

4.8          Commercial Tort
Claims

 

(a)           Representations and Warranties. 
Each Grantor hereby represents and warrants, on the Closing Date, that
Schedule 4.8 (as such schedule may be amended or supplemented from time to
time) sets forth all Commercial Tort Claims of each Grantor in excess of
$500,000 in the aggregate; and

 

(b)           Covenants and Agreements. 
Each Grantor hereby covenants and agrees that with respect to any
Commercial Tort Claim in excess of $500,000 in the aggregate hereafter arising
it shall deliver to the Priority Lien Collateral Trustee a completed Pledge
Supplement, substantially in the form of Exhibit A attached hereto, together
with all Supplements to Schedules thereto, identifying such new Commercial Tort
Claims.

 

30

 

SECTION 5.   ACCESS; RIGHT OF INSPECTION AND FURTHER
ASSURANCES; ADDITIONAL GRANTORS.

 

5.1          Access; Right of
Inspection.  The Priority Lien Collateral Trustee shall at
all times have full and free access during normal business hours and upon
reasonable prior notice to all the books, correspondence and records of each
Grantor, and the Priority Lien Collateral Trustee and its representatives may
examine the same, take extracts therefrom and make photocopies thereof, and
each Grantor agrees to render to the Priority Lien Collateral Trustee, at such
Grantor’s cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto. 
The Priority Lien Collateral Trustee and its representatives shall at
all times also have the right to enter any premises of each Grantor during
normal business hours and upon reasonable prior notice and inspect any property
of each Grantor where any of the Collateral of such Grantor granted pursuant to
this Agreement is located for the purpose of inspecting the same, observing its
use or otherwise protecting its interests therein.

 

5.2          Further
Assurances.

 

(a)           Each Grantor agrees that from time to time, at the
expense of such Grantor, that it shall promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary,
or that the Priority Lien Collateral Trustee may reasonably request, in order
to create and/or maintain the validity, perfection or priority of and protect
any security interest granted hereby or to enable the Priority Lien Collateral Trustee
to exercise and enforce its rights and remedies hereunder with respect to any
Collateral. Without limiting the generality of the foregoing, each Grantor
shall:

 

(i)            file such financing or continuation statements, or
amendments thereto, and execute and deliver such other agreements, instruments,
endorsements, powers of attorney or notices, as may be necessary, or as the
Priority Lien Collateral Trustee may reasonably request, in order to perfect
and preserve the security interests granted or purported to be granted hereby;

 

(ii)           take all actions necessary to ensure the recordation
of appropriate evidence of the liens and security interest granted hereunder in
the Intellectual Property with any intellectual property registry in which said
Intellectual Property is registered or in which an application for registration
is pending including, without limitation, the United States Patent and
Trademark Office, the United States Copyright Office, the various Secretaries
of State, and the foreign counterparts on any of the foregoing;

 

(iii)          at any reasonable time, upon prior written notice and
upon request by the Priority Lien Collateral Trustee, and subject to Sections
5.6 and 9.2 of the Credit Agreement, allow inspection of the Collateral by the
Priority Lien Collateral Trustee, or persons designated by the Priority Lien
Collateral Trustee; and

 

(iv)          at the Priority Lien Collateral Trustee’s reasonable
request, appear in and defend any action or proceeding that may affect such
Grantor’s title to or the Priority Lien Collateral Trustee’s security interest
in all or any part of the Collateral.

 

(b)           Each Grantor hereby authorizes the Priority Lien
Collateral Trustee to file a Record or Records, including, without limitation,
financing or continuation statements, and amendments thereto, in any
jurisdictions and with any filing offices as the Priority Lien Collateral

 

31

 

Trustee may determine, in its sole
discretion, are necessary or advisable to perfect the security interest granted
to the Priority Lien Collateral Trustee herein. 
Such financing statements may describe the Collateral in the same manner
as described herein or may contain an indication or description of collateral that
describes such property in any other manner as the Priority Lien Collateral
Trustee may determine, in its sole discretion, is necessary, advisable or
customary to ensure the perfection of the security interest in the Collateral
granted to the Priority Lien Collateral Trustee herein, including, without
limitation, describing such property as “all assets” or “all personal property,
whether now owned or hereafter acquired.” 
Each Grantor shall furnish to the Priority Lien Collateral Trustee from
time to time the statements and schedules further identifying and describing
the Collateral and the other reports in connection with the Collateral as are
provided in Section 5.17 of the Credit Agreement.

 

(c)           Each Grantor hereby authorizes the Priority Lien
Collateral Trustee to modify this Agreement after obtaining such Grantor’s
approval of or signature to such modification by amending Schedule 4.7 (as such
schedule may be amended or supplemented from time to time) to include reference
to any right, title or interest in any existing Intellectual Property or any
Intellectual Property acquired or developed by any Grantor after the execution
hereof or to delete any reference to any right, title or interest in any
Intellectual Property in which any Grantor no longer has or claims any right,
title or interest.

 

5.3          Additional Grantors.  From time to time
subsequent to the date hereof, additional Persons may become parties hereto as
additional Grantors (each, an “Additional Grantor”), by executing a Counterpart
Agreement.  Upon delivery of any such
counterpart agreement to the Priority Lien Collateral Trustee, notice of which
is hereby waived by Grantors, each Additional Grantor shall be a Grantor and
shall be as fully a party hereto as if the 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 Priority Lien Collateral Trustee not to cause any Subsidiary of
NewPageCo 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.

 

SECTION 6.   COLLATERAL TRUSTEE APPOINTED
ATTORNEY-IN-FACT.

 

6.1          Power of Attorney.  Each Grantor hereby
irrevocably appoints the Priority Lien Collateral Trustee (such appointment
being coupled with an interest) 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, the Priority Lien Collateral Trustee or otherwise, from time to time
in the Priority Lien Collateral Trustee’s discretion to take any action and to
execute any instrument that the Priority Lien Collateral Trustee may deem
reasonably necessary or advisable to accomplish the purposes of this Agreement,
including, without limitation, the following:

 

(a)           upon the occurrence and during the continuance of any
Event of Default, to obtain and adjust insurance required to be maintained by
such Grantor or paid to the Priority Lien Collateral Trustee pursuant to the
Priority Lien Documents;

 

(b)           upon the occurrence and during the continuance of any
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;

 

32

 

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

 

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

 

(e)           to prepare and file any UCC financing statements
against such Grantor as debtor;

 

(f)            to prepare, sign, and file for recordation in any
intellectual property registry, appropriate evidence of the lien and security
interest granted herein in the Intellectual Property in the name of such
Grantor as debtor;

 

(g)           to take or cause to be taken all actions necessary to
perform or comply or cause performance or compliance with the terms of this
Agreement, including, without limitation, access to pay or discharge taxes or
Liens (other than Permitted Liens) levied or placed upon or threatened against
the Collateral, and which the applicable Grantor has not paid or discharged
when required hereunder, the legality or validity thereof and the amounts
necessary to discharge the same to be determined by the Priority Lien
Collateral Trustee in its sole discretion, any such payments made by the
Priority Lien Collateral Trustee to become obligations of such Grantor to the
Priority Lien Collateral Trustee, due and payable immediately without demand;
and

 

(h)           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 the Priority Lien Collateral Trustee were the absolute owner thereof
for all purposes, and to do, at the Priority Lien Collateral Trustee’s option
and such Grantor’s expense, all acts and things that the Priority Lien
Collateral Trustee deems reasonably necessary to protect, preserve or realize
upon the Collateral and the Priority Lien Collateral Trustee’s security
interest therein in order to effect the intent of this Agreement, all as fully
and effectively as such Grantor might do.

 

6.2          No Duty on the Part
of Priority Lien Collateral Trustee or Secured Parties.  The powers
conferred on the Priority Lien Collateral Trustee hereunder are solely to
protect the interests of the Secured Parties in the Collateral and shall not
impose any duty upon the Priority Lien Collateral Trustee or any Secured Party
to exercise any such powers.  The
Priority Lien Collateral Trustee and the Secured Parties shall be accountable
only for amounts that they actually receive as a result of the exercise of such
powers, and neither they nor any of their officers, directors, employees or
agents shall be responsible to any Grantor for any act or failure to act
hereunder, except for their own gross negligence or willful misconduct.

 

SECTION 7.   REMEDIES.

 

7.1          Generally.

 

(a)           If any Event of Default shall have occurred and be
continuing, the Priority Lien Collateral Trustee may exercise in respect of the
Collateral, in addition to all other rights and remedies provided for herein or
otherwise available to it at law or in equity, all the rights and remedies of
the Priority Lien Collateral Trustee on default under the UCC (whether or

 

33

 

not the UCC applies to the affected
Collateral) to collect, enforce or satisfy any Secured Obligations then owing,
whether by acceleration or otherwise, and also may pursue any of the following
separately, successively or simultaneously:

 

(i)            require any Grantor to, and each Grantor hereby agrees
that it shall at its expense and promptly upon request of the Priority Lien
Collateral Trustee forthwith, assemble all or part of the Collateral as
directed by the Priority Lien Collateral Trustee and make it available to the
Priority Lien Collateral Trustee at a place to be designated by the Priority
Lien Collateral Trustee that is 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 the Priority Lien
Collateral Trustee deems appropriate; and

 

(iv)          without notice except as specified below or under the
UCC, sell, assign, lease, license (on an exclusive or nonexclusive basis) or
otherwise dispose of the Collateral or any part thereof in one or more parcels
at public or private sale, at any of the Priority Lien Collateral Trustee’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 the Priority
Lien Collateral Trustee may deem commercially reasonable.

 

(b)           The Priority Lien Collateral Trustee or any Secured
Party may be the purchaser of any or all of the Collateral at any public or
private (to the extent to the portion of the Collateral being privately sold is
of a kind that is customarily sold on a recognized market or the subject of
widely distributed standard price quotations) sale in accordance with the UCC
and the Priority Lien Collateral Trustee, as collateral trustee for and
representative of the 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 any such sale made in accordance with the
UCC, to use and apply any of the Secured Obligations as a credit on account of
the purchase price for any Collateral payable by the Priority Lien Collateral
Trustee 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 (10) 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.  The
Priority Lien Collateral Trustee shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given.  The Priority Lien Collateral Trustee may
adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.  Each Grantor agrees that it would not be
commercially unreasonable for the Priority Lien Collateral Trustee to dispose
of the Collateral or any portion thereof by using internet sites that provide
for the auction of assets of the types included in the Collateral or that have
the reasonable capability of doing so, or that match buyers and sellers of
assets.  Each Grantor hereby waives any
claims against the Priority Lien Collateral Trustee and each Secured Party 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

 

34

 

public sale, even if the Priority Lien
Collateral Trustee accepts the first offer received and does not offer such
Collateral to more than one offeree.  If
the proceeds of any sale or other disposition of the Collateral are
insufficient to pay all the Secured Obligations, Grantors shall be liable for
the deficiency and the fees of any attorneys employed by the Priority Lien
Collateral Trustee to collect such deficiency. 
Each Grantor further agrees that a breach of any of the covenants
contained in this Section will cause irreparable injury to the Priority Lien
Collateral Trustee, that the Priority Lien Collateral Trustee has no adequate
remedy at law in respect of such breach and, as a consequence, that each and
every covenant contained in this Section shall be specifically enforceable
against such Grantor, and such Grantor hereby waives and agrees not to assert
any defenses against an action for specific performance of such covenants
except for a defense that no default has occurred giving rise to the Secured
Obligations becoming due and payable prior to their stated maturities.  Nothing in this Section shall in any way
alter the rights of the Priority Lien Collateral Trustee hereunder.

 

(c)           The Priority Lien Collateral Trustee may sell the
Collateral without giving any warranties as to the Collateral.  The Priority Lien Collateral Trustee may
specifically disclaim or modify any warranties of title or the like.  This procedure will not be considered to
adversely affect the commercial reasonableness of any sale of the Collateral.

 

(d)           The Priority Lien Collateral Trustee shall have no
obligation to marshal any of the Collateral.

 

7.2          Application of
Proceeds.  Except as expressly provided elsewhere in
this Agreement, all proceeds received by the Priority Lien Collateral Trustee
in respect of any sale, any collection from, or other realization upon all or
any part of the Collateral shall be applied in full or in part by the Priority
Lien Collateral Trustee as provided in the Collateral Trust Agreement.

 

7.3          Sales on Credit.  If Priority Lien
Collateral Trustee sells any of the Collateral upon credit, Grantor will be
credited only with payments actually made by purchaser and received by Priority
Lien Collateral Trustee and applied to indebtedness of the purchaser.  In the event the purchaser fails to pay for
the Collateral, Priority Lien Collateral Trustee may resell the Collateral and
Grantor shall be credited with proceeds of the sale.

 

7.4          Deposit Accounts.

 

If any Event
of Default shall have occurred and be continuing, the Priority Lien Collateral
Trustee may apply the balance from any Deposit Account or instruct the bank at
which any Deposit Account is maintained to pay the balance of any Deposit
Account to or for the benefit of the Priority Lien Collateral Trustee.

 

7.5          Investment Related
Property.

 

Each Grantor
recognizes that, by reason of certain prohibitions contained in the Securities
Act and applicable state securities laws, the Priority Lien Collateral Trustee
may be compelled, with respect to any sale of all or any part of the Investment
Related Property conducted without prior registration or qualification of such
Investment Related Property under the Securities Act and/or such state
securities laws, to limit purchasers to those who will agree, among other
things, to acquire the Investment Related Property for their own account, for
investment and not with a view to the distribution or resale thereof.  Each Grantor acknowledges that any such
private sale may be at prices and on terms less favorable than those obtainable
through a public sale without

 

35

 

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 the Priority Lien Collateral Trustee shall have no obligation
to engage in public sales and no obligation to delay the sale of any Investment
Related Property for the period of time necessary to permit the issuer thereof
to register it for a form of public sale requiring registration under the
Securities Act or under applicable state securities laws, even if such issuer
would, or should, agree to so register it. 
If the Priority Lien Collateral Trustee determines to exercise its right
to sell any or all of the Investment Related Property, upon written request,
each Grantor shall and shall cause each issuer of any Pledged Stock to be sold
hereunder, each partnership and each limited liability company from time to
time to furnish to the Priority Lien Collateral Trustee all such information as
the Priority Lien Collateral Trustee may request in order to determine the
number and nature of interest, shares or other instruments included in the
Investment Related Property which may be sold by the Priority Lien Collateral
Trustee 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.

 

7.6          Intellectual
Property.

 

(a)           Anything contained herein to the contrary
notwithstanding, upon the occurrence and during the continuation of an Event of
Default:

 

(i)            the Priority Lien Collateral Trustee shall have the
right (but not the obligation) to bring suit or otherwise commence any action
or proceeding in the name of any Grantor, the Priority Lien Collateral Trustee
or otherwise, in the Priority Lien Collateral Trustee’s sole discretion, to
enforce any Intellectual Property owned by a Grantor, in which event such Grantor
shall, at the request of the Priority Lien Collateral Trustee, do any and all
lawful acts and execute any and all documents required by the Priority Lien
Collateral Trustee in aid of such enforcement and such Grantor shall promptly,
upon demand, reimburse and indemnify the Priority Lien Collateral Trustee as
provided in the Collateral Trust Agreement or in the Priority Lien Documents,
as applicable, in connection with the exercise of its rights under this
Section, and, to the extent that the Priority Lien Collateral Trustee shall
elect not to bring suit to enforce any Intellectual Property owned by a Grantor
as provided in this Section, each Grantor agrees to use commercially reasonable
measures, whether by action, suit, proceeding or otherwise, to prevent the
infringement or other violation of any of such Grantor’s rights in the
Intellectual Property by others and for that purpose agrees to diligently
maintain any action, suit or proceeding against any Person so infringing as
shall be necessary to prevent such infringement or violation;

 

(ii)           upon written demand from the Priority Lien Collateral
Trustee, each Grantor shall grant, assign, convey or otherwise transfer to the
Priority Lien Collateral Trustee or such Priority Lien Collateral Trustee’s
designee all of such Grantor’s right, title and interest in and to the
Intellectual Property and shall execute and deliver to the Priority Lien
Collateral Trustee such documents as are reasonably necessary 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 the Priority Lien Collateral Trustee (or any Secured Party)
receives cash proceeds in respect of the sale of, or other realization upon,
the Intellectual Property;

 

36

 

(iv)          within five (5) Business Days after written notice
from the Priority Lien Collateral Trustee, each Grantor shall make available to
the Priority Lien Collateral Trustee, 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 the Priority Lien Collateral Trustee 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 and Trademark Licenses owned or entered into by a Grantor, such
persons to be available to perform their prior functions on the Priority Lien
Collateral Trustee’s behalf and to be compensated by the Priority Lien
Collateral Trustee 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; and

 

(v)           the Priority Lien Collateral Trustee shall have the
right to notify, or require each Grantor to notify, any obligors with respect
to amounts due or to become due to such Grantor in respect of the Intellectual
Property owned by a Grantor, of the existence of the security interest created
herein, to direct such obligors to make payment of all such amounts directly to
the Priority Lien Collateral Trustee, 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;

 

(1)                                  all amounts and proceeds (including
checks and other instruments) received by Grantor in respect of amounts due to
such Grantor in respect of the Collateral or any portion thereof shall be
received in trust for the benefit of the Priority Lien Collateral Trustee
hereunder, shall be segregated from other funds of such Grantor and shall be
forthwith paid over or delivered to the Priority Lien Collateral Trustee in the
same form as so received (with any necessary endorsement) to be held as cash
Collateral and applied as provided by Section 7.7 hereof; and

 

(2)                                  Grantor shall not 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)           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 or other transfer to the Priority Lien
Collateral Trustee of any rights, title and interests in and to the
Intellectual Property shall have been previously made and shall have become
absolute and effective, and (iv) the Secured Obligations shall not have become
immediately due and payable, upon the written request of any Grantor, the
Priority Lien Collateral Trustee shall promptly execute and deliver to such
Grantor, at such Grantor’s sole cost and expense, such assignments or other
transfer as may be necessary to reassign to such Grantor any such rights, title
and interests as may have been assigned to the Priority Lien Collateral Trustee
as aforesaid, subject to any disposition thereof that may have been made by the
Priority Lien Collateral Trustee; provided, after giving effect to such reassignment,
the Priority Lien Collateral Trustee’s security interest granted pursuant
hereto, as well as all other rights and remedies of the Priority Lien
Collateral Trustee granted hereunder, shall continue to be in full force and
effect; and provided further, the rights, title and interests so reassigned
shall be free and clear of any other Liens granted by or on behalf of the
Priority Lien Collateral Trustee and the Secured Parties.

 

37

 

(c)           For the purpose of enabling the Priority Lien
Collateral Trustee, during the continuance of an Event of Default, to exercise
rights and remedies herein at such time as the Priority Lien Collateral Trustee
shall be lawfully entitled to exercise such rights and remedies, and for no
other purpose, each Grantor hereby grants to the Priority Lien Collateral
Trustee, to the extent assignable, an irrevocable, non-exclusive license
(exercisable without payment of royalty or other compensation to such Grantor)
to use, assign, license or sublicense any of the Intellectual Property
Collateral now owned or hereafter acquired by such Grantor, wherever the same
may be located, including in such license access to all media in which any of
the licensed items may be recorded or stored and to all computer programs used
for the compilation or printout thereof.

 

SECTION 8.   COLLATERAL TRUSTEE.

 

The Priority
Lien Collateral Trustee has been appointed to act as Priority Lien Collateral
Trustee hereunder by each Priority Lien Representative and, by their acceptance
of the benefits hereof, the other Secured Parties. The Priority Lien Collateral
Trustee 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 Collateral Trust Agreement; provided, the Priority Lien
Collateral Trustee shall, exercise, or refrain from exercising, any
remedies provided for herein in accordance with the terms of the Collateral
Trust Agreement and the Intercreditor Agreement.  In furtherance of the foregoing provisions of
this Section, each Secured Party, 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 such Secured Party that
all rights and remedies hereunder may be exercised solely by the Priority Lien
Collateral Trustee for the benefit of Secured Parties in accordance with the
terms of this Section.  The rights,
privileges, protections and immunities in the Collateral Trust Agreement for
the benefit of the Collateral Trustee are hereby incorporated herein for the
benefit of the Priority Lien Collateral Trustee.  Priority Lien Collateral Trustee may resign
at any time by giving thirty (30) days’ prior written notice thereof to each
Priority Lien Representative and the Grantors, and Priority Lien Collateral
Trustee may be removed at any time with or without cause by an instrument or
concurrent instruments in writing delivered to the Grantors and Priority Lien
Collateral Trustee and approved pursuant to the terms of the Collateral Trust
Agreement.  Upon any such notice of
resignation or any such removal, a successor Priority Lien Collateral Trustee
shall be appointed as provided in the Collateral Trust Agreement.  Upon the acceptance of any appointment as
Priority Lien Collateral Trustee hereunder by a successor Priority Lien
Collateral Trustee, that successor Priority Lien Collateral Trustee shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring or removed Priority Lien Collateral Trustee under
this Agreement, and the retiring or removed Priority Lien Collateral Trustee
under this Agreement, upon payment of its charges, shall promptly
(i) transfer to such successor Priority Lien Collateral Trustee all sums,
Securities and other items of Collateral held hereunder, together with all
records and other documents necessary or appropriate in connection with the
performance of the duties of the successor Priority Lien Collateral Trustee
under this Agreement, and (ii) execute and deliver to such successor Priority
Lien Collateral Trustee or otherwise authorize the filing of such amendments to
financing statements, and take such other actions, as may be necessary or
appropriate in connection with the assignment to such successor Priority Lien
Collateral Trustee of the security interests created hereunder, whereupon such
retiring or removed Priority Lien Collateral Trustee shall be discharged from
its duties and obligations under this Agreement.  After any retiring or removed Priority Lien
Collateral Trustee’s resignation or removal hereunder as the Priority Lien
Collateral Trustee, the provisions of this Agreement shall inure to its benefit
as to any actions taken or

 

38

 

omitted to be taken by it under
this Agreement while it was the Priority Lien Collateral Trustee hereunder.

 

SECTION 9.   CONTINUING SECURITY INTEREST; TRANSFER OF
LOANS.

 

This Agreement
shall create a continuing security interest in the Collateral and shall remain
in full force and effect until the Discharge of Priority Lien Obligations, be
binding upon each Grantor, its successors and assigns, and inure, together with
the rights and remedies of the Priority Lien Collateral Trustee hereunder, to
the benefit of the Priority Lien Collateral Trustee and its successors,
transferees and assigns.  Upon the
Discharge of Priority Lien Obligations, the security interest granted hereby
shall terminate hereunder and of record and all rights to the Collateral shall
revert to Grantors.  Upon any such
termination the Priority Lien Collateral Trustee shall, at Grantors’ expense,
execute and deliver to Grantors or otherwise authorize the filing of such
documents as Grantors shall reasonably request, including financing statement
amendments to evidence such termination.

 

SECTION 10.   STANDARD OF CARE; COLLATERAL TRUSTEE MAY
PERFORM.

 

The powers
conferred on the Priority Lien Collateral Trustee 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, the Priority
Lien Collateral Trustee 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. 
The Priority Lien Collateral Trustee 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 the
Priority Lien Collateral Trustee accords its own property.  Neither the Priority Lien Collateral Trustee
nor any of its directors, officers, employees or agents shall be liable for
failure to demand, collect or realize upon all or any part of the Collateral or
for any delay in doing so or shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of any Grantor or otherwise.  If any Grantor fails to perform any agreement
contained herein, the Priority Lien Collateral Trustee may, but shall not be
required to, itself perform, or cause performance of, such agreement, and the
expenses of the Priority Lien Collateral Trustee incurred in connection
therewith shall be payable by each Grantor under the Collateral Trust
Agreement.

 

SECTION 11.   MISCELLANEOUS.

 

Any notice
required or permitted to be given under this Agreement shall be given in
accordance with the Collateral Trust Agreement. 
No failure or delay on the part of the Priority Lien Collateral Trustee
in the exercise of any power, right or privilege hereunder or under the
Collateral Trust Agreement 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 other
or further exercise thereof or of any other power, right or privilege.  All rights and remedies existing under this
Agreement and the Collateral Trust Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.  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.  All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be

 

39

 

permitted by an exception to,
or would otherwise be within the limitations of, another covenant shall not
avoid the occurrence of a Default or an Event of Default if such action is
taken or condition exists.  This
Agreement shall be binding upon and inure to the benefit of the Priority Lien
Collateral Trustee and Grantors and their respective successors and
assigns.  No Grantor shall, without the
prior written consent of the Priority Lien Collateral Trustee given in
accordance with the Collateral Trust Agreement, assign any right, duty or
obligation hereunder.  This Agreement and
the Collateral Trust Agreement embody the entire agreement and understanding
between Grantors and the Priority Lien Collateral Trustee and supersede all
prior agreements and understandings between such parties relating to the
subject matter hereof and thereof. 
Accordingly, the Collateral Trust Agreement may not be contradicted by
evidence of prior, contemporaneous or subsequent oral agreements of the
parties.  There are no unwritten oral
agreements between the parties.  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.

 

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 LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS CONFLICTS OF LAW PROVISIONS
(OTHER THAN SECTION 5-1401 AND SECTION 5-1402 OF THE NEW YORK GENERAL
OBLIGATION LAWS).

 

Each party to
this Agreement waives its rights to a jury trial of any claim or cause of
action based upon or arising under this Agreement or any of the other Security
Documents or any dealings between them relating to the subject matter of this
Agreement or the intents and purposes of the other Security Documents.  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 Agreement and the other Security
Documents, including contract claims, tort claims, breach of duty claims and
all other common law and statutory claims. 
Each party to this Agreement acknowledges that this waiver is a material
inducement to enter into a business relationship, that each party hereto has
already relied on this waiver in entering into this Agreement, and that each
party hereto will continue to rely on this waiver in its related future
dealings.  Each party hereto further
warrants and represents that it has reviewed this waiver with its legal counsel
and that it 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 11 and executed by each of the parties hereto), and this waiver
will apply to any subsequent amendments, renewals, supplements or modifications
of or to this Agreement or any of the other Security Documents or to any other
documents or agreements relating thereto. 
In the event of litigation, this Agreement may be filed as a written
consent to a trial by the court.

 

In no event
shall the Collateral Trustee be responsible or liable for any failure or delay
in the performance of its obligations hereunder arising out of or caused by,
directly or indirectly, forces beyond its control, including, without
limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil
or military disturbances, nuclear or natural catastrophes or acts of God, and
interruptions, loss or malfunctions of utilities, communications or computer
(software and hardware) services; it being understood that the Collateral
Trustee shall use

 

40

 

reasonable efforts which are
consistent with accepted practices in the banking industry to resume
performance as soon as practicable under the circumstances.

 

41

 

IN WITNESS
WHEREOF, each Grantor and the Priority Lien Collateral Trustee have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.

 

 

	
   

  	
  NEWPAGE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Linda M. Sheffield

  
	
   

  	
   

  	
  Name:

  	
  Linda M. Sheffield

  
	
   

  	
   

  	
  Title:

  	
  Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NEWPAGE HOLDING CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Linda M. Sheffield

  
	
   

  	
   

  	
  Name:

  	
  Linda M. Sheffield

  
	
   

  	
   

  	
  Title:

  	
  Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CHILLICOTHE PAPER INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Linda M. Sheffield

  
	
   

  	
   

  	
  Name:

  	
  Linda M. Sheffield

  
	
   

  	
   

  	
  Title:

  	
  Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ESCANABA PAPER COMPANY

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter H. Vogel

  
	
   

  	
   

  	
  Name:

  	
  Peter H. Vogel

  
	
   

  	
   

  	
  Title:

  	
  President

  

 

 

	
   

  	
  MEADWESTVACO MARYLAND, INC.

  
	
   

  	
  (to be named LUKE PAPER COMPANY)

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter H. Vogel

  
	
   

  	
   

  	
  Name:

  	
  Peter H. Vogel

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MEADWESTVACO OXFORD

  CORPORATION

  
	
   

  	
  (to be named RUMFORD PAPER

  COMPANY)

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter H. Vogel

  
	
   

  	
   

  	
  Name:

  	
  Peter H. Vogel

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MEADWESTVACO ENERGY

  SERVICES LLC

  
	
   

  	
  (to be named NEWPAGE ENERGY

  SERVICES LLC)

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter H. Vogel

  
	
   

  	
   

  	
  Name:

  	
  Peter H. Vogel

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  RUMFORD COGENERATION, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter H. Vogel

  
	
   

  	
   

  	
  Name:

  	
  Peter H. Vogel

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  

 

 

	
   

  	
  RUMFORD FALLS POWER COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter H. Vogel

  
	
   

  	
   

  	
  Name:

  	
  Peter H. Vogel

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  UPLAND RESOURCES, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter H. Vogel

  
	
   

  	
   

  	
  Name:

  	
  Peter H. Vogel

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  WICKLIFFE PAPER COMPANY

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Linda M. Sheffield

  
	
   

  	
   

  	
  Name:

  	
  Linda M. Sheffield

  
	
   

  	
   

  	
  Title:

  	
  Treasurer

  

 

 

	
   

  	
  THE BANK OF NEW YORK,

  
	
   

  	
  as the Priority Lien Collateral Trustee

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Patricia Gallagher

  
	
   

  	
   

  	
  Name:

  	
  Patricia Gallagher

  
	
   

  	
   

  	
  Title:

  	
  Vice PresidentExhibit 10.10

 

 

EXECUTION COPY

 

 

REVOLVING
CREDIT

 

PLEDGE
AND SECURITY AGREEMENT

 

 

dated
as of May 2, 2005

 

 

between

 

 

EACH
OF THE GRANTORS PARTY HERETO

 

 

and

 

JPMorgan
Chase Bank, N.A.

 

as
Collateral Agent

 

 

TABLE OF CONTENTS

 

	
  SECTION 1. DEFINITIONS; GRANT OF
  SECURITY

  	
   

  
	
  1.1

  	
  General
  Definitions

  	
   

  
	
  1.2

  	
  Definitions;
  Interpretation

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2. GRANT OF SECURITY

  	
   

  
	
  2.1

  	
  Grant of
  Security

  	
   

  
	
  2.2

  	
  Certain
  Limited Exclusions

  	
   

  
	
  2.3

  	
  Intercreditor
  Agreement

  	
   

  
	
   

  	
   

  
	
  SECTION 3. SECURITY FOR
  OBLIGATIONS; GRANTORS REMAIN LIABLE

  	
   

  
	
  3.1

  	
  Security
  for Obligations

  	
   

  
	
  3.2

  	
  Continuing
  Liability Under Collateral

  	
   

  
	
   

  	
   

  
	
  SECTION 4. REPRESENTATIONS AND
  WARRANTIES AND COVENANTS

  	
   

  
	
  4.1

  	
  Generally

  	
   

  
	
  4.2

  	
  Inventory

  	
   

  
	
  4.3

  	
  Receivables

  	
   

  
	
  4.4

  	
  Investment
  Related Property; Pledged Debt; Investment Accounts

  	
   

  
	
  4.5

  	
  Material
  Contracts

  	
   

  
	
  4.6

  	
  Letter of
  Credit Rights

  	
   

  
	
  4.7

  	
  Commercial
  Tort Claims

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5. ACCESS; RIGHT OF
  INSPECTION AND FURTHER ASSURANCES; ADDITIONAL GRANTORS

  	
   

  
	
  5.1

  	
  Access;
  Right of Inspection

  	
   

  
	
  5.2

  	
  Further
  Assurances

  	
   

  
	
  5.3

  	
  Additional
  Grantors

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6. COLLATERAL AGENT
  APPOINTED ATTORNEY-IN-FACT

  	
   

  
	
  6.1

  	
  Power of
  Attorney

  	
   

  
	
  6.2

  	
  No Duty on
  the Part of Collateral Agent or Secured Parties

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 7. REMEDIES

  	
   

  
	
  7.1

  	
  Generally

  	
   

  
	
  7.2

  	
  Application
  of Proceeds

  	
   

  
	
  7.3

  	
  Sales on
  Credit

  	
   

  
	
  7.4

  	
  Deposit Accounts

  	
   

  
	
  7.5

  	
  Investment Related Property

  	
   

  
	
  7.6

  	
  Intellectual Property

  	
   

  
	
  7.7

  	
  Cash
  Proceeds

  	
   

  
	
   

  	
   

  
	
  SECTION 8. COLLATERAL AGENT

  	
   

  
	
   

  	
   

  
	
  SECTION 9. CONTINUING SECURITY
  INTEREST; TRANSFER OF LOANS

  	
   

  
	
   

  	
   

  
	
  SECTION 10. STANDARD OF CARE;
  COLLATERAL AGENT MAY PERFORM

  	
   

  

 

i

 

	
  SECTION 11. MISCELLANEOUS

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 4.1

  	
   

  	
  GENERAL
  INFORMATION

  	
   

  
	
  SCHEDULE 4.2

  	
   

  	
  LOCATION
  OF INVENTORY

  	
   

  
	
  SCHEDULE 4.4

  	
   

  	
  PLEDGED
  DEBT AND INVESTMENT ACCOUNTS

  	
   

  
	
  SCHEDULE 4.5

  	
   

  	
  MATERIAL
  CONTRACTS

  	
   

  
	
  SCHEDULE 4.6

  	
   

  	
  DESCRIPTION
  OF LETTERS OF CREDIT

  	
   

  
	
  SCHEDULE 4.7

  	
   

  	
  COMMERCIAL
  TORT CLAIMS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT A

  	
   

  	
  PLEDGE
  SUPPLEMENT

  	
   

  
	
  EXHIBIT B

  	
   

  	
  UNCERTIFICATED
  SECURITIES CONTROL AGREEMENT

  	
   

  
	
  EXHIBIT C

  	
   

  	
  SECURITIES
  ACCOUNT CONTROL AGREEMENT

  	
   

  
	
  EXHIBIT D

  	
   

  	
  DEPOSIT
  ACCOUNT CONTROL AGREEMENT

  	
   

  

 

ii

 

This PLEDGE AND SECURITY AGREEMENT, dated as of May 2,
2005 (this “Agreement”), between EACH OF THE UNDERSIGNED, whether as an
original signatory hereto or as an Additional Grantor (as herein defined)
(each, a “Grantor”), and JPMORGAN CHASE BANK, N.A., as collateral agent for the
Secured Parties (as herein defined) (in such capacity as collateral agent, the “Collateral Agent”).

 

RECITALS:

 

WHEREAS, reference is made to that certain Revolving Credit and Guaranty
Agreement, dated as of the date hereof (as it may be amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among NEWPAGE CORPORATION, a Delaware corporation,
as Borrower (“NewPageCo”), NEWPAGE HOLDING CORPORATION, a Delaware corporation, and CERTAIN
SUBSIDIARIES OF NEWPAGECO, as Guarantors, the various lenders party thereto from time to time
(the “Lenders”), GOLDMAN SACHS CREDIT PARTNERS, L.P., as Joint Lead Arranger, Joint Bookrunner and
Co-Syndication Agent, GOLDMAN SACHS CREDIT
PARTNERS L.P., as Administrative Agent, UBS SECURITIES LLC, as Joint Lead Arranger, Joint Bookrunner
and Co-Syndication Agent, and JPMORGAN CHASE
BANK, N.A., as Collateral Agent;

 

WHEREAS, in consideration of the extensions of credit and other accommodations
of Lenders as set forth in the Credit Agreement, each Grantor has agreed to
secure such Grantor’s obligations under the Credit Documents as set forth
herein.

 

NOW,
THEREFORE, in consideration
of the premises and the agreements, provisions and covenants herein contained
each Grantor and the Collateral Agent:

 

SECTION 1.   DEFINITIONS; GRANT OF
SECURITY. 

 

1.1          General Definitions.  In this Agreement, the following terms shall
have the following meanings:

 

“Account Debtor” shall mean each Person who is obligated on a
Receivable or any Supporting Obligation related thereto.

 

“Accounts” shall mean all “accounts” as defined in Article 9
of the UCC, including Health-Care Insurance Receivables.

 

“Additional Grantors” shall have the meaning assigned in Section 5.3.

 

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

 

“Assigned Agreements” shall mean, as to each Grantor, all
agreements and contracts to which such Grantor is a party as of the date
hereof, or to which such Grantor becomes a party after the date hereof,
including, without limitation, each Material Contract, as each such agreement
may be amended, supplemented or otherwise modified from time to time.

 

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

 

“Cash Proceeds” shall have the meaning assigned in Section 7.7.

 

 

“Chattel Paper” shall mean all “chattel paper” as defined in
Article 9 of the UCC, including, without limitation, “electronic chattel
paper” or “tangible chattel paper”, as each term is defined in Article 9
of the UCC.

 

“Collateral” shall have the meaning assigned in Section 2.1.

 

“Collateral Account” shall mean any account established by the
Collateral Agent. 

 

“Collateral Agent” shall have the meaning set forth in the
preamble.

 

“Collateral Records” shall mean books, records, ledger cards,
files, correspondence, customer lists, blueprints, technical specifications, manuals,
computer software, computer printouts, tapes, disks and related data processing
software and similar items 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.

 

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

 

“Commercial Tort Claims” shall mean all “commercial tort claims” as
defined in Article 9 of the UCC, including, without limitation, all
commercial tort claims listed on Schedule 4.7 (as such schedule may
be amended or supplemented from time to time).

 

“Copyright Licenses” shall mean any and all written agreements
containing the express grant of any right in or to Copyrights (whether such
Grantor is licensee or licensor thereunder) including, without limitation, each
agreement referred to in Schedule 4.7(B) (as such schedule may
be amended or supplemented from time to time).

 

“Copyrights”
shall mean all United
States, and foreign copyrights (including European Union Community designs),
including but not limited to copyrights in software and databases, whether
registered or unregistered, and, with respect to any and all of the foregoing: (i) all
registrations and applications therefor including, without limitation, the
registrations and applications referred to in Schedule 4.7(A) (as
such schedule may be amended or supplemented from time to time), (ii) all
extensions and renewals thereof, (iii) all rights corresponding thereto
throughout the world, (iv) all rights to sue for past, present and future
infringements thereof, and (v) all Proceeds of the foregoing, including,
without limitation, licenses, royalties, income, payments, claims, damages and
proceeds of suit.

 

“Credit Agreement” shall have the meaning set forth in the
recitals.

 

“Deposit Account Control Agreement” shall have the
meaning assigned in Section 4.4.4(c).

 

“Deposit Accounts” (i) shall mean all “deposit accounts”
as defined in Article 9 of the UCC and (ii) shall include, without
limitation, all of the accounts listed on Schedule 4.4 under the heading “Deposit
Accounts” (as such schedule may be amended or supplemented from time to
time).

 

“Documents” shall mean all “documents” as defined in Article 9
of the UCC.

 

2

 

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

 

“ERISA” means the Employee Retirement Income
Security Act of 1974, as amended from time to time, and any successor thereto.

 

“General Intangibles” (i) shall mean all “general intangibles”
as defined in Article 9 of the UCC, including “payment intangibles” also
as defined in Article 9 of the UCC and (ii) shall include, without
limitation, all interest rate or currency protection or hedging arrangements,
all tax refunds, all licenses, permits, concessions and authorizations, all
Assigned Agreements and all Intellectual Property (in each case, regardless of
whether characterized as general intangibles under the UCC).

 

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

 

“Health-Care Insurance Receivable” shall mean all “health-care-insurance
receivable” as defined in Article 9 of the UCC.

 

“Instruments” shall mean all “instruments” as defined in Article 9
of the UCC.

 

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

 

“Intellectual Property” shall mean, collectively, the Copyrights,
the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks, the
Trademark Licenses, the Trade Secrets, and the Trade Secret Licenses.

 

“Intercompany Notes of
Subsidiaries” means
all indebtedness owing by NewPageHoldCo or any of its Subsidiaries to
NewPageHoldCo or any of its Subsidiaries, whether or not represented by a note
or agreement.

 

“Intercreditor Agreement” means the Intercreditor Agreement dated as
of the date hereof, among NewPageCo, the Guarantors thereunder, the Collateral
Agent, and The Bank of New York, as Collateral Trustee, as it may be amended,
supplemented or otherwise modified from time to time.

 

“Inventory” shall mean (i) all “inventory” as
defined in Article 9 of the UCC and (ii) all goods held for sale or
lease or to be furnished under contracts of service or so leased or furnished,
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 any
Grantor’s business; all such goods in which any Grantor has an interest in mass
or a joint or other interest or right of any kind; and all such goods which are
returned to or repossessed by any Grantor, all computer programs embedded in
any such goods and all accessions thereto and products thereof (in each case,
regardless of whether characterized as inventory under the UCC).

 

“Investment Accounts” shall mean the Collateral Account,
Securities Accounts and Deposit Accounts.

 

“Investment Related Property” shall mean: 
(i) all “investment property” (as such term is defined in Article 9
of the UCC) and (ii) all of the following (regardless of whether

 

3

 

classified as investment property under the
UCC):  all Pledged Debt, the Investment
Accounts and certificates of deposit.

 

“Lenders” shall have the meaning set forth in the
recitals.

 

“Letter of Credit” shall mean “letter of credit” as defined in Article 9 of the
UCC.  

 

“Letter of Credit Rights” shall mean “letter-of-credit right” as
defined in Article 9 of the UCC.

 

“Money” shall mean “money” as defined in the UCC.

 

“NewPageCo” shall
have the meaning set forth in the recitals. 

 

“Non-Assignable Contract” shall mean any agreement, contract or
license to which any Grantor is a party that by its terms purports to restrict
or prevent the assignment or granting of a security interest therein (either by
its terms or by any federal or state statutory prohibition or otherwise
irrespective of whether such prohibition or restriction is enforceable under
Sections 9-406 through 409 of the UCC).

 

“Patent Licenses” shall mean all written agreements containing
the express grant of any right in or to Patents (whether such Grantor is
licensee or licensor thereunder) including, without limitation, each agreement
referred to in Schedule 4.7(D) (as such schedule may be amended
or supplemented from time to time).

 

“Patents” shall
mean all United States and foreign patents and certificates of invention, or
similar industrial property rights, and applications for any of the foregoing,
including, but not limited to: (i) each patent and patent application
referred to in Schedule 4.7(C) hereto (as such schedule may be
amended or supplemented from time to time), (ii) all reissues, divisions,
continuations, continuations-in-part, extensions, renewals, and reexaminations
thereof, (iii) all rights corresponding thereto throughout the world, (iv) all
inventions and improvements described therein, (v) all rights to sue for
past, present and future infringements thereof, (vi) all licenses, claims,
damages, and proceeds of suit arising therefrom, and (vii) all Proceeds of
the foregoing, including, without limitation, licenses, royalties, income,
payments, claims, damages, and proceeds of suit.

 

“Person” shall mean and include natural persons,
corporations, limited partnerships, general partnerships, limited liability
companies, limited liability partnerships, joint stock companies, joint
ventures, associations, companies, trusts, banks, trust companies, land trusts,
business trusts or other organizations, whether or not legal entities, and
Governmental Authorities.

 

“Pledge Supplement” shall mean any supplement to this agreement
in substantially the form of Exhibit A.

 

“Pledged Debt” shall mean all Indebtedness owed to such
Grantor, including, without limitation, all Indebtedness described on Schedule 4.4(A) under
the heading “Pledged Debt” (as such schedule may be amended or
supplemented from time to time), issued by the obligors named therein, the
instruments evidencing such Indebtedness, 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 such
Indebtedness.

 

4

 

“Proceeds” shall mean: 
(i) all “proceeds” as defined in Article 9 of the UCC, (ii) payments
or distributions made with respect to any Investment Related Property and (iii) whatever
is receivable or received when Collateral or proceeds are sold, exchanged,
collected or otherwise disposed of, whether such disposition is voluntary or
involuntary.

 

“Receivables” shall mean all rights to payment, whether or
not earned by performance, for goods or other property sold, leased, licensed,
assigned or otherwise disposed of, or services rendered or to be rendered,
including, without limitation all such rights constituting or evidenced by any
Account, Chattel Paper, Instrument, Revolving Credit General Intangible or
Investment Related Property, together with all of Grantor’s rights, if any, in
any goods or other property giving rise to such right to payment and all
Collateral Support and Supporting Obligations related thereto and all
Receivables Records.

 

“Receivables Records” shall mean (i) all original copies of
all documents, instruments or other writings or electronic records or other
Records evidencing the Receivables, (ii) all books, correspondence, credit
or other files, Records, ledger sheets or cards, invoices, and other papers
relating to Receivables, including, without limitation, all tapes, cards,
computer tapes, computer discs, computer runs, record keeping systems and other
papers and documents relating to the Receivables, whether in the possession or
under the control of Grantor or any computer bureau or agent from time to time
acting for Grantor or otherwise, (iii) all evidences of the filing of
financing statements and the registration of other instruments in connection
therewith, and amendments, supplements or other modifications thereto, notices
to other creditors or secured parties, and certificates, acknowledgments, or
other writings, including, without limitation, lien search reports, from filing
or other registration officers, (iv) all credit information, reports and
memoranda relating thereto and (v) all other written or nonwritten forms
of information related in any way to the foregoing or any Receivable.

 

“Record” shall have the meaning specified in Article 9
of the UCC.

 

“Revolving Credit General
Intangibles” means
all General Intangibles pertaining to any items of Collateral set forth in Section 2.1,
including, without limitation, all contingent rights with respect to warranties
on Inventory or Accounts which are not yet “payment intangibles” (as defined in
Article 9 of the UCC).

 

“Secured Obligations” shall have the meaning assigned in Section 3.1.

 

“Secured Parties” shall mean the Agents and the Lenders and
shall include, without limitation, all former Agents and Lenders to the extent
that any Obligations owing to such Persons were incurred while such Persons
were Agents or Lenders and such Obligations have not been paid or satisfied in
full. 

 

“Securities” shall mean any stock, shares, partnership
interests, voting trust certificates, certificates of interest or participation
in any profit-sharing agreement or arrangement, options, warrants, bonds, debentures,
notes, or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as “securities”
or any certificates of interest, shares or participations in temporary or
interim certificates for the purchase or acquisition of, or any right to
subscribe to, purchase or acquire, any of the foregoing.

 

“Securities Accounts” (i) shall mean all “securities accounts”
as defined in Article 8 of the UCC and (ii) shall include, without limitation,
all of the accounts listed on Schedule 4.4(A)

 

5

 

under the heading “Securities Accounts” (as such schedule may
be amended or supplemented from time to time).

 

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

 

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

 

“Supporting Obligation” shall mean all “supporting obligations” as
defined in Article 9 of the UCC.

 

“Tax Code” shall mean the United States Internal
Revenue Code of 1986, as amended from time to time.

 

“Trademark Licenses” shall mean any and all written agreements
containing express grant of any right in or to Trademarks (whether such Grantor
is licensee or licensor thereunder) including, without limitation, each
agreement referred to in Schedule 4.7(F) (as such schedule may
be amended or supplemented from time to time).

 

“Trademarks” shall mean all United States, and foreign
trademarks, trade names, corporate names, company names, business names,
fictitious business names, Internet domain names, service marks, certification
marks, collective marks, logos, other source or business identifiers, designs
and general intangibles of a like nature, all registrations and applications
for any of the foregoing including, but not limited to: (i) the
registrations and applications referred to in Schedule 4.7(E) (as
such schedule may be amended or supplemented from time to time), (ii) all
extensions or renewals of any of the foregoing, (iii) all of the goodwill
of the business connected with the use of and symbolized by the foregoing, (iv) the
right to sue for past, present and future infringement or dilution of any of
the foregoing or for any injury to goodwill, and (v) all Proceeds of the
foregoing, including, without limitation, licenses, royalties, income,
payments, claims, damages, and proceeds of suit.

 

“Trade Secret Licenses” shall mean any and all written agreements
containing the express grant of any right in or to Trade Secrets (whether such
Grantor is licensee or licensor thereunder) including, without limitation, each
agreement referred to in Schedule 4.7(G) (as such schedule may
be amended or supplemented from time to time). 

 

“Trade Secrets” shall mean all trade secrets and all other
confidential or proprietary information and know-how whether or not such trade
secret has been reduced to a writing or other tangible form, including all
documents and things embodying, incorporating, or referring in any way to such
trade secret, including but not limited to: (i) the right to sue for past,
present and future misappropriation or other violation of any Trade Secret, and
(ii) all Proceeds of the foregoing, including, without limitation,
licenses, royalties, income, payments, claims, damages, and proceeds of suit.

 

“UCC” shall mean the Uniform Commercial Code as in
effect from time to time in the State of New York or, when the context implies,
the Uniform Commercial Code as in effect from time to time in any other
applicable jurisdiction.

 

“United States” shall mean the United States of America.

 

6

 

1.2          Definitions; Interpretation.  All capitalized
terms used herein (including the preamble and recitals hereto) and not
otherwise defined herein shall have the meanings ascribed thereto in the Credit
Agreement as in effect on the date hereof without giving effect to any
amendments or modifications thereto or, if not defined therein, in the
UCC.  References to “Sections,” “Exhibits”
and “Schedules” shall be to Sections, Exhibits and Schedules, as the case may
be, of this Agreement unless otherwise specifically provided.  Section 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.  Any of the terms defined herein
may, unless the context otherwise requires, be used in the singular or the
plural, depending on the reference.  The
use herein of the word “include” or “including”, when following any general
statement, term or matter, shall not be construed to limit such statement, term
or matter to the specific items or matters set forth immediately following such
word or to similar items or matters, whether or not nonlimiting language (such
as “without limitation” or “but not limited to” or words of similar import) is
used with reference thereto, but rather shall be deemed to refer to all other
items or matters that fall within the broadest possible scope of such general statement,
term or matter.  If any conflict or
inconsistency exists between this Agreement and the Credit Agreement, the
Credit Agreement shall govern.  All
references herein to provisions of the UCC shall include all successor
provisions under any subsequent version or amendment to any Article of the
UCC.

 

SECTION 2.   GRANT OF SECURITY.

 

2.1          Grant of Security.  Each Grantor hereby
grants to the Collateral Agent for its benefit and for the benefit of the
Secured Parties a security interest in and continuing lien on all of such
Grantor’s right, title and interest in, to and under all personal property of
such Grantor, subject to the limitations set forth in Section 2.2,
including, but not limited to the following, in each case whether now owned or
existing or hereafter acquired or arising and wherever located (all of which
being hereinafter collectively referred to as the “Collateral”):

 

(a)           Accounts,

 

(b)           All
Inventory;

 

(c)           Documents
relating to or evidencing any Inventory or other item of property described in
this Section 2.1;

 

(d)           Investment
Accounts (including all cash, marketable securities and other funds held in
credited to or on deposit in any Investment Account);

 

(e)           Instruments
(including Intercompany Notes of Subsidiaries);

 

(f)            Chattel
Paper;

 

(g)           Revolving
Credit General Intangibles;

 

(h)           Insurance;

 

(i)            Letter
of Credit Rights;

 

(j)            Records,
including all Collateral Records, “supporting obligations” (as defined in Article 9
of the UCC) and related Letters of Credit, Commercial Tort Claims or other
claims and causes of action, in each case, to the extent related primarily to
any of the foregoing;

 

7

 

(k)           to
the extent not otherwise included above, all Collateral Support relating to any
of the foregoing; and 

 

(l)            to
the extent not otherwise included above, all Proceeds, products, accessions,
rents and profits of or in respect of any of the foregoing.

 

2.2          Certain Limited Exclusions.  Notwithstanding
anything herein to the contrary, in no event shall the Collateral include or
the security interest granted under Section 2.1 hereof attach to any
lease, license, contract, Intellectual Property, property rights or agreement
to which any Grantor is a party or any of its rights or interests thereunder if
and for so long as the grant of such security interest shall constitute or
result in (i) the abandonment, invalidation or unenforceability of any
right, title or interest of any Grantor therein or (ii) in a breach or
termination pursuant to the terms of, or a default under, any such lease,
license, contract, property rights or agreement (other than to the extent that
any such term would be rendered ineffective pursuant to Sections 9-406, 9-407,
9-408 or 9-409 of the UCC (or any successor provision or provisions) of any
relevant jurisdiction or any other applicable law (including the Bankruptcy
Code) or principles of equity), provided however that the Collateral shall
include and such security interest shall attach immediately at such time as the
condition causing such abandonment, invalidation or unenforceability shall be
remedied and to the extent severable, shall attach immediately to any portion
of such lease, license, contract, property rights or agreement that does not
result in any of the consequences specified in (i) or (ii) above. 

 

2.3          Intercreditor Agreement.  Notwithstanding anything herein to the
contrary, the lien and security interest granted to the Collateral Agent
pursuant to this Agreement and the exercise of any right or remedy by the
Collateral Agent hereunder are subject to the provisions of the Intercreditor
Agreement.  In the event of any conflict
between the terms of the Intercreditor Agreement and this Agreement, the terms
of the Intercreditor Agreement shall govern and control.  Any reference in this Agreement to a “first
priority lien” or words of similar effect in describing the security interests
created hereunder shall be understood to refer to such priority as set forth in
the Intercreditor Agreement.  All
representations, warranties and covenants in this Agreement shall be subject to
the provisions and qualifications set forth in this Section 2.3.

 

SECTION 3.   SECURITY FOR OBLIGATIONS;
GRANTORS REMAIN LIABLE.

 

3.1          Security for
Obligations.  This Agreement secures, and the Collateral is
collateral security for, the prompt and complete payment or performance in full
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment of amounts that 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) (and any successor provision
thereof)), of all Obligations with respect to every Grantor (the “Secured Obligations”).

 

3.2          Continuing
Liability Under Collateral.  Notwithstanding anything herein to the
contrary, (i) each Grantor
shall remain liable for all obligations under the Collateral and nothing
contained herein is intended or shall be a delegation of duties to the
Collateral Agent or any Secured Party, (ii) each Grantor shall remain
liable under each of the agreements included in the Collateral to perform all
of the obligations undertaken by it thereunder all in accordance with and
pursuant to the terms and provisions thereof and neither the Collateral Agent
nor any Secured Party shall have any obligation or liability under any of such
agreements by reason of or arising out of this Agreement or any other document
related thereto nor shall the Collateral Agent nor any Secured Party have any
obligation to make any inquiry as to the nature or sufficiency of any payment
received by it or have any obligation to take any action to collect or enforce
any rights

 

8

 

under any
agreement included in the Collateral and (iii) the exercise by the
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.

 

SECTION 4.   REPRESENTATIONS AND
WARRANTIES AND COVENANTS.

 

4.1          Generally.

 

(a)           Representations
and Warranties.  Each Grantor hereby
represents and warrants, on the Closing Date and on each Credit Date, that:

 

(i)            it owns
the Collateral purported to be owned by it or otherwise has the rights it
purports to have in each item of Collateral free and clear of any and all
Liens, rights or claims of all other Persons other than Permitted Liens;

 

(ii)           it has
indicated on Schedule 4.1(A)(as such schedule may be amended or
supplemented from time to time): (w) the type of organization of such Grantor,
(x) the jurisdiction of organization of such Grantor, (y) its organizational
identification number and (z) the jurisdiction where the chief executive office
or its sole place of business is, and for the one-year period preceding the
date hereof has been, located.

 

(iii)          the full
legal name of such Grantor is as set forth on Schedule 4.1(A) and it
has not done in the last five (5) years, and does not do, business under
any other name (including any trade-name or fictitious business name) except
for those names set forth on Schedule 4.1(B) (as such schedule may
be amended or supplemented from time to time);

 

(iv)          except as
provided on Schedule 4.1(C), it has not changed its name, jurisdiction of
organization, chief executive office or sole place of business (or principal
residence if such Grantor is a natural person) or its corporate structure in
any way (e.g., by merger, consolidation, change in corporate form or otherwise)
within the past five (5) years;

 

(v)           other than
in connection with Permitted Liens, it has not within the last five (5) years
become bound (whether as a result of merger or otherwise) as debtor under a
security agreement entered into by another Person, which has not heretofore
been terminated other than the agreements identified on Schedule 4.1(D) hereof
(as such schedule may be amended or supplemented from time to time);

 

(vi)          with
respect to each agreement identified on Schedule 4.1(D), it has indicated
on Schedule 4.1 (A) and Schedule 4.1(B) the information
required pursuant to Section 4.1(a)(ii), (iii) and (iv) with
respect to the debtor under each such agreement;

 

(vii)         (u) upon
the filing of all UCC financing statements naming each Grantor as “debtor” and
the Collateral Agent as “secured party” and describing the Collateral in the
filing offices set forth opposite such Grantor’s name on Schedule 4.1(E) hereof
(as such schedule may be amended or supplemented from time to time) and
other filings delivered by each Grantor, (v) upon delivery of all
Instruments Chattel Paper and certificated Pledged Debt, (w) upon sufficient
identification of Commercial Tort Claims, (x) upon execution of a control
agreement establishing the Collateral Agent’s “control” (within the meaning of Section 8-106,
9-106 or 9-104 of the UCC, as applicable) with

 

9

 

respect to
any Investment Account, and (y) upon consent of the issuer with respect to
Letter of Credit Rights, the security interests granted to the Collateral Agent
hereunder constitute valid and perfected first priority Liens (subject in the
case of priority only to Permitted Liens and to the rights of the United States
government (including any agency or department thereof) with respect to United
States government Receivables) on all of the Collateral;

 

(viii)        after
giving effect to the actions described in subsection (vii) above,
except as may be required, in connection with the disposition of any
Securities, by laws generally affecting the offering and sale of Securities,
all actions and consents, including all filings, notices, registrations and
recordings necessary or desirable for the exercise by the Collateral Agent of
the voting or other rights provided for in this Agreement or the exercise of
remedies in respect of the Collateral have been made or obtained;

 

(ix)           other
than the financing statements filed in favor of the Collateral Agent, no
effective UCC financing statement, fixture filing or other instrument similar
in effect under any applicable law covering all or any part of the Collateral
is on file in any filing or recording office except for (x) financing
statements for which proper termination statements have been delivered to the
Collateral Agent for filing and (y) financing statements filed in connection
with Permitted Liens;

 

(x)            no
authorization, approval or other action by, and no notice to or filing with,
any Governmental Authority or regulatory body (other than those which have been
obtained) is required for either (i) the pledge or grant by any Grantor of
the Liens purported to be created in favor of the Collateral Agent hereunder or
(ii) the exercise by Collateral Agent of any rights or remedies in respect
of any Collateral (whether specifically granted or created hereunder or created
or provided for by applicable law), except (A) for the filings
contemplated by clause (vii) above and (B) as may be required, in
connection with the disposition of any Securities, by laws generally affecting
the offering and sale of Securities;

 

(xi)           all
written information supplied by any Grantor with respect to any of the
Collateral (in each case taken as a whole with respect to any particular
Collateral) is accurate and complete in all material respects;

 

(xii)          none of
the Collateral constitutes, or is the Proceeds of, “farm products” (as defined
in the UCC);

 

(xiii)         it does
not own any “As-extracted collateral” (as defined in the UCC) or any timber to
be cut other than the “As-extracted collateral” and the timber located on the
Real Property as described on Schedule 4.1(F) hereof;

 

(xiv)        except as
described on Schedule 4.1(D), such
Grantor has not become bound as a debtor, either by contract or by operation of
law, by a security agreement previously entered into by another Person; and

 

(xv)         such
Grantor has been duly organized as an entity of the type as set forth opposite
such Grantor’s name on Schedule 4.1(A) solely under the laws of the
jurisdiction as set forth opposite such Grantor’s name on Schedule 4.1(A) and
remains duly existing as such.  Such
Grantor has not filed any certificates of domestication, transfer or
continuance in any other jurisdiction.

 

10

 

(b)           Covenants
and Agreements.  Each Grantor hereby
covenants and agrees that:

 

(i)            except
for the security interest created by this Agreement, it shall not create or
suffer to exist any Lien upon or with respect to any of the Collateral, except
Permitted Liens, and such Grantor shall defend the Collateral against all
Persons at any time claiming any interest therein;

 

(ii)           it shall
not produce, 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 if such violation
could reasonably be expected to have a Material Adverse Effect; 

 

(iii)          it shall
not change such Grantor’s name, identity, corporate structure (e.g., by merger,
consolidation, change in corporate form or otherwise), sole place of business,
chief executive office, type of organization or jurisdiction of organization or
establish any trade names unless it shall have (a) notified the Collateral
Agent in writing, by executing and delivering to the Collateral Agent a
completed Pledge Supplement, substantially in the form of Exhibit A
attached hereto, together with all Supplements to Schedules thereto, at least
fifteen (15) days prior to any such change or establishment, identifying such
new proposed name, identity, corporate structure, sole place of business, chief
executive office or jurisdiction of organization or trade name and providing
such other information in connection therewith as the Collateral Agent may
reasonably request and (b) taken all actions necessary or advisable to
maintain the continuous validity, perfection and the same or better priority of
the Collateral Agent’s security interest in the Collateral intended to be
granted and agreed to hereby;

 

(iv)          if the
Collateral Agent or any other Secured Party gives value to enable Grantor to
acquire rights in or the use of any Collateral, it shall use such value for
such purposes and such Grantor further agrees that repayment of any Obligation
shall apply on a “first-in, first-out” basis so that the portion of the value
used to acquire rights in any Collateral shall be paid in the chronological
order such Grantor acquired rights therein; 

 

(v)           it shall
pay promptly when due all property and other taxes, assessments and
governmental charges or levies imposed upon, and all claims (including claims
for labor, materials and supplies) against, the Collateral, except to the
extent the validity thereof is being contested in good faith and as otherwise
provided in the Credit Agreement; provided, such Grantor shall in any event pay
such taxes, assessments, charges, levies or claims not later than five (5) days
prior to the date of any proposed sale under any judgment, writ or warrant of
attachment entered or filed against such Grantor or any of the Collateral as a
result of the failure to make such payment; 

 

(vi)          upon such
Grantor or any Senior Officer of such Grantor obtaining actual knowledge
thereof, it shall promptly notify the Collateral Agent in writing of any event
that would reasonably be expected to have a Material Adverse Effect on the
value of the Collateral or any material portion thereof, the ability of any
Grantor or the Collateral Agent to dispose of the Collateral or any material
portion thereof, or the rights and remedies of the Collateral Agent in relation
thereto, including, without limitation, the levy of any legal process against
the Collateral or any portion thereof; 

 

11

 

(vii)         it shall
not take or permit any action which would reasonably be expected to materially
impair the Collateral Agent’s rights in the Collateral; and

 

(viii)        it shall
not sell, transfer or assign (by operation of law or otherwise) any Collateral
except as otherwise permitted in accordance with the Credit Agreement.

 

4.2          Inventory.

 

(a)           Representations
and Warranties.  Each Grantor
represents and warrants, on the Closing Date and on each Credit Date, that:

 

(i)            all of
the Inventory (other than Inventory in transit) included in the Collateral is
kept for the past four (4) years only at the locations specified in Schedule 4.2
(as such schedule may be amended or supplemented from time to time); 

 

(ii)           any goods
now or hereafter produced by any Grantor included in the Collateral have been
and will be produced in compliance with the requirements of the Fair Labor
Standards Act, as amended; and

 

(iii)          except as
set forth in Schedule 4.2, none of the Inventory is in the possession of
an issuer of a negotiable document (as defined in Section 7-104 of the
UCC) therefor or otherwise in the possession of a bailee or a warehouseman.

 

(b)           Covenants
and Agreements.  Each Grantor
covenants and agrees that:

 

(i)            other
than Inventory in transit or sold to customers in the ordinary course of
business, it shall keep the Inventory and any Documents evidencing Inventory in
the locations specified on Schedule 4.2 (as such schedule may be
amended or supplemented from time to time) unless, with respect to any location
at which Inventory having a value in excess of $500,000 is located, it shall
have (a) notified the Collateral Agent in writing, by executing and
delivering to the Collateral Agent an Officer’s Certificate, and a completed
Pledge Supplement, substantially in the form of Exhibit A attached hereto,
together with all Supplements to Schedules thereto, at least fifteen (15) days
prior to any change in locations, identifying such change in the location of
and the new location of such Collateral, and providing such other information
in connection therewith as the Collateral Agent may reasonably request and (b) taken
all actions necessary or advisable to maintain the continuous validity,
perfection and the same or better priority of the Collateral Agent’s security
interest in the Collateral intended to be granted and agreed to hereby, or to
enable the Collateral Agent to exercise and enforce its rights and remedies
hereunder, with respect to such Inventory; 

 

(ii)           it shall
keep correct and accurate records of the Inventory, as is customarily
maintained under similar circumstances by Persons of established reputation
engaged in a similar business, and in any event in conformity with GAAP;

 

(iii)          it shall
not deliver any Document evidencing any Inventory to any Person other than the
issuer of such Document (or to a shipper or freight forwarder acting on such
Grantor’s behalf in the ordinary course of business) to claim the goods
evidenced therefor or the Collateral Agent; and

 

12

 

(iv)          if any
Inventory having a value in excess of $500,000 in the aggregate is in
possession or control of any third party (other than Inventory in transit and
customers purchasing inventory in the ordinary course of business), each
Grantor shall join with the Collateral Agent in notifying the third party of
the Collateral Agent’s security interest and obtaining an acknowledgment from
the third party that it is holding the Inventory for the benefit of the
Collateral Agent.

 

4.3          Receivables.

 

(a)           Representations
and Warranties.  Each Grantor
represents and warrants, on the Closing Date and on each Credit Date, that:

 

(i)            each
Receivable (a) is the legal, valid and binding obligation of the Account
Debtor in respect thereof, representing an unsatisfied obligation of such
Account Debtor, (b) is enforceable in accordance with its terms except as
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws, (c) is not subject to any setoffs, defenses, taxes
or counterclaims that have not been disclosed to the Collateral Agent (except
with respect to refunds, returns and allowances in the ordinary course of
business) and (d) is in compliance in all material respects with all
applicable laws, whether federal, state, local or foreign; 

 

(ii)           none of
the Account Debtors in respect of any Receivable in excess of $500,000
individually or $1,000,000 in the aggregate is the government of the United
States, any agency or instrumentality thereof, any state or municipality or any
foreign sovereign; and

 

(iii)          no
Receivable is evidenced by, or constitutes, an Instrument or Chattel Paper
which has not been delivered to, or otherwise subjected to the control of, the
Collateral Agent to the extent required by, and in accordance with Section 4.3(c).

 

(b)           Covenants
and Agreements:  Each Grantor hereby
covenants and agrees that:

 

(i)            it shall
keep and maintain at its own cost and expense satisfactory and complete records
of the Receivables, including, but not limited to, the originals of all
documentation with respect to all Receivables and records of all payments
received and all credits granted on the Receivables, all merchandise returned
and all other dealings therewith;  

 

(ii)           it shall
mark conspicuously, in form and manner reasonably satisfactory to the
Collateral Agent, all Chattel Paper and Instruments (other than any delivered
to the Collateral Agent as provided herein), as well as the Receivables Records
with an appropriate reference to the fact that the Collateral Agent has a
security interest therein;

 

(iii)          it shall
perform in all material respects all of its obligations with respect to the
Receivables, except to the extent being contested in good faith, so long as
adequate reserve or other appropriate provision, as shall be required in
conformity with GAAP, shall have been made therefor;

 

13

 

(iv)          other than
in the ordinary course of business as generally conducted by it on and prior to
the date hereof, and except as otherwise provided in subsection (v) below,
following an Event of Default, such Grantor shall not (w) grant any extension
or renewal of the time of payment of any Receivable, (x) compromise or settle
any dispute, claim or legal proceeding with respect to any Receivable for less
than the total unpaid balance thereof, (y) release, wholly or partially, any
Person liable for the payment thereof, or (z) allow any credit or discount
thereon;

 

(v)           except as
otherwise provided in this subsection, each Grantor shall continue to collect
all amounts due or to become due to such Grantor under the Receivables and any
Supporting Obligation and diligently exercise each material right it may have
under any Receivable any Supporting Obligation or Collateral Support, in each
case, at its own expense, and in connection with such collections and exercise,
such Grantor shall take such action as such Grantor may deem necessary or
advisable.  Notwithstanding the
foregoing, the Collateral Agent shall have the right following an Event of
Default to notify, or require any Grantor to notify, any Account Debtor of the
Collateral Agent’s security interest in the Receivables and any Supporting
Obligation and, in addition, at any time following the occurrence and during
the continuation of an Event of Default, the Collateral Agent may:  (1) direct the Account Debtors under any
Receivables to make payment of all amounts due or to become due to such Grantor
thereunder directly to the Collateral Agent; (2) notify, or require any
Grantor to notify, each Person maintaining a lockbox or similar arrangement to
which Account Debtors under any Receivables 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 the Collateral Agent; and (3) enforce, at the expense of such
Grantor, collection of any such Receivables 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.  If the
Collateral Agent notifies any Grantor that it has elected to collect the Receivables
in accordance with the preceding sentence, any payments of Receivables received
by such Grantor shall be forthwith (and in any event within two (2) Business
Days) deposited by such Grantor in the exact form received, duly indorsed by
such Grantor to the Collateral Agent if required, in the Collateral Account
maintained under the sole dominion and control of the Collateral Agent, and
until so turned over, all amounts and proceeds (including checks and other
instruments) received by such Grantor in respect of the Receivables, any Supporting
Obligation or Collateral Support shall be received in trust for the benefit of
the Collateral Agent hereunder and shall be segregated from other funds of such
Grantor and such Grantor shall not adjust, settle or compromise the amount or
payment of any Receivable, or release wholly or partly any Account Debtor or
obligor thereof, or allow any credit or discount thereon; and

 

(vi)          it shall
use its best efforts to keep in full force and effect any Supporting Obligation
or Collateral Support relating to any Receivable.

 

(c)           Delivery
and Control of Receivables.  With
respect to any Receivables in excess of $100,000 individually or $500,000 in
the aggregate that is evidenced by, or constitutes, Chattel Paper or
Instruments, each Grantor shall cause each originally executed copy thereof to
be delivered to the Collateral Agent (or its agent or designee) appropriately
indorsed to the Collateral Agent or indorsed in blank:  (i) with respect to any such Receivables
in existence on the date hereof, on or prior to the date hereof and (ii) with
respect to any such Receivables hereafter arising, within ten (10) days of
such Grantor acquiring rights therein. 
With respect to any Receivables in excess of $100,000 individually or
$500,000 in the aggregate which would constitute “electronic

 

14

 

chattel
paper” under Article 9 of the UCC, each Grantor shall take all steps
necessary to give the Collateral Agent control over such Receivables (within
the meaning of Section 9-105 of the UCC): 
(i) with respect to any such Receivables in existence on the date
hereof, on or prior to the date hereof and (ii) with respect to any such
Receivables hereafter arising, within ten (10) days of such Grantor
acquiring rights therein.  Any Receivable
not otherwise required to be delivered or subjected to the control of the
Collateral Agent in accordance with this subsection (c) shall be
delivered or subjected to such control upon request of the Collateral Agent.

 

4.4          Investment Related Property; Pledged Debt; Investment Accounts.

 

4.4.1       Investment
Related Property Generally

 

(a)           Covenants
and Agreements.  Each Grantor hereby
covenants and agrees that to the extent any of the Collateral includes any
Investment Related Property:

 

(i)            in the
event it acquires rights in any such Investment Related Property after the date
hereof, it shall deliver to the Collateral Agent a completed Pledge Supplement,
substantially in the form of Exhibit A attached hereto, together with all
Supplements to Schedules thereto, reflecting such new Investment Related
Property and all other such Investment Related Property.  Notwithstanding the foregoing, it is
understood and agreed that the security interest of the Collateral Agent shall
attach to all such Investment Related Property immediately upon any Grantor’s
acquisition of rights therein and shall not be affected by the failure of any
Grantor to deliver a supplement to Schedule 4.4 as required hereby;

 

(ii)           except as
provided in the next sentence, in the event such Grantor receives any
dividends, interest or distributions on any such Investment Related Property,
or any securities or other property upon the merger, consolidation, liquidation
or dissolution of any issuer of any such Investment Related Property, then (a) such
dividends, interest or distributions and securities or other property shall be
included in the definition of Collateral without further action and (b) such
Grantor shall immediately take all steps, if any, necessary or advisable to
ensure the validity, perfection, priority and, if applicable, control of the
Collateral Agent over such Investment Related Property (including, without
limitation, delivery thereof to the Collateral Agent) and pending any such
action such Grantor shall be deemed to hold such dividends, interest,
distributions, securities or other property in trust for the benefit of the
Collateral Agent and shall segregate such dividends, distributions, Securities
or other property from all other property of such Grantor.  Notwithstanding the foregoing, so long as no
Event of Default shall have occurred and be continuing, the Collateral Agent
authorizes each Grantor to retain all ordinary cash dividends and distributions
paid by the issuer and all scheduled payments of interest and principal; and

 

(iii)          each
Grantor consents to the grant by each other Grantor of a Security Interest in
all such Investment Related Property to the Collateral Agent.

 

(b)           Delivery
and Control.  

 

(i)            To the
extent any of the Collateral includes any Investment Related Property, unless
prohibited by the Organizational Documents of the Issuer of any such Investment
Related Property with respect to a joint venture of such Grantor, each Grantor
agrees that with respect to any such Investment Related Property in which it

 

15

 

currently
has rights it shall comply with the provisions of this Section 4.4.1(b) on
or before the Closing Date and with respect to any such Investment Related
Property hereafter acquired by such Grantor it shall comply with the provisions
of this Section 4.4.1(b) promptly upon acquiring rights therein, in
each case in form and substance satisfactory to the Collateral Agent.  With respect to any such Investment Related
Property in a principal amount in excess of $5,000 individually that is
represented by a certificate or that is an “instrument” (other than any such
Investment Related Property credited to a Securities Account), subject to the
terms of the Intercreditor Agreement, it shall cause such certificate or
instrument to be delivered to the Collateral Agent, indorsed in blank by an “effective
indorsement” (as defined in Section 8-107 of the UCC), regardless of
whether such certificate constitutes a “certificated security” for purposes of
the UCC.  With respect to any such
Investment Related Property that is an “uncertificated security” for purposes
of the UCC (other than any “uncertificated securities” credited to a Securities
Account), it shall cause the issuer of such uncertificated security to either,
subject to the terms of the Intercreditor Agreement, (i) register the
Collateral Agent as the registered owner thereof on the books and records of
the issuer or (ii) execute an agreement substantially in the form of Exhibit B
hereto, pursuant to which such issuer agrees to comply with the Collateral
Agent’s instructions with respect to such uncertificated security without
further consent by such Grantor.  

 

(c)           Voting
and Distributions.

 

(i)            So long
as no Event of Default shall have occurred and be continuing to the extent any
of the Collateral consists of Investment Related Property: 

 

(1)                                  except as
otherwise provided under the covenants and agreements relating to such
Investment Related Property in this Agreement or elsewhere herein or in the
Credit Agreement, each Grantor shall be entitled to exercise or refrain from
exercising any and all voting and other consensual rights pertaining to such
Investment Related Property or any part thereof for any purpose not
inconsistent with the terms of this Agreement or the Credit Agreement;
provided, no Grantor shall exercise or refrain from exercising any such right
if the Collateral Agent shall have notified such Grantor that, in the
Collateral Agent’s reasonable judgment, such action would have a Material
Adverse Effect on the value of such Investment Related Property or any part
thereof; and provided further, such Grantor shall give the Collateral Agent at
least five (5) Business Days prior written notice of the manner in which
it intends to exercise, or the reasons for refraining from exercising, any such
right; it being understood, however, that neither the voting by such Grantor of
any capital stock owned by such Grantor for, or such Grantor’s consent to, the
election of directors (or similar governing body) at a regularly scheduled
annual or other meeting of stockholders or with respect to routine matters at
any such meeting, nor such Grantor’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
within the meaning of this Section 4.4(c)(i)(1), and no notice of any such
voting or consent need be given to the Collateral Agent; and

 

(2)                                  the
Collateral Agent shall promptly execute and deliver (or cause to be executed
and delivered) to each Grantor all proxies, and other instruments as such
Grantor may from time to time reasonably request for the purpose of enabling
such Grantor

 

16

 

to exercise
the voting and other consensual rights when and to the extent which it is
entitled to exercise pursuant to clause (1) above;

 

(3)                                  Upon the
occurrence and during the continuation of an Event of Default and any Grantors’
receipt of notice of exercise by the Collateral Agent of any powers, rights,
privileges and remedies available upon the occurrence and during the
continuance of an Event of Default, subject to the terms of the Intercreditor
Agreement: 

 

(A)                              all rights of each Grantor to exercise or
refrain from exercising 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 the Collateral Agent who shall
thereupon have the sole right to exercise such voting and other consensual
rights; and

 

(B)                                in order to permit the 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: (1) each Grantor shall
promptly execute and deliver (or cause to be executed and delivered) to the
Collateral Agent all proxies, dividend payment orders and other instruments as
the Collateral Agent may from time to time reasonably request and (2) each
Grantor acknowledges that the Collateral Agent may utilize the power of
attorney set forth in Section 6.1.

 

4.4.2       Pledged Debt

 

(a)           Representations
and Warranties.  Each Grantor hereby
represents and warrants, on the date of this Agreement, that Schedule 4.4
(as such schedule may be amended or supplemented from time to time) sets
forth under the heading “Pledged Debt” all of the Pledged Debt owned by any
Grantor (other than Pledged Debt owned by another Grantor or one of its
Subsidiaries), all of such 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;

 

(b)           Covenants
and Agreements.  Each Grantor hereby
covenants and agrees that it shall notify the Collateral Agent of any default
under any Pledged Debt that has caused, either in any individual case or in the
aggregate, a Material Adverse Effect.

 

4.4.3       Investment
Accounts

 

(a)           Representations
and Warranties. Each Grantor hereby represents and warrants, on the Closing
Date and each Credit Date, that:

 

(i)            Schedule 4.4
hereto (as such schedule may be amended or supplemented from time to time)
sets forth under the heading “Securities Accounts” all of the Securities
Accounts in which each Grantor has an interest. 
Each Grantor is the sole entitlement holder of each such Securities
Account on Schedule 4.4, and such Grantor has not consented to, and
is not otherwise aware of, any Person (other than the Collateral Agent pursuant
hereto or the Priority Lien Collateral Trustee (as defined in the Intercreditor
Agreement)) having “control” (within the meanings of Sections 8-106 and 9-106
of the

 

17

 

UCC) over,
or any other interest in, any such Securities Account or securities or other
property credited thereto;

 

(ii)           Schedule 4.4
hereto (as such schedule may be amended or supplemented from time to time)
sets forth under the heading “Deposit Accounts” all of the Deposit Accounts in
which each Grantor has an interest.  Each
Grantor is the sole account holder of each such Deposit Account on Schedule 4.4
and such Grantor has not consented to, and is not otherwise aware of, any
Person (other than the Collateral Agent pursuant hereto or the Priority Lien
Collateral Trustee) having either sole dominion and control (within the meaning
of common law) or “control” (within the meanings of Section 9-104 of the
UCC) over, or any other interest in, any such Deposit Account or any money or
other property deposited therein; and

 

(iii)          Each
Grantor has taken all actions necessary or desirable, including those specified
in Section 4.4.4(c), to: (a) establish Collateral Agent’s “control”
(within the meanings of Sections 8-106 and 9-106 of the UCC) over any portion
of the Collateral constituting Certified Securities, Uncertified Securities,
Securities Accounts, Securities Entitlements (each as defined in the UCC); (b) establish
the Collateral Agent’s “control” (within the meaning of Section 9-104 of
the UCC) over all Deposit Accounts (other than those Deposit Accounts not
subject to such requirement under Section 4.4.4(c)); and (c) deliver
all Instruments to the Collateral Agent.

 

(b)           Covenants
and Agreements.  Each Grantor hereby
covenants and agrees with the Collateral Agent and each other Secured Party
that it shall not close or terminate any Investment Account without prior
notice to the Collateral Agent or establish any additional Investment Accounts
unless a control agreement has been entered into by the appropriate Grantor,
Collateral Agent and securities intermediary or depository institution at which
such additional account is to be maintained in accordance with the provisions
of Section 4.4.4(c).

 

(c)           Delivery
and Control

 

(i)            With
respect to any Investment Accounts consisting of Securities Accounts or
Securities Entitlements, it shall cause the securities intermediary maintaining
such Securities Account or Securities Entitlement to enter into an agreement
substantially in the form of Exhibit C hereto (or otherwise reasonably
acceptable to the Collateral Agent) pursuant to which it shall agree to comply
with the Collateral Agent’s “entitlement orders” without further consent by
such Grantor.  With respect to any
Investment Related Property that is a “Deposit Account,” it shall cause the
depositary institution maintaining such account to enter into an agreement
substantially in the form of Exhibit D hereto (or otherwise reasonably
acceptable to the Collateral Agent) (a “Deposit Account Control
Agreement”), pursuant to which the Collateral Agent shall have both
sole dominion and control over such Deposit Account (within the meaning of the
common law), subject to the terms of the Intercreditor Agreement, and “control”
(within the meaning of Section 9-104 of the UCC) over such Deposit
Account; provided that the Grantors shall not be required to comply with this
sentence with respect to Deposit Accounts that (A) are used exclusively to
fund payroll or (B) have an aggregate balance for all such Deposit
Accounts of $2,500,000 or less.  Subject
to the proviso to the immediately preceding sentence, each Grantor shall have
entered into such control agreement or agreements with respect to: (i) any
Securities Accounts, Securities Entitlements or Deposit Accounts that exist on
the Closing Date, as of or prior to the Closing Date and (ii) any
Securities Accounts, Securities Entitlements or Deposit Accounts that are
created or acquired after the

 

18

 

Closing Date,
as of or prior to the deposit or transfer of any such Securities Entitlements
or funds, whether constituting moneys or investments, into such Securities
Accounts or Deposit Accounts.  If any
Grantor fails to comply with this covenant with respect to Deposit Accounts,
such Grantor shall have ten (10) days to either (x) transfer funds in an
amount sufficient to bring such Grantor into compliance with this covenant from
Deposit Accounts not covered by Deposit Account Control Agreements to Deposit
Accounts covered by Deposit Account Control Agreements or (y) enter into one or
more Deposit Account Control Agreements with the Collateral Agent and the
depository institutions at which such Deposit Accounts are not covered by
Deposit Account Control Agreements maintained in accordance with the provisions
of this Section 4.4.4(c) such that Grantors will then be in
compliance with this covenant.  Failure
to comply within such ten (10) day period shall constitute an Event of
Default.

 

(ii)           In
addition to the foregoing, if any issuer of any Investment Related Property
included in the Collateral is located in a jurisdiction outside of the United
States, each Grantor shall take such additional actions, including, without
limitation, causing the issuer to register the pledge on its books and records
or making such filings or recordings, in each case as may be necessary or
advisable, under the laws of such issuer’s jurisdiction to insure the validity,
perfection and priority of the security interest of the Collateral Agent, unless
the Collateral Agent, in its reasonable judgment, determines that the cost of
such actions is excessive relative to the value of such Investment Related
Property or that such actions would materially interfere with the Grantor’s
ability to use a Securities Account or Deposit Account in the ordinary course
of business.   Upon the occurrence and
during the continuation of an Event of Default, the Collateral Agent shall have
the right, without notice to any Grantor, to transfer all or any portion of such
Investment Related Property to its name or the name of its nominee or
agent.  In addition, the Collateral Agent
shall have the right at any time, without notice to any Grantor, to exchange
any certificates or instruments representing any such Investment Related
Property for certificates or instruments of smaller or larger denominations.

 

4.5          Material Contracts.

 

(a)           Representations
and Warranties.  Each Grantor hereby
represents and warrants, on the Closing Date and on each Credit Date, that:

 

(i)            Schedule 4.5
(as such schedule may be amended or supplemented from time to time) sets
forth all of the Material Contracts to which such Grantor has rights; 

 

(ii)           the
Material Contracts, true and complete copies (including any amendments or
supplements thereof) of which have been furnished to the Collateral Agent, have
been duly authorized, executed and delivered by Grantors and all other parties
thereto, are in full force and effect and are binding upon and enforceable
against all parties thereto in accordance with their respective terms, except
as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws.  There
exists no material default under any Material Contract by any Grantor or any
other party thereto and neither such Grantor, nor to its knowledge, any other
Person party thereto is likely to become in default thereunder and no Person
party thereto has any defenses, counterclaims or right of set-off with respect
to any Material Contract; and

 

19

 

(iii)          no
Material Contract prohibits assignment or requires consent of or notice to any
Person in connection with the assignment to the Collateral Agent hereunder,
except such as has been given or made or which such Grantor is using its
commercially reasonable efforts to obtain.

 

(b)           Covenants
and Agreements.  Each Grantor hereby
covenants and agrees that:

 

(i)            After the
occurrence and during the continuance of an Event of Default, in addition to
any rights under the Section of this Agreement relating to Receivables,
the Collateral Agent may at any time notify, or require any Grantor to so
notify, the counterparty on any Material Contract of the security interest of
the Collateral Agent therein and may upon written notice to the applicable
Grantor, notify, or require any Grantor to notify, the counterparty to make all
payments under the Material Contracts directly to the Collateral Agent;

 

(ii)           each
Grantor shall deliver promptly to the Collateral Agent notice of any Material
Contract as required pursuant to Section 5.1 of the Credit Agreement;

 

(iii)          each
Grantor shall deliver promptly to the Collateral Agent, and in any event within
ten (10) Business Days, after (1) any Material Contract of such
Grantor is terminated or amended in a manner that is materially adverse to such
Grantor or (2) any new Material Contract is entered into by such Grantor,
a written statement describing such event, with copies of such material
amendments or new contracts, delivered to the Collateral Agent (to the extent
such delivery is permitted by the terms of any such Material Contract,
provided, no prohibition on delivery shall be effective if it were bargained
for by such Grantor with the intent of avoiding compliance with this Section 4.5(b)(iii)),
and an explanation of any actions being taken with respect thereto;

 

(iv)          it shall
perform in all material respects all of its obligations with respect to the
Material Contracts except to the extent contested in good faith, so long as
adequate reserve or other appropriate provision, as shall be required in
conformity with GAAP, shall have been made therefor;

 

(v)           it shall
promptly and diligently exercise each material right it may have under any
Material Contract, any Supporting Obligation or Collateral Support, in each
case, at its own expense, and in connection with such collections and exercise,
such Grantor shall take such action as such Grantor may deem necessary or
advisable; and

 

(vi)          it shall
use its best efforts to keep in full force and effect any Supporting Obligation
or Collateral Support relating to any Material Contract, except where, in its
business judgment, it concludes that loss or relinquishment will not have a
Material Adverse Effect.  

 

4.6          Letter of Credit Rights.

 

(a)           Representations
and Warranties.  Each Grantor hereby
represents and warrants, on the Closing Date and on each Credit Date, that:

 

20

 

(i)            all
material letters of credit to which such Grantor has rights are listed on Schedule 4.6
(as such schedule may be amended or supplemented from time to time)
hereto; and

 

(ii)           it has
obtained the consent of each issuer of any letter of credit in an undrawn face
amount of $250,000 or more in the aggregate to the assignment of the proceeds
of the letter of credit to the Collateral Agent.

 

(b)           Covenants
and Agreements.  Each Grantor hereby
covenants and agrees that with respect to any letter of credit hereafter
arising in an undrawn face amount of $250,000 or more in the aggregate it shall
obtain the consent of the issuer thereof to the assignment of the proceeds of
the letter of credit to the Collateral Agent and shall deliver to the
Collateral Agent a completed Pledge Supplement, substantially in the form of Exhibit A
attached hereto, together with all Supplements to Schedules thereto.

 

4.7          Commercial Tort Claims

 

(a)           Representations
and Warranties.  Each Grantor hereby
represents and warrants, on the Closing Date and on each Credit Date, that Schedule 4.7
(as such schedule may be amended or supplemented from time to time) sets
forth all Commercial Tort Claims of each Grantor relating primarily to the
Collateral in excess of $500,000 in the aggregate; and

 

(b)           Covenants
and Agreements.  Each Grantor hereby
covenants and agrees that with respect to any Commercial Tort Claim relating
primarily to the Collateral in excess of $500,000 in the aggregate hereafter
arising it shall deliver to the Collateral Agent a completed Pledge Supplement,
substantially in the form of Exhibit A attached hereto, together with all
Supplements to Schedules thereto, identifying such new Commercial Tort Claims.

 

SECTION 5.   ACCESS; RIGHT OF INSPECTION
AND FURTHER ASSURANCES; ADDITIONAL GRANTORS.

 

5.1          Access; Right of
Inspection.  The Collateral Agent shall at all times have
full and free access during normal business hours and upon reasonable prior
notice to all the books, correspondence and records of each Grantor, and the
Collateral Agent and its representatives may examine the same, take extracts
therefrom and make photocopies thereof, and each Grantor agrees to render to
the Collateral Agent, at such Grantor’s cost and expense, such clerical and
other assistance as may be reasonably requested with regard thereto.  The Collateral Agent and its representatives
shall at all times also have the right to enter any premises of each Grantor
during normal business hours and upon reasonable prior notice and inspect any
property of each Grantor where any of the Collateral of such Grantor granted
pursuant to this Agreement is located for the purpose of inspecting the same,
observing its use or otherwise protecting its interests therein.

 

5.2          Further Assurances.

 

(a)           Each
Grantor agrees that from time to time, at the expense of such Grantor, that it
shall promptly execute and deliver all further instruments and documents, and
take all further action, that may be necessary, or that the Collateral Agent
may reasonably request, in order to create and/or maintain the validity,
perfection or priority of and protect any security interest granted hereby or
to enable the 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 shall:

 

21

 

(i)            file such
financing or continuation statements, or amendments thereto, and execute and
deliver such other agreements, instruments, endorsements, powers of attorney or
notices, as may be necessary, or as the Collateral Agent may reasonably
request, in order to perfect and preserve the security interests granted or
purported to be granted hereby;

 

(ii)           at any
reasonable time, upon prior written notice and upon request by the Collateral
Agent, and subject to Sections 5.6 and 9.2 of the Credit Agreement, allow
inspection of the Collateral by the Collateral Agent, or persons designated by
the Collateral Agent; and 

 

(iii)          at the
Collateral Agent’s reasonable request, appear in and defend any action or
proceeding that may affect such Grantor’s title to or the Collateral Agent’s
security interest in all or any part of the Collateral.  

 

(b)           Each
Grantor hereby authorizes the Collateral Agent to file a Record or Records,
including, without limitation, financing or continuation statements, and
amendments thereto, in any jurisdictions and with any filing offices as the
Collateral Agent may determine, in its sole discretion, are necessary or
advisable to perfect the security interest granted to the Collateral Agent
herein.  Such financing statements may
describe the Collateral in the same manner as described herein or may contain
an indication or description of collateral that describes such property in any
other manner as the Collateral Agent may determine, in its sole discretion, is
necessary, advisable or prudent to ensure the perfection of the security
interest in the Collateral granted to the Collateral Agent herein, including,
without limitation, describing such property as “all assets” or “all personal
property, whether now owned or hereafter acquired.”  Each Grantor shall furnish to the Collateral
Agent from time to time the statements and schedules further identifying and
describing the Collateral and the other reports in connection with the
Collateral as are provided in Section 5.17 of the Credit Agreement.

 

(c)           Each
Grantor hereby authorizes the Collateral Agent to modify this Agreement after
obtaining such Grantor’s approval of or signature to such modification by
amending Schedule 4.7 (as such schedule may be amended or
supplemented from time to time) to include reference to any right, title or
interest in any existing Intellectual Property or any Intellectual Property
acquired or developed by any Grantor after the execution hereof or to delete
any reference to any right, title or interest in any Intellectual Property in
which any Grantor no longer has or claims any right, title or interest.

 

5.3          Additional Grantors.  From time to time
subsequent to the date hereof, additional Persons may become parties hereto as
additional Grantors (each, an “Additional Grantor”), by executing a Counterpart
Agreement.  Upon delivery of any such
counterpart agreement to the Collateral Agent, notice of which is hereby waived
by Grantors, each Additional Grantor shall be a Grantor and shall be as fully a
party hereto as if the 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 NewPageCo 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.

 

22

 

SECTION 6.   COLLATERAL AGENT APPOINTED
ATTORNEY-IN-FACT.

 

6.1          Power of Attorney.  Each Grantor hereby
irrevocably appoints the Collateral Agent (such appointment being coupled with
an interest) 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, the Collateral
Agent or otherwise, from time to time in the Collateral Agent’s discretion to
take any action and to execute any instrument that the Collateral Agent may
deem reasonably necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation, the following: 

 

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

 

(b)           upon
the occurrence and during the continuance of any 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; 

 

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

 

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

 

(e)           to
prepare and file any UCC financing statements against such Grantor as debtor;

 

(f)            to
prepare, sign, and file for recordation in any intellectual property registry,
appropriate evidence of the lien and security interest granted herein in the
Intellectual Property in the name of such Grantor as debtor;

 

(g)           to
take or cause to be taken all actions necessary to perform or comply or cause
performance or compliance with the terms of this Agreement, including, without
limitation, access to pay or discharge taxes or Liens (other than Permitted
Liens) levied or placed upon or threatened against the Collateral, and which
the applicable Grantor has not paid or discharged when required hereunder, the
legality or validity thereof and the amounts necessary to discharge the same to
be determined by the Collateral Agent in its sole discretion, any such payments
made by the Collateral Agent to become obligations of such Grantor to the
Collateral Agent, due and payable immediately without demand; and 

 

(h)           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 the Collateral
Agent were the absolute owner thereof for all purposes, and to do, at the
Collateral Agent’s option and such Grantor’s expense, all acts and things that
the Collateral Agent deems reasonably necessary to protect, preserve or realize
upon the Collateral and the 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.

 

6.2          No Duty on the Part of
Collateral Agent or Secured Parties.   The powers conferred on the Collateral Agent
hereunder are solely to protect the interests of the Secured Parties in the
Collateral and shall not impose any duty upon the Collateral Agent or any
Secured Party to

 

23

 

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

 

SECTION 7.   REMEDIES.

 

7.1          Generally.  

 

(a)           If
any Event of Default shall have occurred and be continuing, the 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 at law or
in equity, all the rights and remedies of the Collateral Agent on default under
the UCC (whether or not the UCC applies to the affected Collateral) to collect,
enforce or satisfy any Secured Obligations then owing, whether by acceleration
or otherwise, and also may pursue any of the following separately, successively
or simultaneously:

 

(i)            require
any Grantor to, and each Grantor hereby agrees that it shall at its expense and
promptly upon request of the Collateral Agent forthwith, assemble all or part
of the Collateral as directed by the Collateral Agent and make it available to
the Collateral Agent at a place to be designated by the Collateral Agent that
is 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 the Collateral Agent deems appropriate; and

 

(iv)          without
notice except as specified below or under the UCC, sell, assign, lease, license
(on an exclusive or nonexclusive basis) or otherwise dispose of the Collateral
or any part thereof in one or more parcels at public or private sale, at any of
the 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 the Collateral Agent may deem commercially reasonable.

 

(b)           The
Collateral Agent or any Secured Party may be the purchaser of any or all of the
Collateral at any public or private (to the extent to the portion of the
Collateral being privately sold is of a kind that is customarily sold on a
recognized market or the subject of widely distributed standard price
quotations) sale in accordance with the UCC and the Collateral Agent, as
collateral agent for and representative of the 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 any such sale
made in accordance with the UCC, to use and apply any of the Secured
Obligations as a credit on account of the purchase price for any Collateral
payable by the Collateral Agent 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 (10) days
notice to such Grantor of the time and place of any public sale or the time
after

 

24

 

which any
private sale is to be made shall constitute reasonable notification.  The Collateral Agent shall not be obligated to
make any sale of Collateral regardless of notice of sale having been
given.  The Collateral Agent may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned. 
Each Grantor agrees that it would not be commercially unreasonable for
the Collateral Agent to dispose of the Collateral or any portion thereof by
using Internet sites that provide for the auction of assets of the types
included in the Collateral or that have the reasonable capability of doing so,
or that match buyers and sellers of assets. 
Each Grantor hereby waives any claims against the Collateral Agent and
each Secured Party 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 the Collateral Agent
accepts the first offer received and does not offer such Collateral to more
than one offeree.  If the proceeds of any
sale or other disposition of the Collateral are insufficient to pay all the
Secured Obligations, Grantors shall be liable for the deficiency and the fees of
any attorneys employed by the Collateral Agent to collect such deficiency.  Each Grantor further agrees that a breach of
any of the covenants contained in this Section will cause irreparable
injury to the Collateral Agent, that the 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 shall be specifically enforceable
against such Grantor, and such Grantor hereby waives and agrees not to assert
any defenses against an action for specific performance of such covenants
except for a defense that no default has occurred giving rise to the Secured
Obligations becoming due and payable prior to their stated maturities.  Nothing in this Section shall in any way
alter the rights of the Collateral Agent hereunder. 

 

(c)           The
Collateral Agent may sell the Collateral without giving any warranties as to
the Collateral.  The Collateral Agent may
specifically disclaim or modify any warranties of title or the like.  This procedure will not be considered to
adversely affect the commercial reasonableness of any sale of the Collateral.

 

(d)           The
Collateral Agent shall have no obligation to marshal any of the Collateral. 

 

7.2          Application of
Proceeds.  Except as expressly provided elsewhere in
this Agreement, all proceeds received by the Collateral Agent in respect of any
sale, any collection from, or other realization upon all or any part of the
Collateral shall be applied in full or in part by the Collateral Agent against,
the Secured Obligations in the following order of priority:  first, to the payment of all costs and
expenses of such sale, collection or other realization, including reasonable
compensation to the Collateral Agent and its agents and counsel, and all other
expenses, liabilities and advances made or incurred by the Collateral Agent in
connection therewith, and all amounts for which the Collateral Agent is
entitled to indemnification hereunder (in its capacity as the Collateral Agent
and not as a Lender) and all advances made by the Collateral Agent hereunder
for the account of the applicable Grantor, and to the payment of all costs and
expenses paid or incurred by the Collateral Agent in connection with the
exercise of any right or remedy hereunder or under the Credit Agreement, all in
accordance with the terms hereof or thereof; second, to the extent of any
excess of such proceeds, to the payment of all Secured Obligations (other than
obligations with respect to any purchasing card or similar program owed to any
Lender, any Affiliate of any Lender, the Administrative Agent or the Collateral
Agent); third, ratably, to all Obligations (not to exceed $1,500,000 in the
aggregate) owed to any Lender, any Affiliate of any Lender, the Administrative
Agent or the Collateral Agent arising from any purchasing card or similar
program; and fourth, to the extent of any excess of such proceeds, to the
payment to or upon the order of such Grantor or to whosoever may be lawfully
entitled to receive the same or as a court of competent jurisdiction may
direct.

 

25

 

7.3          Sales on Credit.  If Collateral Agent
sells any of the Collateral upon credit, Grantor will be credited only with
payments actually made by purchaser and received by Collateral Agent and
applied to indebtedness of the purchaser. 
In the event the purchaser fails to pay for the Collateral, Collateral
Agent may resell the Collateral and Grantor shall be credited with proceeds of
the sale.

 

7.4          Deposit Accounts.

 

If any Event of Default
shall have occurred and be continuing, the Collateral Agent may apply the
balance from any Deposit Account or instruct the bank at which any Deposit
Account is maintained to pay the balance of any Deposit Account to or for the
benefit of the Collateral Agent. 

 

7.5          Investment Related Property.  

 

Each Grantor recognizes
that, by reason of certain prohibitions contained in the Securities Act and
applicable state securities laws, the Collateral Agent may be compelled, with
respect to any sale of all or any part of the Collateral consisting of
Investment Related Property conducted without prior registration or
qualification of such Investment Related Property under the Securities Act
and/or such state securities laws, to limit purchasers to those who will agree,
among other things, to acquire such Investment Related Property for their own
account, for investment and not with a view to the distribution or resale
thereof.  Each Grantor acknowledges that
any such private sale 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 the Collateral Agent shall have no obligation to engage in public sales
and no obligation to delay the sale of any such Investment Related Property for
the period of time necessary to permit the issuer thereof to register it for a
form of public sale requiring registration under the Securities Act or under
applicable state securities laws, even if such issuer would, or should, agree
to so register it.  If the Collateral
Agent determines to exercise its right to sell any or all of such Investment
Related Property, upon written request, each Grantor shall and shall cause each
issuer of any of the shares of capital stock owned by any such Grantor to be
sold hereunder, each partnership and each limited liability company from time
to time to furnish to the Collateral Agent all such information as the
Collateral Agent may request in order to determine the number and nature of
interest, shares or other instruments included in such Investment Related
Property which may be sold by the 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. 

 

7.6          Intellectual Property.  

 

For the purpose of enabling
the Collateral Agent, during the continuance of an Event of Default, to
exercise rights and remedies herein at such time as the Collateral Agent shall
be lawfully entitled to exercise such rights and remedies, and for no other
purpose, each Grantor hereby grants to the Collateral Agent, to the extent
assignable, an irrevocable, non-exclusive license (exercisable without payment
of royalty or other compensation to such Grantor) to use, assign, license or
sublicense any of the Intellectual Property now owned or hereafter acquired by
such Grantor, wherever the same may be located, including in such license
access to all media in which any of the licensed items may be recorded or
stored and to all computer programs used for the compilation or printout
thereof. 

 

26

 

7.7          Cash Proceeds.  In addition to the
rights of the Collateral Agent specified in Section 4.3 with respect to
payments of Receivables, from and after the receipt of an Activation Notice
from the Collateral Agent in accordance with the Credit Agreement, all proceeds
of any Collateral received by any Grantor consisting of cash, checks and other
non-cash items (collectively, “Cash Proceeds”)
in the Concentration Account shall be forwarded daily to the Collection
Account, which shall be under the exclusive dominion and control of the
Collateral Agent, and shall, forthwith upon receipt by such Grantor, unless
otherwise provided pursuant to Section 4.4.1(a)(ii), be forwarded to the
Collection Account in the exact form received by such Grantor (duly indorsed by
such Grantor to the Collateral Agent, if required).  Any Cash Proceeds received by the Collateral
Agent (whether from a Grantor or otherwise) shall be applied as set forth in Section 9.1
of the Credit Agreement.

 

SECTION 8.   COLLATERAL AGENT.

 

The Collateral Agent has
been appointed to act as Collateral Agent hereunder by Lenders and, by their
acceptance of the benefits hereof, the other Secured Parties. The 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 any action (including, without limitation, the release or
substitution of Collateral), solely in accordance with this Agreement and the
Credit Agreement.  In furtherance of the
foregoing provisions of this Section, each Secured Party, 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 such
Secured Party that all rights and remedies hereunder may be exercised solely by
the Collateral Agent for the benefit of Secured Parties in accordance with the
terms of this Section. Collateral Agent may resign at any time by giving thirty
(30) days’ prior written notice thereof to Lenders and the Grantors, and
Collateral Agent may be removed at any time with or without cause by an
instrument or concurrent instruments in writing delivered to the Grantors and
Collateral Agent signed by Requisite Lenders. 
Upon any such notice of resignation or any such removal, Requisite
Lenders shall have the right, upon five (5) Business Days’ notice to the
Administrative Agent, to appoint a successor Collateral Agent.  Upon the acceptance of any appointment as
Collateral Agent hereunder 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 or removed Collateral
Agent under this Agreement, and the retiring or removed Collateral Agent under
this Agreement shall promptly (i) transfer to such successor Collateral
Agent all sums, Securities and other items of Collateral held hereunder,
together with all records and other documents necessary or appropriate in
connection with the performance of the duties of the successor Collateral Agent
under this Agreement, and (ii) execute and deliver to such successor
Collateral Agent or otherwise authorize the filing of such amendments to
financing statements, and take such other actions, as may be necessary or
appropriate in connection with the assignment to such successor Collateral
Agent of the security interests created hereunder, whereupon such retiring or
removed Collateral Agent shall be discharged from its duties and obligations
under this Agreement.  After any retiring
or removed Collateral Agent’s resignation or removal hereunder as the
Collateral Agent, 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 the Collateral Agent hereunder.

 

SECTION 9.   CONTINUING SECURITY INTEREST;
TRANSFER OF LOANS.

 

This Agreement shall create
a continuing security interest in the Collateral and shall remain in full force
and effect until the payment in full of all Secured Obligations and the
cancellation or termination of the Commitments, be binding upon each Grantor,
its successors and assigns, and inure, together with the rights and remedies of
the Collateral Agent hereunder, to the benefit of the

 

27

 

Collateral Agent and its successors,
transferees and assigns.  Without
limiting the generality of the foregoing, but subject to the terms 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 herein or
otherwise.  Upon the payment in full of
all Secured Obligations and the cancellation or termination of the Commitments,
the security interest granted hereby shall terminate hereunder and of record
and all rights to the Collateral shall revert to Grantors.  Upon any such termination the Collateral
Agent shall, at Grantors’ expense, execute and deliver to Grantors or otherwise
authorize the filing of such documents as Grantors shall reasonably request,
including financing statement amendments to evidence such termination.   

 

SECTION 10.   STANDARD OF CARE; COLLATERAL
AGENT MAY PERFORM.

 

The powers conferred on the
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, the 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.  The 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 the Collateral Agent accords its own property.  Neither the Collateral Agent nor any of its
directors, officers, employees or agents shall be liable for failure to demand,
collect or realize upon all or any part of the Collateral or for any delay in
doing so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of any Grantor or otherwise.  If any Grantor fails to perform any agreement
contained herein, the Collateral Agent may itself perform, or cause performance
of, such agreement, and the expenses of the Collateral Agent incurred in
connection therewith shall be payable by each Grantor under Section 10.2
of the Credit Agreement.

 

SECTION 11.   MISCELLANEOUS.

 

Any notice required or
permitted to be given under this Agreement shall be given in accordance with Section 11.1
of the Credit Agreement.  No failure or
delay on the part of the Collateral Agent in the exercise of any power, right
or privilege hereunder or under any other Credit Document 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 other or further exercise thereof or of any
other power, right or privilege.  All
rights and remedies existing under this Agreement and the Credit Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise
available.  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.  All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or would otherwise be within the limitations of, another covenant shall not
avoid the occurrence of a Default or an Event of Default if such action is
taken or condition exists.  This
Agreement shall be binding upon and inure to the benefit of the Collateral
Agent and Grantors and their respective successors and assigns.  No Grantor shall, without the prior written
consent of the Collateral Agent given in accordance with the Credit Agreement,
assign any right, duty or obligation hereunder. 
This Agreement and the other Credit Documents embody the entire
agreement and understanding between Grantors and the Collateral Agent and
supersede all prior agreements and understandings

 

28

 

between such parties relating to the subject
matter hereof and thereof.  Accordingly,
the Credit Documents may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties.  There are no unwritten oral agreements
between the parties.  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.

 

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 LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS CONFLICTS OF LAW PROVISIONS
(OTHER THAN SECTION 5-1401 AND SECTION 5-1402 OF THE NEW YORK GENERAL
OBLIGATION LAWS).

 

Each party to this Agreement
waives its rights to a jury trial of any claim or cause of action based upon or
arising under this Agreement or any of the other Security Documents or any
dealings between them relating to the subject matter of this Agreement or the
intents and purposes of the other Security Documents.  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 Agreement and the other Security
Documents, including contract claims, tort claims, breach of duty claims and
all other common law and statutory claims. 
Each party to this Agreement acknowledges that this waiver is a material
inducement to enter into a business relationship, that each party hereto has
already relied on this waiver in entering into this Agreement, and that each
party hereto will continue to rely on this waiver in its related future
dealings.  Each party hereto further
warrants and represents that it has reviewed this waiver with its legal counsel
and that it 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 11
and executed by each of the parties hereto), and this waiver will apply to any
subsequent amendments, renewals, supplements or modifications of or to this
Agreement or any of the other Security Documents or to any other documents or
agreements relating thereto.  In the
event of litigation, this Agreement may be filed as a written consent to a
trial by the court.

 

In no event shall the Collateral
Agent be responsible or liable for any failure or delay in the performance of
its obligations hereunder arising out of or caused by, directly or indirectly,
forces beyond its control, including, without limitation, strikes, work
stoppages, accidents, acts of war or terrorism, civil or military disturbances,
nuclear or natural catastrophes or acts of God, and interruptions, loss or
malfunctions of utilities, communications or computer (software and hardware)
services; it being understood that the Collateral Agent shall use reasonable
efforts which are consistent with accepted practices in the banking industry to
resume performance as soon as practicable under the circumstances.  

 

29

 

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

 

 

	
   

  	
  NEWPAGE
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Linda M. Sheffield

  	
   

  
	
   

  	
   

  	
  Name: Linda M. Sheffield

  
	
   

  	
   

  	
  Title:   Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NEWPAGE
  HOLDING CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Linda M. Sheffield

  	
   

  
	
   

  	
   

  	
  Name: Linda M. Sheffield

  
	
   

  	
   

  	
  Title:   Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CHILLICOTHE
  PAPER INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Linda M. Sheffield

  	
   

  
	
   

  	
   

  	
  Name: Linda M. Sheffield

  
	
   

  	
   

  	
  Title:   Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ESCANABA
  PAPER COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter H. Vogel

  	
   

  
	
   

  	
   

  	
  Name: Peter H. Vogel

  
	
   

  	
   

  	
  Title:   President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEADWESTVACO
  MARYLAND, INC.

  
	
   

  	
  (to
  be named LUKE PAPER COMPANY)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter H. Vogel

  	
   

  
	
   

  	
   

  	
  Name: Peter H. Vogel

  
	
   

  	
   

  	
  Title:   President

  

 

 

	
   

  	
  MEADWESTVACO
  OXFORD

  CORPORATION

  
	
   

  	
  (to
  be named RUMFORD PAPER

  
	
   

  	
  COMPANY)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter H. Vogel

  	
   

  
	
   

  	
   

  	
  Name: Peter H.
  Vogel

  
	
   

  	
   

  	
  Title:   President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEADWESTVACO
  ENERGY SERVICES

  LLC

  
	
   

  	
  (to
  be named NEWPAGE ENERGY

  SERVICES LLC)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter H. Vogel

  	
   

  
	
   

  	
   

  	
  Name: Peter H.
  Vogel

  
	
   

  	
   

  	
  Title:   President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  RUMFORD
  COGENERATION, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter H. Vogel

  	
   

  
	
   

  	
   

  	
  Name: Peter H.
  Vogel

  
	
   

  	
   

  	
  Title:   Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  RUMFORD
  FALLS POWER COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter H. Vogel

  	
   

  
	
   

  	
   

  	
  Name: Peter H.
  Vogel

  
	
   

  	
   

  	
  Title:   Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  UPLAND
  RESOURCES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter H. Vogel

  	
   

  
	
   

  	
   

  	
  Name: Peter H. Vogel

  
	
   

  	
   

  	
  Title:   President

  

 

 

	
   

  	
  WICKLIFFE
  PAPER COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Linda M. Sheffield

  	
   

  
	
   

  	
   

  	
  Name: Linda M. Sheffield

  
	
   

  	
   

  	
  Title:   Treasurer

  

 

 

	
   

  	
  JPMORGAN CHASE BANK, N.A.

  
	
   

  	
  as the Collateral Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter S. Predun

  	
   

  
	
   

  	
   

  	
  Name: Peter S. Predun

  
	
   

  	
   

  	
  Title:   Vice President

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00092-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00092-of-00352.parquet"}]]