Document:

exv10w3

Exhibit 10.3

EXECUTION VERSION

 

SECURITY AGREEMENT

Dated as of January 28, 2011

among

SCORPIO MERGER SUB CORPORATION

(to be merged with and into POLYMER GROUP, INC.)

SCORPIO ACQUISITION CORPORATION,

CERTAIN OTHER SUBSIDIARIES OF SCORPIO ACQUISITION CORPORATION

IDENTIFIED HEREIN

and

CITIBANK, N.A.,

as COLLATERAL AGENT

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	ARTICLE I

	 
	 	 	 	 
	Definitions

	 
	 	 	 	 
	Section 1.01 Definitions
	 	 	1	 
	Section 1.02 Other Defined Terms
	 	 	2	 
	 
	 	 	 	 
	ARTICLE II

	 
	 	 	 	 
	Pledge of Securities

	Section 2.01 Pledge
	 	 	7	 
	Section 2.02 Delivery of the Pledged Collateral
	 	 	8	 
	Section 2.03 Representations, Warranties and Covenants
	 	 	9	 
	Section 2.04 Certification of Limited Liability Company and Limited Partnership Interests
	 	 	11	 
	Section 2.05 Registration in Nominee Name; Denominations
	 	 	11	 
	Section 2.06 Voting Rights; Dividends and Interest
	 	 	11	 
	Section 2.07 Collateral Agent Not a Partner or Limited Liability Company Member
	 	 	13	 
	 
	 	 	 	 
	ARTICLE III

	 
	 	 	 	 
	Security Interests in Personal Property

	 
	 	 	 	 
	Section 3.01 Security Interest
	 	 	14	 
	Section 3.02 Representations and Warranties
	 	 	16	 
	Section 3.03 Covenants
	 	 	18	 
	Section 3.04 Other Actions
	 	 	19	 
	 
	 	 	 	 
	ARTICLE IV

	 
	 	 	 	 
	Special Provisions Concerning Intellectual Property Collateral

	 
	 	 	 	 
	Section 4.01 Grant of License to Use Intellectual Property
	 	 	21	 
	Section 4.02 Protection of Collateral Agent’s Security
	 	 	22	 

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	 	 	Page	 
	ARTICLE V
	 	 	 	 
	 
	 	 	 	 
	Collections
	 	 	 	 
	 
	 	 	 	 
	ARTICLE VI
	 	 	 	 
	 
	 	 	 	 
	Remedies
	 	 	 	 
	 
	 	 	 	 
	Section 6.01 Remedies Upon Default
	 	 	23	 
	Section 6.02 Application of Proceeds
	 	 	26	 
	 
	 	 	 	 
	ARTICLE VII
	 	 	 	 
	 
	 	 	 	 
	Indemnity, Subrogation and Subordination
	 	 	 	 
	 
	 	 	 	 
	ARTICLE VIII
	 	 	 	 
	 
	 	 	 	 
	Miscellaneous
	 	 	 	 
	 
	 	 	 	 
	Section 8.01 Notices
	 	 	27	 
	Section 8.02 Waivers; Amendment
	 	 	27	 
	Section 8.03 Collateral Agent’s Fees and Expenses; Indemnification
	 	 	28	 
	Section 8.04 Successors and Assigns
	 	 	29	 
	Section 8.05 Survival of Agreement
	 	 	29	 
	Section 8.06 Counterparts; Effectiveness; Several Agreement
	 	 	29	 
	Section 8.07 Severability
	 	 	29	 
	Section 8.08 Right of Set-Off
	 	 	30	 
	Section 8.09 GOVERNING LAW
	 	 	30	 
	Section 8.10 WAIVER OF RIGHT TO TRIAL BY JURY
	 	 	30	 
	Section 8.11 Headings
	 	 	31	 
	Section 8.12 Security Interest Absolute
	 	 	31	 
	Section 8.13 Termination or Release
	 	 	31	 
	Section 8.14 Additional Guarantors
	 	 	32	 
	Section 8.15 Collateral Agent Appointed Attorney-in-Fact
	 	 	32	 
	Section 8.16 Recourse; Limited Obligations
	 	 	33	 
	Section 8.17 Mortgages
	 	 	33	 
	Section 8.18 Intercreditor Agreement
	 	 	33	 

SCHEDULES

	 	 	 

	Schedule I -

	 	Borrowers
	Schedule II -

	 	Guarantors
	Schedule III -

	 	Pledged Equity; Pledged Debt
	Schedule IV -

	 	Commercial Tort Claims
	Schedule V -

	 	Intellectual Property

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	EXHIBITS
	 	 
	 
	 	 
	Exhibit A -

	 	Form of Security Agreement Supplement
	Exhibit B -

	 	Form of Perfection Certificate
	Exhibit C -

	 	Form of Grant of Security Interest in Trademarks
	Exhibit D -

	 	Form of Grant of Security Interest in Patents
	Exhibit E -

	 	Form of Grant of Security Interest in Copyrights

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          SECURITY AGREEMENT (as amended, supplemented, restated or otherwise modified from time
to time pursuant to the terms hereof, this “Agreement”) is entered into as of January 28,
2011 by and among SCORPIO MERGER SUB CORPORATION (prior to the Merger (as defined below), the
“Lead Borrower”), a Delaware corporation to be merged (the “Merger”) with and into
POLYMER GROUP, INC., a Delaware corporation (upon and after the Merger, the “Lead
Borrower”), the other Borrowers set forth on Schedule I hereto (together with the Lead
Borrower, collectively, the “Borrowers”), SCORPIO ACQUISITION CORPORATION, a Delaware
corporation (“Holdings”), the Guarantors set forth on Schedule II hereto (together
with the Borrowers and Holdings, collectively, the “Grantors”), and CITIBANK, N.A., as
Administrative Agent and Collateral Agent (in such capacity, the “Collateral Agent”) for
the Secured Parties. Capitalized terms used herein and defined in Article I are used
herein as therein defined.

          Reference is made to the Credit Agreement, dated as of the date hereof (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among
the Borrowers, Holdings, the Collateral Agent, the other agents listed therein and the Lenders from
time to time party thereto.

          The Lenders have agreed to extend credit to the Borrowers, subject to the terms and conditions
set forth in the Credit Agreement, and each L/C Issuer has agreed to issue Letters of Credit for
the account of the Borrowers on the terms and conditions set forth therein. The obligations of the
Lenders to extend such credit, and the obligation of each L/C Issuer to issue Letters of Credit,
are, in each case, conditioned upon, among other things, the execution and delivery of this
Agreement by each of the Grantors. The Grantors are affiliates of one another, are an integral
part of a consolidated enterprise and will derive substantial direct and indirect benefits from (a)
the extensions of credit to the Borrowers pursuant to the Credit Agreement and (b) the issuance of
Letters of Credit by each L/C Issuer for the account of the Borrowers, and are willing to execute
and deliver this Agreement in order to induce the Lenders to extend such credit and each L/C Issuer
to issue such Letters of Credit. Accordingly, the parties hereto agree as follows:

ARTICLE I

Definitions

          Section 1.01 Definitions.

          (a) Capitalized terms used in this Agreement and not otherwise defined herein have the
meanings specified in the Credit Agreement. Unless otherwise defined in the Credit Agreement, all
terms defined in the UCC and used but not defined in this Agreement have the meanings specified in
the UCC; the term “instrument” shall have the meaning specified in Article 9 of the UCC.

          (b) The rules of construction specified in Article I of the Credit Agreement also apply to
this Agreement.

 

 

          Section 1.02 Other Defined Terms. As used in this Agreement, the following terms have the meanings
specified below:

          “Agreement” has the meaning assigned to such term in the preamble.

          “Article 9 Collateral” has the meaning assigned to such term in Section
3.01(a).

          “Bankruptcy Event of Default” means any Event of Default under Sections 8.01(f) or (g)
of the Credit Agreement; provided that for the purposes of this Agreement only and
notwithstanding Section 8.03 of the Credit Agreement, in determining whether such an Event of
Default has occurred, any reference in any such clause to any Restricted Subsidiary or Loan Party
shall be deemed not to include (i) any Subsidiary that is not a Material Subsidiary affected by any
event or circumstances referred to in any such clause (it being agreed that all such Restricted
Subsidiaries affected by any event or circumstance referred to in any such clause shall be
considered together, as a single consolidated Restricted Subsidiary, for purposes of determining
whether they constitute Material Subsidiaries) nor (ii) any Restricted Subsidiary that is not a
Loan Party affected by any event or circumstances referred to in any such clause.

          “Collateral” means, collectively, the Article 9 Collateral and the Pledged Collateral.

          “Collateral Account” means any cash collateral account established pursuant to, or in
connection with, any Loan Document, which cash collateral account shall be maintained with, and
under the sole dominion and control of, the Collateral Agent for the benefit of the relevant
Secured Parties.

          “Collateral Agent” has the meaning assigned to such term in the preamble.

          “Copyright License” means any written agreement, now or hereafter in effect, granting
any right to any third party under any Copyright now or hereafter owned by any Grantor or that such
Grantor otherwise has the right to license, or granting any right to any Grantor under any
Copyright now or hereafter owned by any third party, and all rights of such Grantor under any such
agreement.

          “Copyrights” means all of the following now owned or hereafter acquired by or assigned
to any Grantor: (a) all copyright rights in any work subject to the copyright laws of the United
States or any other country, whether as author, assignee, transferee or otherwise, whether
registered or unregistered and whether published or unpublished, (b) all registrations and
applications for registration of any such copyright in the United States or any other country,
including registrations, supplemental registrations and pending applications for registration in
the United States Copyright Office, including those copyright registrations and applications listed
on Schedule V and (c) all (i) rights and privileges arising under applicable Law with
respect to such Grantor’s use of such copyrights, (ii) renewals and extensions thereof and
amendments thereto, (iii) income, fees, royalties, damages, claims and payments now or hereafter
due and/or payable with respect thereto, including damages and payments for past, present or future
Infringements thereof, (iv) rights corresponding thereto throughout the world and (v) rights to sue
for past, present or future Infringements thereof.

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          “Credit Agreement” has the meaning assigned to such term in the preamble.

          “Deposit Account Control Agreement” means, with respect to a Dominion Account, a
deposit account control agreement reasonably satisfactory in form and substance to the Collateral
Agent, among one or more Loan Parties, the Collateral Agent and the bank which maintains the
Dominion Account.

          “Domain Names” means all Internet domain names and associated URL addresses in or to
which any Grantor now or hereafter has any right, title or interest.

          “Domestic Restricted Subsidiary” means any Restricted Subsidiary that is organized or
existing under the laws of the United States, any state thereof, or the District of Columbia other
than any such Restricted Subsidiary that is a Subsidiary of a Foreign Subsidiary that is a
“controlled foreign corporation” within the meaning of Section 957 of the Internal Revenue Code of
1986, as amended; provided that the Lead Borrower shall in all cases be deemed a Domestic
Restricted Subsidiary.

          “Equipment” means (x) any “equipment” as such term is defined in Article 9 of the UCC
and in any event, shall include, but shall not be limited to, all machinery, equipment,
furnishings, appliances, furniture, fixtures, tools, and vehicles now or hereafter owned by any
Grantor in each case, regardless of whether characterized as equipment under the UCC (but excluding
any such items which constitute Inventory) and (y) any and all additions, substitutions and
replacements of any of the foregoing and all accessions thereto, wherever located, whether or not
at any time of determination incorporated or installed therein or attached thereto, and all
replacements therefor, together with all attachments, components, parts, equipment and accessories
installed thereon or affixed thereto.

          “Equipment Lease Agreement” means, collectively, that certain equipment lease
agreement, dated June 24, 2010, between Chicopee, Inc. and Gossamer Holdings, LLC, and the related
construction agency agreement, guarantees and other documentation, as amended and/or restated from
time to time.

          “Excluded Accounts” means (i) accounts, the funds in which are specifically and
exclusively used for the payment of payroll, salaries and wages, workers’ compensation, benefits
and similar expenses or taxes, including for withholding income taxes and federal, state or local
employment taxes or in escrow accounts or trust for third parties (other than another Grantor),
(ii) accounts the funds in which are specifically and exclusively required to be paid over to an
employee benefit plan pursuant to DOL Reg. Sec. 2510.3-102 on behalf of or for the benefit of
employees of one or more Grantors, (iii) accounts, the funds in which are used solely in connection
with Factoring Agreements and (iv) accounts the balance of which consists solely of Uncontrolled
Cash.

          “Excluded Contract” means at any date any rights or interest of any Grantor in any
assets or under any agreement, contract, license, instrument, document or other general intangible
(referred to solely for purposes of this definition as a “Contract”) to the extent that such
Contract by the terms of a restriction in favor of a Person who is not any Grantor, or any
requirement of law, prohibits, or requires any consent or establishes any other condition for or

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would terminate because of an assignment thereof or a grant of a security interest therein by a
Grantor; provided that: (i) rights under any such Contract otherwise constituting an Excluded
Contract by virtue of this definition shall be included in the Collateral to the extent permitted
thereby or by Section 9-406 or Section 9-408 of the UCC and (ii) all proceeds paid or payable to
any Grantor from any sale, transfer or assignment of such Contract and all rights to receive such
proceeds shall be included in the Collateral. For the avoidance of doubt, the Equipment Lease
Agreement and all assets subject thereto shall constitute an “Excluded Contract”.

          “Excluded Equipment” means at any date any equipment or other assets of any Grantor
which is subject to, or secured by, a Capitalized Lease Obligation or a purchase money obligation
if and to the extent that (i) a restriction in favor of a Person who is not Holdings or a
Subsidiary thereof contained in the agreements or documents granting or governing such Capitalized
Lease Obligation or purchase money obligation prohibits, or requires any consent or establishes any
other conditions for or would result in the termination of such agreement or document because of an
assignment thereof, or a grant of a security interest therein, by a Grantor and (ii) such
restriction relates only to the asset or assets acquired by a Grantor with the proceeds of such
Capitalized Lease Obligation or purchase money obligation and attachments thereto, improvements
thereof or substitutions therefor; provided that all proceeds paid or payable to any Grantor from
any sale, transfer or assignment or other voluntary or involuntary disposition of such assets and
all rights to receive such proceeds shall be included in the Collateral to the extent not otherwise
required to be paid to the holder of any Capitalized Lease Obligations or purchase money
obligations secured by such assets.

          “Excluded Equity Interests” has the meaning assigned to such term in Section 2.01.

          “Foreign Factoring Agreements” means factoring arrangements made for the factoring of
Accounts held by Foreign Subsidiaries.

          “General Intangibles” has the meaning provided in Article 9 of the UCC and shall in
any event include all choses in action and causes of action and all other intangible personal
property of every kind and nature (other than Accounts) now owned or hereafter acquired by any
Grantor, as the case may be, including corporate or other business records, indemnification claims,
contract rights (including rights under leases, whether entered into as lessor or lessee, Swap
Contracts and other agreements), goodwill, registrations, franchises, tax refund claims and any
letter of credit, guarantee, claim, security interest or other security held by or granted to any
Grantor.

          “Grant of Security Interest” means a Grant of Security Interest in certain
Intellectual Property in the form of Exhibit C, D or E attached hereto.

          “Grantors” has the meaning assigned to such term in the preamble.

          “Holdings” has the meaning assigned to such term in the preamble.

          “Infringement” means infringement, misappropriation, dilution, tarnishment, impairment
or other violation.

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          “Intellectual Property” means all intellectual and similar property of every kind and
nature now owned or hereafter acquired by any Grantor, including (a) inventions, designs, Domain
Names, Patents, Copyrights, Licenses, Trademarks, trade secrets, and (b) confidential or
proprietary technical and business information, know how, show how, or other proprietary data or
information relating to its business, software, databases, and all other proprietary information
relating to its business.

          “Intellectual Property Collateral” means Collateral consisting of Intellectual
Property.

          “Intercreditor Agreement” means the Lien Subordination and Intercreditor Agreement,
dated as of January 28, 2011, among the Collateral Agent, Wilmington Trust Company, as collateral
agent for the Noteholder Lien Secured Parties (as defined therein), Parent, the Company and the
subsidiaries of the Company named therein (as amended, restated, supplemented or otherwise modified
from time to time)

          “License” means any Patent License, Trademark License, Copyright License or other
written intellectual property license or sublicense agreement relating solely to Intellectual
Property to which any Grantor is a party, including those exclusive license agreements listed on
Schedule V.

          “Margin Stock” means any “margin stock” (as defined in Regulation U issued by the
Board of Governors of the Federal Reserve System).

          “Noteholder Collateral Agent” has the meaning assigned to such term in the
Intercreditor Agreement.

          “Noteholder First Lien Collateral” has the meaning assigned to such term in the
Intercreditor Agreement.

          “Noteholder Lien Security Documents” has the meaning assigned to such term in the
Intercreditor Agreement.

          “Patent License” means any written agreement, now or hereafter in effect, granting to
any third party any right to make, have made, use, sell, offer to sell or import any invention
covered in whole or in part by a Patent, now or hereafter owned by any Grantor or that any Grantor
otherwise has the right to license, or granting to any Grantor any right to make, have made, use,
sell, offer to sell or import any invention covered in whole or in part by a patent, now or
hereafter owned by any third party, and all rights of any Grantor under any such agreement.

          “Patents” means all of the following now owned or hereafter acquired by any Grantor:
(a) all letters patent of the United States or the equivalent thereof in any other country, all
registrations thereof, and all applications for letters patent of the United States or the
equivalent thereof in any other country, including registrations and pending applications in the
United States Patent and Trademark Office or any similar offices in any other country, including
those listed on Schedule V, and (b) all (i) rights and privileges arising under applicable
Law with respect to such Grantor’s use of any patents, (ii) inventions and improvements described
and

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claimed therein, (iii) reissues, divisions, continuations, renewals, extensions and continuations-in-part thereof and amendments thereto, (iv) income, fees, royalties, damages, claims
and payments now or hereafter due and/or payable thereunder and with respect thereto including
damages and payments for past, present or future Infringements thereof, (v) rights corresponding
thereto throughout the world and (vi) rights to sue for past, present or future Infringements
thereof.

          “Perfection Certificate” means a certificate substantially in the form of Exhibit
B, completed and supplemented with the schedules and attachments contemplated thereby, and duly
executed on behalf of each Grantor.

          “Pledged Collateral” has the meaning assigned to such term in Section 2.01.

          “Pledged Debt” has the meaning assigned to such term in Section 2.01.

          “Pledged Equity” has the meaning assigned to such term in Section 2.01.

          “Pledged Securities” means any promissory notes, stock certificates or other
securities now or hereafter included in the Pledged Collateral, including all Pledged Equity,
Pledged Debt and all other certificates, instruments or other documents representing or evidencing
any Pledged Collateral.

          “Proceeds” means (a) all “proceeds” as defined in Article 9 of the UCC, with respect
to the Collateral, and (b) whatever is recoverable or recovered when any Collateral is sold,
exchanged, collected, or disposed of, whether voluntarily or involuntarily.

          “Secured Obligations” means the “Finance Obligations” (as defined in the Credit
Agreement); it being acknowledged and agreed that the term “Secured Obligations” as used herein
shall include each extension of credit under the Credit Agreement, in each case, whether
outstanding on the date of this Agreement or extended from time to time after the date of this
Agreement.

          “Security” means any “security” as such term is defined in Article 8 of the UCC, 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.

          “Security Agreement Supplement” means an instrument substantially in the form of
Exhibit A hereto.

          “Security Interest” has the meaning assigned to such term in Section 3.01(a).

          “Trademark License” means any written agreement, now or hereafter in effect, granting
to any third party any right to use any Trademark now or hereafter owned by any Grantor or that any
Grantor otherwise has the right to license, or granting to any Grantor any right to

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use any
trademark now or hereafter owned by any third party, and all rights of any Grantor under any such
agreement.

          “Trademarks” means all of the following now owned or hereafter acquired by any
Grantor: (a) all trademarks, service marks, trade names, corporate names, company names, business
names, fictitious business names, trade styles, trade dress, logos, other source or business
identifiers, designs and general intangibles of like nature, now owned or hereafter adopted,
acquired or assigned to, all registrations and applications filed in connection therewith,
including registrations and applications in the United States Patent and Trademark Office or any
similar offices in any State of the United States or any other country or any political subdivision
thereof, including those listed on Schedule V and (b) any and all (i) rights and privileges
arising under applicable Law with respect to such Grantor’s use of any trademarks, (ii) renewals
thereof and amendments thereto, (iii) income, fees, royalties, damages and payments now and
hereafter due and/or payable thereunder and with respect thereto, including damages, claims and
payments for past, present or future Infringements thereof, (iv) rights corresponding thereto
throughout the world and (v) rights to sue for past, present and future Infringements thereof.

          “U.S. Factoring Agreements” means the factoring agreement between CIT Group/Commercial
Services, Inc., on the one hand, and Lead Borrower and/or one or more of its Subsidiaries, on the
other hand, existing as of the date hereof or any replacement or renewal thereof that does not have
terms, taken as a whole, that are materially more onerous to Holdings and its Subsidiaries;
provided that the U.S. Factoring Agreements shall never be comprised of more than one
factoring arrangement at any one time.

ARTICLE II

Pledge of Securities

          Section 2.01 Pledge. As security for the payment or performance, as the case may be, in full of
the Secured Obligations, each Grantor hereby assigns and pledges to the Collateral Agent, its
successors and assigns, for the benefit of the Secured Parties, and hereby grants to the Collateral
Agent, its successors and assigns, for the benefit of the Secured Parties, a security interest in,
all of such Grantor’s right, title and interest in, to and under:

     (i) all Equity Interests held by it and listed on Schedule III and any other Equity
Interests obtained in the future by such Grantor and the certificates representing all such Equity
Interests (the “Pledged Equity”); provided that (x) pledges of voting Equity
Interests of each Foreign Subsidiary shall be limited to 65% of the total combined voting power of
all Equity Interests of such Foreign Subsidiary at any time; and (y) the Pledged Equity shall not
include (A) Equity Interests of any Subsidiary of a Foreign Subsidiary, (B) Equity Interests of a
Person that is not a direct or indirect wholly owned Subsidiary of a Grantor to the extent
prohibited by the terms of such Subsidiary’s Organization Documents, (C) any Margin Stock owned by
such Grantor, (D) pledges prohibited by law or by agreements containing anti-assignment clauses not
overridden by the UCC or applicable Law, (E) any Equity Interests of any Restricted Subsidiary
subject to a Lien existing at the time such Restricted Subsidiary is acquired or merged with or
into or consolidated with any Grantor and not incurred in connection with such acquisition, merger
or consolidation that is permitted by the Credit Agreement to the extent and for so long as the
contract or other

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agreement in which such Lien is granted limits or prohibits the creation of any
other Lien on such Equity Interests, (F) Equity Interests of any “not-for-profit” Subsidiary, (G)
Equity Interests of any Captive Insurance Subsidiary, (H) Equity Interests of any Domestic
Restricted Subsidiary of the Borrowers that is treated as a disregarded entity for U.S. federal
income tax purposes, (I) Equity Interests of any Subsidiary with respect to which in the reasonable
judgment of the Lead Borrower the costs or other consequences (including adverse tax consequences
(including as a result of Section 956 of the Code or any similar law, rule or regulation in any
applicable jurisdiction) in the reasonable judgment of the Lead Borrower confirmed in writing by
notice to the Collateral Agent) of providing a pledge of its Equity Interests or perfection thereof
is excessive in view of the benefits to be obtained by the Secured Parties, (J) Equity Interests of
Unrestricted Subsidiaries (until such time as any Unrestricted Subsidiary becomes a Restricted
Subsidiary in accordance with the Credit Agreement, at which time, and without any further action,
this clause (y)(J) shall no longer apply to the Equity Interests of such Subsidiary), (K) Equity
Interests of Subsidiaries that are not Grantors and which are Immaterial Subsidiaries or (L) Equity
Interests of any Subsidiary which would require material or non-ministerial consent, approval,
license or authorization from a Governmental Authority, unless such consent, approval, license or
authorization has been received (clauses (A) through (K) collectively, the “Excluded Equity
Interests”); (ii)(A) the promissory notes and any instruments evidencing indebtedness owned by
it and listed opposite the name of such Grantor on Schedule III and (B) any promissory
notes and instruments evidencing indebtedness obtained in the future by such Grantor (the
“Pledged Debt”); (iii) all other property that may be delivered to and held by the
Collateral Agent pursuant to the terms of this Section 2.01; (iv) subject to Section
2.06, all payments of principal or interest, dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect of, in exchange for or
upon the conversion of, and all other Proceeds received in respect of, the securities referred to
in clauses (i) and (ii) above; (v) subject to Section 2.06, all rights and
privileges of such Grantor with respect to the securities and other property referred to in
clauses (i), (ii), (iii) and (iv) above; and (vi) all Proceeds of,
and Security Interests in, any of the foregoing (the items referred to in clauses (i)
through (vi) above, subject to the limitations set forth in the Collateral and Guarantee
Requirement, being collectively referred to as the “Pledged Collateral”).

          TO HAVE AND TO HOLD the Pledged Collateral, together with all right, title, interest, powers,
privileges and preferences pertaining or incidental thereto, unto the Collateral Agent, its
successors and assigns, for the benefit of the applicable Secured Parties, forever; subject,
however, to the terms, covenants and conditions hereinafter set forth.

          Section 2.02 Delivery of the Pledged Collateral.

          (a) Each Grantor agrees promptly (but in any event within 30 days of acquisition,
formation or obtaining an interest in such Pledged Securities) to deliver or cause to be delivered
to the Collateral Agent, for the benefit of the applicable Secured Parties, any and all Pledged
Securities (other than any uncertificated securities, but only for so long as such securities
remain uncertificated) (unless the Noteholder Collateral Agent is granted a prior security interest
in such Pledged Securities and the same are required to be delivered (and are delivered) to the
Noteholder Collateral Agent pursuant to the Intercreditor Agreement) and to the extent such

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Pledged
Securities are promissory notes and instruments evidencing Indebtedness, only as are required to be
delivered under clause (b) immediately below.

          (b) Each Grantor will cause any Indebtedness for borrowed money having an aggregate
principal amount equal to or in excess of $5,000,000, which for avoidance of doubt excludes
accounts receivable in the ordinary course of business, owed to such Grantor by any Person (other
than another Grantor) to be evidenced by a duly executed promissory note that is pledged and
delivered promptly (but in any event within 30 days of acquisition, issuance or obtaining an
interest in such promissory note) to the Collateral Agent, for the benefit of the applicable
Secured Parties, pursuant to the terms hereof (unless the Noteholder Collateral Agent is granted a
prior security interest in such promissory note and the same are required to be delivered (and are
delivered) to the Noteholder Collateral Agent pursuant to the Intercreditor Agreement).

          (c) Upon delivery to the Collateral Agent, (i) any Pledged Securities shall be accompanied
by stock or bond powers duly executed in blank or other instruments of transfer as may be
reasonably necessary to perfect the security interest of to the Collateral Agent and by such other
instruments and documents as the Collateral Agent may reasonably request and (ii) all other
property comprising part of the Pledged Collateral shall be accompanied by proper instruments of
assignment duly executed by the applicable Grantor and such other instruments or documents as the
Collateral Agent may reasonably request. Each delivery of Pledged Securities shall be accompanied
by a schedule describing the securities, which schedule shall be deemed to supplement
Schedule III and be made a part hereof; provided that failure to attach any such
schedule hereto shall not affect the validity of such pledge of such Pledged Securities. Each
schedule so delivered shall supplement any prior schedules so delivered.

          Section 2.03 Representations, Warranties and Covenants. Each Grantor represents, warrants and
covenants, as to itself and the other Grantors, to and with the Collateral Agent, for the benefit
of the Secured Parties, that:

     (a) Schedule III correctly sets forth the percentage of the issued and
outstanding units of each class of the Equity Interests of the issuer thereof represented by
the Pledged Equity and includes all Equity Interests, the promissory notes and instruments
required to be pledged pursuant to the Collateral and Guarantee Requirement and Section 2.01
of this Agreement;

     (b) the Pledged Equity issued by the Grantors and Pledged Debt (solely with respect
to Pledged Debt issued by a Person other than the Lead Borrower or a Subsidiary of the Lead
Borrower, to the best of the Lead Borrower’s knowledge) have been duly and validly
authorized and issued by the issuers thereof and (i) in the case of Pledged Equity (other
than Pledged Equity consisting of limited liability company interests or partnership
interests which, pursuant to the relevant organizational or formation documents, cannot be
fully paid and non-assessable), are fully paid and non-assessable and (ii) in the case of
Pledged Debt (solely with respect to Pledged Debt issued by a Person other than the Lead
Borrower or a Subsidiary of the Lead Borrower, to the best of the Lead Borrower’s
knowledge), are legal, valid and binding obligations of the issuers thereof;

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     (c) except for the security interests granted hereunder, each of the Grantors
(i) is and, subject to any transfers made in compliance with the Credit Agreement, will
continue to be the direct owner, beneficially and of record, of the Pledged Securities
indicated on Schedule III as owned by such Grantors, (ii) holds the same free and
clear of all Liens, other than (A) Liens created by the Collateral Documents and the
Noteholder Lien Security Documents and (B) Permitted Liens, (iii) will make no assignment,
pledge, hypothecation or transfer of, or create or permit to exist any security interest in
or other Lien on, the Pledged Collateral, other than (A) Liens created by the Collateral
Documents and the Noteholder Lien Security Documents and (B) nonconsensual Permitted Liens,
and (iv) will defend its title or interest thereto or therein against any and all Liens
(other than the Liens permitted pursuant to this Section 2.03(c)), however arising,
of all Persons whomsoever;

     (d) except (i) for restrictions and limitations imposed by the Loan Documents or
securities laws generally, (ii) in the case of Pledged Equity of Persons that are not wholly
owned Subsidiaries, for transfer restrictions that exist at the time of acquisition of
Equity Interests in such Persons, and (iii) as described in the Perfection Certificate, the
Pledged Collateral is and will continue to be freely transferable and assignable, and none
of the Pledged Collateral is or will be subject to any option, right of first refusal,
shareholders agreement, charter or by-law provisions or contractual restriction of any
nature that might prohibit, impair, delay or otherwise affect in any manner material and
adverse to the Secured Parties the pledge of such Pledged Collateral hereunder, the sale or
disposition thereof pursuant hereto or the exercise by the Collateral Agent of rights and
remedies hereunder;

     (e) each of the Grantors has the power and authority to pledge the Pledged
Collateral pledged by it hereunder in the manner hereby done or contemplated (it being
understood that such Grantor’s power and authority to pledge the Equity Interests of a
non-wholly owned Subsidiary may be limited by the Organization Documents of such
Subsidiary);

     (f) except as described in Section 2.03(d) above, no consent or approval of
any Governmental Authority, any securities exchange or any other Person was or is necessary
to the validity of the pledge effected hereby (other than such as have been obtained and are
in full force and effect);

     (g) by virtue of the execution and delivery by the Grantors of this Agreement, when
any Pledged Securities are delivered to the Collateral Agent in accordance with this
Agreement, the Collateral Agent will obtain a legal, valid and perfected lien upon and
security interest in such Pledged Securities as security for the payment and performance of
the Secured Obligations;

     (h) all certificates, agreements or instruments representing or evidencing the
Pledged Securities in existence on the date hereof have been delivered to the Collateral
Agent pursuant to and as required by Section 2.02; and

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     (i) the pledge effected hereby is effective to vest in the Collateral Agent, for
the benefit of the Secured Parties, the rights of the Collateral Agent in the Pledged
Collateral as set forth herein.

          Section 2.04 Certification of Limited Liability Company and Limited Partnership Interests. Each
interest in any limited liability company or limited partnership controlled by any Grantor and
pledged under Section 2.01, to the extent such limited liability company elects to treat
its limited liability company interests as “securities” within the meaning of Article 8 of the UCC,
shall be represented by a certificate, shall be a “security” within the meaning of Article 8 of the
UCC and shall be governed by Article 8 of the UCC.

          Section 2.05 Registration in Nominee Name; Denominations. If an Event of Default shall occur and
be continuing and the Collateral Agent shall give the Lead Borrower notice of its intent to
exercise such rights, subject to the terms of the Intercreditor Agreement, (a) the Collateral
Agent, on behalf of the Secured Parties, shall have the right (in its sole and absolute discretion)
to hold the Pledged Securities in its own name as pledgee, the name of its nominee (as pledgee or
as sub agent) or the name of the applicable Grantor, endorsed or assigned in blank or in favor of
the Collateral Agent and each Grantor will promptly give to the Collateral Agent copies of any
notices or other communications received by it with respect to Pledged Securities registered in the
name of such Grantor and (b) the Collateral Agent shall have the right to exchange the certificates
representing Pledged Securities for certificates of smaller or larger denominations for any purpose
consistent with this Agreement; provided that, notwithstanding the foregoing, if a
Bankruptcy Event of Default shall have occurred and be continuing, the Collateral Agent shall not
be required to give the notice referred to above in order to exercise the rights described above.

          Section 2.06 Voting Rights; Dividends and Interest.

          (a) Unless and until an Event of Default or a Cash Dominion Event, as applicable, shall
have occurred and be continuing and the Collateral Agent shall have notified the Lead Borrower that
the rights of the Grantors under this Section 2.06 are being suspended:

     (i) Each Grantor shall be entitled to exercise any and all voting and/or other
consensual rights and powers inuring to an owner of Pledged Securities or any part thereof
for any purpose consistent with the terms of this Agreement, the Credit Agreement and the
other Loan Documents; provided that such rights and powers shall not be exercised in
any manner that could materially and adversely affect the rights inuring to a holder of any
Pledged Securities or the rights and remedies of any of the Collateral Agent or the other
Secured Parties under this Agreement, the Credit Agreement or any other Loan Document or the
ability of the Secured Parties to exercise the same.

     (ii) The Collateral Agent shall promptly execute and deliver to each Grantor, or
cause to be executed and delivered to such Grantor, all such proxies, powers of attorney and
other instruments as such Grantor may reasonably request for the purpose of enabling such
Grantor to exercise the voting and/or consensual rights and powers it is entitled to
exercise pursuant to subparagraph (i) above.

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     (iii) Each Grantor shall be entitled to receive and retain any and all dividends,
interest, principal and other distributions paid on or distributed in respect of the Pledged
Securities, to the extent (and only to the extent) that such dividends, interest, principal
and other distributions are permitted by, and otherwise paid or distributed in accordance
with, the terms and conditions of the Credit Agreement, the other Loan Documents and
applicable Laws; provided that any non-cash dividends, interest, principal or other
distributions that would constitute Pledged Equity or Pledged Debt, whether resulting from a
subdivision, combination or reclassification of the outstanding Equity Interests of the
issuer of any Pledged Securities or received in exchange for Pledged Securities or any part
thereof, or in redemption thereof, or as a result of any merger, consolidation, acquisition
or other exchange of assets to which such issuer may be a party or otherwise, shall be and
become part of the Pledged Collateral, and, if received by any Grantor, shall not be
commingled by such Grantor with any of its other funds or property but shall be held
separate and apart therefrom, shall be held in trust for the benefit of the Collateral Agent
and the applicable Secured Parties and shall be forthwith delivered to the Collateral Agent
(unless the same are required to be delivered (and are delivered) to the Noteholder
Collateral Agent pursuant to the Intercreditor Agreement) in the same form as so received
(with any endorsement as may be reasonably necessary to perfect the security interest of the
Collateral Agent). So long as no Default or Event of Default has occurred and is
continuing, the Collateral Agent shall promptly deliver to each Grantor any Pledged
Securities in its possession if requested to be delivered to the issuer thereof in
connection with any exchange or redemption of such Pledged Securities.

          (b) Upon the occurrence and during the continuance of a Cash Dominion Event or Event of
Default, as applicable, after the Collateral Agent shall have notified the Lead Borrower of the
suspension of the rights of the Grantors under Section 2.06(a)(iii), then all rights of any
Grantor to dividends, interest, principal or other distributions that such Grantor is authorized to
receive pursuant to Section 2.06(a)(iii) shall cease, and all such rights shall thereupon
become vested in the Collateral Agent, which shall have the sole and exclusive right and authority
to receive and retain such dividends, interest, principal or other distributions, subject to the
terms of the Intercreditor Agreement. All dividends, interest, principal or other distributions
received by any Grantor contrary to the provisions of this Section 2.06 shall be held in
trust for the benefit of the Collateral Agent, shall be segregated from other property or funds of
such Grantor and shall be forthwith delivered to the Collateral Agent upon demand (unless the same
are required to be delivered (and are delivered) to the Noteholder Collateral Agent pursuant to the
Intercreditor Agreement) in the same form as so received (with any necessary endorsement reasonably
requested by the Collateral Agent). Any and all money and other property paid over to or received
by the Collateral Agent pursuant to the provisions of this paragraph (b) shall be retained
by the Collateral Agent in an account to be established by the Collateral Agent upon receipt of
such money or other property and shall be applied in accordance with the provisions of Section
4.02. At such time as a Cash Dominion Event or Event of Default is no longer continuing, the
Collateral Agent shall promptly repay to each Grantor (without interest) all dividends, interest,
principal or other distributions that such Grantor would otherwise be permitted to retain pursuant
to the terms of Section 2.06(a)(iii) in the absence of a Cash Dominion Event or an Event of
Default and that remain in such account.

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          (c) Upon the occurrence and during the continuance of an Event of Default, after the
Collateral Agent shall have notified the Lead Borrower of the suspension of the rights of the
Grantors under Section 2.06(a)(i), then all rights of any Grantor to exercise the voting
and consensual rights and powers it is entitled to exercise pursuant to Section 2.06(a)(i),
and the obligations of the Collateral Agent under Section 2.06(a)(ii), shall cease, and all
such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and
exclusive right and authority to exercise such voting and consensual rights and powers, subject to
the terms of the Intercreditor Agreement; provided that the Collateral Agent shall have the
right from time to time following and during the continuance of an Event of Default to permit the
Grantors to exercise such rights. After all Events of Default have been cured or waived, each
Grantor shall have the exclusive right to exercise the voting and/or consensual rights and powers
that such Grantor would otherwise be entitled to exercise pursuant to the terms of Section
2.06(a)(i), and the obligations of the Collateral Agent under Section 2.06(a)(ii) shall
be reinstated.

          (d) Any notice given by the Collateral Agent to the Lead Borrower suspending the rights of
the Grantors under Section 2.06(a)(i): (x) shall be given in writing, (y) may be given with
respect to one or more of the Grantors at the same or different times and (z) may suspend the
rights of the Grantors under Section 2.06(a)(i) or (iii) in part without suspending
all such rights (as specified by the Collateral Agent in its sole and absolute discretion) and
without waiving or otherwise affecting the Collateral Agent’s rights to give additional notices
from time to time suspending other rights so long as a Cash Dominion Event or an Event of Default,
as applicable, has occurred and is continuing. Notwithstanding anything to the contrary contained
in Section 2.06(a), (b) or (c), if a Bankruptcy Event of Default shall have
occurred and be continuing, the Collateral Agent shall not be required to give any notice referred
to in said Section in order to exercise any of its rights described in such Section, and the
suspension of the rights of each of the Grantors under each such Section shall be automatic upon
the occurrence of such Bankruptcy Event of Default.

          Section 2.07 Collateral Agent Not a Partner or Limited Liability Company Member. Nothing contained
in this Agreement shall be construed to make the Collateral Agent or any other Secured Party liable
as a member of any limited liability company or as a partner of any partnership and neither the
Collateral Agent nor any other Secured Party by virtue of this Agreement or otherwise (except as
referred to in the following sentence) shall have any of the duties, obligations or liabilities of
a member of any limited liability company or as a partner in any partnership. The parties hereto
expressly agree that, unless the Collateral Agent shall become the absolute owner of Pledged Equity
consisting of a limited liability company interest or a partnership interest pursuant hereto, this
Agreement shall not be construed as creating a partnership or joint venture among the Collateral
Agent, any other Secured Party, any Grantor and/or any other Person.

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ARTICLE III

Security Interests in Personal Property

          Section 3.01 Security Interest.

          (a) As security for the payment or performance, as the case may be, in full of the Secured
Obligations, including the Guaranty, each Grantor hereby assigns and pledges to the Collateral
Agent, its successors and assigns, for the benefit of the Secured Parties, and hereby grants to the
Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, a security
interest (the “Security Interest”) in, all right, title or interest in or to any and all of
the following assets and properties now owned or at any time hereafter acquired by such Grantor or
in which such Grantor now has or at any time in the future may acquire any right, title or interest
(collectively, the “Article 9 Collateral”):

     (i) all Accounts;

     (ii) all Chattel Paper;

     (iii) all Documents;

     (iv) all Equipment;

     (v) all General Intangibles;

     (vi) all Instruments;

     (vii) all books and records pertaining to the Article 9 Collateral;

     (viii) all Goods and Fixtures;

     (ix) all Money and Deposit Accounts;

     (x) all Commercial Tort Claims described on Schedule IV from time to time;

     (xi) the Collateral Account, and all cash, securities and other investments
deposited therein;

     (xii) all Supporting Obligations;

     (xiii) all Security Entitlements in any or all of the foregoing and all Securities
Accounts;

     (xiv) all Intellectual Property Collateral;

     (xv) all Inventory;

     (xvi) all Investment Property; and

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

provided that (i) this Agreement shall not constitute a grant of security interest in any
trademark application filed in the United States Patent and Trademark Office on the basis of any
Grantor’s “intent to use” such mark and for which a form evidencing use of the mark has not yet
been filed with the United States Patent and Trademark Office, to the extent that granting a
security interest in such trademark application prior to such filing would adversely affect the
enforceability or validity of such trademark application or any registration that issues therefrom
under applicable federal law and (ii) notwithstanding anything to the contrary in this Agreement,
this Agreement shall not constitute a grant of a security interest in (A) motor vehicles and other
assets subject to certificates of title except to the extent perfection of a security interest
therein may be accomplished by filing of financing statements in appropriate form in the applicable
jurisdiction under the UCC, (B) commercial tort claims in amounts less than $10,000,000, (C) the
Excluded Equity Interests, (D) any property or assets owned by any Foreign Subsidiary or an
Unrestricted Subsidiary, (E) any Excluded Equipment; (F) any Excluded Contract, (G) Excluded
Accounts, (H) Letter of Credit Rights, other than Letter of Credit Rights that are Supporting
Obligations, (I) assets as reasonably determined by the Company to the extent obtaining a security
interest in such assets or perfection thereof would result in costs or consequences (including as a
result of Section 956 of the Code or any similar law, rule or regulation in any applicable
jurisdiction) that are excessive in relation to the value to the Holders of the security to be
afforded thereby, (J) Accounts of Account Debtor subject to Factoring Agreements and (I) proceeds
and products from any and all of the foregoing excluded assets described in clauses (i) and (ii)(A)
through (J), unless such proceeds or products would otherwise constitute Collateral (the items
referred to in clauses (i) and (ii), being collectively referred to as the “Excluded
Assets”). Each Grantor shall, if requested to do so by the Collateral Agent, use commercially
reasonable efforts to obtain any such required consent referred to above that is reasonably
obtainable with respect to Collateral which the Collateral Agent reasonably determines to be
material. In addition, no Grantor shall be required (i) to take actions to perfect security
interests in commercial tort claims in amounts less than $10,000,000 or Letter of Credit Rights
(other than Letter of Credit Rights to the extent perfection of a security interest therein may be
accomplished by filing of financing statements in appropriate form in the applicable jurisdiction
under the UCC), (ii) to take actions to perfect by Control other than with respect to the Pledged
Collateral and as set forth clause (e) below or (iii) take any actions under any laws outside of
the United States to grant, perfect or enforce any security interest.

          (b) Each Grantor hereby irrevocably authorizes the Collateral Agent for the benefit of the
Secured Parties at any time and from time to time to file in any relevant jurisdiction any
financing statements (including fixture filings) with respect to the Collateral or any part thereof
and amendments thereto that (i) indicate the Collateral as all assets of such Grantor or words of
similar effect as being of an equal or lesser scope or with greater detail, and (ii) contain the
information required by Article 9 of the UCC or the analogous legislation of each applicable
jurisdiction for the filing of any financing statement or amendment, including (A) whether such
Grantor is an organization, the type of organization and any organizational identification number
issued to such Grantor and (B) in the case of a financing statement filed as a fixture filing, a
sufficient

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description of the real property to which such Article 9 Collateral relates. Each
Grantor agrees to provide copies of such financing statements to the Collateral Agent promptly upon
any such filing.

          (c) The Security Interest is granted as security only and shall not subject the Collateral
Agent or any other Secured Party to, or in any way alter or modify, any obligation or liability of
any Grantor with respect to or arising out of the Article 9 Collateral.

          (d) Each Grantor hereby further authorizes the Collateral Agent to file a Grant of
Security Interest substantially in the form of Exhibit C, D or E, as
applicable, covering relevant registered or applied for Intellectual Property Collateral with the
United States Patent and Trademark Office or United States Copyright Office, as applicable, or any
similar offices in any other country and such other documents executed by any Grantor as may be
reasonably necessary or reasonably advisable for the purpose of perfecting, confirming, continuing,
enforcing or protecting the Security Interest granted by such Grantor hereunder, and naming such
Grantor, as debtor, and the Collateral Agent, as secured party.

          (e) Notwithstanding anything to the contrary in this Agreement or the Credit Agreement,
none of the Grantors shall be required to enter into any deposit account control agreement or
securities account control agreement (other than any Deposit Account Control Agreements
contemplated by Sections 6.15 and 6.18 of the Credit Agreement and other than with respect to any
cash collateral agreements contemplated under the Credit Agreement) with respect to any deposit
account or securities account or Money.

          Section 3.02 Representations and Warranties. Each Grantor represents and warrants, as to itself
and the other Grantors, to the Collateral Agent and the Secured Parties that:

     (a) Each Grantor has good and valid rights (not subject to any Liens other than
Permitted Liens) and/or title in the Article 9 Collateral with respect to which it has
purported to grant a Security Interest hereunder (which rights and/or title, are in any
event, sufficient under Section 9-203 of the UCC), and has full power and authority to grant
to the Collateral Agent the Security Interest in such Article 9 Collateral pursuant hereto
and to execute, deliver and perform its obligations in accordance with the terms of this
Agreement, without the consent or approval of any other Person other than (i) any consent or
approval that has been obtained and is in full force and effect and (ii) those consents or
approvals, the failure of which to be obtained or to be made could not reasonably be
expected to have a Material Adverse Effect.

     (b) The Perfection Certificate has been duly prepared, completed, executed and
delivered to the Collateral Agent and the information set forth therein, including the exact
legal name of each Grantor, is correct and complete in all material respects as of the
Closing Date. The UCC financing statements (including fixture filings, as applicable) or
other appropriate filings, recordings or registrations prepared by the Collateral Agent
based upon the information provided to the Collateral Agent in the Perfection Certificate
for filing in each governmental, municipal or other office in the jurisdiction of
organization of each Grantor specified in Section 2(a) of the Perfection Certificate (or
specified by notice from the applicable Grantor to the Collateral Agent after the Closing
Date in the

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case of filings, recordings or registrations required by Section 6.11 of the
Credit Agreement), are all the filings, recordings and registrations that are necessary to
establish a legal, valid and perfected security interest in favor of the Collateral Agent
(for the benefit of the Secured Parties) in respect of all Article 9 Collateral in which the
Security Interest may be perfected by filing, recording or registration in the United States
(or any political subdivision thereof) and its territories and possessions, and no further
or subsequent filing, refiling, recording, rerecording, registration or reregistration is
necessary in any such jurisdiction, except as provided under applicable Law with respect to
the filing of continuation statements. Each Grantor represents and warrants that, as of the
Closing Date, fully executed Grants of Security Interest in the form attached as Exhibit
C, D or E, as applicable, containing a description of all Collateral
consisting of Intellectual Property with respect to United States Patents (and Patents for
which United States applications are pending), registered United States Trademarks (and
Trademarks for which United States applications to register are pending) or United States
registered Copyrights, as applicable, have been delivered to the Collateral Agent for
recording in the United States Patent and Trademark Office or the United States Copyright
Office, as applicable, pursuant to 35 U.S.C. § 261, 15 U.S.C. § 1060 or 17 U.S.C. § 205 and
the regulations thereunder or to any similar offices in any other country, as required by
applicable Law in such jurisdiction.

     (c) The Security Interest constitutes (i) a legal and valid security interest in
all the Article 9 Collateral securing the payment and performance of the Secured
Obligations, (ii) subject to the filings described in Section 3.02(b), a perfected
security interest in all Article 9 Collateral in which a security interest may be perfected
by filing, recording or registering a financing statement or analogous document in the
United States (or any political subdivision thereof) and its territories and possessions
pursuant to the UCC and (iii) a security interest that shall be perfected in all Collateral
in which a security interest may be perfected upon the receipt and recording of the relevant
Grants of Security Interest substantially in the form of Exhibits C, D or
E hereto with the United States Patent and Trademark Office and the United States
Copyright Office, as applicable, within the three month period (commencing as of the date
hereof) pursuant to 35 U.S.C. § 261 or 15 U.S.C. § 1060 or the one month period (commencing
as of the date hereof) pursuant to 17 U.S.C. § 205 and otherwise as may be required pursuant
to the laws of any other necessary jurisdiction. The Security Interest is and shall be
prior to any other Lien on any of the Article 9 Collateral, other than any nonconsensual
Permitted Lien that has priority as a matter of law and other than, with respect to
Noteholder First Lien Collateral, Liens created by the Noteholder Lien Security Documents,
subject to the terms of the Intercreditor Agreement.

     (d) The Article 9 Collateral is owned by the Grantors free and clear of any Lien,
except for Permitted Liens. None of the Grantors has filed or consented to the filing of
(i) any financing statement or analogous document under the UCC or any other applicable Laws
covering any Article
9 Collateral, (ii) any assignment in which any Grantor assigns any
Article 9 Collateral or any security agreement or similar instrument covering any Collateral
with the United States Patent and Trademark Office or the United States Copyright Office, or
(iii) any assignment in which any Grantor assigns any Article

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9 Collateral or any security
agreement or similar instrument covering any Article 9 Collateral with any foreign
governmental, municipal or other office, which financing statement or analogous document,
assignment, security agreement or similar instrument is still in effect, except, in each
case, for Permitted Liens.

     (e) All Commercial Tort Claims of each Grantor in excess of $10,000,000 in
existence on the date of this Agreement (or on the date upon which such Grantor becomes a
party to this Agreement) are described on Schedule IV hereto.

          Section 3.03 Covenants.

          (a) The Lead Borrower agrees to promptly (but in any event within 30 days) notify the
Collateral Agent of any change (i) in the legal name of any Grantor, (ii) in the identity or type
of organization or corporate structure of any Grantor, (iii) in the jurisdiction of organization of
any Grantor, (iv) in the “location” (as determined in accordance with Section 9-307 of the UCC) of
any Grantor or (v) in the organizational identification number of any Grantor. In addition, if any
Grantor does not have an organizational identification number on the Closing Date (or the date such
Grantor becomes a party to this Agreement) and later obtains one, the Lead Borrower shall promptly
thereafter notify the Collateral Agent of such organizational identification number and, in each
case, shall take all actions reasonably satisfactory to the Collateral Agent to the extent
necessary to maintain the security interests (and the priority thereof) of the Collateral Agent in
the Collateral intended to be granted hereby fully perfected and in full force and effect.

          (b) Each Grantor shall, at its own expense, take any and all commercially reasonable
actions necessary to defend title to the Article 9 Collateral against all Persons and to defend the
Security Interest of the Collateral Agent in the Article 9 Collateral and the priority thereof
against any Lien that is not a Permitted Lien.

          (c) Each year, at the time of delivery of annual financial statements with respect to the
preceding fiscal year pursuant to Section 6.01 of the Credit Agreement, the Lead Borrower shall
deliver to the Collateral Agent a certificate executed by the chief financial officer and the chief
legal officer of the Lead Borrower setting forth the information required pursuant to Sections
1(a), 2(a), 2(c) and 9 of the Perfection Certificate or confirming that there has been no change in
such information since the date of such certificate or the date of the most recent certificate
delivered pursuant to this Section 3.03(c).

          (d) The Lead Borrower agrees, on its own behalf and on behalf of each other Grantor, at
its own expense, to execute, acknowledge, deliver and cause to be duly filed all such further
instruments and documents and take all such actions necessary or as the Collateral Agent may from
time to time reasonably request to better assure, preserve, protect and perfect the Security
Interest and the rights and remedies created hereby, including the payment of any fees and taxes
required in connection with the execution and delivery of this Agreement, the granting of the
Security Interest and the filing of any financing statements (including amendments or continuations
thereof and fixture filings) or other documents in connection herewith or therewith. If any amount
payable (other than by a Loan Party) under or in connection with any of the Article 9 Collateral
that equals or exceeds $5,000,000 shall be or become evidenced by any promissory

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note or
instrument, such note or instrument shall be promptly pledged and delivered to the Collateral Agent
(unless the same is required to be delivered (and is delivered) to the Noteholder Collateral Agent
pursuant to the Intercreditor Agreement), for the benefit of the Secured Parties, duly endorsed as
may be reasonably necessary to perfect the security interest of the Collateral Agent.

          (e) At its option, the Collateral Agent may discharge past due taxes, assessments,
charges, fees, Liens, security interests or other encumbrances at any time levied or placed on the
Article 9 Collateral (other than Permitted Liens), and may pay for the maintenance and preservation
of the Article 9 Collateral to the extent any Grantor fails to do so as required by the Credit
Agreement or any other Loan Document and within a reasonable period of time after the Collateral
Agent has requested that it do so, and each Grantor jointly and severally agrees to reimburse the
Collateral Agent within 10 days after demand for any payment made or any reasonable expense
incurred by the Collateral Agent pursuant to the foregoing authorization, provided,
however, that a Grantor shall not be obligated to reimburse the Collateral Agent with
respect to any Intellectual Property Collateral which any Grantor has failed to maintain or pursue,
or otherwise has allowed to lapse, terminate or put in the public domain, in accordance with
Section 4.02(f). Nothing in this paragraph shall be interpreted as excusing any Grantor
from the performance of, or imposing any obligation on the Collateral Agent or any Secured Party to
cure or perform, any covenants or other promises of any Grantor with respect to taxes, assessments,
charges, fees, Liens, security interests or other encumbrances and maintenance as set forth herein
or in the other Loan Documents.

          (f) If at any time any Grantor shall take a security interest in any property of an
Account Debtor or any other Person the value of which equals or exceeds $5,000,000 to secure
payment and performance of an Account, subject to the terms of the Intercreditor Agreement, such
Grantor shall promptly assign such security interest to the Collateral Agent for the benefit of the
applicable Secured Parties. Such assignment need not be filed of public record unless necessary to
continue the perfected status of the security interest against creditors of and transferees from
the Account Debtor or other Person granting the security interest.

          (g) Each Grantor (rather than the Collateral Agent or any Secured Party) shall remain
liable (as between itself and any relevant counterparty) to observe and perform all the conditions
and obligations to be observed and performed by it under each contract, agreement or instrument
relating to the Article 9 Collateral, all in accordance with the terms and conditions thereof, and
each Grantor jointly and severally agrees to indemnify and hold harmless the Collateral Agent and
the Secured Parties from and against any and all liability for such performance.

          Section 3.04 Other Actions. In order to further insure the attachment, perfection and priority of,
and the ability of the Collateral Agent to enforce, the Security Interest, each Grantor agrees, in
each case at such Grantor’s own expense, to take the following actions with respect to the
following Article 9 Collateral:

     (a) Instruments. If any Grantor shall at any time hold or acquire any
Instrument constituting Collateral and evidencing an amount equal to or in excess of
$5,000,000 such Grantor shall forthwith endorse, assign and deliver the same to the
Collateral Agent for the benefit of the applicable Secured Parties (unless the same is
required

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to be delivered (and is delivered) to the Noteholder Collateral Agent pursuant to
the Intercreditor Agreement), accompanied by such instruments of transfer or assignment duly
executed in blank as may be reasonably necessary to prefect the security interest of the
Collateral Agent.

     (b) Investment Property. Except to the extent otherwise provided in
Article II, if any Grantor shall at any time hold or acquire any certificated securities,
such Grantor shall forthwith endorse, assign and deliver the same to the Collateral Agent
for the benefit of the applicable Secured Parties (unless the Noteholder Collateral Agent is
granted a prior security interest in such Investment Property and the same is required to be
delivered (and is delivered) to the Noteholder Collateral Agent pursuant to the
Intercreditor Agreement), accompanied by such instruments of transfer or assignment duly
executed in blank as may be reasonably necessary to perfect the security interest of the
Collateral Agent. If any securities now or hereafter acquired by any Grantor are
uncertificated and are issued to such Grantor or its nominee directly by the issuer thereof,
upon the Collateral Agent’s request and following the occurrence of an Event of Default such
Grantor shall promptly notify the Collateral Agent thereof and, at the Collateral Agent’s
reasonable request, pursuant to an agreement in form and substance reasonably satisfactory
to the Collateral Agent (unless the Noteholder Collateral Agent is granted a prior security
interest in such Investment Property and such Grantor is required to do so (and does so) in
favor of the Noteholder Collateral Agent pursuant to the Intercreditor Agreement), either
(i) cause the issuer to agree to comply with instructions from the Collateral Agent as to
such securities, without further consent of any Grantor or such nominee, or (ii) arrange for
the Collateral Agent to become the registered owner of the securities. If any securities,
whether certificated or uncertificated, or other investment property are held by any Grantor
(or its nominee through a securities intermediary or commodity intermediary) for more than
45 days and such securities or other investment property exceed $2,500,000 in value, upon
the Collateral Agent’s request and following the occurrence of an Event of Default, such
Grantor shall immediately notify the Collateral Agent thereof and at the Collateral Agent’s
request and option, pursuant to an agreement in form and substance reasonably satisfactory
to the Collateral Agent shall, unless such Grantor is required to do so (and does so) in
favor of the Noteholder Collateral Agent, either (i) cause such securities intermediary or
(as the case may be) commodity intermediary to agree to comply with entitlement orders or
other instructions from the Collateral Agent to such securities intermediary as to such
security entitlements, or (as the case may be) to apply any value distributed on account of
any commodity contract as directed by the Collateral Agent to such commodity intermediary,
in each case without further consent of any Grantor or such nominee, or (ii) in the case of
financial assets or other Investment Property held through a securities intermediary,
arrange for the Collateral Agent to become the entitlement holder with respect to such
Investment Property, with the Grantor being permitted, only with the consent of the
Collateral Agent, to exercise rights to withdraw or otherwise deal with such Investment
Property. The Collateral Agent agrees with each of the Grantors that the Collateral Agent
shall not give any such entitlement orders or instructions or directions to any such issuer,
securities intermediary or commodity intermediary, and shall not withhold its consent to the
exercise of any withdrawal or dealing rights by any Grantor, unless an Event of Default has
occurred and is continuing. The provisions

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of this paragraph shall not apply to any
financial assets credited to a securities account for which the Collateral Agent is the
securities intermediary. Each Grantor that is the issuer of Pledged Equity agrees that it
will be bound by the terms of this Agreement with respect to the Pledged Equity issued by it
and will comply with such terms insofar as such terms are applicable to it.

     (c) Commercial Tort Claims. If any Grantor shall at any time after the
date of this Agreement acquire a Commercial Tort Claim in an amount (taking the greater of
the aggregate claimed damages thereunder or the reasonably estimated value thereof) of
$10,000,000 or more, such Grantor shall promptly notify the Collateral Agent thereof in a
writing signed by such Grantor and provide supplements to Schedule IV describing the
details thereof and shall grant to the Collateral Agent a security interest therein and in
the proceeds thereof, all upon the terms of this Agreement.

ARTICLE IV

Special Provisions Concerning Intellectual Property Collateral

          Section 4.01 Grant of License to Use Intellectual Property. Without limiting the provisions of
Section 3.01 hereof or any other rights of the Collateral Agent as the holder of a Security
Interest in any Intellectual Property Collateral, for the purpose of enabling the Collateral Agent
to exercise rights and remedies under this Agreement at such time as the Collateral Agent shall be
lawfully entitled to exercise such rights and remedies, each Grantor shall, upon request by the
Collateral Agent at any time after the occurrence and during the continuance of an Event of
Default, grant to the Collateral Agent to the full extent such Grantor is permitted to grant such a
license and to the extent that the Collateral Agent does not exercise its rights pursuant to
Section 6.01(vi) herein, an irrevocable, nonexclusive license (exercisable without payment
of royalty or other compensation to the Grantors) to use, license or, solely to the extent
necessary to exercise such rights and remedies, sublicense any of the Intellectual Property
Collateral now owned or hereafter acquired by such Grantor, and wherever the same may be located
(whether or not any license agreement by and between any Grantor and any other Person relating to
the use of such Intellectual Property Collateral may be terminated hereafter), and, to the extent
permitted by such Grantor’s existing contractual obligations, including in such license reasonable
access to all media in which any of the licensed items may be recorded or stored and to all
computer software and programs used for the compilation or printout thereof. The use of such
license by the Collateral Agent may be exercised, subject to the terms of the Intercreditor
Agreement, at the option of the Collateral Agent, during the continuation of an Event of Default;
provided that any license, sublicense or other transaction entered into by the Collateral
Agent in accordance herewith shall be binding upon the Grantors notwithstanding any subsequent cure
of an Event of Default; and provided, further, that the terms of any license or
sublicense shall include all terms and restrictions that are customarily required to ensure the
continuing validity and effectiveness of the Intellectual Property at issue, such as, without
limitation, quality control and inure provisions with regard to Trademarks, patent designation
provisions with regard to Patents, and copyright notices and restrictions or provisions on
decompilation and reverse engineering of copyrighted software. In the event the license set forth
in this Section 4.01 is exercised with regard to any Trademarks, then the following shall
apply: (i) all goodwill arising from any licensed or sublicensed

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use of any Trademark shall inure
to the Grantor; (ii) the licensed or sublicensed Trademarks shall only be used in association with
goods or services of a quality and nature consistent with the quality and reputation with which
such Trademarks were associated when used by Grantor prior to the exercise of the license rights
set forth herein; and (iii) at the Grantor’s request and expense, licensees and sublicensees shall
provide reasonable cooperation in any effort by the Grantor to maintain the registration or
otherwise secure the ongoing validity and effectiveness of such licensed Trademarks, including,
without limitation, the actions and conduct described in Section 4.02 below.

          Section 4.02 Protection of Collateral Agent’s Security.

          (a) Except to the extent that failure to act could not reasonably be expected to have a
Material Adverse Effect, with respect to any registration or pending application of each item of
its Intellectual Property Collateral for which such Grantor has standing to do so, each Grantor
agrees to take, at its expense, all reasonable steps, including, without limitation, in the U.S.
Patent and Trademark Office, the U.S. Copyright Office and any other governmental authority located
in the United States or with any similar offices in any other country, to (i) maintain the validity
and enforceability of any material registered Intellectual Property Collateral and maintain such
Intellectual Property Collateral in full force and effect, and (ii) pursue the registration and
maintenance of each material Patent, Trademark, or Copyright registration or application, now or
hereafter included in such Intellectual Property Collateral of such Grantor, including, without
limitation, the payment of required fees and taxes, the filing of responses to office actions
issued by the U.S. Patent and Trademark Office, the U.S. Copyright Office or other governmental
authorities or any similar offices in any other country, the filing of applications for renewal or
extension, the filing of affidavits under Sections 8 and 15 of the U.S. Trademark Act, the filing
of divisional, continuation, continuation-in-part, reissue and renewal applications or extensions,
the payment of maintenance fees and the participation in interference, reexamination, opposition,
cancellation, and Infringement proceedings.

          (b) Except to the extent that failure to act could not reasonably be expected to have a
Material Adverse Effect, no Grantor shall do or permit any act or knowingly omit to do any act
whereby any of its material Intellectual Property Collateral may prematurely lapse, be terminated,
or become invalid or unenforceable or placed in the public domain (or in case of a trade secret,
become publicly known).

          (c) Except to the extent that failure to act could not reasonably be expected to have a
Material Adverse Effect, each Grantor shall take all reasonable steps to preserve and protect each
item of its material Intellectual Property Collateral, including, without limitation, maintaining
the quality of any and all products or services used or provided in connection with any of the
material Trademarks, consistent with the quality of the products and services as of the date
hereof, and taking all reasonable steps necessary to ensure that all licensed users of any of the
material Trademarks abide by the applicable license’s terms with respect to the standards of
quality.

          (d) Each Grantor agrees that, should it obtain an ownership or other interest in any
Intellectual Property Collateral after the Closing Date (i) the provisions of this Agreement shall
automatically apply thereto, and (ii) any such Intellectual Property and, in the case of

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Trademarks, the goodwill symbolized thereby, shall automatically become part of the Intellectual
Property Collateral subject to the terms and conditions of this Agreement with respect thereto.

          (e) Subject to the requirements and exclusions of Section 3.01, on December 31 of
each fiscal year of the Lead Borrower, each Grantor shall sign and deliver to the Collateral Agent
an appropriate Security Agreement Supplement or related Grant of Security Interest substantially in
the form of Exhibits A, C, D and E, as applicable, with respect to
all such registered or applied for Intellectual Property owned or exclusively licensed by it as
licensee as of the last day of such period, to the extent that such Intellectual Property is not
covered by any previous Security Agreement Supplement (or Grant of Security Interests) so signed
and delivered by it. In each case, it will promptly cooperate as reasonably necessary to enable
the Collateral Agent to make any necessary or reasonably desirable recordations with the U.S.
Copyright Office or the U.S. Patent and Trademark Office.

          (f) Notwithstanding the foregoing provisions of this Section 4.02 or elsewhere in
this Agreement, nothing in this Agreement shall prevent any Grantor from disposing of,
discontinuing the use or maintenance of, causing or permitting expiration, lapse or abandonment, or
failing to renew any applications or registrations of any of its Intellectual Property Collateral
to the extent not prohibited by the Credit Agreement or any other Loan Document if such Grantor
determines in its reasonable business judgment that such actions are desirable in the conduct of
its business.

ARTICLE V

Collections

          (a) Each Grantor, in its capacity as a Loan Party, shall at all times comply with the cash
management provisions of Section 6.18 of the Credit Agreement including, without limitation, after
the occurrence and during the continuance of a Cash Dominion Event, causing the sweep on each
Business Day of all available cash receipts into the Concentration Account as provided for in the
Credit Agreement.

          (b) Without the prior written consent of the Collateral Agent, no Grantor shall modify or
amend the instructions pursuant to any of the Deposit Account Control Agreements. So long as no
Cash Dominion Event has occurred and is continuing, each Grantor shall, and the Collateral Agent
hereby authorizes each Grantor to, enforce and collect all amounts owing on the Inventory and
Accounts, for the benefit and on behalf of the Collateral Agent and the other Secured Parties;
provided that such authorization may, at the direction of the Collateral Agent, be
terminated after the occurrence and during the continuance of any Cash Dominion Event.

ARTICLE VI

Remedies

          Section 6.01 Remedies Upon Default. Upon the occurrence and during the continuance of an Event of
Default, it is agreed that the Collateral Agent shall have the right to exercise any and all rights
afforded to a secured party with respect to the Secured Obligations, as

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applicable, under the UCC
or other applicable Law, and also may, subject to the terms of the Intercreditor Agreement, (i)
require each Grantor to, and each Grantor agrees that it will at its expense and 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 and time to be designated
by the Collateral Agent that is reasonably convenient to both parties; (ii) occupy any premises
owned or, to the extent lawful and permitted, leased by any of the Grantors where the Collateral or
any part thereof is assembled or located for a reasonable period in order to effectuate its rights
and remedies hereunder or under law, without obligation to such Grantor in respect of such
occupation; provided that the Collateral Agent shall provide the applicable Grantor with
notice thereof prior to or promptly after such occupancy; (iii) exercise any and all rights and
remedies of any of the Grantors under or in connection with the Collateral, or otherwise in respect
of the Collateral; provided that the Collateral Agent shall provide the applicable Grantor
with notice thereof prior to or promptly after such exercise; (iv) withdraw any and all cash or
other Collateral from any Collateral Account and apply such cash and other Collateral to the
payment of any and all Secured Obligations in the manner provided in Section 6.02 of this
Agreement; (v) subject to the mandatory requirements of applicable Law and the notice requirements
described below, sell or otherwise dispose of all or any part of the Collateral securing the
Secured Obligations at a public or private sale or at any broker’s board or on any securities
exchange, for cash, upon credit or for future delivery as the Collateral Agent shall deem
appropriate; and (vi) with respect to any Intellectual Property Collateral, on demand, cause the
Security Interest to become an assignment, transfer and conveyance of any of or all such
Intellectual Property Collateral by the applicable Grantors to the Collateral Agent, or license or
sublicense, whether general, special or otherwise, and whether on an exclusive or nonexclusive
basis, any such Intellectual Property Collateral throughout the world on such terms and conditions
and in such manner as the Collateral Agent shall determine; provided that such terms shall
include all terms and restrictions customarily required to ensure the continuing validity and
effectiveness of the Intellectual Property at issue, such as, without limitation, quality control
and inure provisions with regard to Trademarks, patent designation provisions with regard to
Patents, and copyright notices and restrictions or decompilation and reverse engineering of
copyrighted software. The Grantors recognize that (a) the Collateral Agent may be unable to effect
a public sale of all or a part of the Collateral consisting of securities by reason of certain
prohibitions contained in the Securities Act of 1933, 15 U.S.C. §77 (as amended and in effect, the
“Securities Act”), or the securities laws of various states (the “Blue Sky Laws”),
but may be compelled to resort to one or more private sales to a restricted group of purchasers who
will be obliged to agree, among other things, to acquire such securities for their own account, for
investment and not with a view to the distribution or resale thereof, (b) that private sales so
made may be at prices and upon other terms less favorable to the seller than if such securities
were sold at public sales, (c) that neither the Collateral Agent nor any other Secured Party has
any obligation to delay sale of any of the Collateral for the period of time necessary to permit
such securities to be registered for public sale under the Securities Act or the Blue Sky Laws, and
(d) that private sales made under the foregoing circumstances shall be deemed to have been made in
a commercially reasonable manner. Upon consummation of any such sale the Collateral Agent shall
have the right to assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any sale of Collateral 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 law)

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all rights of redemption, stay and appraisal which such Grantor
now has or may at any time in the future have under any rule of law or statute now existing or
hereafter enacted.

          The Collateral Agent shall give the applicable Grantors 10 days’ written notice (which each
Grantor agrees is reasonable notice within the meaning of Section 9-611 of the UCC or its
equivalent in other jurisdictions) of the Collateral Agent’s intention to make any sale of
Collateral. Such notice, in the case of a public sale, shall state the time and place for such
sale and, in the case of a sale at a broker’s board or on a securities exchange, shall state the
board or exchange at which such sale is to be made and the day on which the Collateral, or portion
thereof, will first be offered for sale at such board or exchange. Any such public sale shall be
held at such time or times within ordinary business hours and at such place or places as the
Collateral Agent may fix and state in the notice (if any) of such sale. The Collateral Agent may
conduct one or more going out of business sales, in the Collateral Agent’s own right or by one or
more agents and contractors. Such sale(s) may be conducted upon any premises owned, leased, or
occupied by any Grantor. The Collateral Agent and any such agent or contractor, in conjunction
with any such sale, may augment the Inventory with other goods (all of which other goods shall
remain the sole property of the Collateral Agent or such agent or contractor). Any amounts
realized from the sale of such goods which constitute augmentations to the Inventory (net of an
allocable share of the costs and expenses incurred in their disposition) shall be the sole property
of the Collateral Agent or such agent or contractor and neither any Grantor nor any Person claiming
under or in right of any Grantor shall have any interest therein. At any such sale, the
Collateral, or portion thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as the Collateral Agent may (in its sole and absolute discretion) determine. The
Collateral Agent shall not be obligated to make any sale of any Collateral if it shall determine
not to do so, regardless of the fact that notice of sale of such Collateral shall have been given.
The Collateral Agent may, without notice or publication, adjourn any public or private sale or
cause the same to be adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place to which the same
was so adjourned. In case any sale of all or any part of the Collateral is made on credit or for
future delivery, the Collateral so sold may be retained by the Collateral Agent until the sale
price is paid by the purchaser or purchasers thereof, but the Collateral Agent shall not incur any
liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral
so sold and, in case of any such failure, such Collateral may be sold again upon like notice. At
any public (or, to the extent permitted by law, private) sale made pursuant to this Agreement, any
Secured Party may bid for or purchase, free (to the extent permitted by law) from any right of
redemption, stay, valuation or appraisal on the part of any Grantor (all said rights being also
hereby waived and released to the extent permitted by law), the Collateral or any part thereof
offered for sale and may make payment on account thereof by using any claim then due and payable to
such Secured Party from any Grantor as a credit against the purchase price, and such Secured Party
may, upon compliance with the terms of sale, hold, retain and dispose of such property without
further accountability to any Grantor therefor. For purposes of determining the Grantors’ rights
in the Collateral, a written agreement to purchase the Collateral or any portion thereof shall be
treated as a sale thereof; the Collateral Agent shall be free to carry out such sale pursuant to
such agreement and no Grantor shall be entitled to the return of the Collateral or any portion
thereof subject thereto, notwithstanding the fact that after the Collateral Agent shall have
entered into such an agreement all Events of Default shall have been remedied and the Secured
Obligations paid in

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full; provided that such terms shall include all terms and restrictions
that customarily required to ensure the continuing validity and effectiveness of the Intellectual
Property at issue, such as, without limitation, quality control and inure provisions with regard to
Trademarks, patent designation provisions with regard to patents, and copyright notices and
restrictions or decompilation and reverse engineering of copyrighted software. As an alternative
to exercising the power of sale herein conferred upon it, the Collateral Agent may proceed by a
suit or suits at law or in equity to foreclose this Agreement and to sell the Collateral or any
portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction
or pursuant to a proceeding by a court appointed receiver. Any sale pursuant to the provisions of
this Section 6.01 shall be deemed to conform to the commercially reasonable standards as
provided in Section 9-610(b) of the UCC or its equivalent in other jurisdictions.

          Subject to the terms of the Intercreditor Agreement, each Grantor irrevocably makes,
constitutes and appoints the Collateral Agent (and all officers, employees or agents designated by
the Collateral Agent) as such Grantor’s true and lawful agent (and attorney-in-fact) during the
continuance of an Event of Default and after notice to the Lead Borrower of its intent to exercise
such rights (except in the case of a Bankruptcy Event of Default, in which case no such notice
shall be required), for the purpose of (i) making, settling and adjusting claims in respect of
Article 9 Collateral under policies of insurance, endorsing the name of such Grantor on any check,
draft, instrument or other item of payment for the proceeds of such policies of insurance, (ii)
making all determinations and decisions with respect thereto and (iii) obtaining or maintaining the
policies of insurance required by Section 6.07 of the Credit Agreement as they relate to Collateral
or to pay any premium in whole or in part relating thereto. All sums disbursed by the Collateral
Agent in connection with this paragraph, including reasonable attorneys’ fees, court costs,
expenses and other charges relating thereto, shall be payable, within 10 days of demand, by the
Grantors to the Collateral Agent and shall be additional Secured Obligations secured hereby.

          By accepting the benefits of this Agreement and each other Collateral Document, the Secured
Parties expressly acknowledge and agree that this Agreement and each other Collateral Document may
be enforced only by the action of the Collateral Agent and that no other Secured Party shall have
any right individually to seek to enforce or to enforce this Agreement or to realize upon the
security to be granted hereby, it being understood and agreed that such rights and remedies may be
exercised by the Collateral Agent for the benefit of the Secured Parties upon the terms of this
Agreement and the other Collateral Documents.

          Section 6.02 Application of Proceeds. The Collateral Agent shall apply the proceeds of any
collection or sale of Collateral, including any Collateral consisting of cash, in accordance with
the provisions of Section 8.04 of the Credit Agreement, subject to the terms of the Intercreditor
Agreement. The Collateral Agent shall have absolute discretion as to the time of application of any
such proceeds, moneys or balances in accordance with this Agreement. Upon any sale of Collateral
by the Collateral Agent (including pursuant to a power of sale granted by statute or under a
judicial proceeding), the receipt of the Collateral Agent or of the officer making the sale shall
be a sufficient discharge to the purchaser or purchasers of the Collateral so sold and such
purchaser or purchasers shall not be obligated to see to the application of any part of the
purchase money paid over to the Collateral Agent or such officer or be answerable in any way

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for
the misapplication thereof. It is understood and agreed that the Grantors shall remain jointly and
severally liable to the extent of any deficiency between the amount of the proceeds of the
Collateral and the aggregate amount of the Secured Obligations.

ARTICLE VII

Indemnity, Subrogation and Subordination

          Each Grantor hereby unconditionally and irrevocably agrees not to exercise any rights that it
may now have or hereafter acquire against the Borrowers or any other Grantor that arise from the
existence, payment, performance or enforcement of such Grantor’s Secured Obligations under or in
respect of this Agreement or any other Finance Document, including, without limitation, any right
of subrogation, reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of any Secured Party against the Borrowers or any other Grantor
or any Collateral, whether or not such claim, remedy or right arises in equity or under contract,
statute or common law, including, without limitation, the right to take or receive from the
Borrowers or any other Grantor, directly or indirectly, in cash or other property or by set-off or
in any other manner, payment or security on account of such claim, remedy or right, unless and
until all of the Secured Obligations (other than contingent indemnity obligations for then
unasserted claims) and all other amounts payable under this Agreement shall have been paid in full,
all Letters of Credit, all Secured Hedge Agreements and all Secured Cash Management Agreements
shall have expired or been terminated and the Revolving Credit Commitments shall have expired or
been terminated. If any amount shall erroneously be paid to any Borrower or any other Grantor on
account of (i) such subrogation, contribution, reimbursement, indemnity or similar right or (ii)
any such indebtedness of any Borrower or any other Grantor, such amount shall be held in trust for
the benefit of the Secured Parties and shall forthwith be paid to the Collateral Agent to be
credited against the payment of the Secured Obligations, whether matured or unmatured, in
accordance with the terms of the Credit Agreement and the other Loan Documents.

ARTICLE VIII

Miscellaneous

          Section 8.01 Notices. All communications and notices hereunder shall (except as otherwise
expressly permitted herein) be in writing and given as provided in Section 10.02 of the Credit
Agreement.

          Section 8.02 Waivers; Amendment.

          (a) No failure or delay by any Senior Credit Party in exercising any right, remedy, power
or privilege hereunder or under any other Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, remedy, power or privilege hereunder, or any
abandonment or discontinuance of steps to enforce such a right, remedy, power or privilege,
preclude any other or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges of the Senior Credit Parties hereunder and
under the other Loan Documents are cumulative and are not exclusive of any other

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rights, remedies,
powers and privileges that they would otherwise have. No waiver of any provision of any Loan
Document or consent to any departure by any Loan Party therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) of this Section 8.02, and then
such waiver or consent shall be effective only in the specific instance and for the purpose for
which given. Without limiting the generality of the foregoing, the making of a Revolving Credit
Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default or Event
of Default, regardless of whether any Senior Credit Party may have had notice or knowledge of such
Default or Event of Default at the time.

          (b) Neither this Agreement nor any provision hereof may be waived, amended or modified
except pursuant to an agreement or agreements in writing entered into by the Collateral Agent and
the Grantor or Grantors with respect to which such waiver, amendment or modification is to apply,
subject to any consent required in accordance with Section 10.01 of the Credit Agreement. This
Agreement shall be construed as a separate agreement with respect to each Grantor and may be
amended, modified, supplemented, waived or released with respect to any Grantor without the
approval of any other Grantor and without affecting the obligations of any other Grantor hereunder.

          Section 8.03 Collateral Agent’s Fees and Expenses; Indemnification.

          (a) The parties hereto agree that the Collateral Agent shall be entitled to reimbursement
of its expenses incurred hereunder as provided in Section 10.04 of the Credit Agreement.

          (b) Without limitation of its indemnification obligations under the other Loan Documents,
each Grantor jointly and severally agrees to indemnify the Collateral Agent and the other
Indemnitees against, and hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and reasonably related expenses (including the reasonable fees, charges and
disbursements of any counsel for any Indemnitee) incurred by any Indemnitee or asserted against any
Indemnitee by any third party or by any Grantor arising out of, in connection with, or as a result
of, (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties hereto of their
respective obligations hereunder or thereunder or the consummation of the transactions contemplated
hereby or thereby or, in the case of the Administrative Agent (and any sub-agent thereof) and its
Related Parties only, the administration of this Agreement and the other Loan Documents or (ii) any
actual or prospective claim, litigation, investigation or proceeding relating to any of the
foregoing brought by a third party or by any Grantor or any other Loan Party or any of such
Borrower’s or such Loan Party’s directors, shareholders or creditors, and regardless of whether any
Indemnitee is a party thereto; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related
expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to
have resulted from the gross negligence, fraud, bad faith or willful misconduct of such Indemnitee.

          (c) Any such amounts payable as provided hereunder shall be additional Secured Obligations
secured by the Collateral Documents. The provisions of this Section 8.03 shall remain
operative and in full force and effect regardless of the termination of this Agreement

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or any other
Loan Document, the consummation of the transactions contemplated hereby, the repayment of any of
the Secured Obligations, the invalidity or unenforceability of any term or provision of this
Agreement or any other Loan Document, or any investigation made by or on behalf of the Collateral
Agent or any other Secured Party. All amounts due under this Section 8.03 shall be payable
within 10 Business Days of written demand therefor.

          Section 8.04 Successors and Assigns. Whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the permitted successors and assigns of such
party; and all covenants, promises and agreements by or on behalf of any Grantor or the Collateral
Agent that are contained in this Agreement shall bind and inure to the benefit of their respective
successors and assigns.

          Section 8.05 Survival of Agreement. All covenants, agreements, indemnities, representations and
warranties made by the Grantors in the Loan Documents and in the certificates or other instruments
delivered in connection with or pursuant to this Agreement or any other Loan Document shall be
considered to have been relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Revolving Credit Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party or on its behalf
and, notwithstanding that any Senior Credit Party may have had notice or knowledge of any Default
or Event of Default or incorrect representation or warranty at the time any credit is extended, and
shall continue in full force and effect until this Agreement is terminated as provided in
Section 8.13 hereof, or with respect to such Grantor or such Grantor is otherwise released
from its obligations under this Agreement in accordance with the terms hereof.

          Section 8.06 Counterparts; Effectiveness; Several Agreement. This Agreement and each other Loan
Document may be executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument. Delivery by telecopier or
by electronic pdf copy of an executed counterpart of a signature page to this Agreement and each
other Loan Document shall be effective as delivery of an original executed counterpart of this
Agreement and such other Loan Document. This Agreement shall become effective when it shall have
been executed by the Grantors and the Collateral Agent and thereafter shall be binding upon and
inure to the benefit of each Grantor and the Collateral Agent and their respective permitted
successors and assigns, except that no Grantor shall have the right to assign its rights hereunder
or any interest herein except as otherwise permitted hereby or by the Credit Agreement. This
Agreement shall be construed as a separate agreement with respect to each Grantor and may be
amended, restated, modified, supplemented, waived or released with respect to any Grantor without
the approval of any other Grantor and without affecting the obligations of any other Grantor
hereunder.

          Section 8.07 Severability. If any provision of this Agreement or the other Loan Documents is held
to be illegal, invalid or unenforceable, the legality, validity and enforceability of the remaining
provisions of this Agreement and the other Loan Documents shall not be affected or impaired
thereby. The invalidity of a provision in a particular jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

-29-

 

          Section 8.08 Right of Set-Off. In addition to any rights and remedies of the Lenders provided by
Law, upon the occurrence and during the continuance of any Event of Default, each Lender and its
Affiliates and each L/C Issuer and its Affiliates is authorized at any time and from time to time,
after obtaining the prior written consent of the Administrative Agent (such consent not to be
unreasonably withheld), without prior notice to the Lead Borrower or any other Loan Party, any such
notice being waived by the Lead Borrower (on its own behalf and on behalf of each Loan Party and
its Subsidiaries) to the fullest extent permitted by applicable Law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final, in whatever currency) at
any time held by, and other Indebtedness at any time owing by, such Lender and its Affiliates or
such L/C Issuer and its Affiliates, as the case may be, to or for the credit or the account of the
respective Loan Parties and their Subsidiaries against any and all Secured Obligations owing to
such Lender and its Affiliates or such L/C Issuer and its Affiliates hereunder or under any other
Loan Document, now or hereafter existing, irrespective of whether or not such Agent or such Lender
and its Affiliates or such L/C Issuer and its Affiliates have made demand under this Agreement or
any other Loan Document and although such Secured Obligations may be contingent or unmatured or are
owed to a branch or office of such Lender or L/C Issuer different from the branch or office holding
such deposit or obligated on such indebtedness. Notwithstanding anything to the contrary contained
herein, no Lender or its Affiliates and no L/C Issuer or its Affiliates shall have a right to set
off and apply any deposits held or other Indebtedness owing by such Lender or its Affiliates or
such L/C Issuer or its Affiliates, as the case may be, to or for the credit or the account of any
Subsidiary of a Loan Party which is not a “United States person” within the meaning of Section
7701(a)(30) of the Code unless such Subsidiary is not a direct or indirect subsidiary of the
Borrowers. Each Lender and L/C Issuer agrees to notify the Lead Borrower and the Administrative
Agent promptly after any such set off and application made by such Lender or L/C Issuer, as the
case may be; provided that the failure to give such notice shall not affect the validity of
such setoff and application. The rights of the Administrative Agent, each Lender and each L/C
Issuer under this Section 8.08 are in addition to other rights and remedies (including
other rights of setoff) that the Administrative Agent, such Lender and such L/C Issuer may have.

          Section 8.09 GOVERNING LAW.

THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK; PROVIDED, HOWEVER, THAT IF THE LAWS OF ANY JURISDICTION OTHER THAN NEW YORK
SHALL GOVERN IN REGARD TO THE VALIDITY, PERFECTION OR EFFECT OF PERFECTION OF ANY LIEN OR IN REGARD
TO PROCEDURAL MATTERS AFFECTING ENFORCEMENT OF ANY LIENS IN COLLATERAL, SUCH LAWS OF SUCH OTHER
JURISDICTIONS SHALL CONTINUE TO APPLY TO THAT EXTENT.

          Section 8.10 WAIVER OF RIGHT TO TRIAL BY JURY. EACH OF THE GRANTORS, THE COLLATERAL AGENT AND THE
SECURED PARTIES HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY.

-30-

 

          Section 8.11 Headings. Article and Section headings and the Table of Contents used herein are for
convenience of reference only, are not part of this Agreement and are not to affect the
construction of, or to be taken into consideration in interpreting, this Agreement.

          Section 8.12 Security Interest Absolute. All rights of the Collateral Agent hereunder, the
Security Interest, the grant of a security interest in the Pledged Collateral and all obligations
of each Grantor hereunder shall be absolute and unconditional irrespective of (a) any lack of
validity or enforceability of the Credit Agreement, any other Loan Document, any agreement with
respect to any of the Secured Obligations or any other agreement or instrument relating to any of
the foregoing, (b) any change in the time, manner or place of payment of, or in any other term of,
all or any of the Secured Obligations, or any other amendment or waiver of or any consent to any
departure from the Credit Agreement, any other Loan Document, or any other agreement or instrument,
(c) any exchange, release or non-perfection of any Lien on other collateral, or any release or
amendment or waiver of or consent under or departure from any guarantee, securing or guaranteeing
all or any of the Secured Obligations or (d) subject only to termination of a Grantor’s obligations
hereunder in accordance with the terms of Section 8.13, but without prejudice to
reinstatement rights under Section 2.4 of the Guaranty, any other circumstance that might otherwise
constitute a defense available to, or a discharge of, any Grantor in respect of the Secured
Obligations or this Agreement.

          Section 8.13 Termination or Release.

          (a) This Agreement, the Security Interest and all other security interests granted hereby
shall terminate with respect to all Secured Obligations when (i) the Revolving Credit Commitments
have expired or been terminated, (ii) the principal of and interest on each Revolving Credit Loan
(including Swing Line Loans) and all fees and other Secured Obligations (other than (x) obligations
under Secured Hedge Agreements, (y) Cash Management Obligations and (z) contingent indemnity
obligations) shall have been paid in full, (iii) all Letters of Credit shall have expired or
terminated (or been Cash Collateralized or backstopped in an amount equal to 101.5% of the L/C
Obligations or in respect of which other arrangements reasonably satisfactory to the Administrative
Agent and L/C Issuers have been made) and (iv) all L/C Obligations have been reduced to zero (or
been Cash Collateralized or backstopped in an amount equal to 101.5% of the L/C Obligations or in
respect of which other arrangements reasonably satisfactory to the Administrative Agent and L/C
Issuers have been made); provided that in connection with the termination of this
Agreement, the Collateral Agent may require such indemnities as it shall reasonably deem necessary
or appropriate to protect the Secured Parties against loss on account of credits previously applied
to the Secured Obligations that may subsequently be reversed or revoked.

          (b) A Grantor shall automatically be released from its obligations hereunder and the
Security Interest in the Collateral of such Grantor shall be automatically released upon the
consummation of any transaction permitted by the Credit Agreement as a result of which such Grantor
(i) ceases to be a Restricted Subsidiary or is designated as an Unrestricted Subsidiary, (ii)
ceases to be a Material Domestic Subsidiary or (iii) becomes an Excluded Subsidiary;
provided that the Required Lenders shall have consented to such transaction (to the extent
required by the Credit Agreement) and the terms of such consent did not provide otherwise.

-31-

 

          (c) Upon any sale or other transfer by any Grantor of any Collateral that is permitted
under the Credit Agreement (other than to another Grantor), or upon the effectiveness of any
written consent to the release of the security interest granted hereby in any Collateral pursuant
to Section 9.10 or 10.01 of the Credit Agreement, the security interest in such Collateral shall be
automatically released.

          (d) In connection with any termination or release pursuant to paragraph (a),
(b) or (c), the Collateral Agent shall promptly (after reasonable advance notice)
execute and deliver to any Grantor, at such Grantor’s expense, all documents that such Grantor
shall reasonably request to evidence such termination or release. Any execution and delivery of
documents pursuant to this Section 8.13 shall be without recourse to or warranty by the
Collateral Agent or any other Secured Party.

          (e) At any time that the respective Grantor desires that the Collateral Agent take any
action described in immediately preceding clause (d), it shall, upon request of the
Collateral Agent, deliver to the Collateral Agent an officer’s certificate certifying that the
release of the respective Collateral is permitted pursuant to paragraph (a), (b) or
(c). The Collateral Agent shall have no liability whatsoever to any Secured Party as the
result of any release of Collateral by it as permitted (or which the Collateral Agent in good faith
believes to be permitted) by this Agreement.

          Section 8.14 Additional Guarantors. Pursuant to Section 6.11 of the Credit Agreement, certain
Subsidiaries of the Loan Parties that were not in existence or not Grantors on the date of the
Credit Agreement that are required to become Guarantors pursuant to the Collateral and Guarantee
Requirement are required to enter in this Agreement as Grantors. Upon execution and delivery by
the Collateral Agent and a Restricted Subsidiary of a Security Agreement Supplement, such
Restricted Subsidiary shall become a Grantor hereunder with the same force and effect as if
originally named as a Grantor herein. The execution and delivery of any such instrument shall not
require the consent of any other Loan Party hereunder. The rights and obligations of each Loan
Party hereunder shall remain in full force and effect notwithstanding the addition of any new Loan
Party as a party to this Agreement.

          Section 8.15 Collateral Agent Appointed Attorney-in-Fact. Each Grantor hereby appoints the
Collateral Agent the attorney-in-fact of such Grantor for the purpose of carrying out the
provisions of this Agreement and taking any action and executing any instrument that the Collateral
Agent may deem necessary or advisable to accomplish the purposes hereof at any time after and
during the continuance of a Cash Dominion Event or an Event of Default, as applicable, which
appointment is irrevocable and coupled with an interest. Without limiting the generality of the
foregoing, the Collateral Agent shall have the right, (i) upon the occurrence and during the
continuance of a Cash Dominion Event and (unless a Bankruptcy Event of Default has occurred and is
continuing) delivery of notice by the Collateral Agent to the Lead Borrower of its intent to
exercise such rights, with full power of substitution either in the Collateral Agent’s name or in
the name of such Grantor (a) to take actions required to be taken by the Grantors under
Article V of this Agreement; and (b) to receive, endorse, assign and/or deliver any and all
notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the
Collateral or any part thereof; and (ii) upon the occurrence and during the continuance of an Event
of Default

-32-

 

and (unless a Bankruptcy Event of Default has occurred and is continuing) delivery of
notice by the Collateral Agent to the Borrower of its intent to exercise such rights, with full
power of substitution either in the Collateral Agent’s name or in the name of such Grantor (a) to
demand, collect, receive payment of, give receipt for and give discharges and releases of all or
any of the Collateral; (b) to sign the name of any Grantor on any invoice or bill of lading
relating to any of the Collateral; (c) to send verifications of Accounts to any Account Debtor; (d)
to commence and prosecute any and all suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect or otherwise realize on all or any of the Collateral or
to enforce any rights in respect of any Collateral; (e) to settle, compromise, compound, adjust or
defend any actions, suits or proceedings relating to all or any of the Collateral; (f) to notify,
or to require any Grantor to notify, Account Debtors to make payment directly to the Collateral
Agent or to a Collateral Account and adjust, settle or compromise the amount of payment of any
Account; and (g) to use, sell, assign, transfer, pledge, make any agreement with respect to or
otherwise deal with all or any of the Collateral, and to do all other acts and things necessary to
carry out the purposes of this Agreement, as fully and completely as though the Collateral Agent
were the absolute owner of the Collateral for all purposes; provided that nothing herein
contained shall be construed as requiring or obligating the Collateral Agent to make any commitment
or to make any inquiry as to the nature or sufficiency of any payment received by the Collateral
Agent, or to present or file any claim or notice, or to take any action with respect to the
Collateral or any part thereof or the moneys due or to become due in respect thereof or any
property covered thereby. The Collateral Agent and the other Secured Parties shall be accountable
only for amounts actually received as a result of the exercise of the powers granted to them
herein, and neither they nor their officers, directors, employees or agents shall be responsible to
any Grantor for any act or failure to act hereunder, except for their own gross negligence or
willful misconduct or that of any of their Affiliates, directors, officers, employees, counsel,
agents or attorneys-in-fact.

          Section 8.16 Recourse; Limited Obligations. This Agreement is made with full recourse to each
Grantor and pursuant to and upon all the warranties, representations, covenants and agreements on
the part of such Grantor contained herein, in the Loan Documents and the other Loan Documents and
otherwise in writing in connection herewith or therewith, with respect to the Secured Obligations
of each applicable Secured Party. It is the desire and intent of each Grantor and each applicable
Secured Party that this Agreement shall be enforced against each Grantor to the fullest extent
permissible under the laws applied in each jurisdiction in which enforcement is sought.

          Section 8.17 Mortgages. In the event that any of the Collateral hereunder is also subject to a
valid and enforceable Lien under the terms of a Mortgage and the terms thereof are inconsistent
with the terms of this Agreement, then with respect to such Collateral, the terms of such Mortgage
shall control in the case of Fixtures and real estate leases, letting and licenses of, and
contracts, and agreements relating to the lease of, real property, and the terms of this Agreement
shall control in the case of all other Collateral.

          Section 8.18 Intercreditor Agreement. Reference is made to the Intercreditor Agreement.
Notwithstanding any other provision contained herein, this Agreement, the Liens created hereby and
the rights, remedies, duties and obligations provided for herein are subject in all respects to the
provisions of the Intercreditor Agreement and, to the extent

-33-

 

provided therein, the applicable
Noteholder Lien Security Documents. In the event of any conflict or inconsistency between the
provisions of this Agreement and the Intercreditor Agreement, the provisions of the Intercreditor
Agreement shall control.

[Signature Pages Follow]

-34-

 

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

	 	 	 	 	 
	 	SCORPIO ACQUISITION CORPORATION

 	 
	 	By:  	/s/ Jason Giordano 	 
	 	 	Name:  	Jason Giordano 	 
	 	 	Title:  	Vice President and Treasurer 	 
	 
	 	SCORPIO MERGER SUB CORPORATION

 	 
	 	By:  	/s/ Jason Giordano 	 
	 	 	Name:  	Jason Giordano 	 
	 	 	Title:  	Vice President and Treasurer 	 
	 

[Signature Page to the Security Agreement]

S-1

 

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

	 	 	 	 	 
	 	POLYMER GROUP, INC.

 	 
	 	By:  	/s/ Dennis E. Norman 	 
	 	 	Name:  	Dennis E. Norman 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

[Signature Page to the Security Agreement]

S-2

 

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

	 	 	 	 	 
	 	[CHICOPEE, INC.
DOMINION TEXTILE (USA), L.L.C.

FABRENE, L.L.C.

PGI EUROPE, INC.

PGI POLYMER, INC.]

 	 
	 	By:  	/s/ Dennis E. Norman 	 
	 	 	Name:  	Dennis E. Norman 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

[Signature Page to the Security Agreement]

S-3

 

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

	 	 	 	 	 
	 	CITIBANK, N.A.

 	 
	 	By:  	/s/ Michael Smolow 	 
	 	 	Name:  	Michael Smolow 	 
	 	 	Title:  	Vice President 	 
	 

[Signature Page to the Security Agreement]

S-4

 

EXHIBIT A TO SECURITY AGREEMENT

FORM OF SECURITY AGREEMENT SUPPLEMENT

          SUPPLEMENT NO. __ dated as of ________, to the Security Agreement (as amended, restated,
supplemented or otherwise modified, the “Security Agreement”), dated as of January 28,
2011, by and among Polymer Group, Inc., a Delaware corporation and successor in interest to Scorpio
Merger Sub Corporation (the “Lead Borrower”), the other Borrowers party thereto, Holdings,
the other Guarantors party thereto (together with the Borrowers and Holdings, collectively, the
“Grantors”) and Citibank, N.A., as Administrative Agent and Collateral Agent (in such
capacity, the “Collateral Agent”) for the Secured Parties.

          A. Reference is made to the Credit Agreement, dated as of January 28, 2011 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by
and among the Borrowers, Holdings, the Collateral Agent, the other agents listed therein and the
Lenders from time to time party thereto.

          B. Capitalized terms used herein and not otherwise defined herein shall have the meanings
assigned to such terms in the Security Agreement referred to therein. Capitalized terms used
herein and not otherwise defined herein or in the Security Agreement shall have the meanings
assigned to such terms in the Credit Agreement.

          C. The Grantors have entered into the Security Agreement in order to induce (x) the Lenders
to make Loans and (y) each L/C Issuer to issue Letters of Credit. Section 8.14 of the Security
Agreement provides that additional Subsidiaries of the Loan Parties that are required to become
Guarantors pursuant to the Collateral and Guarantee Requirement may become Grantors under the
Security Agreement by execution and delivery of an instrument substantially in the form of this
Supplement. The undersigned Restricted Subsidiary (the “New Subsidiary”) is executing this
Supplement in accordance with the requirements of the Credit Agreement to become a Grantor under
the Security Agreement in order to induce the Lenders to make additional Loans and as consideration
for Loans previously made.

          Accordingly, the Collateral Agent and the New Subsidiary agree as follows:

     Section 1. In accordance with Section 8.14 of the Security Agreement, the New
Subsidiary by its signature below becomes a Grantor under the Security Agreement with the
same force and effect as if originally named therein as a Grantor and the New Subsidiary
hereby (a) agrees to all the terms and provisions of the Security Agreement applicable to it
as a Grantor thereunder and (b) represents and warrants that the representations and
warranties made by it as a Grantor thereunder are true and correct on and as of the date
hereof; provided that, to the extent that such representations and warranties
specifically refer to an earlier date, they shall be true and correct in all respects as of
such earlier date. In furtherance of the foregoing, the New Subsidiary, as security for the
payment and performance in full of the Secured Obligations does hereby create and grant to
the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties,
their successors and assigns, a security interest in and lien on all of the New Subsidiary’s
right, title and interest in and to the Collateral (as defined in the Security Agreement) of
the

Exhibit A-1

 

New Subsidiary. Each reference to a “Grantor” in the Security Agreement shall be deemed
to include the New Subsidiary. The Security Agreement is hereby incorporated herein by
reference.

     Section 2. The New Subsidiary represents and warrants to the Collateral Agent and the
other Secured Parties that this Supplement has been duly authorized, executed and delivered
by it and constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms.

     Section 3. This Supplement may be executed in counterparts (and by different parties
hereto on different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Supplement shall become
effective when the Collateral Agent shall have received a counterpart of this Supplement
that bears the signature of the New Subsidiary and the Collateral Agent has executed a
counterpart hereof. Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart of this
Supplement.

     Section 4. The New Subsidiary hereby represents and warrants that (a) set forth on
Schedule I attached hereto is a true and correct schedule of the location of any and all
Collateral of the New Subsidiary and (b) set forth under its signature hereto is the true
and correct legal name of the New Subsidiary, its jurisdiction of formation and the location
of its chief executive office (or if different, its “location” as determined in accordance
with Section 9-307 of the UCC).

     Section 5. Except as expressly supplemented hereby, the Security Agreement shall
remain in full force and effect.

     Section 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.

     Section 7. In case any one or more of the provisions contained in this Supplement
should be held invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and in the Security Agreement
shall not in any way be affected or impaired thereby (it being understood that the
invalidity of a particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties hereto shall
endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.

     Section 8. All communications and notices hereunder shall be in writing and given as
provided in Section 8.01 of the Security Agreement.

     Section 9. The New Subsidiary agrees to reimburse the Collateral Agent for its
reasonable out-of-pocket expenses in connection with this Supplement, including all
reasonable attorneys’ fees of counsel for the Collateral Agent, court costs, expenses and
other charges relating thereto.

Exhibit A-2

 

          IN WITNESS WHEREOF, the New Subsidiary and the Collateral Agent have duly executed this
Supplement to the Security Agreement as of the date first above written.

	 	 	 	 	 
	 	[NAME OF NEW SUBSIDIARY]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	Legal Name:

Jurisdiction of Formation:

Location of Chief Executive Office:
 	 

	 	 	 	 	 
	 	CITIBANK, N.A., as Collateral Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

Exhibit A-3

 

	 	 	 	 	 

SCHEDULE I TO SECURITY AGREEMENT SUPPLEMENT

LOCATION OF COLLATERAL

	 	 	 

	Description
	 	Location

EQUITY INTERESTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Number and	 	 
	 	 	Number of	 	Registered	 	Class of	 	Percentage of
	Issuer	 	Certificate	 	Owner	 	Equity Interest	 	Equity Interests
	 

	 	 
	 	 
	 	 
	 	 

PROMISSORY NOTES

	 	 	 	 	 	 	 
	 	 	Principal	 	 	 	 
	 	 	Amount as of the date	 	 	 	 
	 	 	of issuance	 	Date of	 	 
	Issuer	 	(or delivery)	 	Note/Instrument	 	Maturity Date
	 

	 	 
	 	 
	 	 

COMMERCIAL TORT CLAIMS

INTELLECTUAL PROPERTY

((a) U.S. Patents, U.S. Patent Applications, (b) U.S. Trademark Registrations and Applications, (c)
U.S. Copyright Registrations and Applications and (d) exclusive Licenses of U.S. Patents, Patent
Applications, Trademark Registrations or Applications and Copyrights where the New Subsidiary is
the Licensee)

REAL PROPERTY (LEASED AND OWNED)

Schedule I-1

 

BANK ACCOUNTS

Schedule I-2

 

EXHIBIT B TO SECURITY AGREEMENT

Form of Perfection Certificate

[TO BE INSERTED]

Exhibit B-1

 

EXHIBIT C TO SECURITY AGREEMENT

GRANT OF SECURITY INTEREST

IN UNITED STATES TRADEMARKS

This Trademark Security Agreement, dated as of [____________] by and between [Name of Grantor], a [
] formed under the laws of [ ] (the “Grantor”), in favor of CITIBANK, N.A., in its
capacity as Collateral Agent pursuant to the Credit Agreement dated as of the date hereof (in such
capacity, the “Grantee”).

W I T N E S S E T H:

Whereas, the Grantor is party to a Security Agreement of even date herewith (the
“Security Agreement”) in favor of the Grantee pursuant to which the Grantor is required to
execute and deliver this Trademark Security Agreement;

Now, Therefore, in consideration of the premises and to induce the Grantee, for
the benefit of the Secured Parties, to enter into the Credit Agreement, the Grantor hereby agrees
with the Grantee as follows:

SECTION 1. Defined Terms. Unless otherwise defined herein, terms defined in the
Security Agreement and used herein have the meaning given to them in the Security Agreement.

SECTION 2. Grant of Security Interest in Trademark Collateral. The Grantor hereby
pledges and grants to the Grantee for the benefit of the Secured Parties a lien on and security
interest in and to all of its right, title and interest in, to and under all the Trademarks of the
Grantor including, without limitation, those items listed on Schedule I attached hereto and all
Proceeds of any and all of the foregoing; provided that any United States Trademark,
applications filed in the United States Patent and Trademark Office on the basis of any Grantor’s
“intent-to-use” such Trademarks will not be deemed to be Collateral unless and until a “Statement
of Use” or “Amendment to Allege Use” has been filed and accepted in the United States Patent and
Trademark Office, whereupon such application shall be automatically subject to the security
interest granted herein and deemed to be included in the Collateral.

SECTION 3. Security Agreement. The security interest granted pursuant to this
Trademark Security Agreement is granted in connection with the Security Agreement and is expressly
subject to the terms and conditions thereof. Grantor hereby acknowledges and affirms that the
rights and remedies of the Grantee with respect to the security interest in the Trademarks made and
granted hereby are more fully set forth in the Security Agreement, the terms and provisions of
which are incorporated by reference herein as if fully set forth herein. The Security Agreement
(and all rights and remedies of the Lenders thereunder) shall remain in full force and effect in
accordance with its terms. In the event that any provision of this Trademark Security Agreement is
deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall
control.

SECTION 4. Purpose. This Trademark Security Agreement has been executed and delivered
by the Grantor for the purpose of recording the grant of security interest herein with the United
States Patent and Trademark Office.

Exhibit C-1

 

SECTION 5. Termination. Upon the payment in full of the Secured Obligations and
termination of the Security Agreement, the Grantee shall, at the reasonable request of the Grantor,
execute, acknowledge, and deliver to the Grantor an instrument in writing in recordable form
releasing the collateral pledge, grant, lien and security interest in the Trademarks listed on
Schedule I attached hereto.

SECTION 6. Counterparts. This Trademark Security Agreement may be executed in any
number of counterparts, all of which shall constitute one and the same instrument, and any party
hereto may execute this Trademark Security Agreement by signing and delivering one or more
counterparts.

[signature page follows]

Exhibit C-2

 

In Witness Whereof, the Grantor has caused this Trademark Security Agreement to be
executed and delivered by its duly authorized officer as of the date first set forth above.

	 	 	 	 	 
	 	Very truly yours,

[NAME OF GRANTOR]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	Accepted and Agreed:

CITIBANK, N.A.,

as Collateral Agent and Grantee

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

Exhibit C-3

 

	 	 	 	 	 

SCHEDULE I

to

GRANT OF SECURITY INTEREST

IN UNITED STATES TRADEMARKS

	 	 	 	 	 	 	 
	Owner	 	Trademark	 	Registration No. or Serial No.
	  

	 	 

Schedule I-1

 

EXHIBIT D TO SECURITY AGREEMENT

GRANT OF SECURITY INTEREST

IN UNITED STATES PATENTS

This Patent Security Agreement, dated as of [____________], by and between [Name of Grantor], a [
] formed under the laws of [ ] (the “Grantor”), in favor of CITIBANK, N.A., in its
capacity as Collateral Agent pursuant to the Credit Agreement dated as of the date hereof (in such
capacity, the “Grantee”).

W I T N E S S E T H :

Whereas, the Grantor is party to a Security Agreement of even date herewith (the
“Security Agreement”) in favor of the Grantee pursuant to which the Grantor is required to
execute and deliver this Patent Security Agreement;

Now, Therefore, in consideration of the premises and to induce the Grantee, for the
benefit of the Secured Parties, to enter into the Credit Agreement, the Grantor hereby agrees with
the Grantee as follows:

SECTION 1. Defined Terms. Unless otherwise defined herein, terms defined in the
Security Agreement and used herein have the meaning given to them in the Security Agreement.

SECTION 2. Grant of Security Interest in Patent Collateral. The Grantor hereby pledges
and grants to the Grantee for the benefit of the Secured Parties a lien on and security interest in
and to all of its right, title and interest in, to and under all the Patents of the Grantor
including, without limitation, those items listed on Schedule I attached hereto and all Proceeds of
any and all of the foregoing.

SECTION 3. Security Agreement. The security interest granted pursuant to this Patent
Security Agreement is granted in connection with the Security Agreement and is expressly subject to
the terms and conditions thereof. Grantor hereby acknowledges and affirms that the rights and
remedies of the Grantee with respect to the security interest in the Patents made and granted
hereby are more fully set forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein. The Security Agreement (and all
rights and remedies of the Lenders thereunder) shall remain in full force and effect in accordance
with its terms. In the event that any provision of this Patent Security Agreement is deemed to
conflict with the Security Agreement, the provisions of the Security Agreement shall control.

SECTION 4. Purpose. This Patent Security Agreement has been executed and delivered by
the Grantor for the purpose of recording the grant of security interest herein with the United
States Patent and Trademark Office.

SECTION 5. Termination. Upon the payment in full of the Secured Obligations and
termination of the Security Agreement, the Grantee shall, at the reasonable request of the Grantor,
execute, acknowledge, and deliver to the Grantor an instrument in writing in recordable form
releasing

Exhibit D-1

 

the collateral pledge, grant, lien and security interest in the Patents listed on
Schedule I attached hereto.

SECTION 6. Counterparts. This Patent Security Agreement may be executed in any number
of counterparts, all of which shall constitute one and the same instrument, and any party hereto
may execute this Patent Security Agreement by signing and delivering one or more counterparts.

[signature page follows]

Exhibit D-2

 

In Witness Whereof, the Grantor has caused this Patent Security Agreement to be executed
and delivered by its duly authorized officer as of the date first set forth above.

	 	 	 	 	 
	 	Very truly yours,

[NAME OF GRANTOR]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	Accepted and Agreed:

CITIBANK, N.A.,

as Collateral Agent and Grantee

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

Exhibit D-3

 

	 	 	 	 	 

SCHEDULE I

to

GRANT OF SECURITY INTEREST

IN UNITED STATES PATENTS

	 	 	 	 	 
	 	 	Patent or	 	 
	 	 	Patent	 	 
	 	 	Application	 	 
	Owner	 	Number	 	Title
	 

	 	 
	 	 

Schedule I-1

 

EXHIBIT E TO SECURITY AGREEMENT

GRANT OF SECURITY INTEREST

IN UNITED STATES COPYRIGHTS

This Copyright Security Agreement, dated as of [____________], by and between [Name of Grantor], a
[       ] formed under the laws of [       ] (the “Grantor”), in favor of CITIBANK, N.A., in
its capacity as Collateral Agent pursuant to the Credit Agreement dated as of the date hereof (in
such capacity, the “Grantee”).

W I T N E S S E T H :

Whereas, the Grantor is party to a Security Agreement of even date herewith (the
“Security Agreement”) in favor of the Grantee pursuant to which the Grantor is required to
execute and deliver this Copyright Security Agreement;

Now, Therefore, in consideration of the premises and to induce the Grantee, for the
benefit of the Secured Parties, to enter into the Credit Agreement, the Grantor hereby agrees with
the Grantee as follows:

SECTION 1. Defined Terms. Unless otherwise defined herein, terms defined in the
Security Agreement and used herein have the meaning given to them in the Security Agreement.

SECTION 2. Grant of Security Interest in Copyright Collateral. The Grantor hereby
pledges and grants to the Grantee for the benefit of the Secured Parties a lien on and security
interest in and to all of its right, title and interest in, to and under all the Copyrights of the
Grantor including, without limitation, those items listed on Schedule I attached hereto and all
Proceeds of any and all of the foregoing.

SECTION 3. Security Agreement. The security interest granted pursuant to this
Copyright Security Agreement is granted in connection with the Security Agreement and is expressly
subject to the terms and conditions thereof. Grantor hereby acknowledges and affirms that the
rights and remedies of the Grantee with respect to the security interest in the Copyrights made and
granted hereby are more fully set forth in the Security Agreement, the terms and provisions of
which are incorporated by reference herein as if fully set forth herein. The Security Agreement
(and all rights and remedies of the Lenders thereunder) shall remain in full force and effect in
accordance with its terms. In the event that any provision of this Copyright Security Agreement is
deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall
control.

SECTION 4. Purpose. This Copyright Security Agreement has been executed and delivered
by the Grantor for the purpose of recording the grant of security interest herein with the United
States Copyright Office.

SECTION 5. Termination. Upon the payment in full of the Secured Obligations and
termination of the Security Agreement, the Grantee shall, at the reasonable request of the Grantor,
execute, acknowledge, and deliver to the Grantor an instrument in writing in recordable form
releasing

Exhibit E-1

 

the collateral pledge, grant, lien and security interest in the Copyrights listed on
Schedule I attached hereto.

SECTION 6. Counterparts. This Copyright Security Agreement may be executed in any
number of counterparts, all of which shall constitute one and the same instrument, and any party
hereto may execute this Copyright Security Agreement by signing and delivering one or more
counterparts.

[signature page follows]

Exhibit E-2

 

In Witness Whereof, the Grantor has caused this Copyright Security Agreement to be
executed and delivered by its duly authorized officer as of the date first set forth above.

	 	 	 	 	 
	 	Very truly yours,

[NAME OF GRANTOR]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	Accepted and Agreed:

CITIBANK, N.A.,

as Collateral Agent and Grantee

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

Exhibit E-3

 

	 	 	 	 	 

SCHEDULE I

to

GRANT OF SECURITY INTEREST

IN UNITED STATES COPYRIGHTS

	 	 	 
	 	 	Registration
	Title	 	Number
	 
	 	 
	 
	 	 
	 
	 	 
	 
	 	 
	 
	 	 
	 
	 	 
	 
	 	 
	 
	 	 
	 
	 	 

Exhibit E-4exv10w4

Exhibit 10.4

EXECUTION VERSION

 

LIEN SUBORDINATION AND INTERCREDITOR AGREEMENT

dated as of

January 28, 2011,

among

CITIBANK, N.A.,

as ABL Agent,

WILMINGTON TRUST COMPANY,

as Noteholder Collateral Agent,

SCORPIO ACQUISITION CORPORATION,

POLYMER GROUP, INC.

and

the Subsidiaries of Polymer Group, Inc. named herein

 

 

 

          LIEN SUBORDINATION AND INTERCREDITOR AGREEMENT, dated as of January 28, 2011 (as amended,
supplemented or otherwise modified from time to time in accordance with the terms hereof, this
“Agreement”), among CITIBANK, N.A., as agent for the ABL Secured Parties referred to herein (in
such capacity, and together with its successors in such capacity, the “Original ABL Agent”),
WILMINGTON TRUST COMPANY, as collateral agent for the Noteholder Lien Secured Parties referred to
herein (in such capacity, and together with its successors in such capacity, the “Original
Noteholder Collateral Agent”), SCORPIO ACQUISITION CORPORATION (“Parent”), POLYMER GROUP, INC.
(“PGI”) and the subsidiaries of PGI named herein (the “Guarantors” and together with Parent and
PGI, the “Initial Grantors”).

          Reference is made to (a) the ABL Credit Agreement (such term and each other capitalized term
used and not otherwise defined herein having the meaning assigned to it in Article I), and (b) the
Indenture governing the Indenture Notes.

          In consideration of the mutual agreements herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the ABL Agent (for
itself and on behalf of the ABL Secured Parties), the Noteholder Collateral Agent (for itself and
on behalf of the Indenture Noteholder Lien Secured Parties and the Additional Noteholder Lien
Secured Parties, if any), and the Grantors agree as follows:

ARTICLE I

Definitions

          SECTION 1.01. Construction; Certain Defined Terms.

          (a) The definitions of terms herein shall apply equally to the singular and plural forms of
the terms defined. Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be
deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to
have the same meaning and effect as the word “shall.” Unless the context requires otherwise, (i)
any definition of or reference to any agreement, instrument, other document, statute or regulation
herein or in any Annex or Exhibit of this Agreement shall be construed as referring to such
agreement, instrument, other document, statute or regulation as from time to time amended,
restated, amended and restated, renewed, extended, supplemented or otherwise modified from time to
time, (ii) any reference herein to any Person shall be construed to include such Person’s
successors and assigns, but shall not be deemed to include the Subsidiaries of such Person unless
express reference is made to such Subsidiaries, (iii) the words “herein,” “hereof and “hereunder,”
and words of similar import, shall be construed to refer to this Agreement in its entirety and not
to any particular provision hereof, (iv) all references herein to Articles, Sections, Exhibits and
Annexes shall be construed to refer to Articles, Sections and Annexes of this Agreement, (v) unless
otherwise expressly qualified herein, the words “asset” and “property” shall be construed to have
the same

 

 

meaning and effect and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights and (vi) the term “or” is not exclusive.

          (b) All terms used in this Agreement that are defined in Article 1, 8 or 9 of the New York
UCC (whether capitalized herein or not) and not otherwise defined herein have the meanings assigned
to them in Article 1, 8 or 9 of the New York UCC. If a term is defined in Article 9 of the New
York UCC and another Article of the UCC, such term shall have the meaning assigned to it in Article
9 of the New York UCC.

          (c) Unless otherwise set forth herein, all references herein to the Noteholder Collateral
Agent shall be deemed to refer to the Noteholder Collateral Agent in its capacity as collateral
agent under the Noteholder Collateral Agency Agreement.

          (d) As used in this Agreement, the following terms have the meanings specified below:

          “ABL Agent” means the Original ABL Agent, and, from and after the date of execution and
delivery of an ABL Substitute Facility, the agent, collateral agent, trustee or other
representative of the lenders or holders of the ABL Debt Obligations evidenced thereunder or
governed thereby, in each case, together with its successors in such capacity.

          “ABL Credit Agreement” means the Credit Agreement, dated as of the date hereof, among each
Borrower named therein, the ABL Agent, the lenders party thereto from time to time and the other
agents named therein, and any credit agreement, loan agreement, note agreement, promissory note,
indenture or any other agreement or instrument evidencing or governing the terms of any ABL
Substitute Facility.

          “ABL Debt Documents” means the ABL Credit Agreement, the ABL Security Documents, the other
“Loan Documents” (as defined in the ABL Credit Agreement) and all other loan documents, notes,
guarantees, instruments and agreements governing or evidencing, or executed or delivered in
connection with, any ABL Substitute Facility.

          “ABL Debt Obligations” means the “Finance Obligations” as defined in the ABL Credit Agreement
(or any similar term of any ABL Substitute Facility) from time to time outstanding and, in any
event, ABL Debt Obligations shall expressly include any and all interest accruing and fees, costs
and charges incurred after the date of any filing by or against any Grantor of any petition or
complaint initiating any Insolvency or Liquidation Proceeding, regardless of whether any ABL
Secured Party’s claim therefor is enforceable, allowable or allowed as a claim in the Insolvency or
Liquidation Proceeding commenced by the filing of such petition or complaint.

          “ABL Facility Collateral” means all assets and properties subject to Liens created by the ABL
Security Documents to secure the ABL Debt Obligations.

-2-

 

          “ABL First Lien Collateral” means all present and future right, title and interest of the
Grantors in and to the following, whether now owned or hereafter acquired, existing or arising, and
wherever located:

          (a) Accounts (as defined in the ABL Credit Agreement as in effect on the date hereof);

          (b) inventory and indebtedness owed to any Grantor that arises from cash advances to enable
the obligor thereof to acquire inventory;

          (c) all rights of an unpaid vendor with respect to inventory;

          (d) deposit accounts, commodity accounts, securities accounts and lock-boxes, including all
money and certificated securities, uncertificated securities (other than as each may relate to
Equity Interests of the Grantors), securities entitlements and investment property credited thereto
or deposited therein (including all cash, marketable securities and other funds held in or on
deposit in any deposit account, commodity account or securities account), instruments, including
intercompany notes, chattel paper and all cash and cash equivalents, including cash and cash
equivalents securing reimbursement obligations in respect of letters of credit or other ABL Debt
Obligations;

          (e) general intangibles (other than any patents, trademarks, copyrights and other
intellectual property or any Equity Interests of Subsidiaries) pertaining to the other items of
property included within clauses (a), (b), (c) and (d) of this definition and all tax refunds and
rights to receive tax refunds (other than tax refunds in respect of or otherwise related to real
property, Equipment or fixtures);

          (f) books and records, supporting obligations, documents and related letters of credit,
letter-of-credit rights, commercial tort claims or other claims and causes of action, in each case,
to the extent arising out of, related to or given in exchange or settlement of any of the
foregoing;

          (g) the proceeds of any business interruption insurance policy, including, without
limitation, all rights to payment thereunder; and

          (h) all substitutions, replacements, accessions, products and proceeds (including, without
limitation, insurance proceeds, licenses, royalties, income, payments, claims, damages and proceeds
of suit) of all or any of the foregoing;

except to the extent that any item of property included in clauses (a) through (h)
constitutes an Excluded Asset; provided that in no case shall ABL First Lien Collateral
include (a) any identifiable cash proceeds from a sale, lease, conveyance or other
disposition of any Noteholder First Lien Collateral that has been deposited in a Collateral
Proceeds Account in accordance with the terms of the Indenture, until such time as such
cash proceeds are released therefrom in accordance with the terms of the Indenture and (b)
any real property, equipment, fixtures, intellectual property or Equity Interests of
Subsidiaries.

-3-

 

          “ABL Lender” means a “Lender” under (and as defined in) the ABL Credit Agreement (or under any
ABL Substitute Facility).

          “ABL Liens” means Liens on the ABL Facility Collateral created under the ABL Security
Documents to secure the ABL Debt Obligations (including Liens on such Collateral under the security
documents associated with any ABL Substitute Facility).

          “ABL Loan” means a “Loan” as defined in the ABL Credit Agreement (or any similar term of any
ABL Substitute Facility).

          “ABL Secured Parties” means, at any time, the “Secured Parties” as defined in the ABL Security
Documents (or any similar term of any ABL Substitute Facility).

          “ABL Security Documents” means any security agreements, pledge agreements, collateral
assignments, mortgages, deeds of trust, control agreements, guarantees, notes or any other
documents or instruments now existing or entered into after the date hereof that create Liens on
any assets or properties of any Grantor to secure any ABL Debt Obligations (including any such
agreements, assignments, mortgages, deeds of trust and other documents or instruments associated
with any ABL Substitute Facility).

          “ABL Substitute Facility” means any facility with respect to which the requirements contained
in Section 2.10(a) of this Agreement have been satisfied and that Replaces the ABL Credit
Agreement then in existence. For the avoidance of doubt, no ABL Substitute Facility shall be
required to be a revolving or asset-based loan facility and may be a facility evidenced or governed
by a credit agreement, loan agreement, note agreement, promissory note, indenture or any other
agreement or instrument; provided that any ABL Lien securing such ABL Substitute Facility shall be
subject to the terms of this Agreement for all purposes (including the lien priorities as set forth
herein as of the date hereof).

          “Additional Noteholder Lien Debt Documents” means the Additional Noteholder Lien Debt Facility
and the Additional Noteholder Lien Security Documents.

          “Additional Noteholder Lien Debt Facility” means one or more debt facilities, commercial paper
facilities, indentures or other agreements for which the requirements of Section 2.10(b) of
this Agreement have been satisfied, in each case with banks, other lenders or trustees, providing
for revolving credit loans, term loans, receivables financing (including through the sale of
receivables to such lenders or to special purpose entities formed to borrow from such lenders
against such receivables), letters of credit, notes or other borrowings, in each case, as amended,
restated, modified, renewed, refunded, restated, restructured, increased, supplemented, replaced or
refinanced in whole or in part from time to time in accordance with each applicable Secured
Document; provided that any Noteholder Lien securing such Additional

-4-

 

Noteholder Lien Debt Facility shall be subject to the terms of this Agreement for all purposes
(including the lien priorities as set forth herein as of the date hereof).

          “Additional Noteholder Lien Debt Obligations” means, with respect to any Grantor, any
obligations of such Grantor owed to any Additional Noteholder Lien Secured Party (or any of its
Affiliates) under the Additional Noteholder Lien Debt Documents and any Secured Notes Swap
Obligations.

          “Additional Noteholder Lien Secured Parties” means, at any time, the Noteholder Collateral
Agent, the trustee, agent or other representative of the holders of any Series of Noteholder Lien
Debt who maintains the transfer register for such Series of Noteholder Lien Debt, counterparties
holding Secured Notes Swap Obligations, the beneficiaries of each indemnification obligation
undertaken by any Grantor under any Additional Noteholder Lien Debt Document and each other holder
of, obligee in respect of, or lender pursuant to, any Series of Noteholder Lien Debt outstanding at
such time; provided that the Indenture Noteholder Lien Secured Parties shall not be deemed
Additional Noteholder Lien Secured Parties.

          “Additional Noteholder Lien Security Documents” means the Additional Noteholder Lien Debt
Facility (insofar as the same grants a Lien on any collateral) and all collateral trust agreements,
security agreements, pledge agreements, collateral assignments, mortgages, deeds of trust, control
agreements, guarantees, notes and any other documents or instruments now existing or entered into
after the date hereof that create Liens on any assets or properties of any Grantor to secure any
Additional Noteholder Lien Debt Obligations of the Grantors owed thereunder to any Additional
Noteholder Lien Secured Parties.

          “Additional Secured Debt” has the meaning assigned to that term in Section 2.10(b).

          “Affiliate” of any specified Person means any other Person directly or indirectly through one
or more intermediaries, controlling or controlled by or under direct or indirect common control
with such specified Person. For purposes of this definition, “control,” as used with respect to
any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise. For purposes of this definition, the terms “controlling,”
“controlled by” and “under common control with” shall have correlative meanings.

          “Bank Product” has the meaning assigned to that term in the ABL Credit Agreement (or any
similar term of any ABL Substitute Facility).

          “Bankruptcy Code” means Title 11 of the United States Code, or any similar foreign, federal or
state law for relief of debtors as now or hereinafter in effect.

          “Board of Directors” means (a) with respect to a corporation, the board of directors of the
corporation; (b) with respect to a partnership, the board of directors of the

-5-

 

general partner of the partnership; and (c) with respect to any other Person, the board or
committee of such Person serving a similar function.

          “Borrower” means, collectively, each of PGI and any domestic Subsidiaries that are borrowers
under the ABL Credit Agreement.

          “Capital Stock” means (a) in the case of a corporation, corporate stock, (b) in the case of an
association or business entity, any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock, (c) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or limited), and (d) any
other interest or participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.

          “Class” means, in the case of Noteholder Lien Debt, every Series of Noteholder Lien Debt,
taken together.

          “Collateral” means all of the assets and property of any Grantor, whether real, personal or
mixed, constituting the ABL Facility Collateral and the Noteholder Collateral.

          “Collateral Proceeds Account” means one or more deposit accounts or securities accounts
established or maintained by any Grantor or the Noteholder Collateral Agent or its agent for the
sole purpose of holding the proceeds of any sale or other disposition of any Noteholder First Lien
Collateral that are segregated in such account or accounts.

          “Covered Action” has the meaning assigned to that term in the Noteholder Collateral Agency
Agreement as in effect on the date hereof.

          “Discharge of Senior Secured Debt Obligations” means, with respect to any particular Senior
Secured Obligations, the occurrence of all of the following:

          (a) termination or expiration of all commitments to extend credit (or, in the case of Bank
Products and Secured Hedge Agreements, termination of arrangements giving rise to such debt) that
would constitute such Senior Secured Obligations;

          (b) payment in full in cash of the principal of, interest and premium (if any) on, fees and
other charges comprising such Senior Secured Obligations (other than any undrawn letters of credit)
(including, in any event, all such interest fees and other charges regardless of whether such
interest, fees and other charges are allowed or recoverable in any Insolvency and Liquidation
Proceeding under Section 506 of the Bankruptcy Code or otherwise);

          (c) discharge or cash collateralization (at the lower of (i) 101.5% of the aggregate undrawn
amount, and (ii) the percentage of the aggregate undrawn amount

-6-

 

required for release of liens under the terms of the applicable Senior Documents) of all
outstanding letters of credit constituting such Senior Secured Obligations; and

          (d) payment in full in cash of all other such Senior Secured Obligations that are outstanding
and unpaid at the time the principal of and interest and premium on all such Senior Secured
Obligations are paid in full in cash (other than any obligations for taxes, costs,
indemnifications, reimbursements, damages and other liabilities in respect of which no claim or
demand for payment has been made at such time); provided that the Discharge of Senior Secured Debt
Obligations shall not be deemed to have occurred in connection with a Replacement as contemplated
by Section 2.10(a).

          “Equally and Ratably” means, in reference to sharing of Liens or proceeds thereof as between
holders of any Noteholder Lien Obligations within the same Class, that such Liens or proceeds after
payment of all expenses in connection with the exercise of any remedies with respect to Collateral
subject to such Liens and fees and expenses of any Noteholder Collateral Agent and any trustee
thereunder.

          (a) will be allocated and distributed first to the Noteholder Collateral Agent or Secured Debt
Representative, as the case may be, for each outstanding Series of Noteholder Lien Debt within that
Class, for the account of the holders of such Series of Noteholder Lien Debt, ratably in proportion
to the principal of, and interest and premium (if any) and reimbursement
obligations (contingent or otherwise) with respect to letters of credit, if any, outstanding
(whether or not drawings have been made on such letters of credit) on, each outstanding Series of
Noteholder Lien Debt within that Class when the allocation or distribution is made, and thereafter;
and

          (b) will be allocated and distributed (if any remain after payment in full of all of the
principal of, and interest and premium (if any) and reimbursement obligations (contingent or
otherwise) with respect to letters of credit, if any, outstanding (whether or not drawings have
been made on such letters of credit), on all outstanding Noteholder Lien Obligations within that
Class) to the Noteholder Collateral Agent or Secured Debt Representative, as the case may be, for
each outstanding Series of Noteholder Lien Debt within that Class, for the account of the holders
of any remaining Noteholder Lien Obligations within that Class, ratably in proportion to the
aggregate unpaid amount of such remaining Noteholder Lien Obligations within that Class due and
demanded (with written notice to the Noteholder Collateral Agent or the Secured Debt
Representative, as the case may be) prior to the date such distribution is made.

          “Equity Interests” means Capital Stock and all warrants, options or other rights to acquire
Capital Stock, but excluding any debt security that is convertible into, or exchangeable for,
Capital Stock.

          “Event of Default” means an “Event of Default” under and as defined in the ABL Credit
Agreement, the Indenture or any Additional Noteholder Lien Debt Documents, as the context may
require.

-7-

 

          “Excluded Assets” (i) with respect to the ABL Liens, has the meaning given to such term in the
ABL Security Documents, and (ii) with respect to the Noteholder Liens, has the meaning given such
term in the Noteholder Lien Security Documents.

          “Grantor” means Parent, PGI and each direct or indirect Subsidiary of PGI that shall have
granted any Lien in favor of the ABL Agent and the Noteholder Collateral Agent on any of its assets
or properties to secure any of the Secured Debt Obligations.

          “Guarantors” has the meaning assigned to that term in the preamble hereto.

          “Holders of Noteholder Lien Debt” means (a) the Holders under and as defined in the Indenture,
(b) the holders or lenders pursuant to any Series of Noteholder Lien Debt, and (c) the holders or
lenders of any indebtedness under any Noteholder Substitute Facility.

          “Indenture” means the Indenture, dated as of the date hereof, among PGI, the other Grantors
party thereto from time to time, the Noteholder Collateral Agent and the Trustee, and any credit
agreement, loan agreement, note agreement, promissory note, indenture or any other agreement or
instrument evidencing or governing the terms of any Noteholder Substitute Facility.

          “Indenture Noteholder Security Documents” means the Noteholder Collateral Agency Agreement,
and any other security agreements, pledge agreements, collateral assignments, mortgages, deeds of
trust, control agreements, guarantees, notes or any other documents or instruments now existing or
entered into after the date hereof that create Liens on any assets or properties of any Grantor or
any of its Subsidiaries to secure any Indenture Noteholder Lien Obligations (including any such
agreements, assignments, mortgages, deeds of trust and other documents or instruments associated
with any Noteholder Substitute Facility).

          “Indenture Noteholder Lien Documents” means the Indenture, the Indenture Notes, the Indenture
Noteholder Security Documents and all other loan documents, notes, guarantees, instruments and
agreements governing or evidencing any Noteholder Substitute Facility.

          “Indenture Noteholder Lien Obligations” means, with respect to any Grantor, all “Secured
Obligations” as such term is defined in the Indenture, Noteholder Security Documents, any other
obligations of such Grantor owed to any Indenture Noteholder Lien Secured Party (or any of its
Affiliates) under the Indenture Noteholder Lien Documents and any Secured Notes Swap Obligations.

          “Indenture Noteholder Lien Secured Parties” means, at any time, the “Secured Parties” as
defined in the Indenture Noteholder Security Documents (or any similar term of any Noteholder
Substitute Facility).

-8-

 

          “Indenture Notes” means the 7.75% Senior Secured Notes due 2019 issued under the Indenture.

          “Initial Grantors”has the meaning assigned to such term in the preamble hereto.

          “Insolvency or Liquidation Proceeding” means:

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

          (b) any liquidation, dissolution, marshalling of assets or liabilities or other winding up of
or relating to Parent, PGI or any other Grantor, in each case whether or not voluntary and whether
or not involving bankruptcy or insolvency, in each case to the extent not permitted under the
Senior Documents;

          (c) any proceeding seeking the appointment of any trustee, receiver, liquidator, custodian or
other insolvency official with similar powers with respect to Parent, PGI or any other Grantor or
any of its assets; or

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

          “Intercreditor Agreement Joinder” means an agreement substantially in the form of Exhibit
A.

          “Junior Documents” means (a) in respect of the Noteholder First Lien Collateral, the ABL Debt
Documents and (b) in respect of the ABL First Lien Collateral, the Noteholder Lien Documents.

          “Junior Liens” means (a) in respect of the ABL First Lien Collateral, the Noteholder Liens on
such Collateral, and (b) in respect of the Noteholder First Lien Collateral, the ABL Liens on such
Collateral (other than the ABL Liens in respect of the Tranche 2 Sub-Facility Obligations).

          “Junior Representative” means (a) with respect to the Noteholder First Lien Collateral, the
ABL Agent and (b) with respect to the ABL First Lien Collateral, the Noteholder Collateral Agent.

          “Junior Secured Obligations” means (a) with respect to the Noteholder Lien Obligations (to the
extent such Obligations are secured, or intended to be secured, by the Noteholder First Lien
Collateral), the ABL Debt Obligations and (b) with respect

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to ABL Debt Obligations (to the extent such Obligations are secured, or intended to be
secured, by the ABL First Lien Collateral), the Noteholder Lien Obligations.

          “Junior Secured Obligations Collateral” means the Collateral in respect of which the Junior
Representative (on behalf of itself and the Junior Secured Obligations Secured Parties) holds a
Junior Lien.

          “Junior Secured Obligations Secured Parties” means (a) with respect to the Noteholder First
Lien Collateral, the ABL Secured Parties and (b) with respect to the ABL First Lien Collateral, the
Noteholder Lien Secured Parties.

          “Junior Secured Obligations Security Documents” means (a) with respect to the ABL First Lien
Collateral, the Noteholder Lien Security Documents, and (b) with respect to the Noteholder First
Lien Collateral, the ABL Security Documents.

          “Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise
perfected under applicable law, including any conditional sale or other title retention agreement,
any lease in the nature thereof, any agreement to give a security interest therein and any filing
of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent
statutes of any jurisdiction).

          “Lien Sharing and Priority Confirmation Joinder” means an agreement substantially in the form
of Exhibit B.

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

          “Noteholder Collateral” means all assets and properties subject to Liens created by the
Noteholder Lien Security Documents to secure the Noteholder Lien Obligations.

          “Noteholder Collateral Agency Agreement” means the Intercreditor and Collateral Agency
Agreement, dated as of the date hereof, among the Initial Grantors, the direct or indirect
Subsidiaries of the Grantors from time to time party thereto, the Trustee, the other Secured Debt
Representatives from time to time party thereto, the Noteholder Collateral Agent and the ABL Agent,
as amended, restated, adjusted, waived, renewed, extended, supplemented or otherwise modified from
time to time, in accordance with each applicable Secured Document.

          “Noteholder Collateral Agent” means the Original Noteholder Collateral Agent, and, from and
after the date of execution and delivery of an Noteholder Substitute Facility, the agent,
collateral agent, trustee or other representative of the lenders or other holders of the
indebtedness and other obligations evidence thereunder or governed thereby, in each case, together
with its successors in such capacity.

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          “Noteholder First Lien Collateral” means all present and future right, title and interest of
the Grantors, whether now owned or hereafter acquired, existing or arising, and wherever located,
in all of the assets and property of any Grantor, whether real, personal or mixed (other than in
the Excluded Assets and the ABL First Lien Collateral), including, without limitation, all: (a)
equipment; (b) Real Estate Assets; (c) intellectual property; (d) all general intangibles that do
not constitute ABL First Lien Collateral; (e) documents of title related to equipment; (f) Equity
Interests of the Company and Subsidiaries; (g) books and records, supporting obligations and
related letters of credit, commercial tort claims or other claims and causes of action, in each
case, to the extent related primarily to the foregoing; and (h) substitutions, replacements,
accessions, products and proceeds (including, without limitation, insurance proceeds, licenses,
royalties, income, payments, claims, damages and proceeds of suit) of any or all of the foregoing.

          “Noteholder Lien” means a Lien granted by the Noteholder Lien Security Documents to the
Noteholder Collateral Agent at any time upon any property of any other Grantor to secure Noteholder
Lien Obligations.

          “Noteholder Lien Debt” means the Indenture Notes, all additional notes, loans or other
indebtedness issued or incurred under any Additional Noteholder Lien Debt Documents and, with
respect to which the requirements of Section 2.10(b) have been satisfied, and all notes,
loans or other indebtedness issued or incurred under any Noteholder Substitute Facility.
Noteholder Lien Debt shall expressly include any and all interest accruing and fees, costs and
charges incurred after the date of any filing by or against any Grantor of any petition or
complaint initiating any Insolvency or Liquidation Proceeding, regardless of whether any Noteholder
Lien Secured Party’s claim therefor is enforceable, allowable or allowed as a claim in the
Insolvency or Liquidation Proceeding commenced by the filing of such petition or complaint.

          “Noteholder Lien Documents” means the Indenture Noteholder Lien Documents and the Additional
Noteholder Lien Debt Documents.

          “Noteholder Lien Obligations” means the “Secured Obligations” as defined in the Noteholder
Lien Security Documents, the Noteholder Lien Debt and all other Obligations owed to any Noteholder
Lien Secured Party from time to time.

          “Noteholder Lien Secured Parties” means the Indenture Noteholder Lien Secured Parties and the
Additional Noteholder Lien Secured Parties.

          “Noteholder Lien Security Documents” means the Indenture Noteholder Security Documents and the
Additional Noteholder Lien Security Documents.

          “Noteholder Substitute Facility” means any facility with respect to which the requirements
contained in Section 2.10(a) of this Agreement have been satisfied and that is permitted to
be incurred pursuant to the ABL Debt Documents, the proceeds of which are used to, among other
things, Replace the Indenture and/or any Additional Noteholder Lien Debt Facility then in
existence. For the avoidance of doubt, no

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Noteholder Substitute Facility shall be required to be evidenced by notes or other instruments
and may be a facility evidenced or governed by a credit agreement, loan agreement, note agreement,
promissory note, indenture or any other agreement or instrument; provided that any such Noteholder
Substitute Facility shall be subject to the terms of this Agreement for all purposes (including the
lien priority as set forth herein as of the date hereof) as the other Liens securing the Noteholder
Lien Obligations are subject to under this Agreement.

          “Obligations” means, with respect to any Secured Parties, any principal, interest, penalties,
fees, expenses, indemnifications, reimbursements, damages and other liabilities (including all
interest, fees and expenses accruing after the commencement of any Insolvency or Liquidation
Proceeding, even if such interest, fees and expenses are not enforceable, allowable or allowed as a
claim in such proceeding) under the Secured Documents of such Secured Party.

          “Officer” means the chief executive officer, the president, any vice president, the chief
operating officer or any chief financial officer, treasurer or controller of such Person and any
other officer or similar official thereof responsible for the administration of the obligations of
such Person in respect of this Agreement. Any document delivered hereunder that is signed by an
Officer of a Grantor shall be conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of such Grantor and such Officer shall be
conclusively presumed to have acted on behalf of such Grantor.

          “Officer’s Certificate” means a certificate signed on behalf of applicable Grantor by an
Officer of such Grantor, who must be the principal executive officer, the principal financial
officer, the treasurer or the principal accounting officer of such Grantor.

          “Original ABL Agent” has the meaning assigned to that term in the preamble hereto.

          “Original Noteholder Collateral Agent” has the meaning assigned to that term in the preamble
hereto.

          “Original Trustee” means Wilmington Trust Company, in its capacity as trustee under the
Indenture, and together with its successors in such capacity.

          “Parent” has the meaning assigned to that term in the preamble hereto.

          “Person” means any individual, sole proprietorship, partnership, limited liability company,
joint venture, joint-stock company, trust, unincorporated organization, association, corporation,
government or any agency or political subdivision thereof or any other entity.

          “PGI” has the meaning assigned to that term in the preamble hereto.

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          “Real Estate Asset” means, at any time of determination, any fee interest then owned by any
Grantor in any real property.

          “Replaces” means, (a) in respect of any agreement with reference to the ABL Credit Agreement
or the ABL Debt Obligations or any ABL Substitute Facility, that such agreement refinances,
replaces, exchanges or refunds the ABL Credit Agreement or such ABL Substitute Facility in whole
(in a transaction that is in compliance with Section 2.10(a)) and that all commitments
thereunder are terminated, or, to the extent permitted by the terms of the ABL Credit Agreement or
such ABL Substitute Facility, in part, and (b) in respect of any indebtedness with reference to the
Noteholder Lien Documents or the Noteholder Lien Obligations or any Noteholder Substitute Facility,
that such indebtedness refinances, replaces, exchanges or refunds the Noteholder Lien Documents or
such Noteholder Substitute Facility in whole (in a transaction that is in compliance with
Section 2.10(a)) and that all commitments thereunder are terminated, or, to the extent
permitted by the terms of the Noteholder Lien Documents or such Noteholder Substitute Facility, in
part. “Replace,” “Replaced” and “Replacement” shall have correlative meanings.

          “Representative” means (a) in the case of any Noteholder Lien Obligations, the Noteholder
Collateral Agent, and (b) in the case of any ABL Debt Obligations, the ABL Agent.

          “Secured Debt Obligations” means the Noteholder Lien Obligations (including the Obligations
incurred under each Series of Noteholder Lien Debt) and the ABL Debt Obligations.

          “Secured Debt Representative” means (a) in the case of the Indenture Notes, Noteholder
Collateral Agent, and (b) in the case of any other Series of Noteholder Lien Debt, the trustee,
agent or representative of the holders of such Series of Noteholder Lien Debt who maintains the
transfer register for such Series of Noteholder Lien Debt and is appointed as a representative of
such Series of Noteholder Lien Debt (for purposes related to the administration of the security
documents) pursuant to the indenture, credit agreement or other agreement governing such Series of
Noteholder Lien Debt.

          “Secured Documents” means the Noteholder Lien Documents and the ABL Debt Documents.

          “Secured Hedge Agreements” shall have the meaning ascribed to “Secured Hedge Agreements” in
the ABL Credit Agreement (or any similar term of any ABL Substitute Facility).

          “Secured Parties” means the Noteholder Lien Secured Parties and the ABL Secured Parties.

          “Secured Notes Swap Obligations” means, with respect to any Grantor, the obligations of such
Grantor under any interest rate swap agreement, interest rate cap agreement, interest rate collar
agreement, commodity swap agreement, commodity cap agreement, commodity collar agreement, foreign
exchange contract, currency swap

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agreement or similar agreement (including equity derivative agreements) providing for the
transfer or mitigation of interest rate, currency, commodity or equity risks generally or under
specific contingencies, in each case, to the extent secured under any Noteholder Lien Security
Document (but, for the avoidance of doubt, no Secured Obligations shall also constitute Secured
Hedge Agreements).

          “Security Documents” means the Indenture Noteholder Security Documents, the Additional
Noteholder Lien Security Documents and the ABL Security Documents.

          “Senior Documents” means (a) in respect of the Noteholder First Lien Collateral, the
Noteholder Lien Documents, and (b) in respect of the ABL First Lien Collateral, the ABL Debt
Documents.

          “Senior Liens” means (a) in respect of the ABL First Lien Collateral, the ABL Liens on such
Collateral, and (b) in respect of the Noteholder First Lien Collateral, the Noteholder Liens on
such Collateral.

          “Senior Representative” means (a) with respect to the Noteholder First Lien Collateral, the
Noteholder Collateral Agent, and (b) with respect to the ABL First Lien Collateral, the ABL Agent.

          “Senior Secured Obligations” means (a) with respect to the ABL Debt Obligations (to the extent
such obligations are secured, or are intended to be secured, by the Noteholder First Lien
Collateral), the Noteholder Lien Obligations and (b) with respect to Noteholder Lien Obligations
(to the extent such obligations are secured, or are intended to be secured, by the ABL First Lien
Collateral), the ABL Debt Obligations.

          “Senior Secured Obligations Collateral” means the Collateral in respect of which the Senior
Representative (on behalf of itself and the applicable Senior Secured Obligations Secured Parties)
holds a Senior Lien.

          “Senior Secured Obligations Secured Parties” means (a) with respect to the Noteholder First
Lien Collateral, the Noteholder Lien Secured Parties, and (b) with respect to the ABL First Lien
Collateral, the ABL Secured Parties.

          “Senior Secured Obligations Security Documents” means (a) with respect to the ABL First Lien
Collateral, the ABL Security Documents, and (b) with respect to the Noteholder First Lien
Collateral, the Indenture Noteholder Security Documents and the Additional Noteholder Lien Security
Documents.

          “Series of Noteholder Lien Debt” means, severally, the Indenture Notes and any additional
notes, any Additional Noteholder Lien Debt Facility and other indebtedness that constitutes
Noteholder Lien Debt.

          “Subsidiary” means, with respect to any specified Person (a) any corporation, association or
other business entity of which more than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any

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contingency) to vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by such Person or one or more of the other
subsidiaries of that Person (or a combination thereof); and (b) any partnership (i) the sole
general partner or the managing general partner of which is such Person or a subsidiary of such
Person or (ii) the only general partners of which are such Person or one or more subsidiaries of
such Person (or any combination thereof). Unless otherwise specified, a “Subsidiary” shall be a
Subsidiary of PGI.

          “TIA” means the Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as in effect on
the date hereof.

          “Tranche 2 Sub-Facility Loans” means (i) “Tranche 2 Revolving Credit Loans” as defined in the
ABL Credit Agreement, (ii) “Swing Line Loans,” as defined in the ABL Credit Agreement, to the
extent “Tranche 2 Revolving Credit Lenders,” as defined in the ABL Credit Agreement, hold “Tranche
2 Swing Line Participations,” as defined in the ABL Credit Agreement, in such Swing Line Loans in
their capacities as such, (iii) “Protective Advances,” as defined in the ABL Credit Agreement, to
the extent Tranche 2 Revolving Credit Lenders hold “Tranche 2 Protective Advance Participations,”
in such Protective Advances in their capacities as such, (iv) “L/C Advances”, as defined in the ABL
Credit Agreement, to the extent made by a Tranche 2 Revolving Credit Lender to fund its “Tranche 2
L/C Participation”, as defined in the ABL Credit Agreement, (v) “Tranche 2 L/C Borrowings,” as
defined in the ABL Credit Agreement, (vi) any “Unpaid L/C Lender Amount,” as defined in the ABL
Credit Agreement, resulting from a failure by a Tranche 2 Revolving Credit Lender in its capacity
as such to fund pursuant to Section 2.03(c) (or any similar provision of an ABL Substitute
Facility) of the ABL Credit Agreement, (vii) “Unpaid Swing Line Loan Amount,” as defined in the ABL
Credit Agreement, resulting from a failure by a Tranche 2 Revolving Credit Lender in its capacity
as such to fund pursuant to Section 2.04(c), (viii) “Tranche 2 Letter of Credit Fees”, as defined
in the ABL Credit Agreement and (ix) “Tranche 2 Commitment Fees”, as defined in the ABL Credit
Agreement.

          “Tranche 2 Sub-Facility Obligations” means the Tranche 2 Sub-Facility Loans from time to time
outstanding and, in any event, Tranche 2 Sub-Facility Obligations shall expressly include any and
all interest accruing and fees, costs and charges incurred with respect to the Tranche 2
Sub-Facility Loans, whether before or after the date of any filing by or against any Grantor of any
petition or complaint initiating any Insolvency or Liquidation Proceeding, regardless of whether
any ABL Secured Party’s claim therefor is enforceable, allowable or allowed as a claim in the
Insolvency or Liquidation Proceeding commenced by the filing of such petition or complaint;
provided, however, that the aggregate principal amount of, without duplication, any revolving
credit commitments, advances, revolving credit loans, letters of credit, term loans, bonds,
debentures, notes or similar instruments which constitute “Tranche 2 Sub-Facility Obligations”
hereunder shall not exceed $7,500,000.

          “Trustee” means the Original Trustee, and, from and after the date of execution and delivery
of the Noteholder Substitute Facility, the agent, collateral agent, trustee or other representative
of the lenders or other holders of the indebtedness and

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other obligations evidenced thereunder or governed thereby, together with its successors in
such capacity.

ARTICLE II

Subordination of Junior Liens; Certain Agreements

          SECTION 2.01. Subordination of Junior Liens.

          (a) The grant of the ABL Liens pursuant to the ABL Security Documents and the grant of the
Noteholder Liens pursuant to the Indenture Noteholder Security Documents and the Additional
Noteholder Lien Security Documents create two separate and distinct Liens on the Collateral.

          (b) Except as provided in Section 2.01(e), all Junior Liens in respect of any
Collateral are expressly subordinated and made junior in right, priority, operation and effect to
any and all Senior Liens in respect of such Collateral, notwithstanding anything contained in this
Agreement, the Noteholder Lien Documents, the ABL Debt Documents, or any other agreement or
instrument or operation of law to the contrary, and irrespective of the time, order or method of
creation, attachment or perfection of such Junior Liens and Senior Liens or any failure, defect or
deficiency or alleged failure, defect or deficiency in any of the foregoing.

          (c) It is acknowledged that (i) the aggregate amount of the Senior Secured Obligations may,
subject to the limitations set forth in the Senior Documents, be increased from time to time, (ii)
a portion of the Senior Secured Obligations consists or may consist of indebtedness that is
revolving in nature, and the amount thereof that may be outstanding at any time or from time to
time may be increased or reduced and subsequently reborrowed, and (iii) the Senior Secured
Obligations may, subject to the limitations set forth in the Senior Documents, be increased,
extended, renewed, replaced, restated, supplemented, restructured, repaid, refunded, refinanced or
otherwise amended or modified from time to time, all without affecting the subordination of the
Junior Liens hereunder or the provisions of this Agreement defining the relative rights of the ABL
Secured Parties and the Noteholder Lien Secured Parties. The lien priorities provided for herein
shall not be altered or otherwise affected by any amendment, modification, supplement, extension,
increase, renewal, restatement or Replacement of either the Junior Secured Obligations (or any part
thereof) or the Senior Secured Obligations (or any part thereof), by the release of any Collateral
or of any guarantees for any Senior Secured Obligations or by any action that any Representative or
Secured Party may take or fail to take in respect of any Collateral.

          (d) If at any time ABL Agent shall make a Permitted Subordination (as defined below) with
respect to any ABL First Lien Collateral or Noteholder Collateral Agent shall make a Permitted
Subordination with respect to Noteholder First Lien Collateral, in each case, to or in favor of any
Person, the priority of such Representative’s Liens vis-à-vis the Liens therein of the other
Representative shall not be affected thereby and the subordinating Representative’s Liens shall
continue to be senior in priority to the

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other Representative’s Liens in the affected Collateral as and to the extent provided in this
Section 2. As used herein, the term “Permitted Subordination” shall mean a
voluntary subordination by ABL Agent of its Liens with respect to any or all ABL First Lien
Collateral, or by Noteholder Collateral Agent of its Liens with respect to any or all Noteholder
First Lien Collateral, in favor of depository banks, securities or commodities intermediaries,
landlords, mortgagees, custom brokers, freight forwarders, carriers, warehousemen, factors, Persons
who provide DIP Financing and other Persons who provide goods or services to a Grantor in the
ordinary course of business.

          (e) Notwithstanding anything to the contrary herein or in any of the Secured Documents or in
the Noteholder Collateral Agency Agreement, the Representatives and the holders of ABL Debt
Obligations and Noteholder Lien Obligations agree that subject to the provisions of Section 7.04
(A) the Tranche 2 Sub-Facility Obligations relative to the remaining ABL Debt Obligations, hereby
are secured Equally and Ratably with the Noteholder Lien Obligations with respect to the Noteholder
First Lien Collateral; provided however that the Tranche 2 Sub-Facility Obligations shall not also
be entitled to a Junior Lien on the ABL First Lien Collateral (for the avoidance of doubt, the
foregoing shall not alter or affect the Lien on the ABL First Lien Collateral granted under the ABL
Security Documents for any the Tranche 2 Sub-Facility Obligations and the application of proceeds
from collateral set forth in Section 8.04 of the ABL Credit Agreement, and a “Junior Lien” for the
purposes of the Tranche 2 Sub-Facility Obligations means a Lien other than one granted pursuant to
the ABL Security Documents) and (B) with respect to the Tranche 2 Sub-Facility Obligations,
notwithstanding this clause (e), the ABL Agent shall continue to be a Junior Representative with
respect to the Noteholder First Lien Collateral and the Noteholder Collateral Agent shall continue
to be a Senior Representative with respect to the Noteholder First Lien Collateral and the sole
obligation of the Noteholder Collateral Agent with respect to the Tranche 2 Sub-Facility Obligation
shall be to give effect to the provisions of Section 7.01; provided that notwithstanding the
foregoing provisions of this clause (e), the sole right of a holder of Tranche 2 Sub-Facility
Obligations to receive Noteholder First Lien Collateral or proceeds thereof prior to the Discharge
of the Senior Secured Debt Obligations in respect of Noteholder Lien Obligations shall be as
provided in Section 7.04 hereof and (ii) the Noteholder Lien Secured Parties agree that, without
the prior written consent of the ABL Agent (x) the Noteholder Lien Security Documents and the
Noteholder Collateral Agency Agreement shall not be amended, waived or modified, (y) no Noteholder
Lien Security Documents shall be entered into after the date hereof and (z) no replacement or
substitute of the Noteholder Collateral Agency Agreement may be entered into, in each case, to the
extent it would have the effect of disproportionately affecting the rights of the holders of the
Tranche 2 Sub-Facility Obligations (as such rights are in effect as of the date hereof hereunder or
under the Noteholder Lien Security Documents in existence on the date hereof) as compared to the
other Noteholder Lien Secured Parties.

          (f) Notwithstanding anything contained herein, any difference in the Noteholder Collateral
and the ABL Collateral arising from (x) any variance between the definition of “Excluded Assets” in
the Security Agreement (as defined in the ABL Credit Agreement, the “ABL Security Agreement”)) or
any definition of similar import in any

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ABL Security Document (as any such definition is in effect on the date hereof), on the one
hand, and the definition of “Excluded Assets” in the Security Agreement (as defined in the
Indenture, the “Noteholder Security Agreement”) or any definition of similar import in any
Noteholder Lien Security Document (as any such definition is in effect on the date hereof), on the
other hand or (y) the lack of a provision similar to Section 2.01(b) of the Noteholder Security
Agreement (as such provision is in effect on the date hereof) in the ABL Security Agreement, in
each case shall not be deemed prohibited hereby and no party hereto shall be required to take, or
refrain from taking, any action to address such difference.

          SECTION 2.02. No Action With Respect to Junior Secured Obligations Collateral Subject to
Senior Liens. Subject to Sections 2.04 and 2.13, no Junior Representative or
other Junior Secured Obligations Secured Party shall commence or instruct any Junior Representative
to commence any judicial or nonjudicial foreclosure proceedings with respect to, seek to have a
trustee, receiver, liquidator or similar official appointed for or over, attempt any action to take
possession of, exercise any right, remedy or power with respect to, or otherwise take any action to
enforce its interest in or realize upon, or take any other action available to it in respect of,
any Junior Secured Obligations Collateral under any Junior Secured Obligations Security Document,
applicable law or otherwise until the associated Discharge of Senior Secured Debt Obligations
(including, without limitation, exercising any rights under any deposit account control agreement
constituting Junior Secured Obligations Collateral), it being agreed that only the Senior
Representative, acting in accordance with the applicable Senior Secured Obligations Security
Documents, shall be entitled to take any such actions or exercise any such remedies prior to the
associated Discharge of Senior Secured Debt Obligations. Notwithstanding the foregoing, any Junior
Representative may, but shall have no obligation to, subject to Section 2.05, take all such
actions as it shall deem necessary to perfect or continue the perfection of its Junior Liens.

          SECTION 2.03. No Duties of Senior Representative. Each Junior Secured Obligations
Secured Party acknowledges and agrees that neither the Senior Representative nor any other Senior
Secured Obligations Secured Party shall have any duties or other obligations to such Junior Secured
Obligations Secured Party with respect to any Senior Secured Obligations Collateral, other than to
transfer to the Junior Representative proceeds of any such Collateral that constitutes Junior
Secured Obligations Collateral remaining in its possession following any sale, transfer or other
disposition of such Collateral (in each case, unless the Junior Liens on all such Junior Secured
Obligations Collateral are terminated and released prior to or concurrently with such sale,
transfer, disposition, payment or satisfaction), or the Discharge of Senior Secured Debt
Obligations or if the Senior Representative is in possession of all or any part of any such
Collateral after the Discharge of Senior Secured Debt Obligations, such Collateral or any part
thereof remaining, in each case without representation or warranty on the part of the Senior
Representative or any Senior Secured Obligations Secured Party. In furtherance of the foregoing,
each Junior Secured Obligations Secured Party acknowledges and agrees that until the associated
Discharge of Senior Secured Debt Obligations secured by any Collateral on which such Junior Secured
Obligations Secured Party holds a Junior Lien, the Senior Representative shall be entitled, for the
benefit of

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the holders of such Senior Secured Obligations, to sell, transfer or otherwise dispose of or
deal with such Collateral, as provided herein and in the Senior Secured Obligations Security
Documents, without regard to any Junior Lien or any rights to which the holders of the Junior
Secured Obligations would otherwise be entitled as a result of such Junior Lien. Without limiting
the foregoing, each Junior Secured Obligations Secured Party agrees that neither the Senior
Representative nor any other Senior Secured Obligations Secured Party shall have any duty or
obligation first to marshal or realize upon any type of Senior Secured Obligations Collateral (or
any other collateral securing the Senior Secured Obligations), or to sell, dispose of or otherwise
liquidate all or any portion of such Collateral (or any other collateral securing the Senior
Secured Obligations), in any manner that would maximize the return to the Junior Secured
Obligations Secured Parties, notwithstanding that the order and timing of any such realization,
sale, disposition or liquidation may affect the amount of proceeds actually received by the Junior
Secured Obligations Secured Parties from such realization, sale, disposition or liquidation. Each
of the Junior Secured Obligations Secured Parties waives any claim such Junior Secured Obligations
Secured Party may now or hereafter have against the Senior Representative or any other Senior
Secured Obligations Secured Party (or their representatives) arising out of (i) any actions which
the Senior Representative or the Senior Secured Obligations Secured Parties take or omit to take
(including actions with respect to the creation, perfection or continuation of Liens on any
Collateral, actions with respect to the foreclosure upon, sale, release or depreciation of, or
failure to realize upon, any of the Collateral, and actions with respect to the collection of any
claim for all or any part of the Senior Secured Obligations from any account debtor, guarantor or
any other party) in accordance with the Senior Secured Obligations Security Documents or any other
agreement related thereto or to the collection of the Senior Secured Obligations or the valuation,
use, protection or release of any security for the Senior Secured Obligations, (ii) any election by
the Senior Representative or any Senior Secured Obligations Secured Parties, in any proceeding
instituted under the Bankruptcy Code, of the application of Section 1111(b) of the Bankruptcy Code
or (iii) subject to Section 2.06, any borrowing by, or grant of a security interest or
administrative expense priority under Section 364 of the Bankruptcy Code by, the Company or any of
its subsidiaries, as debtor-in-possession. Notwithstanding the foregoing, each Grantor agrees that
(a) in the event any Grantor takes any action to grant or perfect a Lien in favor of the ABL Agent
in any assets constituting ABL First Lien Collateral, such Grantor shall also take such action to
grant or perfect a Lien (subject to this Agreement) in favor of the Noteholder Collateral Agent to
secure the Noteholder Lien Obligations without request of the Noteholder Collateral Agent and (b)
in the event any Grantor takes any action to grant or perfect a Lien in favor of the Noteholder
Collateral Agent in any assets constituting Noteholder First Lien Collateral, such Grantor shall
also take such action to grant or perfect a Lien (subject to this Agreement) in favor of the ABL
Agent to secure the ABL Lien Obligations without request of the ABL Agent.

          SECTION 2.04. No Interference; Payment Over; Reinstatement.

          (a) Each Junior Secured Obligations Secured Party agrees that (i) it will not take or cause to
be taken any action the purpose or effect of which is, or could be,
to make any Junior Lien pari
passu with, or to give such Junior Secured Obligations

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Secured Party any preference or priority relative to, any Senior Lien with respect to the
Collateral subject to such Senior Lien and Junior Lien or any part thereof (except in each case, as
provided in Section 7.01 with respect to the Tranche 2 Sub-Facility Obligations), (ii) it will not
challenge or question in any proceeding the validity or enforceability of any Senior Secured
Obligations or Senior Secured Obligations Security Document, or the validity, attachment,
perfection or priority of any Senior Lien, or the validity or enforceability of the priorities,
rights or duties established by or other provisions of this Agreement, (iii) it will not take or
cause to be taken any action the purpose or intent of which is, or could be, to interfere, hinder
or delay, in any manner, whether by judicial proceedings or otherwise, any sale, transfer or other
disposition of the Collateral subject to any Junior Lien by any Senior Secured Obligations Secured
Parties secured by Senior Liens on such Collateral or any Senior Representative acting on their
behalf, (iv) it shall have no right to (A) direct any Senior Representative or any holder of Senior
Secured Obligations to exercise any right, remedy or power with respect to the Collateral subject
to any Junior Lien or (B) consent to the exercise by any Senior Representative or any other Senior
Secured Obligations Secured Party of any right, remedy or power with respect to the Collateral
subject to any Junior Lien, (v) it will not institute any suit or assert in any suit or Insolvency
or Liquidation Proceeding any claim against any Senior Representative or other Senior Secured
Obligations Secured Party seeking damages from or other relief by way of specific performance,
instructions or otherwise with respect to, and neither any Senior Representative nor any other
Senior Secured Obligations Secured Party shall be liable for, any action taken or omitted to be
taken by such Senior Representative or other Senior Secured Obligations Secured Party with respect
to any Collateral securing such Senior Secured Obligations that is subject to any Junior Lien, (vi)
it will not seek, and hereby waives any right, to have any Senior Secured Obligations Collateral
subject to any Junior Lien or any part thereof marshaled upon any foreclosure or other disposition
of such Collateral and (vii) it will not attempt, directly or indirectly, whether by judicial
proceedings or otherwise, to challenge the enforceability of any provision of this Agreement.

          (b) The Junior Representative and each other Junior Secured Obligations Secured Party hereby
agrees that if it shall obtain possession of any Senior Secured Obligations Collateral or shall
realize any proceeds or payment in respect of any such Collateral, pursuant to any Junior Secured
Obligations Security Document or by the exercise of any rights available to it under applicable law
or in any Insolvency or Liquidation Proceeding or through any other exercise of remedies, at any
time prior to the Discharge of the Secured Debt Obligations, then it shall hold such Collateral,
proceeds or payment in trust for the Senior Secured Obligations Secured Parties and transfer such
Collateral, proceeds or payment, as the case may be, to the Senior Representative reasonably
promptly after obtaining actual knowledge or notice from the Senior Secured Obligations Secured
Parties that it has possession of such Senior Secured Obligations Collateral or proceeds or
payments in respect thereof. Each Junior Secured Obligations Secured Party agrees that if, at any
time, it receives notice or obtains actual knowledge that all or part of any payment with respect
to any Senior Secured Obligations previously made shall be rescinded for any reason whatsoever,
such Junior Secured Obligations Secured Party shall promptly pay over to the Senior Representative
any payment received by it and then in its possession or under its control in respect of any
Collateral subject to

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any Senior Lien securing such Senior Secured Obligations and shall promptly turn any
Collateral subject to any such Senior Lien then held by it over to the Senior Representative, and
the provisions set forth in this Agreement shall be reinstated as if such payment had not been
made, until the payment and satisfaction in full of the Senior Secured Obligations. Anything
contained herein to the contrary notwithstanding, this Section 2.04(b) shall not apply to any
proceeds of Senior Secured Obligations Collateral realized in a transaction not prohibited by the
Senior Documents and as to which the possession or receipt thereof by the Junior Representative or
other Junior Secured Obligations Secured Party is otherwise permitted by the Senior Documents.

          SECTION 2.05. Release of Liens; Automatic Release of Junior Liens.

          (a) The Junior Representative and each other Junior Secured Obligations Secured Party agree
that (i) in the event the Senior Secured Obligations Secured Parties release their Lien on any
Senior Secured Obligations Collateral subject to any Junior Lien pursuant to the terms contained in
this Agreement (other than a release in connection with a sale, transfer or other disposition of
Senior Secured Obligations Collateral, which shall be governed by clause (a)(ii) below), such
Junior Lien on such Collateral shall terminate and be released automatically and without further
action unless, at the time of such release by the Senior Secured Obligations Secured Parties, an
Event of Default shall then have occurred and be continuing under the Junior Documents (provided
that any Junior Lien that would have otherwise been released and terminated pursuant to this clause
(a)(i) in the absence of such an Event of Default under the Junior Documents shall terminate and be
released automatically and without further action when such Event of Default (and all other Events
of Default under the Junior Documents) cease to exist); and (ii) in the event of a sale, transfer
or other disposition of Senior Secured Obligations Collateral subject to any Junior Lien
(regardless of whether or not an Event of Default has occurred and is continuing under the Junior
Documents at the time of such sale, transfer or other disposition), such Junior Lien on such
Collateral shall terminate and be released automatically and without further action if the
applicable Senior Liens on such Collateral are released and if such sale, transfer or other
disposition either (A) is then not prohibited by the Junior Documents (either pursuant to the terms
of the Junior Documents or pursuant to a consent issued thereunder) or (B) occurs in connection
with the foreclosure upon or other exercise of rights and remedies with respect to such Senior
Secured Obligations Collateral; provided that such Junior Lien shall remain in place with respect
to any proceeds of a sale, transfer or other disposition under this clause (a)(ii) that remain
after the associated Discharge of Senior Secured Debt Obligations. In addition, for the avoidance
of doubt, the Junior Representative and each Junior Secured Obligations Secured Party agree that,
with respect to any property or assets that would otherwise constitute Senior Secured Obligations
Collateral, the requirement that a Junior Lien attach to, or be perfected with respect to, such
property or assets shall be waived automatically and without further action so long as the
requirement that a Senior Lien attach to, or be perfected with respect to, such property or assets
is waived by the Senior Secured Obligations Secured Parties (or the Senior Representative) in
accordance with the Senior Documents and so long as no Event of Default under the Junior Documents
shall have occurred, be continuing or would result therefrom at such time. Notwithstanding the
foregoing, in the event of release of Liens by the Senior Secured

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Obligations Secured Parties on all or substantially all of the Senior Secured Obligations
Collateral (other than when such release occurs in connection with the Senior Secured Obligations
Secured Parties’ foreclosure upon or other exercise of rights and remedies with respect to such
Collateral), no release of the Junior Lien on such Senior Secured Obligations Collateral under this
Section 2.05 shall be made unless (A) consent to the release of such Junior Liens has been
given by the requisite percentage or number of the Junior Secured Obligations Secured Parties at
the time outstanding as provided for in the applicable Junior Documents and (B) PGI has delivered
an Officer’s Certificate to the ABL Agent, the Noteholder Collateral Agent and the Secured Debt
Representatives (if any) certifying that all such consents have been obtained.

          (b) The ABL Agent and the Noteholder Collateral Agent agree for the benefit of the Grantors
that, with respect to the release of any Collateral, if the ABL Agent or Noteholder Collateral
Agent, as applicable, at any time receives:

     (i) an Officer’s Certificate stating that (A) the signing officer has read Article
2 of this Agreement and understands the provisions and the definitions relating hereto, (B)
such officer has made such examination or investigation as is necessary to enable such Persons
to express an informed opinion as to whether or not the conditions precedent in this Agreement
and all other Secured Documents, if any, relating to the release of such Collateral have been
complied with and (C) in the opinion of such officer, such conditions precedent, if any, have
been complied with;

     (ii) prior to the associated Discharge of Senior Secured Debt Obligations, the written
confirmation of the applicable Senior Representative (or, at any time after the associated
Discharge of Senior Secured Debt Obligations, the Junior Representative) (such confirmation to
be given promptly following receipt of, and based solely on, the Officer’s Certificate
described in clause (i) above), in its view, such release is permitted by Section
2.05(a) and the respective Secured Documents governing the Noteholder Lien Obligations or
the ABL Debt Obligations, as applicable, the holders of which such Representative represents;

then the ABL Agent or Noteholder Collateral Agent, as applicable, will execute
(with such acknowledgements and/or notarizations as are required) and deliver such
release to the applicable Grantor on or before the later of (x) the date specified
in such request for such release and (y) the fifth business day (or such shorter
period as shall be acceptable to the Representative) after the date of receipt of
the items required by this Section 2.05(b) by the applicable
Representative.

          (c) The Junior Representative agrees to execute and deliver (at the sole cost and expense of
the Grantors) all such releases and other instruments as shall reasonably be requested by the
Senior Representative to evidence and confirm any release of Junior Secured Obligations Collateral
provided for in this Section 2.05.

          SECTION 2.06. Certain Agreements With Respect to Insolvency or Liquidation
Proceedings.

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          (a) This Agreement shall continue in full force and effect, notwithstanding the commencement
of any Insolvency or Liquidation Proceeding by or against Parent, PGI or any of PGI’s Subsidiaries.

          (b) If Parent, PGI or any of its Subsidiaries shall become subject to a case under the
Bankruptcy Code and shall, as debtor(s)-in-possession, move for approval of financing (“DIP
Financing”) to be provided by one or more lenders (the “DIP Lenders”) under Section 364 of the
Bankruptcy Code or the use of cash collateral with the consent of the DIP Lenders under Section 363
of the Bankruptcy Code, each Junior Secured Obligations Secured Party agrees that it will raise no
objection to any such financing or to the Liens on the Senior Secured Obligations Collateral
securing the same (“DIP Financing Liens”), or to any use of cash collateral that constitutes Senior
Secured Obligations Collateral, unless the Senior Secured Obligations Secured Parties, or Senior
Representative, shall then oppose or object to such DIP Financing in which case, each Junior
Secured Obligations Secured Party may raise an objection to such DIP Financing or such use of cash
collateral only to the extent of and consistent in all respects with the opposition or objection of
the Senior Secured Obligations Secured Parties or Senior Representative, as applicable (and, to the
extent that such DIP Financing Liens or use of such cash collateral or such DIP Financing Liens are
senior to, or rank pari passu with, the Senior Liens, the Junior Representative will, for itself
and on behalf of the other Junior Secured Obligations Secured Parties, subordinate the Junior Liens
on the Senior Secured Obligations Collateral to the Senior Liens and the DIP Financing Liens), so
long as the Junior Secured Obligations Secured Parties retain their Liens on all the Junior Secured
Obligations Collateral, including proceeds thereof arising after the commencement of any Insolvency
or Liquidation Proceeding, with the same priority as existed prior to the commencement of the case
under the Bankruptcy Code. Nothing in this Agreement shall limit (x) the right of any Senior
Secured Obligations Secured Parties to consent to the use of cash collateral or consent to or
provide any DIP Financing on terms other than the terms set forth herein or (y) the right of any
Junior Secured Obligations Secured Parties to object to such DIP Financing or use of Senior Secured
Obligations cash collateral on terms other than those set forth herein; provided that any Lien on
ABL First Lien Collateral securing any DIP Financing provided by any Noteholder Lien Secured
Parties shall be subject to the priorities set forth herein and any Lien on Noteholder First Lien
Collateral securing any DIP Financing provided by any ABL Secured Parties shall be subject to the
priorities set forth herein.

          (c) Each Junior Secured Obligations Secured Party agrees that it will not object to or oppose
a sale or other disposition of any Senior Secured Obligations Collateral (or any portion thereof)
under Section 363 of the Bankruptcy Code or any other provision of the Bankruptcy Code if the
Senior Secured Obligations Secured Parties shall have consented to such sale or disposition of such
Senior Secured Obligations Collateral and all Senior Liens and Junior Liens will attach to the
proceeds of the sale.

          (d) (i) No Noteholder Lien Secured Party shall object to or oppose (or support the objection
or opposition of any other Person) in any Insolvency or Liquidation Proceeding to (A) any motion or
other request by any ABL Secured Party for adequate protection with respect to ABL Agent’s Liens
upon the ABL First Lien Collateral,

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including any claim of any ABL Secured Party to post-petition interest as a result of the ABL
Lien on the ABL First Lien Collateral (so long as any post-petition interest paid as a result
thereof is not paid from the proceeds of Noteholder First Lien Collateral), a request for the
application of proceeds of ABL First Lien Collateral to the ABL Debt Obligations, and request for
replacement Liens on post-petition assets of the same type as the ABL First Lien Collateral, or (B)
any objection or opposition by any ABL Secured Party to any motion, relief, action or proceeding
based on such ABL Secured Party claiming a lack of adequate protection with respect to the ABL
Liens in the ABL First Lien Collateral. In addition, the ABL Agent, for itself and on behalf of
the ABL Secured Parties, may seek adequate protection of its junior interest in the Noteholder
First Lien Collateral, subject to the provisions of this Agreement; provided, that (x) the
Noteholder Collateral Agent is granted adequate protection in the form of a replacement Lien on
post-petition assets of the same type as the Noteholder First Lien Collateral, and (y) such
adequate protection required by the ABL Agent is in the form of a replacement Lien on post-petition
assets of the same type as the Noteholder First Lien Collateral. Such Lien on post-petition
assets of the same type as the Noteholder First Lien Collateral, if granted to the ABL Agent, will
be subordinated to the adequate protection Liens granted in favor of the Noteholder Collateral
Agent on such post-petition assets, and, if applicable, to the DIP Financing Liens of the
Noteholder Collateral Agent or any other Noteholder Lien Secured Party on such post-petition assets
of the same type as the Noteholder First Lien Collateral. If the ABL Agent, for itself and on
behalf of the ABL Secured Parties, seeks or requires (or is otherwise granted) adequate protection
of its junior interest in the Noteholder First Lien Collateral in the form of a replacement Lien of
the post-petition assets of the same type as the Noteholder First Lien Collateral, then the ABL
Agent, for itself and the ABL Secured Parties, agrees that the Noteholder Collateral Agent shall
also be granted a replacement Lien on such post-petition assets as adequate protection of its
senior interest in the Noteholder First Lien Collateral and that the ABL Agent’s replacement Lien
shall be subordinated to the replacement Lien of the Noteholder Collateral Agent on the same basis
as the Liens of the ABL Agent on the Noteholder First Lien Collateral are subordinated to the Liens
of the Noteholder Collateral Agent on the Noteholder First Lien Collateral under this Agreement.
If the ABL Agent or any ABL Secured Party receives as adequate protection a Lien on post-petition
assets of the same type as the ABL First Lien Collateral, then such post-petition assets shall also
constitute ABL First Lien Collateral to the extent of any allowed claim of the ABL Secured Parties
secured by such adequate protection Lien and shall be subject to this Agreement.

          (ii) No ABL Secured Party shall object to or oppose (or support the objection or opposition
of any other Person) in any Insolvency or Liquidation Proceeding to (A) any motion or other request
by any Noteholder Lien Secured Party for adequate protection of the Noteholder Collateral Agent’s
Liens upon any of the Noteholder First Lien Collateral, including any claim of any Noteholder Lien
Secured Party to post-petition interest as a result of the Noteholder Lien on the Noteholder First
Lien Collateral (so long as any post-petition interest paid as a result thereof is paid solely from
the proceeds of Noteholder First Lien Collateral), a request for the application of proceeds of
Noteholder First Lien Collateral to the Noteholder Debt Obligations, and request for replacement
Liens on post-petition assets of the same type as the Noteholder First Lien Collateral or (B) any
objection or opposition by any Noteholder Lien Secured Party to

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any motion, relief, action or proceeding based on such Noteholder Lien Secured Party claiming
a lack of adequate protection with respect to Noteholder Collateral Agent’s Liens in the Noteholder
First Lien Collateral. In addition, the Noteholder Collateral Agent, for itself and on behalf of
the Noteholder Secured Parties, may seek adequate protection of its junior interest in the ABL
First Lien Collateral, subject to the provisions of this Agreement; provided, that (x) the ABL
Agent is granted adequate protection in the form of a replacement Lien on post-petition assets of
the same type as the ABL First Lien Collateral, and (y) such adequate protection required by the
Noteholder Collateral Agent is in the form of a replacement Lien on post-petition assets of the
same type as the ABL First Lien Collateral. Such Lien on post-petition assets of the same type as
the ABL First Lien Collateral, if granted to the Noteholder Collateral Agent, will be subordinated
to the adequate protection Liens granted in favor of the ABL Agent on such post-petition assets,
and, if applicable, to the DIP Financing Liens of the ABL Agent or any other ABL Secured Party on
such post-petition assets of the same type as the ABL First Lien Collateral. If the Noteholder
Collateral Agent, for itself and on behalf of the Noteholder Lien Secured Parties, seeks or
requires (or is otherwise granted) adequate protection of its junior interest in the ABL First Lien
Collateral in the form of a replacement Lien on the post-petition assets of the same type as the
ABL First Lien Collateral, then the Noteholder Collateral Agent, for itself and the Noteholder Lien
Secured Parties, agrees that the ABL Agent shall also be granted a replacement Lien on such
post-petition assets as adequate protection of its senior interest in the ABL First Lien Collateral
and that the Noteholder Collateral Agent’s replacement Lien shall be subordinated to the
replacement Lien of the ABL Agent on the same basis as the Liens of the Noteholder Collateral Agent
on the ABL First Lien Collateral are subordinated to the Liens of the ABL Agent on the ABL First
Lien Collateral under this Agreement. If the Noteholder Collateral Agent or any Noteholder Lien
Secured Party receives as adequate protection a Lien on post-petition assets of the same type as
the Noteholder First Lien Collateral, then such post-petition assets shall also constitute
Noteholder First Lien Collateral to the extent of any allowed claim of the Noteholder Lien Secured
Parties secured by such adequate protection Lien and shall be subject to this Agreement.

          (e) Prior to Discharge of the Senior Secured Debt Obligations and any DIP Financing provided
by the Senior Secured Obligations Secured Parties, no Junior Secured Obligations Secured Party
shall seek relief from the automatic stay in any Insolvency or Liquidation Proceeding with respect
to any Senior Secured Obligations Collateral unless (i) otherwise consented to by the Senior
Representative or (ii) the Senior Representative or Senior Secured Obligations Secured Parties
shall have previously sought relief from the automatic stay with respect to such Collateral to
commence a lien enforcement action with respect to such Senior Secured Obligations Collateral.

          SECTION 2.07. Reinstatement. In the event that any of the Senior Secured Obligations
shall be paid in full and such payment or any part thereof shall subsequently, for whatever reason
(including an order or judgment for disgorgement of a preference under the Bankruptcy Code, or any
similar law, or the settlement of any claim in respect thereof), be required to be returned or
repaid, the terms and conditions of this Article II shall be fully applicable thereto until
all such Senior Secured Obligations shall again have been paid in full in cash.

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          SECTION 2.08. Entry Upon Premises by the ABL Agent and the ABL Secured Parties.

          (a) If the ABL Agent takes any enforcement action with respect to the ABL First Lien
Collateral, the Noteholder Lien Secured Parties (i) shall reasonably cooperate with the ABL Agent
(at the sole cost and expense of the ABL Agent and subject to the condition that the Noteholder
Lien Secured Parties shall have no obligation or duty to take any action or refrain from taking any
action that could reasonably be expected to result in the incurrence of any liability or damage to
the Noteholder Lien Secured Parties) in its efforts to enforce its security interest in the ABL
First Lien Collateral and to finish any work-in-process and assemble the ABL First Lien Collateral,
(ii) shall not take any action designed or intended to hinder or restrict in any respect the ABL
Agent from enforcing its security interest in the ABL First Lien Collateral or from finishing any
work-in-process or assembling the ABL First Lien Collateral, and (iii) subject to the rights of any
landlords under real estate leases, shall permit the ABL Agent, its employees, agents, advisers and
representatives, at the sole cost and expense of the ABL Secured Parties and upon reasonable
advance notice, to enter upon and use the Noteholder First Lien Collateral (including (x)
equipment, processors, computers and other machinery related to the storage or processing of
records, documents or files and (y) intellectual property), for a period not to exceed 180 days
after the taking of such enforcement action, for purposes of (1) assembling and storing the ABL
First Lien Collateral and completing the processing of and turning into finished goods of any ABL
First Lien Collateral consisting of work-in-process, (2) selling any or all of the ABL First Lien
Collateral located on such Noteholder First Lien Collateral, whether in bulk, in lots or to
customers in the ordinary course of business or otherwise, (3) removing any or all of the ABL First
Lien Collateral located on such Noteholder First Lien Collateral, or (4) taking reasonable actions
to protect, secure and otherwise enforce the rights of the ABL Secured Parties in and to the ABL
First Lien Collateral; provided, however, that nothing contained in this Agreement shall restrict
the rights of the Noteholder Collateral Agent from selling, assigning or otherwise transferring any
Noteholder First Lien Collateral prior to the expiration of such 180-day period if the purchaser,
assignee or transferee thereof agrees to be bound by the provisions of this Section. If any stay
or other order prohibiting the exercise of remedies with respect to the ABL First Lien Collateral
has been entered by a court of competent jurisdiction, such 180-day period shall be tolled during
the pendency of any such stay or other order. If the ABL Agent conducts a public auction or
private sale of the ABL First Lien Collateral at any of the real property included within the
Noteholder First Lien Collateral, the ABL Agent shall provide the Noteholder Collateral Agent with
reasonable notice and use reasonable efforts to hold such auction or sale in a manner which would
not unduly disrupt the Noteholder Collateral Agent’s use of such real property.

          (b) During the period of actual occupation, use or control by the ABL Secured Parties or their
agents or representatives of any Noteholder First Lien Collateral, the ABL Secured Parties shall
(i) be responsible for the ordinary course third-party expenses related thereto, including costs
with respect to heat, light, electricity, water and real property taxes with respect to that
portion of any premises so used or occupied, and (ii) be obligated to repair at their expense any
physical damage to such Noteholder First

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Lien Collateral or other assets or property resulting from such occupancy, use or control, and
to leave such Noteholder First Lien Collateral or other assets or property in substantially the
same condition as it was at the commencement of such occupancy, use or control, ordinary wear and
tear excepted. The ABL Secured Parties agree to pay, indemnify and hold the Trustee and the
Noteholder Collateral Agent harmless from and against any third-party liability resulting from the
gross negligence or willful misconduct of the ABL Agent or any of its agents, representatives or
invitees in its or their operation of such facilities. Notwithstanding the foregoing, in no event
shall the ABL Secured Parties have any liability to the Noteholder Lien Secured Parties pursuant to
this Section as a result of any condition (including any environmental condition, claim or
liability) on or with respect to the Noteholder First Lien Collateral existing prior to the date of
the exercise by the ABL Secured Parties of their rights under this Section and the ABL Secured
Parties shall have no duty or liability to maintain the Noteholder First Lien Collateral in a
condition or manner better than that in which it was maintained prior to the use thereof by the ABL
Secured Parties, or for any diminution in the value of the Noteholder First Lien Collateral that
results solely from ordinary wear and tear resulting from the use of the Noteholder First Lien
Collateral by the ABL Secured Parties in the manner and for the time periods specified under this
Section 2.08. Without limiting the rights granted in this paragraph, the ABL Agent, to the
extent that rights have been exercised under this Section 2.08 by the ABL Agent, shall
cooperate with the Noteholder Lien Secured Parties in connection with any efforts made by the
Noteholder Lien Secured Parties to sell the Noteholder First Lien Collateral.

          SECTION 2.09. Insurance. Unless and until written notice by the ABL Agent to the
Noteholder Collateral Agent that the Discharge of Senior Secured Debt Obligations in respect of the
ABL Debt Obligations has occurred, as between the ABL Agent, on the one hand, and the Noteholder
Collateral Agent, on the other hand, only the ABL Agent will have the right (subject to the rights
of the Grantors under the ABL Debt Documents and the Noteholder Lien Documents) to adjust or settle
any insurance policy or claim covering or constituting ABL First Lien Collateral in the event of
any loss thereunder and to approve any award granted in any condemnation or similar proceeding
affecting the ABL First Lien Collateral. Unless and until written notice by the Noteholder
Collateral Agent to the ABL Agent that the Noteholder Lien Obligations have been paid in full, as
between the ABL Agent, on the one hand, and the Noteholder Collateral Agent, on the other hand,
only the Noteholder Collateral Agent will have the right (subject to the rights of the Grantors
under the ABL Debt Documents and the Noteholder Lien Documents) to adjust or settle any insurance
policy covering or constituting Noteholder First Lien Collateral in the event of any loss
thereunder and to approve any award granted in any condemnation or similar proceeding solely
affecting the Noteholder First Lien Collateral. To the extent that an insured loss covers or
constitutes both ABL First Lien Collateral and Noteholder First Lien Collateral, then the ABL Agent
and the Noteholder Collateral Agent will work jointly and in good faith to collect, adjust or
settle (subject to the rights of the Grantors under the ABL Debt Documents and the Noteholder Lien
Documents) under the relevant insurance policy.

          SECTION 2.10. Refinancings and Additional Secured Debt.

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          (a) The ABL Debt Obligations and the Noteholder Lien Obligations may be Replaced, in whole or
in part, by any ABL Substitute Facility or Noteholder Substitute Facility, in each case, without
notice to, or the consent (except to the extent a consent is otherwise required to permit the
refinancing transaction under any ABL Debt Document or any Noteholder Lien Document) of any Secured
Party, all without affecting the Lien priorities provided for herein or the other provisions
hereof; provided, however, that the holders of any such ABL Substitute Facility or Noteholder
Substitute Facility (or an authorized agent or trustee on their behalf) bind themselves in writing
to the terms of this Agreement pursuant to such documents or agreements (including amendments or
supplements to this Agreement) as the Noteholder Collateral Agent or the ABL Agent, as the case may
be, shall reasonably request and in the form and substance reasonably acceptable to the Noteholder
Collateral Agent or the ABL Agent, as the case may be; it being understood that a Lien Sharing and
Priority Confirmation Joinder shall be a document reasonably acceptable to the Noteholder
Collateral Agent and ABL Collateral Agent. In connection with any Replacement contemplated by this
Section 2.10, this Agreement may be amended at the request and sole expense of the Company,
and without the consent of either Representative, (a) to add parties (or any authorized agent or
trustee therefor) providing any such ABL Substitute Facility or Noteholder Substitute Facility, (b)
to establish that Liens on any Noteholder First Lien Collateral securing such ABL Substitute
Facility or Noteholder Substitute Facility shall have the same priority as the Liens on any
Noteholder First Lien Collateral securing the indebtedness being refinanced or replaced, and (c) to
establish that the Liens on any ABL First Lien Collateral securing such ABL Substitute Facility or
Noteholder Substitute Facility shall have the same priority as the Liens on any ABL First Lien
Collateral securing the indebtedness being refinanced or replaced, all on the terms provided for
herein immediately prior to such refinancing or replacement.

          (b) Each Grantor will be permitted to designate as an additional holder of Secured Debt
Obligations hereunder each Person who is, or who becomes, the registered holder of Noteholder Lien
Debt incurred by such Grantor after the date of this Agreement in accordance with the terms of all
applicable Secured Documents. Each Grantor may effect such designation by delivering to the
Noteholder Collateral Agent and the ABL Agent, each of the following:

          (i) an Officer’s Certificate stating that such Grantor intends to incur Additional
Noteholder Lien Debt (“Additional Secured Debt”) which will be Noteholder Lien Debt
permitted by each applicable Secured Document to be incurred and secured by a Noteholder
Lien equally and ratably with all previously existing and future Noteholder Lien Debt;

          (ii) an authorized agent, trustee or other representative on behalf of the holders or
lenders of any Additional Secured Debt must be designated as an additional holder of
Secured Debt Obligations hereunder and must, prior to such designation, sign and deliver on
behalf of the holders or lenders of such Additional Secured Debt a Lien Sharing and
Priority Confirmation Joinder, and, to the extent necessary or appropriate to facilitate
such transaction, a new

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intercreditor agreement substantially similar to this Agreement, as in effect on the
date hereof; and

          (iii) evidence that Grantor has duly authorized, executed (if applicable) and recorded
(or caused to be recorded) in each appropriate governmental office all relevant filings and
recordations deemed necessary by such Grantor and the holder of such Additional Secured
Debt, or its Secured Debt Representative, to ensure that the Additional Secured Debt is
secured by the Collateral in accordance with the Noteholder Lien Security Documents.

Notwithstanding the foregoing, nothing in this Agreement will be construed to allow any Grantor to
incur additional indebtedness unless otherwise permitted by the terms of each applicable Secured
Document.

          SECTION 2.11. No Interference.

          (a) The ABL Secured Parties may agree to modify the terms of any of the ABL Debt Obligations
and grant extensions of the time of payment or performance to and make compromises (including
releases of Liens on the ABL First Lien Collateral or of guaranties) and settlements with any and
all Grantors and all other Persons, in each case, without the consent of the Noteholder Lien
Secured Parties and without affecting the agreements of the Noteholder Lien Secured Parties in this
Agreement. If an ABL Secured Party should amend or waive any provisions of the ABL Debt Documents,
whether or not any ABL Secured Party has knowledge that such amendment or waiver would result in a
breach of any Noteholder Lien Documents or an Event of Default under any Noteholder Lien Documents,
or knowledge of an act, condition or event which with notice or passage of time or both would
constitute an Event of Default under any Noteholder Lien Documents, in no event shall the ABL
Secured Parties have any liability to any Noteholder Lien Secured Parties as a result of such
breach and, without limiting the generality of the foregoing, the ABL Secured Parties shall not
have any liability for tortious interference with contractual relations or for inducement by the
ABL Secured Parties of any Grantor to breach any contract or otherwise. Nothing contained in this
Section 2.11(a) shall limit, impair or waive any right that the Noteholder Lien Secured Parties
have to enforce any of the provisions of the Noteholder Lien Documents against any Grantor and the
provisions of this Agreement against any ABL Secured Party.

          (b) The Noteholder Lien Secured Parties may agree to modify the terms of any of the
Noteholder Lien Obligations and grant extensions of the time of payment or performance to and make
compromises (including releases of Liens on Noteholder First Lien Collateral or of guaranties) and
settlements with any and all Grantors and all other Persons, in each case, without the consent of
the ABL Secured Parties and without affecting the agreements of the ABL Secured Parties in this
Agreement. If a Noteholder Lien Secured Party should amend or waive any provisions of the
Noteholder Lien Documents, whether or not any Noteholder Lien Secured Party has knowledge that such
amendment or waiver would result in a breach of any ABL Debt Documents or an Event of Default under
any ABL Debt Documents, or knowledge of an act, condition or event

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which with notice or passage of time or both would constitute an Event of Default under any
ABL Debt Documents, in no event shall the Noteholder Lien Secured Parties have any liability to any
ABL Secured Parties as a result of such breach and, without limiting the generality of the
foregoing, the Noteholder Lien Secured Parties shall not have any liability for tortious
interference with contractual relations or for inducement by the Noteholder Lien Secured Parties of
any Grantor to breach any contract or otherwise. Nothing contained in this Section 2.11(b) shall
limit, impair or waive any right that the ABL Secured Parties have to enforce any of the provisions
of the ABL Documents against any Grantor and the provisions of this Agreement against any
Noteholder Lien Secured Party.

          SECTION 2.12. Legends. The Grantors and ABL Agent acknowledge with respect to the
ABL Credit Agreement and the ABL Security Documents, on the one hand, and the Grantors and
Noteholder Collateral Agent acknowledge with respect to (a) the Indenture and the Indenture
Noteholder Security Documents and (b) the Additional Noteholder Lien Debt Facility and the
Additional Noteholder Lien Security Documents, if any, on the other hand, that the ABL Credit
Agreement, the Indenture, the Additional Noteholder Lien Debt Facility (if any) and each associated
Security Document granting any security interest in the Collateral will contain the appropriate
legend substantially in the form of Annex I. The Noteholder Collateral Agent shall have no
duty to assure that any such legend so appears, all such duties being that of Grantors.

          SECTION 2.13. Junior Secured Obligations Secured Parties Rights as Unsecured
Creditors. Notwithstanding the provisions of Sections 2.02, 2.04(a) and
2.06(b), (c), (d) and (e) or otherwise, both before and during an
Insolvency or Liquidation Proceeding, any of the Junior Secured Obligations Secured Parties may
take any actions and exercise any and all rights that would be available to a holder of unsecured
claims, including, without limitation, the commencement of an Insolvency or Liquidation Proceeding
against Parent, PGI or any other Grantor in accordance with applicable law; provided, that the
Junior Secured Obligations Secured Parties may not take any of the actions prohibited by
Section 2.02, clauses (i) through (vii) of Section 2.04(a) or Section
2.06(b), (c), (d) and (e); provided, further, that in the event that
any of the Junior Secured Obligations Secured Parties becomes a judgment lien creditor in respect
of any Collateral as a result of its enforcement of its rights as an unsecured creditor with
respect to the Junior Secured Obligations, such judgment lien shall be subject to the terms of this
Agreement for all purposes (including in relation to the Senior Secured Obligations) as the other
Liens securing the Junior Secured Obligations are subject to this Agreement.

          SECTION 2.14. Amendments to ABL Security Documents and Noteholder Lien Security
Documents.

          (a) In the event the ABL Agent or any ABL Secured Party and the relevant Grantor enter into
any amendment, waiver or consent in respect of any of the ABL Security Documents for the purpose of
adding to, or deleting from, or waiving or consenting to any departures from any provisions of, any
ABL Security Document or changing in any manner the rights of the ABL Agent, such ABL Secured
Party, or any Grantor thereunder, then to the extent such amendment, waiver or consent applies
solely

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to ABL First Lien Collateral then such amendment, waiver or consent shall apply automatically
to any comparable provision of the comparable Noteholder Lien Security Documents without the
consent of the Noteholder Collateral Agent or the Noteholder Lien Secured Parties and without any
action by the Noteholder Collateral Agent or any Grantor, provided, that (A) no such amendment,
waiver or consent shall have the effect of (i) removing assets subject to the Lien of the
Noteholder Lien Security Documents, except to the extent that a release of such Lien is permitted
by Section 2.05 of this Agreement and provided that there is a corresponding release of the Lien
securing the ABL Debt Obligations, (ii) imposing duties on the Noteholder Collateral Agent without
its consent or (iii) permitting other Liens on the Collateral not permitted under the terms of the
Noteholder Lien Debt Documents or this Agreement and (B) notice of such amendment, waiver or
consent shall have been given to the Noteholder Collateral Agent within ten (10) Business Days
after the effective date of such amendment, waiver or consent.

          (b) In the event the Noteholder Collateral Agent or any Noteholder Lien Secured Party and the
relevant Grantor enter into any amendment, waiver or consent in respect of any of the Noteholder
Lien Security Documents for the purpose of adding to, or deleting from, or waiving or consenting to
any departures from any provisions of, any Noteholder Lien Security Document or changing in any
manner the rights of the Noteholder Collateral Agent, such Noteholder Lien Secured Party, or any
Grantor thereunder, then to the extent such amendment, waiver or consent applies solely to
Noteholder First Lien Collateral then such amendment, waiver or consent shall apply automatically
to any comparable provision of the comparable ABL Security Documents without the consent of the ABL
Agent or the ABL Secured Parties and without any action by the ABL Agent or any Grantor, provided,
that (A) no such amendment, waiver or consent shall have the effect of (i) removing assets subject
to the Lien of the ABL Debt Security Documents, except to the extent that a release of such Lien is
permitted by Section 2.05 of this Agreement and provided that there is a corresponding release of
the Lien securing the Noteholder Lien Obligations, (ii) imposing duties on the ABL Agent without
its consent or (iii) permitting other Liens on the Collateral not permitted under the terms of the
ABL Debt Documents or this Agreement and (B) notice of such amendment, waiver or consent shall have
been given to the ABL Agent within ten (10) Business Days after the effective date of such
amendment, waiver or consent.

          SECTION 2.15. Tracing of Proceeds.

     Other than by virtue of a sale, transfer, conveyance or other disposition of Noteholder First
Lien Collateral for which the proceeds thereof have been segregated, all proceeds realized from the
sale, transfer, conveyance or other disposition of assets constituting Noteholder First Lien
Collateral shall lose their characterization as Noteholder First Lien Collateral and as “proceeds”
of Noteholder First Lien Collateral upon the receipt of such proceeds by or on behalf of PGI or any
Guarantor and application thereof to the obligations under the ABL Credit Agreement; provided that
if (i) written notice by the Noteholder Collateral Agent of an Event of Default under and as
defined in the Indenture has been delivered to the ABL Agent or (ii) an Insolvency or Liquidation
Proceeding has been initiated with respect to PGI or any Guarantor, all

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identifiable proceeds of Noteholder First Lien Collateral received by the Issuer or any
Guarantor thereafter shall constitute Noteholder First Lien Collateral.

ARTICLE III

Gratuitous Bailment for Perfection of Certain Security Interests; Rights Under Permits and Licenses

          SECTION 3.01. General. The Senior Representative agrees that if it shall at any time
hold a Senior Lien on any Junior Secured Obligations Collateral that can be perfected by the
possession or control of such Collateral or of any account in which such Collateral is held, and if
such Collateral or any such account is in fact in the possession or under the control of the Senior
Representative, the Senior Representative will serve as gratuitous bailee for the Junior
Representative for the sole purpose of perfecting the Junior Lien of the Junior Representative on
such Collateral. It is agreed that the obligations of the Senior Representative and the rights of
the Junior Representative and the other Junior Secured Obligations Secured Parties in connection
with any such bailment arrangement will be in all respects subject to the provisions of Article II.
Notwithstanding anything to the contrary herein, the Senior Representative will be deemed to make
no representation as to the adequacy of the steps taken by it to perfect the Junior Lien on any
such Collateral and shall have no responsibility, duty, obligation or liability to the Junior
Representative or other Junior Secured Obligations Secured Party or any other person for such
perfection or failure to perfect, it being understood that the sole purpose of this Article is to
enable the Junior Secured Obligations Secured Parties to obtain a perfected Junior Lien in such
Collateral to the extent, if any, that such perfection results from the possession or control of
such Collateral or any such account by the Senior Representative. Subject to Section 2.07
and to the Senior Representative receiving such indemnifications as shall be required by such
Senior Representative, from and after the associated Discharge of Senior Secured Debt Obligations,
the Senior Representative shall take all such actions in its power as shall reasonably be requested
by the Junior Representative (at the sole cost and expense of the Grantors) to transfer possession
of such Collateral in its possession (in each case to the extent the Junior Representative has a
Lien on such Collateral after giving effect to any prior or concurrent releases of Liens) to the
Junior Representative (and with respect to any Collateral constituting ABL First Lien Collateral,
to the Noteholder Collateral Agent for the benefit of all applicable Junior Secured Obligations
Secured Parties).

          SECTION 3.02. Deposit Accounts.

          (a) The Grantors, to the extent required by the ABL Credit Agreement, may from time to time
establish deposit accounts (the “Deposit Accounts”) with certain depositary banks in which
collections from Inventory and Accounts may be deposited. To the extent that any such Deposit
Account is under the control of the ABL Agent and Noteholder Lien Secured Parties at any time, the
ABL Agent will act as gratuitous bailee and agent for the Noteholder Collateral Agent for the
purpose of perfecting the Liens of the Noteholder Lien Secured Parties in such Deposit Accounts and
the cash and other

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assets therein as provided in Section 3.01 (but will have no duty, responsibility or
obligation to the Noteholder Lien Secured Parties (including, without limitation, any duty,
responsibility or obligation as to the maintenance of such control, the effect of such arrangement
or the establishment of such perfection). Unless the Junior Liens on such ABL First Lien
Collateral shall have been or concurrently are released, after the occurrence of Discharge of
Senior Secured Debt Obligations, the ABL Agent shall, to the extent that the same are then under
the sole dominion and control of the ABL Agent and that such action is otherwise within the power
and authority of the ABL Agent pursuant to the ABL Documents, at the request of the Noteholder
Collateral Agent, cooperate with the Grantors and the Noteholder Collateral Agent (at the expense
of the Grantors) in permitting control of any Deposit Accounts to be transferred to the Noteholder
Collateral Agent (or for other arrangements with respect to each such Deposit Accounts satisfactory
to the Noteholder Collateral Agent to be made).

          (b) The Grantors, the Representatives, the Secured Parties and all other parties hereto agree
that only proceeds of the Noteholder First Lien Collateral may be deposited in the Collateral
Proceeds Account and the Grantors agree to so instruct each account debtor of each Grantor and each
other applicable Person and to take all other actions necessary to give effect to the intent of
this Section 3.02(b). Without limiting the generality of the foregoing, the Noteholder
Collateral Agent hereby agrees that if the Collateral Proceeds Account contains any proceeds of the
ABL First Lien Collateral, it shall hold such proceeds in trust for the ABL Secured Parties and
transfer such proceeds to the ABL Secured Parties reasonably promptly after obtaining actual
knowledge or notice from the ABL Secured Parties that it has possession of such proceeds in
accordance with Section 2.04(b).

          SECTION 3.03. Rights under Permits and Licenses. The Noteholder Collateral Agent
agrees that if the ABL Agent shall require rights available under any permit or license controlled
by the Noteholder Collateral Agent (as certified to the Noteholder Collateral Agent by the ABL
Agent, upon which the Noteholder Collateral Agent may rely) in order to realize on any ABL First
Lien Collateral, the Noteholder Collateral Agent shall (subject to the terms of the Indenture,
including the Noteholder Collateral Agent’s rights to indemnification thereunder) take all such
actions as shall be available to it (at the sole expense of the Grantors), consistent with
applicable law and reasonably requested by the ABL Agent in writing, to make such rights available
to the ABL Agent, subject to the Noteholder Liens. The ABL Agent agrees that if the Noteholder
Collateral Agent shall require rights available under any permit or license controlled by the ABL
Agent (as certified to the ABL Agent by the Noteholder Collateral Agent, upon which the ABL Agent
may rely) in order to realize on any Noteholder First Lien Collateral, the ABL Agent shall (subject
to its right to receive indemnification) take all such actions as shall be available to it (at the
sole expense of the Grantors), consistent with applicable law and reasonably requested by the
Noteholder Collateral Agent in writing, to make such rights available to the Noteholder Collateral
Agent, subject to the ABL Liens.

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ARTICLE IV

Existence and Amounts of Liens and Obligations

          Whenever a Representative shall be required, in connection with the exercise of its rights or
the performance of its obligations hereunder, to determine the existence or amount of any Senior
Secured Obligations (or the existence of any commitment to extend credit that would constitute
Senior Secured Obligations) or Junior Secured Obligations, or the existence of any Lien securing
any such obligations, or the Collateral subject to any such Lien, it may request that such
information be furnished to it in writing by the other Representative and shall be entitled to make
such determination on the basis of the information so furnished; provided, however, that if a
Representative shall fail or refuse reasonably promptly to provide the requested information, the
requesting Representative shall be entitled to make any such determination by such method as it
may, in the exercise of its good faith judgment, determine, including by reliance upon a
certificate of PGI. Each Representative may rely conclusively, and shall be fully protected in so
relying, on any determination made by it in accordance with the provisions of the preceding
sentence (or as otherwise directed by a court of competent jurisdiction) and shall have no
liability to the Grantors or any of their Subsidiaries, any Secured Party or any other person as a
result of such determination.

ARTICLE V

Consent of Grantors

          Each Grantor hereby consents to the provisions of this Agreement and the intercreditor
arrangements provided for herein and agrees that the obligations of the Grantors under the Security
Documents will in no way be diminished or otherwise affected by such provisions or arrangements
(except as expressly provided herein).

ARTICLE VI

Representations and Warranties

          SECTION 6.01. Representations and Warranties of Each Party. Each party hereto
represents and warrants to the other parties hereto as follows:

          (a) Such party is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite power and authority to enter into and
perform its obligations under this Agreement.

          (b) This Agreement has been duly executed and delivered by such party.

          (c) The execution, delivery and performance by such party of this Agreement (i) do not
require any consent or approval of, registration or filing with or any other action by any
governmental authority of which the failure to obtain could reasonably be expected to have a
Material Adverse Effect (as defined in the ABL Credit Agreement), (ii) will not violate any
applicable law or regulation or any order of any governmental authority or, to its knowledge, any
indenture, agreement or other

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instrument binding upon such party which could reasonably be expected to have a Material
Adverse Effect and (iii) will not violate the charter, by-laws or other organizational documents of
such party.

          SECTION 6.02. Representations and Warranties of Each Representative. Each of the
Noteholder Collateral Agent and the ABL Agent represents and warrants to the other parties hereto
that it is authorized under the Noteholder Collateral Agency Agreement and the ABL Credit
Agreement, as the case may be, to enter into this Agreement.

ARTICLE VII

Payments

          SECTION 7.01. Application of Proceeds.

          (a) So long as the Discharge of Senior Secured Debt Obligations in respect of the ABL Debt
Obligations has not occurred, whether or not any Insolvency or Liquidation Proceeding has been
commenced by or against any Grantor, all ABL First Lien Collateral or proceeds thereof received in
connection with the sale or other disposition of, or collection on, such ABL First Lien Collateral
upon the exercise of remedies or other enforcement action by either Representative or any ABL
Secured Party or Noteholder Lien Secured Party, shall be delivered to the ABL Agent and shall be
applied or further distributed by the ABL Agent to or on account of the ABL Debt Obligations in
such order, if any, as specified in the relevant ABL Debt Documents or as a court of competent
jurisdiction may otherwise direct. Upon the Discharge of Senior Secured Debt Obligations in
respect of ABL Debt Obligations, the ABL Agent shall deliver to the Noteholder Collateral Agent any
Collateral and proceeds of Collateral received or delivered to it pursuant to the preceding
sentence, in the same form as received, with any necessary endorsements, to be applied by the
Noteholder Collateral Agent to the Noteholder Lien Obligations in such order as specified in the
Noteholder Lien Documents (subject to Section 7.04 below) or as a court of competent jurisdiction
may otherwise direct.

          (b) So long as the Discharge of Senior Secured Debt Obligations in respect of the Noteholder
Lien Obligations has not occurred, whether or not any Insolvency or Liquidation Proceeding has been
commenced by or against any Grantor, all Noteholder First Lien Collateral or proceeds thereof
received in connection with the sale or other disposition of, or collection on, such Noteholder
First Lien Collateral upon the exercise of remedies or other enforcement action by either
Representative or any Noteholder Lien Secured Party or ABL Secured Party, shall be delivered to the
Noteholder Collateral Agent and shall be applied by the Noteholder Collateral Agent to the
Noteholder Lien Obligations in such order as specified in the relevant Noteholder Lien Documents or
as a court of competent jurisdiction may otherwise direct provided that if at such time a Covered
Action shall have occurred and the Discharge of the Senior Secured Debt Obligations in respect of
the Tranche 2 Sub-Facility Obligations has not

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occurred, then Section 7.04 shall apply for the benefit of the Tranche 2 Sub-Facility
Obligations. Upon the Discharge of Senior Secured Debt Obligations in respect of Noteholder Lien
Obligations, the Noteholder Collateral Agent shall deliver to the ABL Agent any Collateral and
proceeds of Collateral received or delivered to it pursuant to the preceding sentence, in the same
form as received, with any necessary endorsements to be applied by the ABL Agent to the ABL Debt
Obligations in such order as specified in the ABL Debt Documents or as a court of competent
jurisdiction may otherwise direct.

          SECTION 7.02. Payments Over in Violation of Agreement. So long as the Discharge of
Senior Secured Debt Obligations in respect of either the ABL Debt Obligations or the Noteholder
Lien Obligations has not occurred, whether or not any Insolvency or Liquidation Proceeding has been
commenced by or against any Grantor, any Collateral received by either Representative or any
Noteholder Lien Secured Party or ABL Secured Party in connection with the exercise of any right,
power, or remedy (including set-off) relating to the Collateral in contravention of this Agreement
shall be segregated and held in trust and forthwith paid over to the appropriate Senior
Representative for the benefit of the holders of the applicable Senior Secured Obligations in the
same form as received, with any necessary endorsements or as a court of competent jurisdiction may
otherwise direct. Each Representative is hereby authorized by the other Representative to make any
such endorsements as agent for the other Representative or any Noteholder Lien Secured Party or ABL
Secured Party, as applicable. This authorization is coupled with an interest and is irrevocable
until the Discharge of Senior Secured Debt Obligations in respect of both the ABL Debt Obligations
and the Noteholder Lien Obligations.

          SECTION 7.03. Application of Payments. Subject to the other terms of this Agreement
including, without limitation Section 7.04, all payments received by (a) the ABL Agent or
the ABL Secured Parties may be applied, reversed and reapplied, in whole or in part, to the ABL
Debt Obligations to the extent provided for in the ABL Debt Documents and (b) the Noteholder
Collateral Agent or the Noteholder Lien Secured Parties may be applied, reversed and reapplied, in
whole or in part, to the Noteholder Lien Obligations to the extent provided for in the Noteholder
Lien Documents.

SECTION 7.04. Application of Payment in Respect of Noteholder First Lien Collateral In
Connection with Covered Actions. So long as the Discharge of the Senior Secured Debt
Obligations in respect of the Tranche 2 Sub-Facility Obligations has not occurred, the Tranche 2
Sub-Facility Obligations shall be entitled to be paid out of the proceeds of Noteholder First Lien
Collateral to the extent set forth in the Noteholder Collateral Agency Agreement. Subject to the
Discharge of the Senior Secured Debt Obligations in respect of the Tranche 2 Sub-Facility
Obligations, the Noteholder Collateral Agent and the Noteholder Lien Secured Parties shall be
subrogated to the rights of the ABL Agent to receive distributions in respect of the Noteholder
First Lien Collateral with respect to the Tranche 2 Sub-Facility Obligations until the Discharge of
the Senior Secured Oblgiations in respect of the Noteholder Lien Obligations.

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ARTICLE VIII

Miscellaneous

          SECTION 8.01. Notices. All notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service, mailed by
certified or registered mail or sent by telecopy, as follows:

          (a) if to the ABL Agent, to it at Citibank, N.A., 390 Greenwich Street, 1/F, New York, NY
10013, Attention: Michael Smolow, Telephone: (212) 723-3761, Facsimile No.: (646) 861-6221, Email:
michael.smolow@citi.com,with a copy ot Citigroup Global Loans, 1615 Brett Road, New Castle, DE
19720, Attention: Tracey Wilson, Telephone: (302) 894-6094, Email: tracey.l.wilson@citi.com;

          (b) if to the Noteholder Collateral Agent, to it at Wilmington Trust Company, Rodney Square
North, 1100 North Market Street, Wilmington, DE 19890, Attention Corporate Client Series — Polymer
Group, Inc., Facsimile No.: (302) 636-4145;

          (c) if to the Grantors, to Polymer Group, Inc., 9335 Harris Corners Parkway, Suite 300,
Charlotte, North Carolina 28269 Attention: General Counsel, Facsimile No.: (704) 697-5122; and

          (d) and if to any other Secured Debt Representative, to such address as specified in the Lien
Sharing and Priority Confirmation Joinder.

Any party hereto may change its address or telecopy number for notices and other communications
hereunder by notice to the other parties hereto (and for this purpose a notice to PGI shall be
deemed to be a notice to each Grantor). All notices and other communications given to any party
hereto in accordance with the provisions of this Agreement shall be deemed to have been given on
the date of receipt (if a business day) and on the next business day thereafter (in all other
cases) at the address of such party as provided in this Section 8.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this Section 8.01.
As agreed to in writing among PGI, on behalf of the Grantors, the Noteholder Collateral Agent and
the ABL Agent from time to time, notices and other communications may also be delivered by e-mail
to the e-mail address of a representative of the applicable person provided from time to time by
such person.

          SECTION 8.02. Waivers; Amendment.

          (a) No failure or delay on the part of any party hereto in exercising any right or power
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such
right or power, or any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other right or power. The
rights and remedies of the parties hereto are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any provision of this Agreement or consent
to any departure by any party therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only
in

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the specific instance and for the purpose for which given. No notice or demand on any party
hereto in any case shall entitle such party to any other or further notice or demand in similar or
other circumstances.

          (b) Neither this Agreement nor any provision hereof may be terminated, waived, amended or
modified except pursuant to an agreement or agreements in writing entered into by each
Representative and PGI, on behalf of the Grantors; provided, however, that this Agreement may be
amended from time to time (x) as provided in Sections 2.10 and 2.14 and (y) at the
sole request and expense of PGI, and without the consent of either Representative, to add, pursuant
to the Intercreditor Agreement Joinder, additional Grantors whereupon such Person will be bound by
the terms hereof to the same extent as if it had executed and delivered this Agreement as of the
date hereof. Any amendment of this Agreement that is proposed to be effected without the consent
of a Representative as permitted by the proviso to the preceding sentence shall be submitted to
such Representative for its review at least 5 business days (or such shorter period as shall be
acceptable to such Representative) prior to the proposed effectiveness of such amendment; provided,
that no prior review shall be required for the joinder of a Grantor pursuant to a joinder in the
form of Exhibit A.

          SECTION 8.03. Parties in Interest. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns, as well as the other
Secured Parties, all of whom are intended to be bound by, and to be third party beneficiaries of,
this Agreement.

          SECTION 8.04. Survival of Agreement. All covenants, agreements, representations and
warranties made by any party in this Agreement shall be considered to have been relied upon by the
other parties hereto and shall survive the execution and delivery of this Agreement.

          SECTION 8.05. Counterparts. This Agreement may be executed in counterparts, each of
which shall constitute an original but all of which when taken together shall constitute a single
contract. Delivery of an executed signature page to this Agreement by facsimile transmission (or
other electronic transmission) shall be as effective as delivery of a manually signed counterpart
of this Agreement.

          SECTION 8.06. Severability. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such invalidity, illegality or unenforceability without affecting the validity, legality
and enforceability of the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. The
parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provisions.

          SECTION 8.07. Governing Law; Jurisdiction; Consent to Service of Process.

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

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

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

          (d) Each party to this Agreement irrevocably consents to service of process in the manner
provided for notices in Section 8.01. Nothing in this Agreement will affect the right of
any party to this Agreement to serve process in any other manner permitted by law.

          SECTION 8.08. WAIVER OF JURY TRIAL. EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.

          SECTION 8.09. Headings. Article, Section and Annex headings used herein are for
convenience of reference only, are not part of this Agreement and are not to affect the
construction of, or to be taken into consideration in interpreting, this Agreement.

          SECTION 8.10. Conflicts. In the event of any conflict or inconsistency between the
provisions of this Agreement and the provisions of any Secured Documents, the provisions of this
Agreement shall control; provided, however, that if any of the provisions of the Noteholder Lien
Security Documents limit, qualify or conflict with the duties imposed by the provisions of the TIA,
the TIA shall control.

-39-

 

          SECTION 8.11. Provisions Solely to Define Relative Rights. The provisions of this Agreement
are and are intended solely for the purpose of defining the relative rights of the ABL Secured
Parties, on the one hand, and the Noteholder Lien Secured Parties, on the other hand. None of the
Grantors or any other creditor thereof shall have any rights or obligations hereunder, except as
expressly provided in this Agreement (provided that nothing in this Agreement (other than
Sections 2.05, 2.06, 2.10, 2.14 or Article VIII) is
intended to or will amend, waive or otherwise modify the provisions of the ABL Credit Agreement or
the Indenture), and no Grantor may rely on the terms hereof (other than Sections 2.05,
2.06, 2.10, 2.14 Article VI and Article VIII). Nothing in
this Agreement is intended to or shall impair the obligations of Grantors, which are absolute and
unconditional, to pay the Obligations under the Secured Documents as and when the same shall become
due and payable in accordance with their terms. Notwithstanding anything to the contrary herein or
in any Secured Document, the Grantors shall not be required to act or refrain from acting (a)
pursuant to this Agreement or any Noteholder Lien Document with respect to any ABL First Lien
Collateral in any manner that would cause a default under any ABL Debt Document, or (b) pursuant to
this Agreement or any ABL Debt Document with respect to any Noteholder First Lien Collateral in any
manner that would cause a default under any Noteholder Lien Document.

          SECTION 8.12. Certain Terms Concerning the Noteholder Collateral Agent. The
Noteholder Collateral Agent is executing and delivering this Agreement solely in its capacity as
such and pursuant to direction set forth in the Noteholder Collateral Agency Agreement; and in so
doing, the Noteholder Collateral Agent shall not be responsible for the terms or sufficiency of
this Agreement for any purpose. The Noteholder Collateral Agent shall have no duties or obligations
under or pursuant to this Agreement other than such duties as may be expressly set forth in this
Agreement as duties on its part to be performed or observed. In entering into this Agreement, or
in taking (or forbearing from) any action under or pursuant to the Agreement, the Noteholder
Collateral Agent shall have and be protected by all of the rights, immunities, indemnities and
other protections granted to it under the Indenture (including without limitation Sections
7.01, 7.02, 7.07 and 10.11 thereof) and the Noteholder Lien Security
Documents.

          SECTION 8.13. Certain Terms Concerning ABL Agent and Noteholder Collateral Agent; Force
Majeure. Neither the ABL Agent nor the Noteholder Collateral Agent shall have any liability or
responsibility for the actions or omissions of any other Secured Party, or for any other Secured
Party’s compliance with (or failure to comply with) the terms of this Agreement. Neither the ABL
Agent nor the Noteholder Collateral Agent shall have individual liability to any Person if it shall
mistakenly pay over or distribute to any Secured Party (or the Grantors) any amounts in violation
of the terms of this Agreement, so long as the ABL Agent or the Noteholder Collateral Agent, as the
case may be, is acting in good faith. Neither the ABL Agent nor the Noteholder Collateral Agent
shall be responsible for or liable for any failure or delay in the performance of its obligations
under this Agreement arising out of or caused by, directly or indirectly, forces beyond its
reasonable control, including without limitation, strikes, work stoppages, accidents, acts of war
or terrorism, civil or military disturbances, nuclear

-40-

 

or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities,
communications or computer (software or hardware) services.

[Remainder of this page intentionally left blank]

-41-

 

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their
respective authorized officers as of the day and year first above written.

	 	 	 	 	 
	 	CITIBANK, N.A., as ABL Agent

 	 
	 	By:  	/s/ Michael Smolow
 	 
	 	 	Name:  	Michael Smolow 	 
	 	 	Title:  	Vice President 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	WILMINGTON TRUST COMPANY,

as Noteholder Collateral Agent

 	 
	 	By  	/s/ Joshua C. Jones
 	 
	 	 	Name:  	Joshua C. Jones 	 
	 	 	Title:  	Financial Services Officer 	 

-2-

 

	 	 	 	 	 

	 	 	 	 	 
	 	SCORPIO ACQUISITION CORPORATION

 	 
	 	By:  	/s/ Jason Giordano
 	 
	 	 	Name:  	Jason Giordano 	 
	 	 	Title:  	Vice President and Treasurer 	 

-3-

 

	 	 	 	 	 

	 	 	 	 	 
	 	POLYMER GROUP, INC.

 	 
	 	By:  	/s/ Daniel L. Rikard
 	 
	 	 	Name:  	Daniel L. Rikard 	 
	 	 	Title:  	Senior Vice President, General Counsel
and Secretary 	 
	 
	 	PGI POLYMER, INC.

 	 
	 	By:  	/s/ Daniel L. Rikard
 	 
	 	 	Name:  	Daniel L. Rikard 	 
	 	 	Title:  	Secretary 	 
	 
	 	CHICOPEE, INC.

 	 
	 	By:  	/s/ Daniel L. Rikard
 	 
	 	 	Name:  	Daniel L. Rikard 	 
	 	 	Title:  	Secretary 	 
	 
	 	FABRENE, L.L.C.

 	 
	 	By:  	/s/ Daniel L. Rikard
 	 
	 	 	Name:  	Daniel L. Rikard 	 
	 	 	Title:  	Secretary 	 
	 
	 	DOMINION TEXTILE (USA), L.L.C.

 	 
	 	By:  	/s/ Daniel L. Rikard
 	 
	 	 	Name:  	Daniel L. Rikard 	 
	 	 	Title:  	Secretary 	 
	 
	 	PGI EUROPE, INC..

 	 
	 	By:  	/s/ Daniel L. Rikard
 	 
	 	 	Name:  	Daniel L. Rikard 	 
	 	 	Title:  	Secretary 	 
	 

-4-

 

ANNEX I

Provision for the ABL Credit Agreement, the Indenture and the Additional Noteholder Lien Debt
Facility

Reference is made to the Lien Subordination and Intercreditor Agreement, dated as of January 28,
2011, among CITIBANK, N.A., as ABL Agent (as defined in the Intercreditor Agreement) for the ABL
Secured Parties referred to therein; WILMINGTON TRUST COMPANY, as Noteholder Collateral Agent (as
defined in the Intercreditor Agreement); Scorpio Acquisition Corporation, Polymer Group, Inc.; and
the other Subsidiaries of Polymer Group, Inc. named therein (the “Intercreditor Agreement”). Each
[Lender hereunder] [holder of the [Indenture Notes][the notes issued under the Additional
Noteholder Lien Debt Facility]], by its acceptance of [the Indenture Notes] [the notes issued under
the Additional Noteholder Lien Debt Facility] (a) consents to the subordination of Liens provided
for in the Intercreditor Agreement, (b) agrees that it will be bound by, and will take no actions
contrary to, the provisions of the Intercreditor Agreement and (c) authorizes and instructs the
[ABL Agent] [Noteholder Collateral Agent [on behalf of each holder of Indenture Noteholder Lien
Debt Obligations][on behalf of each holder of Additional Noteholder Lien Debt Obligations] to enter
into the Intercreditor Agreement as [ABL Agent] [Noteholder Collateral Agent] on behalf of such
[holder of ABL Debt Obligations] [holder of Indenture Noteholder Lien Debt Obligations][holder of
Additional Noteholder Lien Debt Obligations]. The foregoing provisions are intended as an
inducement to the [ABL Lenders] [holders of Indenture Noteholder Lien Debt Obligations] [holders of
Additional Noteholder Lien Debt Obligations] to [extend credit to Borrowers] [to acquire the
[Indenture Notes][notes issued under the Additional Noteholder Lien Debt Facility] of PGI] and such
[ABL Lenders][holders of such [Indenture Notes][notes]] are intended third party beneficiaries of
such provisions and the provisions of the Intercreditor Agreement.

Provision for all ABL Security Documents, Indenture Noteholder Security Documents and the
Additional Noteholder Lien Security Documents that Grant a Security Interest in Collateral

Reference is made to the Lien Subordination and Intercreditor Agreement, dated as of January 28,
2011, among CITIBANK, N.A., as ABL Agent (as defined in the Intercreditor Agreement) for the ABL
Secured Parties referred to therein; WILMINGTON TRUST COMPANY, as Noteholder Collateral Agent (as
defined in the Intercreditor Agreement); Scorpio Acquisition Corporation, Polymer Group, Inc.; and
the other Subsidiaries of Polymer Group, Inc. named therein (the “Intercreditor Agreement”). Each
Person that is secured hereunder, by accepting the benefits of the security provided hereby, (i)
consents (or is deemed to consent), to the subordination of Liens provided for in the
Intercreditor Agreement, (ii) agrees (or is deemed to agree) that it will be bound by, and will
take no actions contrary to, the provisions of the Intercreditor Agreement, (iii) authorizes (or is
deemed to authorize) the [ABL Agent] [Noteholder Collateral Agent] on behalf of such Person

 

 

to enter into, and perform under, the Intercreditor Agreement and (iv) acknowledges (or is deemed
to acknowledge) that a copy of the Intercreditor Agreement was delivered, or made available, to
such Person.

Notwithstanding any other provision contained herein, this Agreement, the Liens created hereby and
the rights, remedies, duties and obligations provided for herein are subject in all respects to the
provisions of the Intercreditor Agreement and, to the extent provided therein, the applicable
Security Documents (as defined in the Intercreditor Agreement). In the event of any conflict or
inconsistency between the provisions of this Agreement and the Intercreditor Agreement, the
provisions of the Intercreditor Agreement shall control.

-2-

 

EXHIBIT A

to Intercreditor Agreement

[FORM OF]

INTERCREDITOR AGREEMENT JOINDER

     The undersigned, _____________________, a _______________, hereby agrees to become party as a
[Grantor] under the Lien Subordination and Intercreditor Agreement dated as of January 28, 2011
(the “Intercreditor Agreement”) among Scorpio Acquisition Corporation, Polymer Group, Inc., the
Grantors from time to time party thereto, Citibank, N.A., as agent under the ABL Credit Agreement
(as defined therein) and Wilmington Trust Company, as collateral agent under the Noteholder
Collateral Agency Agreement and the Indenture (each as defined in the Intercreditor Agreement) and
the Additional Noteholder Lien Security Documents (as defined therein), if any; for all purposes
thereof on the terms set forth therein, and to be bound by the terms of the Intercreditor Agreement
as fully as if the undersigned had executed and delivered the Intercreditor Agreement as of the
date thereof.

     The provisions of Article VIII of the Intercreditor Agreement will apply with like
effect to this Joinder.

     IN WITNESS WHEREOF, the parties hereto have caused this Intercreditor Agreement Joinder to be
executed by their respective officers or representatives as of ___________________, 20___.

	 	 	 	 	 
	 	[___________________________]

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 
	 	[Notice Address]	 

 

 

EXHIBIT B

to Intercreditor Agreement

[FORM OF]

LIEN SHARING AND PRIORITY CONFIRMATION JOINDER

     Reference is made to the Lien Subordination and Intercreditor Agreement, dated as of January
28, 2011 (as amended, supplemented, amended and restated or otherwise modified and in effect from
time to time, the “Intercreditor Agreement”) among Citibank, N.A., as ABL Agent for the ABL Secured
Parties (each such term as defined therein), Wilmington Trust Company, as Noteholder Collateral
Agent for the Noteholder Lien Secured Parties (each such term as defined therein), SCORPIO
ACQUISITION CORPORATION (“Parent”), POLYMER GROUP, INC. (“PGI”, together with Parent and Merger,
the “Initial Grantors”) and the Subsidiaries of PGI named therein.

     Capitalized terms used but not otherwise defined herein shall have the meaning set forth in
the Intercreditor Agreement. This Lien Sharing and Priority Confirmation Joinder is being executed
and delivered pursuant to Section 2.10[a][b] of the Intercreditor Agreement as a condition
precedent to the debt for which the undersigned is acting as representative being entitled to the
rights and obligations of being additional secured debt under the Intercreditor Agreement.

     1. Joinder. The undersigned, [_________________], a [_______________], (the “New
Representative”) as [trustee] [collateral trustee] [administrative agent] [collateral agent] under
that certain [described applicable indenture, credit agreement or other document governing the
additional secured debt] hereby:

          (a) represents that the New Representative has been authorized to become a party to the
Intercreditor Agreement on behalf of the [ABL Secured Parties under an ABL Substitute
Facility][Indenture Noteholder Lien Secured Parties under the Noteholder Substitute
Facility][Additional Noteholder Lien Secured Parties under the Additional Noteholder Lien Debt
Facility] as [an ABL Agent under an ABL Substitute Facility] [a Noteholder Collateral Agent under a
Noteholder Substitute Facility] [a Secured Debt Representative] under the Intercreditor Agreement
for all purposes thereof on the terms set forth therein, and to be bound by the terms of the
Intercreditor Agreement as fully as if the undersigned had executed and delivered the Intercreditor
Agreement as of the date thereof; and

          (b) agrees that its address for receiving notices pursuant to the Intercreditor Agreement
shall be as follows:

          [Address];

     2. Lien Sharing and Priority Confirmation.

     [Option A: to be used if Additional Debt constitutes ABL Debt Obligations] The
undersigned New Representative, on behalf of itself and each holder of ABL Debt Obligations for
which the undersigned is acting as [collateral agent] hereby agrees, for

 

 

the benefit of all Secured Parties and each future Secured Debt Representative, and as a
condition to being treated as ABL Debt Obligations under the Intercreditor Agreement, that the New
Representative is bound by the provisions of the Intercreditor Agreement, including the provisions
relating to the ranking of ABL Liens. [or]

     [Option B: to be used if Additional Debt constitutes a Series of Noteholder Lien Debt]
The undersigned New Representative, on behalf of itself and each holder of Obligations in respect
of the Series of Noteholder Lien Debt [that constitutes Noteholder Substitute Facility] for which
the undersigned is acting as [Secured Debt Representative][Noteholder Collateral Agent] hereby
agrees, for the benefit of all Secured Parties and each future Secured Debt Representative, and as
a condition to being treated as Secured Debt under the Intercreditor Agreement, that:

     (a) all Noteholder Lien Obligations will be and are secured Equally and Ratably by all
Noteholder Liens at any time granted by the Initial Grantors or any other Grantor to secure any
Obligations in respect of such Series of Noteholder Lien Debt, whether or not upon property
otherwise constituting Collateral for such Series of Noteholder Lien Debt, and that all such
Noteholder Liens will be enforceable by the Noteholder Collateral Agent with respect to such Series
of Noteholder Lien Debt for the benefit of all holders of Noteholder Lien Obligations Equally and
Ratably;

     (b) the New Representative and each holder of Obligations in respect of the Series of
Noteholder Lien Debt for which the undersigned is acting as [Secured Debt Representative] are bound
by the provisions of the Intercreditor Agreement, including the provisions relating to the ranking
of Noteholder Liens and the order of application of proceeds from enforcement of Noteholder Liens;
and

     (c) the New Representative and each holder of Obligations in respect of the Series of
Noteholder Lien Debt for which the undersigned is acting as [Secured Debt Representative] appoints
the Noteholder Collateral Agent and consents to the terms of the Intercreditor Agreement and the
performance by the Noteholder Collateral Agent of, and directs the Noteholder Collateral Agent to
perform, its obligations under the Intercreditor Agreement and the Noteholder Collateral Agency
Agreement, together with all such powers as are reasonably incidental thereto.

     3. Governing Law and Miscellaneous Provisions. The provisions of Article
VIII of the Intercreditor Agreement will apply with like effect to this Lien Sharing and
Priority Confirmation Joinder.

-2-

 

IN WITNESS WHEREOF, the parties hereto have caused this Lien Sharing and Priority Confirmation
Joinder to be executed by their respective officers or representatives as of [___________________,
20____].

	 	 	 	 	 
	 	[insert name of New Representative]

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

The Noteholder Collateral Agent hereby acknowledges receipt of this Lien Sharing and Priority
Confirmation Joinder and agrees to act as Noteholder Collateral Agent for the New Representative
and the holders of the Obligations represented thereby:

	 	 	 	 	 
	 	____________________________,

as Noteholder Collateral Agent

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

The ABL Agent hereby acknowledges receipt of this Lien Sharing and Priority Confirmation Joinder
and agrees to act as ABL Agent for the New Representative and the holders of the Obligations
represented thereby:

	 	 	 	 	 
	 	____________________________,

as ABL Agent

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

-3-

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