Document:

Exhibit
10.14

 

PLEDGE AGREEMENT

 

PLEDGE
AGREEMENT, dated as of March 17, 2004 (as amended, restated, modified and/or
supplemented from time to time, this “Agreement”), among each of the
undersigned (each, a “Pledgor” and, together with each other entity which
becomes a party hereto pursuant to Section 25, collectively, the “Pledgors”)
and Bank of America, N.A., as Collateral Agent (together with any successor
Collateral Agent, the “Pledgee”), for the benefit of the Secured
Creditors (as defined below).  Except as
otherwise defined herein, terms used herein and defined in the Second-Lien
Credit Agreement (as defined below) shall be used herein as therein defined.

 

W I T N E S S E T
H :

 

WHEREAS,
EnerSys (“Holdings”), EnerSys Capital Inc. (the “Borrower”), various
financial institutions from time to time party thereto (the “Lenders”),
Bank of America, N.A., as Administrative Agent (together with a successor
Administrative Agent, the “Administrative Agent” and, together with the
Lenders, the Collateral Agent, the other Agents and the Pledgee, the “Secured
Creditors”), Morgan Stanley Senior Funding Inc., as Syndication Agent, and
Lehman Commercial Paper Inc., as Documentation Agent, have entered into a
Second-Lien Credit Agreement, dated as of March 17, 2004 providing for the
making of Second-Lien Loans to the Borrower (as used herein, the term “Second-Lien
Credit Agreement” means the Second-Lien Credit Agreement described above in
this paragraph as amended, restated, modified, extended, renewed, replaced,
supplemented, restructured and/or refinanced from time to time);

 

WHEREAS,
pursuant to the Holdings Guaranty, Holdings has unconditionally guaranteed to
the Secured Creditors the payment when due of all Guaranteed Obligations as
described therein;

 

WHEREAS,
pursuant to the Subsidiaries Guaranty, each Subsidiary Guarantor has jointly
and severally guaranteed to the Secured Creditors the payment when due of all
Guaranteed Obligations as described therein;

 

WHEREAS,
it is a condition precedent to the making of Second-Lien Loans to the Borrower
under the Second-Lien Credit Agreement that each Pledgor shall have executed
and delivered to the Pledgee this Agreement;

 

WHEREAS,
Holdings, the Borrower, various financial institutions from time to time party
thereto and Bank of America, N.A., as administrative agent and collateral agent
(in such capacity, the “First-Lien Collateral Agent”), have entered into
a credit agreement, dated as of the date hereof (as amended, restated,
modified, extended, renewed, replaced, supplemented, restructured and/or
refinanced from time to time, the “First-Lien Credit Agreement”);

 

WHEREAS,
each Pledgor will obtain benefits from the incurrence of Second-Lien Loans by
the Borrower under the Second-Lien Credit Agreement and accordingly, desires

 

 

to execute this Agreement
in order to satisfy the condition precedent described in the second preceding
paragraph and to induce the Lenders to make Second-Lien Loans to the Borrower;

 

WHEREAS,
in order to secure the obligations under the First-Lien Credit Agreement, each
Pledgor is concurrently granting to the First-Lien Collateral Agent, for the
benefit of the holders of obligations under the First-Lien Credit Agreement, a first priority security interest in the Collateral (it
being understood that the relative rights and priorities of the grantees in
respect of the Collateral are governed by the Intercreditor Agreement, dated as of the date hereof (as amended, restated, supplemented or
otherwise modified from time to time, the “Intercreditor Agreement”), among Holdings, the Borrower, the First-Lien Collateral Agent, the
Collateral Agent and certain other persons party or that may become party
thereto from time to time); and

 

NOW,
THEREFORE, in consideration of the foregoing and other benefits accruing to
each Pledgor, the receipt and sufficiency of which are hereby acknowledged,
each Pledgor hereby makes the following representations and warranties to the
Pledgee for the benefit of the Secured Creditors and hereby covenants and
agrees with the Pledgee for the benefit of the Second Creditors as follows:

 

1.            SECURITY FOR OBLIGATIONS.  This
Agreement is made by each Pledgor for the benefit of the Secured Creditors to
secure:

 

(i)           the full and prompt
payment when due (whether at stated maturity, by acceleration or otherwise) of
all obligations, liabilities and indebtedness (including, without limitation,
principal, premium, interest (including, without limitation, all interest that
accrues after the commencement of any case, proceeding or other action relating
to the bankruptcy, insolvency, reorganization or similar proceeding of any
Pledgor or any Subsidiary thereof at the rate provided for in the respective
documentation, whether or not a claim for post-petition interest is allowed in
any such proceeding), fees, costs and indemnities) of such Pledgor owing to the
Secured Creditors, whether now existing or hereafter incurred under, arising
out of, or in connection with, the Second-Lien Credit Agreement and the other
Credit Documents to which such Pledgor is a party (including, in the case of
each Pledgor that is a Guarantor, all such obligations, liabilities and
indebtedness of such Pledgor under its Guaranty) and the due performance and
compliance by such Pledgor with all of the terms, conditions and agreements contained
in the Second-Lien Credit Agreement and in such other Credit Documents (all
such obligations, liabilities and indebtedness under this clause (i), being
herein collectively called the “Credit Document Obligations”);

 

(ii)          any and all sums
advanced by the Pledgee in order to preserve the Collateral (as hereinafter
defined) or preserve its security interest in the Collateral;

 

(iii)        in the event of any
proceeding for the collection or enforcement of any indebtedness, obligations
or liabilities of such Pledgor referred to in clause (i) above, after an Event
of Default shall have occurred and be continuing, the reasonable expenses of
retaking, holding, preparing for sale or lease, selling or otherwise disposing
of or realizing on the Collateral, or of any exercise by the

 

 

Pledgee of its
rights hereunder, together with reasonable attorneys’ fees and court costs;

 

(iv)         all amounts paid by any
Indemnitees as to which such Indemnitee has the right to reimbursement under
Section 11 of this Agreement; and

 

(v)          all amounts owing to any
Agent or any of its affiliates pursuant to any of the Credit Documents in its
capacity as such;

 

all such obligations, liabilities, indebtedness, sums and expenses set
forth in clauses (i) through (v) of this Section 1 being collectively called
the “Obligations”, it being agreed that the “Obligations” shall include
extensions of credit of the types described above, whether outstanding on the
date of this Agreement or extended from time to time after the date of this
Agreement.

 

2.            DEFINITIONS; ANNEXES.  (a)  Unless
otherwise defined herein, all capitalized terms used herein and defined in the
Second-Lien Credit Agreement shall be used herein as therein defined.  Reference to singular terms shall include
the plural and vice versa.

 

(b)          The
following capitalized terms used herein shall have the definitions specified
below:

 

“Administrative
Agent” shall have the meaning set forth in the recitals hereto.

 

“Adverse
Claim” shall have the meaning given such term in Section 8-102(a)(1) of the
UCC.

 

“Agreement”
shall have the meaning set forth in the first paragraph hereof.

 

“Borrower”
shall have the meaning set forth in the recitals hereto.

 

“Certificated
Security” shall have the meaning given such term in Section 8-102(a)(4) of
the UCC.

 

“Clearing
Corporation” shall have the meaning given such term in Section 8-102(a)(5)
of the UCC.

 

“Collateral”
shall have the meaning set forth in Section 3.1 hereof.

 

“Collateral
Accounts” shall mean any and all accounts established and maintained by the
Pledgee in the name of any Pledgor to which Collateral may be credited.

 

 “Credit Document Obligations” shall
have the meaning set forth in Section 1(i) hereof.

 

“Domestic
Corporation” shall have the meaning set forth in the definition of “Stock.”

 

“Event
of Default” shall mean any Event of Default under, and as defined in, the
Second-Lien Credit Agreement and shall in any event include, without
limitation, any payment default on any of the Obligations after the expiration
of any applicable grace period.

 

 

“Excluded
Collateral” shall mean (x) on and after the Accounts Receivable Facility
Transaction Date, any Accounts Receivable Facility Assets for so long as, and
to the extent, same have been sold or transferred pursuant to the Accounts
Receivable Facility Documents, provided that at such time as, and to the
extent that, any such Excluded Collateral is repurchased by or reconveyed to,
an Assignor, such Accounts Receivable Facility Assets shall cease to constitute
Excluded Collateral, (y) Margin Stock owned or held by any Pledgor except to
the extent required to be pledged pursuant to Section 8.18 of the Credit
Agreement and (z) the capital stock of Yuasa Inc. S.A., EnerSys Europe Ltd. and
YCI Inc. so long as, in the case of EnerSys Europe Ltd. and YCI Inc., the gross
book value of the assets of each entity does not exceed $50,000 at any time.

 

“Exempted
Foreign Corporation” shall mean (i) any Foreign Corporation and any limited
liability company organized under the laws of a jurisdiction other than the United
States or any State or Territory thereof that, in any such case, is treated as
a corporation or an association taxable as a corporation for U.S. Federal
income tax purposes and (ii) Cayman Partnership Shareholder #1.

 

“Financial
Asset” shall have the meaning given such term in Section 8-102(a)(9) of the
UCC.

 

“Foreign
Corporation” shall have the meaning set forth in the definition of “Stock.”

 

“Holdings”
shall have the meaning set forth in the first paragraph hereof.

 

“Indemnitees”
shall have the meaning set forth in Section 11 hereof.

 

“Instrument”
shall have the meaning given such term in Section 9-102(a)(47) of the UCC.

 

“Intercreditor
Agreement” shall have the meaning given such term in the recitals hereto.

 

 “Investment Property” shall have the
meaning given such term in Section 9-102(a)(49) of the UCC.

 

“Lenders”
shall have the meaning set forth in the Recitals hereto.

 

“Limited
Liability Company Assets” shall mean all assets, whether tangible or
intangible and whether real, personal or mixed (including, without limitation,
all limited liability company capital and interest in other limited liability
companies), at any time owned by any Pledgor or represented by any Limited
Liability Company Interest.

 

“Limited
Liability Company Interests” shall mean the entire limited liability
company membership interest at any time owned by any Pledgor in any limited
liability company.

 

“Location”
of any Pledgor has the meaning given such term in Section 9-307 of the UCC.

 

 

“Non-Voting
Stock” shall mean all capital stock which is not Voting Stock.

 

“Notes”
shall mean (x) all intercompany notes at any time issued to each Pledgor and
(y) all other promissory notes from time to time issued to, or held by, each
Pledgor.

 

“Obligations”
shall have the meaning set forth in Section 1 hereof.

 

“Partnership
Assets” shall mean all assets, whether tangible or intangible and whether
real, personal or mixed (including, without limitation, all partnership capital
and interest in other partnerships), at any time owned or represented by any
Partnership Interest.

 

“Partnership
Interest” shall mean the entire general partnership interest or limited
partnership interest at any time owned by any Pledgor in any general
partnership or limited partnership.

 

“Pledged
Notes” shall mean all Notes at any time pledged or required to be pledged
hereunder.

 

“Pledgee”
shall have the meaning set forth in the first paragraph hereof.

 

“Pledgor”
shall have the meaning set forth in the first paragraph hereof.

 

“Proceeds”
shall have the meaning given such term in Section 9-102(a)(64) of the UCC.

 

“Registered
Organization” shall have the meaning given such term in Section
9-102(a)(70) of the UCC.

 

“Required
Lenders” shall have the meaning given such term in the Second-Lien Credit
Agreement.

 

“Second-Lien
Collateral Agent” shall have the meaning provided in the Intercreditor
Agreement.

 

“Second-Lien
Credit Agreement” shall have the meaning set forth in the recitals hereto.

 

“Secured
Creditors” shall have the meaning set forth in the recitals hereto.

 

“Secured
Debt Agreements” shall have the meaning set forth in Section 5 hereof.

 

“Securities
Account” shall have the meaning given such term in Section 8-501(a) of the
UCC.

 

“Securities
Act” shall mean the Securities Act of 1933, as amended, as in effect from
time to time.

 

“Securities
Intermediary” shall have the meaning given such term in Section 8-102(14)
of the UCC.

 

 

“Security”
and “Securities” shall have the meaning given such term in Section
8-102(a)(15) of the UCC and shall in any event also include all Stock and all
Notes.

 

“Security
Entitlement” shall have the meaning given such term in Section 8-102(a)(17)
of the UCC.

 

“Specified
Default” shall have the meaning set forth in Section 5 hereof.

 

“Stock”
shall mean (x) with respect to corporations incorporated under the laws of the
United States or any State or territory thereof or the District of Columbia
(each, a “Domestic Corporation”), all of the issued and outstanding
shares of capital stock of any Domestic Corporation at any time owned by any
Pledgor and (y) with respect to corporations not Domestic Corporations (each, a
“Foreign Corporation”), all of the issued and outstanding shares of
capital stock of any Foreign Corporation at any time owned by any Pledgor.

 

“Termination
Date” shall have the meaning set forth in Section 19 hereof.

 

“UCC”
shall mean the Uniform Commercial Code as in effect in the State of
New York from time to time; provided that all references herein to
specific sections or subsections of the UCC are references to such sections or
subsections, as the case may be, of the Uniform Commercial Code as in effect in
the State of New York on the date hereof.

 

“Uncertificated
Security” shall have the meaning given such term in Section 8-102(a)(18) of
the UCC.

 

“Voting
Stock” shall mean all classes of equity interests of any Foreign
Corporation entitled to vote (as used in the Treasury Regulations under Section
956 under the Code).

 

3.            PLEDGE OF SECURITY
INTEREST, ETC.

 

3.1.         Pledge.  To
secure the Obligations now or hereafter owed or to be performed by such Pledgor
(but subject to the terms of the Intercreditor Agreement), each Pledgor does
hereby grant, pledge and assign to the Pledgee for the benefit of the Secured
Creditors, and does hereby create a continuing security interest in favor of the
Pledgee for the benefit of the Secured Creditors in, all of the right, title
and interest in and to the following, whether now existing or hereafter from
time to time acquired (collectively, the “Collateral”):

 

(a)          each
of the Collateral Accounts, including any and all assets of whatever type or
kind deposited by such Pledgor in such Collateral Account, whether now owned or
hereafter acquired, existing or arising, including, without limitation, all
Financial Assets, Investment Property, moneys, checks, drafts, Instruments,
Securities or interests therein of any type or nature deposited or required by
the Second-Lien Credit Agreement or any other Secured Debt Agreement to be
deposited in such Collateral Account, and all investments and all certificates and
other Instruments (including depository receipts, if any) from time to time
representing or evidencing the same, and all dividends, interest,
distributions, cash and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all of the
foregoing;

 

 

(b)          all
Securities owned or held by such Pledgor from time to time and all options and
warrants owned by such Pledgor from time to time to purchase Securities;

 

(c)          all
Limited Liability Company Interests owned by such Pledgor from time to time and
all of its right, title and interest in each limited liability company to which
each such Limited Liability Company Interest relates, whether now existing or
hereafter acquired, including, without limitation, to the fullest extent
permitted under the terms and provisions of the documents and agreements
governing such Limited Liability Company Interests and applicable law:

 

(A)         all its capital therein
and its interest in all profits, losses, Limited Liability Company Assets and
other distributions to which such Pledgor shall at any time be entitled in
respect of such Limited Liability Company Interests;

 

(B)         all other payments due or
to become due to such Pledgor in respect of Limited Liability Company Interests,
whether under any limited liability company agreement or otherwise, whether as
contractual obligations, damages, insurance proceeds or otherwise;

 

(C)         all of its claims,
rights, powers, privileges, authority, options, security interests, liens and
remedies, if any, under any limited liability company agreement or operating
agreement, or at law or otherwise in respect of such Limited Liability Company
Interests;

 

(D)         all present and future
claims, if any, of such Pledgor against any such limited liability company for
moneys loaned or advanced, for services rendered or otherwise;

 

(E)          all of such Pledgor’s
rights under any limited liability company agreement or operating agreement or
at law to exercise and enforce every right, power, remedy, authority, option
and privilege of such Pledgor relating to such Limited Liability Company
Interests, including any power to terminate, cancel or modify any limited
liability company agreement or operating agreement, to execute any instruments
and to take any and all other action on behalf of and in the name of any such
Pledgor in respect of such Limited Liability Company Interests and any such
limited liability company, to make determinations, to exercise any election
(including, but not limited to, election of remedies) or option or to give or
receive any notice, consent, amendment, waiver or approval, together with full
power and authority to demand, receive, enforce, collect or receipt for any of
the foregoing or for any Limited Liability Company Asset, to enforce or execute
any checks, or other instruments or orders, to file any claims and to take any
action in connection with any of the foregoing; and

 

(F)          all other property
hereafter delivered in substitution for or in addition to any of the foregoing,
all certificates and instruments representing or evidencing such other property
and all cash, securities, interest, dividends, rights and other property at any
time and from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all thereof;

 

 

(d)          all
Partnership Interests of such Pledgor from time to time and all of its right,
title and interest in each partnership to which each such interest relates,
whether now existing or hereafter acquired, including, without limitation:

 

(A)         all its capital therein
and its interest in all profits, losses, Partnership Assets and other
distributions to which such Pledgor shall at any time be entitled in respect of
such Partnership Interests;

 

(B)         all other payments due or
to become due to such Pledgor in respect of Partnership Interests, whether
under any partnership agreement or otherwise, whether as contractual
obligations, damages, insurance proceeds or otherwise;

 

(C)         all of its claims,
rights, powers, privileges, authority, options, security interests, liens and
remedies, if any, under any partnership agreement or operating agreement, or at
law or otherwise in respect of such Partnership Interests;

 

(D)         all present and future
claims, if any, of such Pledgor against any such partnership for moneys loaned
or advanced, for services rendered or otherwise;

 

(E)          all of such Pledgor’s
rights under any partnership agreement or operating agreement or at law to
exercise and enforce every right, power, remedy, authority, option and
privilege of such Pledgor relating to such Partnership Interests, including any
power to terminate, cancel or modify any partnership agreement or operating
agreement, to execute any instruments and to take any and all other action on
behalf of and in the name of any such Pledgor in respect of such Partnership
Interests and any such partnership, to make determinations, to exercise any
election (including, but not limited to, election of remedies) or option or to
give or receive any notice, consent, amendment, waiver or approval, together
with full power and authority to demand, receive, enforce, collect or receipt
for any of the foregoing or for any Partnership Asset, to enforce or execute
any checks, or other instruments or orders, to file any claims and to take any
action in connection with any of the foregoing; and

 

(F)          all other property
hereafter delivered in substitution for or in addition to any of the foregoing,
all certificates and instruments representing or evidencing such other property
and all cash, securities, interest, dividends, rights and other property at any
time and from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all thereof;

 

(e)          all
Financial Assets and Investment Property of such Pledgor from time to time;

 

(f)           all
Security Entitlements of such Pledgor from time to time in any and all of the
foregoing; and

 

(g)          all
Proceeds of any and all of the foregoing;

 

 

provided that (x) no Pledgor shall
be required at any time to pledge hereunder, and the pledge granted hereunder
shall not be deemed to extend to, more than 65% of the total combined voting
power of all classes of Voting Stock of any Exempted Foreign Corporation and
(y) each Pledgor shall be required to pledge hereunder 100% of any Non-Voting
Stock of each Exempted Foreign Corporation at any time and from time to time
acquired by such Pledgor, which Non-Voting Stock shall not be subject to the
limitations described in clause (x). 
Notwithstanding anything to the contrary contained herein, (I) the
Collateral shall at no time include any items which would at such time
constitute Excluded Collateral and (II) the lien and security interest granted
to the Pledgee pursuant to this Agreement and the exercise of any right or
remedy by the Pledgee hereunder are subject to the provisions of the
Intercreditor Agreement.  In the event
of any conflict between the terms of the Intercreditor Agreement and this
Agreement, the terms of the Intercreditor Agreement shall govern and control.

 

3.2.         Procedures.  (a)  To
the extent that any Pledgor at any time or from time to time owns, acquires or
obtains any right, title or interest in any Collateral, such Collateral shall
automatically (and without the taking of any action by the respective Pledgor)
be pledged pursuant to Section 3.1 of this Agreement and, in addition thereto
(but subject to the terms of the Intercreditor Agreement (including, without
limitation, Section 5.5 thereof)), such Pledgor shall (to the extent provided
below and not inconsistent with the terms of the Intercreditor Agreement) take
the following actions as set forth below (as promptly as practicable and, in
any event, within 10 days after it obtains such Collateral) for the benefit of
the Pledgee and the Secured Creditors:

 

(i)           with respect to a
Certificated Security (other than a Certificated Security credited on the books
of a Clearing Corporation or Securities Intermediary), such Pledgor shall
physically deliver such Certificated Security to the Pledgee, endorsed to the
Pledgee or endorsed in blank;

 

(ii)          with respect to an
Uncertificated Security (other than an Uncertificated Security credited on the
books of a Clearing Corporation or Securities Intermediary), such Pledgor shall
cause the issuer of such Uncertificated Security to duly authorize and execute,
and deliver to the Pledgee, an agreement for the benefit of the Pledgee and the
other Secured Creditors substantially in the form of Annex G hereto
(appropriately completed to the satisfaction of the Pledgee and with such
modifications, if any, as shall be satisfactory to the Pledgee) pursuant to
which such issuer agrees to comply with any and all instructions originated by
the Pledgee without further consent by the registered owner and not to comply
with instructions regarding such Uncertificated Security (and any Partnership
Interests and Limited Liability Company Interests issued by such issuer)
originated by any other Person other than a court of competent jurisdiction;

 

(iii)        with respect to a
Certificated Security, Uncertificated Security, Partnership Interest or Limited
Liability Company Interest credited on the books of a Clearing Corporation or
Securities Intermediary (including a Federal Reserve Bank, Participants Trust
Company or The Depository Trust Company), the respective Pledgor shall promptly
notify the Pledgee thereof and shall promptly take all actions (x) required (i)
to comply with the applicable rules of such Clearing Corporation or Securities
Intermediary and (ii) to perfect the security interest of the Pledgee under applicable
law (including, in any event, under

 

 

Sections
9-314(a), (b), and (c), 9-106 and 8-106(d) of the UCC) and (y) as the Pledgee
deems necessary or desirable to effect the foregoing;

 

(iv)         with respect to a
Partnership Interest or a Limited Liability Company Interest (other than a
Partnership Interest or Limited Liability Company Interest credited on the
books of a Clearing Corporation or Securities Intermediary), (1) if such
Partnership Interest or Limited Liability Company Interest is represented by a
certificate and is a Security for purposes of the UCC, the procedure set forth
in Section 3.2(a)(i), and (2) if such Partnership Interest or Limited Liability
Company Interest is not represented by a certificate and is a Security for
purposes of the UCC, the procedure set forth in Section 3.2(a)(ii);

 

(v)          with respect to any
Note, physical delivery of such Note to the Pledgee, endorsed to the Pledgee or
endorsed in blank (except that any Note with a face amount of less than
$500,000 shall not be required to be so delivered, so long as not more than
$2,500,000 in aggregate principal amount of Notes are excluded pursuant to the
delivery requirements of this clause (v) as a result of such $500,000
limitation); and

 

(vi)         with respect to cash
proceeds from any of the Collateral, prompt deposit of such cash in a “Subject
Deposit Account” (as such term is defined in the Security Agreement) or, if an
Event of Default shall have occurred and be continuing, a Collateral Account.

 

(b)          In
addition to the actions required to be taken pursuant to preceding Section
3.2(a), each Pledgor shall take the following additional actions with respect
to the Securities and Collateral:

 

(i)  with respect to all Collateral of such
Pledgor of which the Pledgee may obtain “control” thereof within the meaning of
Section 8-106 of the UCC (or under any provision of the UCC as same may be
amended or supplemented from time to time, or under the laws of any relevant
State other than the State of New York), the respective Pledgor shall take
all actions as may be requested from time to time by the Pledgee (to the extent
not inconsistent with the Intercreditor Agreement) so that “control” of such
Collateral is obtained and at all times held by the Pledgee; and

 

(ii)  each Pledgor shall from time to time cause
appropriate financing statements (on Form UCC-1 or other appropriate form)
under the Uniform Commercial Code as in effect in the various relevant States,
in form covering all Collateral hereunder (with such form to be satisfactory to
the Pledgee), to be filed in the relevant filing offices so that at all times
the Pledgee has a security interest in all Investment Property and other
Collateral which is perfected by the filing of such financing statements (in
each case to the maximum extent perfection by filing may be obtained under the
laws of the relevant States, including, without limitation, Section 9-312(a) of
the UCC).

 

3.3.         Subsequently Acquired
Collateral.  If any Pledgor shall acquire (by purchase, stock
dividend, distribution or otherwise) any additional Collateral at any time or
from time to time after the date hereof, such Collateral shall automatically
(and without any further action being required to be taken) be subject to the
pledge and security interests created pursuant

 

 

to Section 3.1 and, furthermore, such Pledgor
will, to the extent not inconsistent with the Intercreditor Agreement, promptly
thereafter take (or cause to be taken) all action with respect to such
Collateral in accordance with the procedures set forth in Section 3.2 and the
Intercreditor Agreement, and will, to the extent not inconsistent with the
Intercreditor Agreement, promptly thereafter deliver to the Pledgee (i) a
certificate executed by a principal executive officer of such Pledgor
describing such Collateral and certifying that the same has been duly pledged
in favor of the Pledgee (for the benefit of the Secured Creditors) hereunder
and (ii) supplements to Annexes A through F hereto as are necessary to cause
such annexes to be complete and accurate at such time.  Without limiting the foregoing, each Pledgor
shall be required to pledge hereunder any shares of stock or other equity
interests of any Exempted Foreign Corporation at any time and from time to time
after the date hereof acquired by such Pledgor, provided that (x) no
Pledgor shall be required at any time to pledge hereunder more than 65% of the
total combined voting power of all classes of Voting Stock of any Exempted
Foreign Corporation, and (y) each Pledgor shall be required to pledge hereunder
100% of the Non-Voting Stock of any Exempted Foreign Corporation at any time
and from time to time acquired by such Pledgor.  Notwithstanding the foregoing, except as otherwise required by
Section 8.18 of the Credit Agreement, no Pledgor shall be required to pledge
hereunder any Margin Stock owned by such Pledgor.

 

3.4.         Transfer Taxes.  Each pledge of Collateral under Section 3.1
or Section 3.3 shall be accompanied by any transfer tax stamps required in
connection with the pledge of such Collateral.

 

3.5.         Certain
Representations and Warranties Regarding the Collateral.  Each Pledgor represents and warrants that on
the date hereof: (i) each Subsidiary of such Pledgor, and the direct ownership
thereof, is listed in Annex A hereto; (ii) the Stock (and any warrant or
options to purchase Stock) held by such Pledgor consists of the number and type
of shares of the Stock (and any warrants or options to purchase Stock) of the
corporations as described in Annex B hereto; (iii) such Stock referenced in
clause (ii) of this paragraph constitutes that percentage of the issued and
outstanding capital stock of the issuing corporation as is set forth in Annex B
hereto; (iv) the Notes held by such Pledgor consist of the promissory notes
described in Annex C hereto where such Pledgor is listed as the lender; (v) the
Limited Liability Company Interests held by such Pledgor consist of the number
and type of interests of the Persons described in Annex D hereto; (vi) each
such Limited Liability Company Interest referenced in clause (v) of this
paragraph constitutes that percentage of the issued and outstanding equity
interest of the issuing Person as set forth in Annex D hereto; (vii) the
Partnership Interests held by such Pledgor consist of the number and type of
interests of the Persons described in Annex E hereto; (viii) each such
Partnership Interest referenced in clause (vii) of this paragraph constitutes
that percentage or portion of the entire partnership interest of the
Partnership as set forth in Annex E hereto; (ix) the exact address of each
chief executive office of such Pledgor is listed on Annex F hereto; (x) the
Pledgor has complied with the respective procedure set forth in Section 3.2(a)
with respect to each item of Collateral described in Annexes A through F
hereto; and (xi) on the date hereof, such Pledgor owns no other Securities,
Stock, Notes, Limited Liability Company Interests or Partnership Interests.

 

4.            APPOINTMENT OF SUB-AGENTS;
ENDORSEMENTS, ETC.  Subject to the terms of the Intercreditor
Agreement, the Pledgee shall have the right to appoint one or more sub-agents
for the purpose of retaining physical possession of the Collateral, which may
be held (in the discretion of the Pledgee) in the name of the relevant Pledgor,
endorsed or assigned

 

 

in blank or in favor of the Pledgee or any nominee or
nominees of the Pledgee or a sub-agent appointed by the Pledgee.

 

5.            VOTING, ETC., WHILE NO
EVENT OF DEFAULT OR SPECIFIED DEFAULT.  Unless and until there
shall have occurred and be continuing any Event of Default under the
Second-Lien Credit Agreement or a Default under Section 10.01 or 10.05 of the
Second-Lien Credit Agreement (each such Default, a “Specified Default”),
each Pledgor shall be entitled to exercise all voting rights attaching to any
and all Collateral owned by it, and to give consents, waivers or ratifications
in respect thereof, provided that no vote shall be cast or any consent,
waiver or ratification given or any action taken which would violate, result in
breach of any covenant contained in, or be inconsistent with, any of the terms
of this Agreement, the Second-Lien Credit Agreement or any other Credit
Document (collectively, the “Secured Debt Agreements”), or which would
have the effect of impairing the value of the Collateral or any part thereof or
the position or interests of the Pledgee or any other Secured Creditor
therein.  All such rights of a Pledgor
to vote and to give consents, waivers and ratifications shall cease in case an
Event of Default shall occur and be continuing and Section 7 hereof shall
become applicable.

 

6.            DIVIDENDS AND OTHER
DISTRIBUTIONS.  Unless and until an Event of Default shall have
occurred and be continuing, all cash dividends, cash distributions, cash
Proceeds and other cash amounts payable in respect of the Collateral shall be
paid to the respective Pledgor.  Subject
to Section 3.2 hereof and the terms of the Intercreditor Agreement, the Pledgee
shall be entitled to receive directly, and to retain as part of the Collateral:

 

(i)           all other or additional stock, notes,
certificates, limited liability company interests, partnership interests,
instruments or other securities or property (including, but not limited to,
cash dividends other than as set forth above) paid or distributed by way of
dividend or otherwise in respect of the Collateral;

 

(ii)          all other or additional stock, notes,
certificates, limited liability company interests, partnership interests,
instruments or other securities or property (including, but not limited to,
cash) paid or distributed in respect of the Collateral by way of stock-split,
spin-off, split-up, reclassification, combination of shares or similar
rearrangement; and

 

(iii)        all other or additional stock, notes,
certificates, limited liability company interests, partnership interests,
instruments or other securities or property (including, but not limited to,
cash) which may be paid in respect of the Collateral by reason of any
consolidation, merger, exchange of stock, conveyance of assets, liquidation or
similar corporate reorganization.

 

Except as otherwise provided in the Intercreditor Agreement, nothing
contained in this Section 6 shall limit or restrict in any way the Pledgee’s
right to receive the proceeds of the Collateral in any form in accordance with
Section 3 of this Agreement.  To the extent
not inconsistent with the terms of the Intercreditor Agreement, all dividends,
distributions or other payments which are received by the respective Pledgor
contrary to the provisions of this Section 6 or Section 7 shall be received in
trust for the benefit of the Pledgee, shall be segregated from other property
or funds of such Pledgor and shall be forthwith paid over to the Pledgee as
Collateral in the same form as so received (with any necessary endorsement).

 

 

7.            REMEDIES IN CASE OF AN
EVENT OF DEFAULT OR SPECIFIED DEFAULT.  In the event an Event of
Default shall have occurred and be continuing, to the extent not inconsistent
with the terms of the Intercreditor Agreement, the Pledgee shall be entitled to
exercise all of the rights, powers and remedies (whether vested in it by this
Agreement or by any other Secured Debt Agreement or by law) for the protection
and enforcement of its rights in respect of the Collateral, including, without
limitation, all the rights and remedies of a secured party upon default under
the UCC and the Pledgee shall be entitled, without limitation, to exercise any
or all of the following rights, which each Pledgor hereby agrees to be
commercially reasonable:

 

(i)           to receive all amounts payable in
respect of the Collateral otherwise payable under Section 6 to such Pledgor;

 

(ii)          to transfer all or any part of the
Collateral into the Pledgee’s name or the name of its nominee or nominees;

 

(iii)        to accelerate any Pledged Note which may
be accelerated in accordance with its terms, and take any other lawful action
to collect upon any Pledged Note (including, without limitation, to make any
demand for payment thereon);

 

(iv)         to vote all or any part of the
Collateral (whether or not transferred into the name of the Pledgee) and give
all consents, waivers and ratifications in respect of the Collateral and
otherwise act with respect thereto as though it were the outright owner thereof
(each Pledgor hereby irrevocably constituting and appointing the Pledgee the
proxy and attorney-in-fact of such Pledgor, with full power of substitution to
do so); provided that prior to taking the actions described in this clause
(iv), the Pledgee shall give such Pledgor at least 5 days notice of its
intention to do so unless there shall have occurred and be continuing any
Default or Event of Default under Section 10.05 of the Credit Agreement, in
which case no such notice to such Pledgor shall be required;

 

(v)          at any time or from time to time to
sell, assign and deliver, or grant options to purchase, all or any part of the
Collateral, or any interest therein, at any public or private sale, without
demand of performance, advertisement or notice of intention to sell or of the
time or place of sale or adjournment thereof or to redeem or otherwise (all of which
are hereby waived by each Pledgor), for cash, on credit or for other property,
for immediate or future delivery without any assumption of credit risk, and for
such price or prices and on such terms as the Pledgee in its absolute
discretion may determine; provided that at least 10 days’ notice of the
time and place of any such sale shall be given to such Pledgor.  The Pledgee shall not be obligated to make
such sale of Collateral regardless of whether any such notice of sale has
theretofore been given.  Each purchaser
at any such sale shall hold the property so sold absolutely free from any claim
or right on the part of each Pledgor, and each Pledgor hereby waives and
releases to the fullest extent permitted by law any right or equity of
redemption with respect to the Collateral, whether before or after sale
hereunder, all rights, if any, of marshalling the Collateral and any other
security for the Obligations or otherwise, and all rights, if any, of stay
and/or appraisal which it now has or may at any time in the future have under
rule of law or statute now existing or hereafter enacted.  At any such sale, unless prohibited by
applicable law, the Pledgee on behalf of all Secured Creditors (or certain of
them) may bid for and purchase (by bidding in Obligations or otherwise) all or
any part of the

 

 

Collateral so sold free
from any such right or equity of redemption. 
Neither the Pledgee nor any other Secured Creditor shall be liable for
failure to collect or realize upon any or all of the Collateral or for any
delay in so doing nor shall any of them be under any obligation to take any
action whatsoever with regard thereto; and

 

(vi)         to set-off any and all Collateral
against any and all Obligations, and to withdraw any and all cash or other
Collateral from any and all Collateral Accounts and to apply such cash and
other Collateral to the payment of any and all Obligations.

 

(b)          If
there shall have occurred and be continuing a Specified Default, then and in
every such case but subject to the terms of the Intercreditor Agreement, the
Pledgee shall be entitled to vote (and exercise all rights and powers in
respect of voting) all or any part of the Collateral, (whether or not
transferred into the name of the Pledgee), and give all consents, waivers and
ratifications in respect of the Collateral and otherwise act with respect
thereto as though it were the outright owner thereof (each Pledgor hereby
irrevocably constituting and appointing the Pledgee the proxy and
attorney-in-fact of such Pledgor, with full power of substitution to do so).

 

8.            REMEDIES, ETC., CUMULATIVE.  Each
right, power and remedy of the Pledgee provided for in this Agreement or any
other Secured Debt Agreement (including, without limitation, the Intercreditor
Agreement), or now or hereafter existing at law or in equity or by statute
shall be cumulative and concurrent and shall be in addition to every other such
right, power or remedy.  The exercise or
beginning of the exercise by the Pledgee or any other Secured Creditor of any
one or more of the rights, powers or remedies provided for in this Agreement or
any other Secured Debt Agreement (including, without limitation, the
Intercreditor Agreement) or now or hereafter existing at law or in equity or by
statute or otherwise shall not preclude the simultaneous or later exercise by
the Pledgee or any other Secured Creditor of all such other rights, powers or
remedies, and no failure or delay on the part of the Pledgee or any other
Secured Creditor to exercise any such right, power or remedy shall operate as a
waiver thereof.  Unless otherwise
required by the Credit Documents, no notice to or demand on any Pledgor in any
case shall entitle such Pledgor to any other or further notice or demand in
similar other circumstances or constitute a waiver of any of the rights of the
Pledgee or any other Secured Creditor to any other or further action in any
circumstances without demand or notice. 
Subject to the terms of the Intercreditor Agreement, the Secured
Creditors agree that this Agreement may be enforced only by the action of the
Pledgee, acting upon the instructions of the Required Lenders and that no other
Secured Creditor 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 Pledgee, for the benefit of the Secured Creditors upon the terms of this
Agreement, the Intercreditor Agreement and the other Credit Documents.

 

9.            APPLICATION OF PROCEEDS.  (a)  All
moneys collected by the Pledgee upon any sale or other disposition of the
Collateral pursuant to the terms of this Agreement, together with all other
moneys received by the Pledgee hereunder, shall be applied to the payment of
the Obligations in the manner provided in the Security Agreement.

 

(b)  It is understood and agreed that the
Pledgors shall remain jointly and severally liable to the extent of any
deficiency between the amount of proceeds of the Collateral hereunder and the
aggregate amount of the Obligations.

 

 

10.          PURCHASERS OF COLLATERAL.  Upon any sale of the Collateral by the
Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or the
officer making such sale of the purchase money paid as consideration pursuant
to such 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
Pledgee or such officer or be answerable in any way for the misapplication or
nonapplication thereof.

 

11.          INDEMNITY.  Each Pledgor jointly and severally agrees
(i) to indemnify, reimburse and hold harmless the Pledgee and each other
Secured Creditor and their respective successors, assigns, employees, agents
and affiliates (individually an “Indemnitee”, and collectively, the “Indemnitees”)
from and against any and all obligations, damages, injuries, penalties, claims,
demands, losses, judgments and liabilities (including, without limitation,
liabilities for penalties) of whatsoever kind or nature, and (ii) to reimburse
each Indemnitee for all reasonable costs, expenses and disbursements, including
reasonable attorneys’ fees and expenses, in each case arising out of or
resulting from this Agreement or the exercise by any Indemnitee of any right or
remedy granted to it hereunder or under any other Secured Debt Agreement (but
excluding any obligations, damages, injuries, penalties, claims, demands,
losses, judgments and liabilities (including, without limitation, liabilities
for penalties) or expenses of whatsoever kind or nature to the extent incurred
or arising by reason of gross negligence or willful misconduct of such
Indemnitee (as determined by a court of competent jurisdiction in a final and
non-appealable decision)).  In no event
shall the Pledgee hereunder be liable, in the absence of gross negligence or
willful misconduct on its part (as determined by a court of competent
jurisdiction in a final and non-appealable decision), for any matter or thing
in connection with this Agreement other than to account for monies or other
property actually received by it in accordance with the terms hereof.  If and to the extent that the obligations of
any Pledgor under this Section 11 are unenforceable for any reason, such
Pledgor hereby agrees to make the maximum contribution to the payment and
satisfaction of such obligations which is permissible under applicable law. The
indemnity obligations of each Pledgor contained in this Section 11 shall
continue in full force and effect notwithstanding the full payment of all the
Notes issued under the Second-Lien Credit Agreement and the payment of all
other Obligations and notwithstanding the discharge thereof.

 

12.          FURTHER ASSURANCES; POWER OF
ATTORNEY.  (a)  Each Pledgor agrees that it will join
with the Pledgee in executing and, at such Pledgor’s own expense, file and
refile under the UCC or other applicable law such financing statements,
continuation statements and other documents in such offices as the Pledgee
(acting on its own or on the instructions of the Required Lenders) may
reasonably deem necessary or appropriate (to the extent not inconsistent with
the Intercreditor Agreement) and wherever required or permitted by law in order
to perfect and preserve the Pledgee’s security interest in the Collateral
hereunder and hereby authorizes the Pledgee to file financing statements and
amendments thereto relative to all or any part of the Collateral (including,
without limitation, financing statements which list the Collateral specifically
and/or “all assets” as collateral) without the signature of such Pledgor where
permitted by law, and agrees to do such further acts and things and to execute
and deliver to the Pledgee such additional conveyances, assignments, agreements
and instruments as the Pledgee may reasonably require or deem advisable to
carry into effect the purposes of this Agreement or to further assure and confirm
unto the Pledgee its rights, powers and remedies hereunder or thereunder.

 

 

(b)  Each Pledgor hereby appoints the Pledgee
such Pledgor’s attorney-in-fact, with full authority in the place and stead of
such Pledgor and in the name of such Pledgor or otherwise, from time to time
after the occurrence and during the continuance of an Event of Default, in the
Pledgee’s discretion to take any action and to execute any instrument which the
Pledgee may deem necessary or advisable to accomplish the purposes of this
Agreement.

 

13.          THE PLEDGEE AS SECOND-LIEN
COLLATERAL AGENT.  Subject to the terms of the Intercreditor
Agreement, the Pledgee will hold in accordance with this Agreement all items of
the Collateral at any time received under this Agreement.  It is expressly understood, acknowledged and
agreed by each Secured Creditor that by accepting the benefits of this
Agreement each such Secured Creditor acknowledges and agrees that the
obligations of the Pledgee as holder of the Collateral and interests therein and
with respect to the disposition thereof, and otherwise under this Agreement,
are only those expressly set forth in this Agreement.  The Pledgee shall act hereunder on the terms and conditions set
forth herein and in Section 12 of the Second-Lien Credit Agreement.

 

14.          TRANSFER BY THE PLEDGORS.  No
Pledgor will sell or otherwise dispose of, grant any option with respect to, or
mortgage, pledge or otherwise encumber any of the Collateral or any interest
therein (except in accordance with the terms of this Agreement and the other
Secured Debt Agreements).

 

15.          REPRESENTATIONS, WARRANTIES
AND COVENANTS OF THE PLEDGORS.  (a)  Each Pledgor
represents, warrants and covenants that:

 

(i)           it is the legal, beneficial and
record owner of, and has good and marketable title to, all Collateral
consisting of one or more Securities, Partnership Interests and Limited
Liability Company Interests and that it has sufficient interest in all
Collateral in which a security interest is purported to be created hereunder
for such security interest to attach (subject, in each case, to no pledge,
lien, mortgage, hypothecation, security interest, charge, option, Adverse Claim
or other encumbrance whatsoever, except the liens and security interests
created by this Agreement);

 

(ii)          it has full power, authority and legal
right to pledge all the Collateral pledged by it pursuant to this Agreement;

 

(iii)        this Agreement has been duly authorized,
executed and delivered by such Pledgor and constitutes a legal, valid and
binding obligation of such Pledgor enforceable against such Pledgor in
accordance with its terms, except to the extent that the enforceability thereof
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws generally affecting creditors’ rights and by equitable
principles (regardless of whether enforcement is sought in equity or at law);

 

(iv)         except to the extent already obtained
or made (or, in the case of the filing of UCC-1 Financing Statements, as will
be made within 10 days of the Initial Borrowing Date), no consent of any other
party (including, without limitation, any stockholder, member, partner or
creditor of such Pledgor or any of its Subsidiaries) and no consent, license,
permit, approval or authorization of, exemption by, notice or report to, or
registration, filing or declaration with, any governmental authority is
required to be obtained by such Pledgor in connection with (a) the execution,
delivery or performance

 

 

of this Agreement, (b)
the validity or enforceability of this Agreement (except as set forth in clause
(iii) above), (c) the perfection or enforceability of the Pledgee’s security
interest in the Collateral or (d) except for compliance with or as may be
required by applicable securities laws, the exercise by such Pledgee of any of
its rights or remedies provided herein;

 

(v)          neither the execution, delivery and
performance by such Pledgor of this Agreement nor compliance by such Pledgor
with the terms and provisions hereof, nor the consummation of the transactions
contemplated herein, will contravene any material provision of any material
applicable law, statute, rule or regulation or any order, judgment, writ,
injunction, award or decree of any court, arbitrator or governmental authority,
domestic or foreign, applicable to such Pledgor, or violate any provision of
the certificate of incorporation, by-laws, operating agreement, certificate of
partnership, partnership agreement, certificate of limited liability company or
limited liability company agreement of such Pledgor or any of its Subsidiaries
or of any securities issued by such Pledgor or any of its Subsidiaries, nor
will it in any material respect conflict or be inconsistent with or result in
any breach of, any of the terms, covenants, conditions or provisions, or
constitute a default under or, (other than pursuant to this Agreement) result
in the creation or imposition of (or the obligation to create or impose) any
lien or encumbrance (other than the Liens created by the Security Documents)
upon any of the property or assets of such Pledgor or any of its Subsidiaries
pursuant to the terms of any mortgage, deed of trust, indenture, lease, loan
agreement, credit agreement or any other material contract, agreement,
instrument or undertaking to which such Pledgor or any of its Subsidiaries is a
party or by which it or any of its assets are bound or to which it may be
subject (including, without limitation, the Existing Indebtedness Agreements);

 

(vi)         all of the Collateral (consisting of
Securities, Limited Liability Company Interests or Partnership Interests) has
been duly and validly issued, is fully paid and non-assessable and is subject
to no options to purchase or similar rights;

 

(vii)        each of the Pledged Notes constitutes,
or when executed by the obligor thereof will constitute, the legal, valid and
binding obligation of such obligor, enforceable in accordance with its terms,
except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws generally affecting creditors’ rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law);

 

(viii)       the pledge, collateral assignment and
delivery to the Pledgee of the Collateral consisting of Certificated Securities
and Pledged Notes pursuant to this Agreement creates a valid and perfected
second priority security interest in such Securities (subject in priority to
the Lien of the First-Lien Collateral Agent in accordance with the terms of the
Intercreditor Agreement), and the proceeds thereof, subject to no prior Lien or
encumbrance or to any agreement purporting to grant to any third party a Lien
or encumbrance on the property or assets of such Pledgor which would include
the Securities and the Pledgee is entitled to all the rights, priorities and
benefits afforded by the UCC or other relevant law as enacted in any relevant
jurisdiction to perfect security interests in respect of such Collateral; and

 

 

(ix)         “control” (as defined in Section 8-106
of the UCC) has been obtained by the Pledgee over all Collateral consisting of
Securities (including Notes which are Securities) with respect to which such
“control” may be obtained pursuant to Section 8-106 of the UCC.

 

(b)  Each
Pledgor covenants and agrees that it will defend the Pledgee’s right, title and
security interest in and to the Securities and the proceeds thereof against the
claims and demands of all persons whomsoever; and each Pledgor covenants and
agrees that it will have like title to and right to pledge any other property
at any time hereafter pledged to the Pledgee as Collateral hereunder and will
likewise defend the right thereto and security interest therein of the Pledgee
and the other Secured Creditors.

 

(c)  Each
Pledgor covenants and agrees that it will take no action which would violate
any of the terms of any Secured Debt Agreement.

 

16.          LEGAL NAMES; TYPE OF
ORGANIZATION (AND WHETHER A REGISTERED ORGANIZATION AND/OR A TRANSMITTING
UTILITY); JURISDICTION OF ORGANIZATION; LOCATION; ORGANIZATIONAL IDENTIFICATION
NUMBERS; CHANGES THERETO; ETC.  The
exact legal name of each Pledgor, the type of organization of such Pledgor,
whether or not such Pledgor is a Registered Organization, the jurisdiction of
organization of such Pledgor, such Pledgor’s Location, the organizational
identification number (if any) of each Pledgor, and whether or not such Pledgor
is a Transmitting Utility, is listed on Annex A hereto for such Pledgor.  No Pledgor shall change its legal name, its
type of organization, its status as a Registered Organization (in the case of a
Registered Organization), its status as a Transmitting Utility or as a Person
which is not a Transmitting Utility, as the case may be, its jurisdiction of
organization, its Location, or its organizational identification number (if
any), except that any such changes shall be permitted (so long as not in
violation of the applicable requirements of the Secured Debt Agreements and so
long as same do not involve (x) a Registered Organization ceasing to constitute
same or (y) any Pledgor changing its jurisdiction of organization or Location
from the United States or a State thereof to a jurisdiction of organization or
Location, as the case may be, outside the United States or a State thereof) if
(i) it shall have given to the Second-Lien Collateral Agent not less than 15
days’ prior written notice of each change to the information listed on Annex A
(as adjusted for any subsequent changes thereto previously made in accordance
with this sentence), together with a supplement to Annex A which shall correct
all information contained therein for such Pledgor, and (ii) in connection with
the respective such change or changes, it shall have taken all action
reasonably requested by the Second-Lien Collateral Agent to maintain the
security interests of the Second-Lien Collateral Agent in the Collateral
intended to be granted hereby at all times fully perfected and in full force
and effect.  In addition, to the extent
that any Pledgor does not have an organizational identification number on the
date hereof and later obtains one, such Pledgor shall promptly thereafter
deliver a notification to the Second-Lien Collateral Agent of such
organizational identification number and shall take all actions reasonably
satisfactory to the Second-Lien Collateral Agent to the extent necessary to
maintain the security interest of the Second-Lien Collateral Agent in the
Collateral intended to be granted hereby fully perfected and in full force and
effect.

 

17.          PLEDGORS’ OBLIGATIONS ABSOLUTE,
ETC.  The obligations of each Pledgor under this Agreement shall
be absolute and unconditional and shall remain in full force and effect without
regard to, and shall not be released, suspended, discharged, terminated

 

 

or otherwise affected by, any circumstance or
occurrence whatsoever (other than termination of this Agreement pursuant to
Section 19 hereof), including, without limitation:

 

(i)           any renewal, extension, amendment or
modification of, or addition or supplement to or deletion from any Secured Debt
Agreement (other than this Agreement in accordance with its terms), or any
other instrument or agreement referred to therein, or any assignment or
transfer of any thereof;

 

(ii)          any waiver, consent, extension,
indulgence or other action or inaction under or in respect of any such
agreement or instrument or this Agreement (other than a waiver, consent or
extension with respect to this Agreement in accordance with its terms);

 

(iii)        any furnishing of any additional
security to the Pledgee or its assignee or any acceptance thereof or any
release of any security by the Pledgee or its assignee;

 

(iv)         any limitation on any party’s liability
or obligations under any such instrument or agreement or any invalidity or
unenforceability, in whole or in part, of any such instrument or agreement or
any term thereof; or

 

(v)          any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other like
proceeding relating to any Pledgor or any Subsidiary of any Pledgor, or any
action taken with respect to this Agreement by any trustee or receiver, or by
any court, in any such proceeding, whether or not such Pledgor shall have
notice or knowledge of any of the foregoing.

 

18.          REGISTRATION, ETC.  (a)  If
an Event of Default shall have occurred and be continuing and any Pledgor shall
have received from the Pledgee a written request or requests (to the extent not
inconsistent with the terms of the Intercreditor Agreement) that such Pledgor
cause any registration, qualification or compliance under any federal or state
securities law or laws to be effected with respect to all or any part of the
Collateral consisting of Securities, Limited Liability Company Interests or
Partnership Interests, such Pledgor as soon as practicable and at its expense
will use its best efforts to cause such registration to be effected (and be
kept effective) and will use its best efforts to cause such qualification and
compliance to be effected (and be kept effective) as may be so requested and as
would permit or facilitate the sale and distribution of such Collateral
consisting of Securities, Limited Liability Company Interests or Partnership
Interests, including, without limitation, registration under the Securities Act
of 1933, as then in effect (or any similar statute then in effect), appropriate
qualifications under applicable blue sky or other state securities laws and
appropriate compliance with any other governmental requirements; provided,
that the Pledgee shall furnish to such Pledgor such information regarding the
Pledgee as such Pledgor may request in writing and as shall be required in
connection with any such registration, qualification or compliance.  Each Pledgor will cause the Pledgee to be
kept reasonably advised in writing as to the progress of each such
registration, qualification or compliance and as to the completion thereof,
will furnish to the Pledgee such number of prospectuses, offering circulars and
other documents incident thereto as the Pledgee from time to time may
reasonably request, and will indemnify, to the extent permitted by law, the
Pledgee and all other Secured Creditors participating in the distribution of
such Collateral consisting of Securities, Limited Liability Company Interests
or Partnership Interests against all claims, losses, damages and liabilities
caused by any untrue statement (or alleged untrue

 

 

statement) of a material fact contained therein (or in
any related registration statement, notification or the like) or by any
omission (or alleged omission) to state therein (or in any related registration
statement, notification or the like) a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as the same may have been caused by an untrue statement or omission
based upon information furnished in writing to such Pledgor by the Pledgee
expressly for use therein.

 

(b)  Subject to the terms of the Intercreditor
Agreement, if at any time when the Pledgee shall determine to exercise its
right to sell all or any part of the Collateral consisting of Securities,
Limited Liability Company Interests or Partnership Interests pursuant to
Section 7, and such Collateral or the part thereof to be sold shall not, for
any reason whatsoever, be effectively registered under the Securities Act of
1933, as then in effect, the Pledgee may, in its sole and absolute discretion,
sell such Collateral or part thereof by private sale in such manner and under
such circumstances as the Pledgee may deem necessary or advisable in order that
such sale may legally be effected without such registration. Without limiting
the generality of the foregoing, in any such event the Pledgee, in its sole and
absolute discretion (to the extent not inconsistent with the terms of the
Intercreditor Agreement):  (i) may
proceed to make such private sale notwithstanding that a registration statement
for the purpose of registering such Collateral or part thereof shall have been
filed under such Securities Act; (ii) may approach and negotiate with a single
possible purchaser to effect such sale; and (iii) may restrict such sale to a
purchaser who will represent and agree that such purchaser is purchasing for
its own account, for investment, and not with a view to the distribution or
sale of such Collateral or part thereof. 
In the event of any such sale, the Pledgee shall incur no responsibility
or liability for selling all or any part of the Collateral at a price which the
Pledgee, in its sole and absolute discretion, may in good faith deem reasonable
under the circumstances, notwithstanding the possibility that a substantially
higher price might be realized if the sale were deferred until the registration
as aforesaid.

 

19.          TERMINATION; RELEASE.  (a)  On
the Termination Date (as defined below), this Agreement shall terminate
(provided that all indemnities set forth herein including, without limitation,
in Section 11 hereof shall survive any such termination) and the Pledgee, at
the request and expense of the respective Pledgor, will execute and deliver to
such Pledgor a proper instrument or instruments acknowledging the satisfaction
and termination of this Agreement (including, without limitation, UCC
termination statements and instruments of satisfaction, discharge and/or
reconveyance), and will duly assign, transfer and deliver to such Pledgor
(without recourse and without any representation or warranty) such of the
Collateral as may be in the possession of the Pledgee and as has not
theretofore been sold or otherwise applied or released pursuant to this
Agreement, together with any moneys at the time held by the Pledgee or any of
its sub-agents hereunder and, with respect to any Collateral consisting of an
Uncertificated Security (other than an Uncertificated Security credited on the
books of a Clearing Corporation), a Partnership Interest or a Limited Liability
Company Interest, a termination of the agreement relating thereto executed and
delivered by the issuer of such Uncertificated Security pursuant to Section
3.2(a)(ii) or by the respective partnership or limited liability company
pursuant to Section 3.2(a)(iv).  As used
in this Agreement, “Termination Date” shall mean the date upon which the
Total Commitments have been terminated, no Second-Lien Loan Note is outstanding
(and all Second-Lien Loans have been paid in full), and all other Obligations
(other than indemnitees provided for in the Credit Documents for which no claim
has been made) have been paid in full.

 

 

(b)  In
the event that any part of the Collateral is sold or otherwise disposed of (to
a Person other than a Credit Party) in connection with a sale or disposition
permitted by Section 9.02 of the Second-Lien Credit Agreement or is otherwise
released at the direction of the Required Lenders (or all the Lenders if
required by Section 13.01 of the Second-Lien Credit Agreement) or is required
to be released pursuant to the terms of the Intercreditor Agreement, and, the
proceeds of such sale or disposition (or from such release) are applied in
accordance with the terms of the Second-Lien Credit Agreement, to the extent
required to be so applied, the Pledgee, at the request and expense of such
Pledgor, will duly assign, transfer and deliver to such Pledgor (without
recourse and without any representation or warranty) such of the Collateral as
is then being (or has been) so sold or released and as may be in possession of
the Pledgee and has not theretofore been released pursuant to this Agreement
and to the extent requested by such Pledgor, deliver UCC termination statements
and instruments of satisfaction, discharge and/or reconveyance.

 

(c)  At
any time that any Pledgor desires that Collateral be released as provided in
the foregoing Section 19(a) or (b), it shall deliver to the Pledgee a
certificate signed by a principal executive officer of such Pledgor stating
that the release of the respective Collateral is permitted pursuant to Section
19(a) or (b).  If reasonably requested
by the Pledgee (although the Pledgee shall have no obligation to make any such
request), the relevant Pledgor shall furnish appropriate legal opinions (from
counsel reasonably acceptable to the Pledgee) to the effect set forth in the
immediately preceding sentence.  The
Pledgee shall have no liability whatsoever to any Secured Creditor as the result
of any release of Collateral by it as permitted by this Section 19.

 

20.          NOTICES, ETC.  All
notices and other communications hereunder shall be in writing and shall be
delivered or mailed by first class mail, postage prepaid, addressed:

 

(i)           if to any Pledgor, at its address set
forth opposite its signature below;

 

(ii)          if to the Pledgee, at:

 

Bank of America, N.A., as
Second-Lien Collateral Agent

Mailcode CA5-701-05-19

1455 Market Street, 5th Floor

San Francisco, CA 94103

Telephone: (415) 436-3495

Facsimile:  (415) 503-5006

Attention:  Charles Graber

 

with a
copy to:

 

Bank of America, N.A., as
Second-Lien Collateral Agent

Mailcode NC1-007-13-06

100 N. Tryon Street, 13th Floor

Charlotte, NC 28255

Telephone: (704) 388-6415

Facsimile:  (704) 409-0564

Attention:  Laura Clark

 

 

(iii)        if to any Lender (other than the
Pledgee), at such address as such Lender shall have specified in the
Second-Lien Credit Agreement;

 

or at such address as shall have been furnished in writing by any
Person described above to the party required to give notice hereunder.

 

21.          PLEDGEE NOT A PARTNER OR
LIMITED LIABILITY COMPANY MEMBER. 
(a)  Nothing herein shall be construed to make the Pledgee or
any other Secured Creditor liable as a member of any limited liability company
or partnership and neither the Pledgee nor any other Secured Creditor 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 partnership.  The parties hereto expressly agree that, unless the Pledgee shall
become the absolute owner of Collateral consisting of a Limited Liability
Company Interest or Partnership Interest pursuant hereto, this Agreement shall
not be construed as creating a partnership or joint venture among the Pledgee,
any other Secured Creditor and/or any Pledgor.

 

(b)          Except as provided in the last
sentence of paragraph (a) of this Section 21, the Pledgee, by accepting this
Agreement, did not intend to become a member of any limited liability company or
partnership or otherwise be deemed to be a co-venturer with respect to any
Pledgor or any limited liability company or partnership either before or after
an Event of Default shall have occurred. 
The Pledgee shall have only those powers set forth herein and the
Secured Creditors shall assume none of the duties, obligations or liabilities
of a member of any limited liability company or partnership or any Pledgor
except as provided in the last sentence of paragraph (a) of this Section 21.

 

(c)          The Pledgee and the other Secured
Creditors shall not be obligated to perform or discharge any obligation of any
Pledgor as a result of the pledge hereby effected.

 

(d)          The acceptance by the Pledgee of this
Agreement, with all the rights, powers, privileges and authority so created,
shall not at any time or in any event obligate the Pledgee or any other Secured
Creditor to appear in or defend any action or proceeding relating to the
Collateral to which it is not a party, or to take any action hereunder or
thereunder, or to expend any money or incur any expenses or perform or
discharge any obligation, duty or liability under the Collateral.

 

22.          WAIVER; AMENDMENT.  Except as contemplated by the Intercreditor
Agreement and Sections 19 and 28 hereof, none of the terms and conditions of
this Agreement may be changed, waived, discharged or terminated in any manner
whatsoever unless such change, waiver, discharge or termination is in writing
duly signed by each Pledgor directly and adversely affected thereby and the
Second-Lien Collateral Agent (with the consent of the Required Lenders (or, to
the extent required by Section 13.01 of the Second-Lien Credit Agreement, all
of the Lenders).

 

23.          MISCELLANEOUS.  This
Agreement shall create a continuing security interest in the Collateral and
shall (i) remain in full force and effect, subject to release and/or
termination as set forth in Section 19, (ii) be binding upon each Pledgor, its
successors and assigns, and (iii) inure, together with the rights and remedies
of the Pledgee hereunder, to the benefit of the Pledgee, the other Secured
Creditors and their respective successors, transferees

 

 

and assigns.  The
headings of the several sections and subsections in this Agreement are for
purposes of reference only and shall not limit or define the meaning
hereof.  This Agreement may be executed
in any number of counterparts, each of which shall be an original, but all of
which together shall constitute one instrument.  In the event that any provision of this Agreement shall prove to
be invalid or unenforceable, such provision shall be deemed to be severable
from the other provisions of this Agreement which shall remain binding on all
parties hereto.  All agreements,
statements, representations and warranties made by each Pledgor herein or in
any certificate or other instrument delivered by such Pledgor or on its behalf
under this Agreement shall be considered to have been relied upon by the
Secured Creditors and shall survive the execution and delivery of this
Agreement and the other Secured Debt Agreements regardless of any investigation
made by the Secured Creditors or on their behalf.

 

24.          GOVERNING LAW; SUBMISSION TO
JURISDICTION; VENUE; WAIVER OF JURY TRIAL.    (A)  THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.  ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, IN EACH CASE
WHICH ARE LOCATED IN THE COUNTY OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, EACH PLEDGOR HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS. EACH PLEDGOR HEREBY FURTHER IRREVOCABLY
WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK PERSONAL JURISDICTION OVER SUCH
PLEDGOR, AND AGREES NOT TO PLEAD OR CLAIM IN ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN ANY OF
THE AFORESAID COURTS THAT ANY SUCH COURT LACKS PERSONAL JURISDICTION OVER SUCH
PLEDGOR.  EACH PLEDGOR FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ANY SUCH PLEDGOR AT ITS
ADDRESS FOR NOTICES AS PROVIDED IN SECTION 20 ABOVE, SUCH SERVICE TO BECOME
EFFECTIVE 30 DAYS AFTER SUCH MAILING. 
EACH PLEDGOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF
PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY
ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT
THAT SUCH SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE
PLEDGEE UNDER THIS AGREEMENT, OR ANY SECURED CREDITOR, TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST ANY PLEDGOR IN ANY OTHER JURISDICTION.

 

(B)         EACH PLEDGOR HEREBY
IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT

 

 

BROUGHT IN THE COURTS REFERRED TO IN CLAUSE
(a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR
CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

(C)         EACH OF THE PARTIES TO
THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY.

 

25.          ADDITIONAL PLEDGORS.  It
is understood and agreed that any Subsidiary of the Borrower that is required
to become a party to this Agreement after the date hereof pursuant to the
requirements of the Second-Lien Credit Agreement shall automatically become a
Pledgor hereunder by (x) executing a counterpart hereof and/or an assumption
agreement, in each case in form and substance satisfactory to the Pledgee, (y)
delivering supplements to Annexes A through F hereto as are necessary to cause
such Annexes to be complete and accurate with respect to such additional
Pledgor on such date and (z) taking all actions as specified in Section 3 of
this Agreement as would have been taken by such Pledgor had it been an original
party to this Agreement, in each case with all documents required above to be
delivered to the Pledgee and with all documents and actions required to be
taken above to be taken to the reasonable satisfaction of the Pledgee.

 

26.          RECOURSE.  This Agreement is made with full recourse to
the Pledgors and pursuant to and upon all the representations, warranties,
covenants and agreements on the part of the Pledgors contained herein and in
the other Secured Debt Agreements and otherwise in writing in connection
herewith or therewith.

 

27.          FRAUDULENT CONVEYANCE; ETC.  It is the desire and intent of each Pledgor
and the Secured Creditors that this Agreement shall be enforced against each
Pledgor to the fullest extent permissible under the laws and public policies
applied in each jurisdiction in which enforcement is sought.  Notwithstanding anything to the contrary
contained herein, in furtherance of the foregoing, it is noted that the
obligations of each Pledgor constituting a Subsidiary Guarantor have been
limited as, and to the extent, provided in Section 27 of the Subsidiaries
Guaranty.

 

28.          RELEASE OF PLEDGORS.  If at any time all of the Equity Interests
of any Pledgor owned by the Borrower or any of its Subsidiaries are sold (to a
Person other than a Credit Party) in a transaction permitted pursuant to the
Second-Lien Credit Agreement or the security interest therein is otherwise
required to be released pursuant to the terms of the Intercreditor Agreement,
then such Pledgor shall be released as a Pledgor pursuant to this Agreement
without any further action hereunder (it being understood that the sale of all
of the equity interests in any Person that owns, directly or indirectly, all of
the equity interests in any Pledgor shall be deemed to be a sale of all of the
equity interests in such Pledgor for purposes of this Section), and the Pledgee
is authorized and directed to execute and deliver such instruments of release
as are reasonably satisfactory to it. 
At any time that the Borrower desires that a Pledgor be released from
this Agreement as provided in this Section 28, the Borrower shall deliver to
the Pledgee a certificate signed by a principal executive officer of the
Borrower stating that the release of such Pledgor is permitted pursuant to this
Section 28.  If requested by Pledgee

 

 

(although the Pledgee shall have no obligation to make
any such request), the Borrower shall furnish legal opinions (from counsel
acceptable to the Pledgee) to the effect set forth in the immediately preceding
sentence.  The Pledgee shall have no
liability whatsoever to any other Secured Creditor as a result of the release
of any Pledgor by it in accordance with, or which it believes to be in
accordance with, this Section 28.

 

 

IN
WITNESS WHEREOF, each Pledgor and the Pledgee have caused this Agreement to be
executed by their elected officers duly authorized as of the date first above
written.

 

	
  2366 Bernville Road

  	
  ENERSYS,

  	
   

  
	
  Reading, PA, 19605

  	
  as a Pledgor

  	
   

  
	
  Telephone: 
  (610) 208-1991

  	
   

  	
   

  
	
  Facsimile: 
  (610) 208-1671

  	
   

  	
   

  
	
  Attention: Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  2366 Bernville Road

  	
  ENERSYS CAPITAL INC.,

  	
   

  
	
  Reading, PA, 19605

  	
  as a Pledgor

  	
   

  
	
  Telephone: 
  (610) 208-1991

  	
   

  	
   

  
	
  Facsimile: 
  (610) 208-1671

  	
   

  	
   

  
	
  Attention: Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  2366 Bernville Road

  	
  ENERSYS DELAWARE INC.,

  	
   

  
	
  Reading, PA, 19605

  	
  as a Pledgor

  	
   

  
	
  Telephone: 
  (610) 208-1991

  	
   

  	
   

  
	
  Facsimile: 
  (610) 208-1671

  	
   

  	
   

  
	
  Attention: Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  2366 Bernville Road

  	
  ESFINCO, INC.,

  	
   

  
	
  Reading, PA, 19605

  	
  as a Pledgor

  	
   

  
	
  Telephone: 
  (610) 208-1991

  	
   

  	
   

  
	
  Facsimile: 
  (610) 208-1671

  	
   

  	
   

  
	
  Attention: Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					

 

 

	
  2366 Bernville Road

  	
  ESRMCO, INC.,

  	
   

  
	
  Reading, PA, 19605

  	
  as a Pledgor

  	
   

  
	
  Telephone: 
  (610) 208-1991

  	
   

  	
   

  
	
  Facsimile: 
  (610) 208-1671

  	
   

  	
   

  
	
  Attention: Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  2366 Bernville Road

  	
  HAWKER ENERGY PRODUCTS INC.,

  	
   

  
	
  Reading, PA, 19605

  	
  as a Pledgor

  	
   

  
	
  Telephone: 
  (610) 208-1991

  	
   

  	
   

  
	
  Facsimile: 
  (610) 208-1671

  	
   

  	
   

  
	
  Attention: Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  2366 Bernville Road

  	
  HAWKER POWER SYSTEMS, INC.,

  	
   

  
	
  Reading, PA, 19605

  	
   as a Pledgor

  	
   

  
	
  Telephone: 
  (610) 208-1991

  	
   

  	
   

  
	
  Facsimile: 
  (610) 208-1671

  	
   

  	
   

  
	
  Attention: Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  2366 Bernville Road

  	
  POWERSAFE STANDBY BATTERIES INC.,

  
	
  Reading, PA, 19605

  	
   as a Pledgor

  	
   

  
	
  Telephone: 
  (610) 208-1991

  	
   

  	
   

  
	
  Facsimile: 
  (610) 208-1671

  	
   

  	
   

  
	
  Attention: Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  2366 Bernville Road

  	
  HAWKER POWERSOURCE, INC.,

  	
   

  
	
  Reading, PA, 19605

  	
   as a Pledgor

  	
   

  
	
  Telephone: 
  (610) 208-1991

  	
   

  	
   

  
	
  Facsimile: 
  (610) 208-1671

  	
   

  	
   

  
	
  Attention: Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					

 

 

	
  2366 Bernville Road

  	
  NEW PACIFICO REALTY, INC.,

  	
   

  
	
  Reading, PA, 19605

  	
   as a Pledgor

  	
   

  
	
  Telephone: 
  (610) 208-1991

  	
   

  	
   

  
	
  Facsimile: 
  (610) 208-1671

  	
   

  	
   

  
	
  Attention: Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
						

 

 

	
  Accepted and Agreed to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BANK OF AMERICA, N.A.,

  	
   

  	
   

  
	
  as Second Lien Collateral Agent and Pledgee

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
					

 

 

	
  ANNEX A

  	
   

  
	
  TO

  	
   

  
	
  PLEDGE AGREEMENT

  	
   

  

 

 

SCHEDULE OF LEGAL NAMES, TYPE OF ORGANIZATION

(AND WHETHER A REGISTERED ORGANIZATION AND/OR

A TRANSMITTING UTILITY), JURISDICTION OF ORGANIZATION, 

LOCATION AND ORGANIZATIONAL IDENTIFICATION NUMBERS

 

	
  Exact Legal

  Name of Each

  Pledgor

  	
   

  	
  Registered

  Organization?

  (Yes/No)

  	
   

  	
  Jurisdiction of

  Organization

  	
   

  	
  Pledgor’s

  Location (for

  purposes of NY

  UCC

  § 9-307)

  	
   

  	
  Pledgor’s

  Organization

  Identification

  Number (or, if it

  has none, so

  indicate)

  	
   

  	
  Transmitting

  Utility?

  (Yes/No)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

	
  ANNEX B

  	
   

  
	
  TO

  	
   

  
	
  PLEDGE AGREEMENT

  	
   

  

 

LIST OF STOCK

 

 

 

	
  ANNEX C

  	
   

  
	
  TO

  	
   

  
	
  PLEDGE AGREEMENT

  	
   

  

 

LIST OF NOTES

 

 

 

	
  ANNEX D

  	
   

  
	
  TO

  	
   

  
	
  PLEDGE AGREEMENT

  	
   

  

 

LIST OF LIMITED LIABILITY
COMPANY INTERESTS

 

 

 

	
  ANNEX E

  	
   

  
	
  TO

  	
   

  
	
  PLEDGE AGREEMENT

  	
   

  

 

LIST OF PARTNERSHIP
INTERESTS

 

 

 

	
  ANNEX F

  	
   

  
	
  TO

  	
   

  
	
  PLEDGE AGREEMENT

  	
   

  

 

LIST OF CHIEF EXECUTIVE
OFFICES

 

 

 

Form of Agreement
Regarding Uncertificated Securities, Limited Liability

Company Interests and Partnership Interests

 

AGREEMENT
(as amended, modified or supplemented from time to time, this “Agreement”),
dated as of
                 
     ,
             ,
among each of the undersigned pledgors (each a “Pledgor” and,
collectively, the “Pledgors”),
                      ,
not in its individual capacity but solely as Second-Lien Collateral Agent (the
“Pledgee”), and
                     ,
as the issuer of the Uncertificated Securities, Limited Liability Company
Interests and/or Partnership Interests (each as defined below) (the “Issuer”).

 

W I T N E S S E T H :

 

WHEREAS,
each Pledgor and the Pledgee are entering into a Pledge Agreement, dated as of
March 17, 2004 (as amended, amended and restated, modified or supplemented from
time to time, the “Pledge Agreement”), under which, among other things,
in order to secure the payment of the Obligations (as defined in the Pledge
Agreement), each Pledgor will pledge to the Pledgee for the benefit of the
Secured Creditors (as defined in the Pledge Agreement), and grant a security
interest in favor of the Pledgee for the benefit of the Secured Creditors in,
all of the right, title and interest of such Pledgor in and to any and all (1)
“uncertificated securities” (as defined in Section 8-102(a)(18) of the Uniform
Commercial Code, as adopted in the State of New York) (“Uncertificated
Securities”), (2) Partnership Interests (as defined in the Pledge
Agreement) and (3) Limited Liability Company Interests (as defined in the
Pledge Agreement), in each case issued from time to time by the Issuer, whether
now existing or hereafter from time to time acquired by such Pledgor (with all
of such Uncertificated Securities, Partnership Interests and Limited Liability
Company Interests being herein collectively called the “Issuer Pledged
Interests”); and

 

WHEREAS,
each Pledgor desires the Issuer to enter into this Agreement in order to
perfect the security interest of the Pledgee under the Pledge Agreement in the
Issuer Pledged Interests, to vest in the Pledgee control of the Issuer Pledge
Interests and to provide for the rights of the parties under this Agreement;

 

NOW
THEREFORE, in consideration of the premises and the mutual promises and
agreements contained herein, and for other valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:

 

1.  Subject to the terms of the Intercreditor
Agreement, each Pledgor hereby irrevocably authorizes and directs the Issuer,
and the Issuer hereby agrees, to comply with any and all instructions and orders
originated by the Pledgee (and its successors and assigns) regarding any and
all of the Issuer Pledged Interests without the further consent by the
registered owner (including the respective Pledgor), and not to comply with any
instructions or orders regarding any or all of the Issuer Pledged Interests
originated by any person or entity other than the Pledgee (and its successors
and assigns) or a court of competent jurisdiction.

 

2.  The Issuer hereby certifies that (i) no
notice of any security interest, lien or other encumbrance or claim affecting
the Issuer Pledged Interests (other than the security interest

 

 

of the Pledgee) has been
received by it, and (ii) the security interest of the Pledgee in the Issuer
Pledged Interests has been registered in the books and records of the Issuer.

 

3.  The Issuer hereby represents and warrants
that (i) the pledge by the Pledgors of, and the granting by the Pledgors of a
security interest in, the Issuer Pledged Interests to the Pledgee, for the
benefit of the Secured Creditors, does not violate the charter, by-laws,
partnership agreement, membership agreement or any other agreement governing
the Issuer or the Issuer Pledged Interests, and (ii) the Issuer Pledged
Interests are fully paid and nonassessable.

 

4.  All notices, statements of accounts,
reports, prospectuses, financial statements and other communications to be sent
to any Pledgor by the Issuer in respect of the Issuer will also be sent to the
Pledgee at the following address:

 

Bank of America, N.A., as
Second-Lien Collateral Agent

Mailcode CA5-701-05-19

1455 Market Street, 5th Floor

San Francisco, CA 94103

Telephone: (415) 436-3495

Facsimile:  (415) 503-5006

Attention:  Charles Graber

 

with a
copy to:

 

Bank of America, N.A., as
Second-Lien Collateral Agent

Mailcode NC1-007-13-06

100 N. Tryon Street, 13th Floor

Charlotte, NC 28255

Telephone: (704) 388-6415

Facsimile:  (704) 409-0564

Attention:  Laura Clark

 

5.  Until the Pledgee shall have delivered
written notice to the Issuer that all of the Obligations have been paid in full
and this Agreement is terminated, the Issuer will send any and all redemptions,
distributions, interest or other payments in respect of the Issuer Pledged
Interests from the Issuer for the account of the Pledgor only by wire transfers
to the following address:

 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  [Account Information]

  	
   

  
	
  ABA No.:

  	
   

  	
   

  
	
  Account in the Name of:

  	
   

  	
   

  
	
  Account No.:

  	
   

  	
   

  
					

 

6.  Except as expressly provided otherwise in
Sections 4 and 5, all notices, instructions, orders and communications
hereunder shall be sent or delivered by mail, telex,

 

 

telecopy or overnight
courier service and all such notices and communications shall, when mailed,
telexed, telecopied or sent by overnight courier, be effective when deposited
in the mails or delivered to the overnight courier, prepaid and properly
addressed for delivery on such or the next Business Day, or sent by telex or
telecopier, except that notices and communications to the Pledgee shall not be
effective until received by the Pledgee. 
All notices and other communications shall be in writing and addressed
as follows:

 

(a)          if to any Pledgor, at:

 

(b)          if to the Pledgee, at the address
given in Section 4 hereof:

 

 (c)         if
to the Issuer, at:

 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Attention:

  	
   

  	
   

  
	
  Telephone No.:

  	
   

  	
   

  
	
  Telephone No.:

  	
   

  	
   

  
					

 

or at such other address
as shall have been furnished in writing by any Person described above to the
party required to give notice hereunder. 
As used in this Section 6, “Business Day” means any day other
than a Saturday, Sunday, or other day in which banks in New York are authorized
to remain closed.

 

7.  This Agreement shall be binding upon the
successors and assigns of each Pledgor and the Issuer and shall inure to the
benefit of and be enforceable by the Pledgee and its successors and assigns.  This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which shall
constitute one instrument.  In the event
that any provision of this Agreement shall prove to be invalid or unenforceable,
such provision shall be deemed to be severable from the other provisions of
this Agreement which shall remain binding on all parties hereto.  None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
except in writing signed by the Pledgee, the Issuer and any Pledgor which at
such time owns any Issuer Pledged Interests.

 

8.  This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to its principles of conflict of laws.

 

 

IN
WITNESS WHEREOF, each Pledgor, the Pledgee and the Issuer have caused this
Agreement to be executed by their duly elected officers duly authorized as of
the date first above written.

 

 

	
   

  	
  [

  	
   

  	
  ],

  
	
   

  	
     as Pledgor

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A.,

  not in its individual capacity but solely as Second-Lien Collateral Agent and
  Pledgee

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [

  	
   

  	
  ],

  
	
   

  	
     as the Issuer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:Exhibit 10.15

 

 

 

 

SECURITY AGREEMENT

 

among

 

ENERSYS,

 

VARIOUS SUBSIDIARIES OF ENERSYS

 

and

 

BANK OF AMERICA, N.A.,

as Second-Lien Collateral Agent

 

Dated as of March 17, 2004

 

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I SECURITY INTERESTS

  	
   

  
	
   

  	
   

  
	
  1.1. Grant of Security
  Interests

  	
   

  
	
  1.2. Power of Attorney

  	
   

  
	
   

  	
   

  
	
  ARTICLE II GENERAL REPRESENTATIONS,
  WARRANTIES AND COVENANTS

  	
   

  
	
   

  	
   

  
	
  2.1. Necessary Filings

  	
   

  
	
  2.2. No Liens

  	
   

  
	
  2.3. Other Financing
  Statements

  	
   

  
	
  2.4. Chief Executive
  Office; Records

  	
   

  
	
  2.5. Location of
  Inventory and Equipment

  	
   

  
	
  2.6. Recourse

  	
   

  
	
  2.7. Legal Names; Type of Organization (and
  Whether a Registered Organization and/or a Transmitting Utility);
  Jurisdiction of Organization; Location; Organizational Identification
  Numbers; Changes Thereto; etc.

  	
   

  
	
  2.8. Trade Names; Etc.

  	
   

  
	
  2.9.
  Certain Significant Transactions

  	
   

  
	
  2.10. Non-UCC Property

  	
   

  
	
  2.11.
  As-Extracted Collateral; Timber-to-be-Cut

  	
   

  
	
  2.12. Collateral in
  the Possession of a Bailee

  	
   

  
	
   

  	
   

  
	
  ARTICLE III SPECIAL PROVISIONS
  CONCERNING RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS

  	
   

  
	
   

  	
   

  
	
  3.1.
  Additional Representations and Warranties

  	
   

  
	
  3.2.
  Maintenance of Records

  	
   

  
	
  3.3.
  Direction to Account Debtors; Contracting Parties; etc.

  	
   

  
	
  3.4. Modification of Terms;
  etc.

  	
   

  
	
  3.5. Collection

  	
   

  
	
  3.6. Instruments

  	
   

  
	
  3.7. Further Actions

  	
   

  
	
  3.8. Assignors
  Remain Liable Under Contracts

  	
   

  
	
  3.9.
  Deposit Accounts; Etc.

  	
   

  
	
  3.10.
  Letter-of-Credit Rights

  	
   

  
	
  3.11.
  Commercial Tort Claims

  	
   

  
	
  3.12. Chattel Paper

  	
   

  
	
  3.13. Further Actions

  	
   

  
	
   

  	
   

  
	
  ARTICLE IV SPECIAL PROVISIONS
  CONCERNING TRADEMARKS AND DOMAIN NAMES

  	
   

  
	
   

  	
   

  
	
  4.1. Additional
  Representations and Warranties

  	
   

  
	
  4.2.
  Licenses and Assignments

  	
   

  
	
  4.3. Infringements

  	
   

  

 

i

 

	
  4.4.
  Preservation of Marks

  	
   

  
	
  4.5. Maintenance of
  Registration

  	
   

  
	
  4.6. Future
  Registered Marks and Domain Names

  	
   

  
	
  4.7. Remedies

  	
   

  
	
   

  	
   

  
	
  ARTICLE V SPECIAL PROVISIONS CONCERNING
  PATENTS, COPYRIGHTS AND TRADE SECRETS

  	
   

  
	
   

  	
   

  
	
  5.1. Additional
  Representations and Warranties

  	
   

  
	
  5.2. Licenses and Assignments

  	
   

  
	
  5.3. Infringements

  	
   

  
	
  5.4. Maintenance
  of Patents and Copyrights

  	
   

  
	
  5.5. Prosecution of
  Patent or Copyright Applications

  	
   

  
	
  5.6. Other Patents and
  Copyrights

  	
   

  
	
  5.7. Remedies

  	
   

  
	
   

  	
   

  
	
  ARTICLE VI PROVISIONS CONCERNING ALL
  COLLATERAL

  	
   

  
	
   

  	
   

  
	
  6.1. Protection of
  Second-Lien Collateral Agent’s Security

  	
   

  
	
  6.2. Warehouse
  Receipts Non-Negotiable

  	
   

  
	
  6.3. Further Actions

  	
   

  
	
  6.4.
  Financing Statements

  	
   

  
	
  6.5.
  Additional Information

  	
   

  
	
   

  	
   

  
	
  ARTICLE VII REMEDIES UPON OCCURRENCE
  OF EVENT OF DEFAULT

  	
   

  
	
   

  	
   

  
	
  7.1.
  Remedies; Obtaining the Collateral Upon Default

  	
   

  
	
  7.2. Remedies;
  Disposition of the Collateral

  	
   

  
	
  7.3. Waiver of Claims

  	
   

  
	
  7.4.
  Application of Proceeds

  	
   

  
	
  7.5.
  Remedies Cumulative

  	
   

  
	
  7.6. Discontinuance of
  Proceedings

  	
   

  
	
   

  	
   

  
	
  ARTICLE VIII INDEMNITY

  	
   

  
	
   

  	
   

  
	
  8.1. Indemnity

  	
   

  
	
  8.2.
  Indemnity Obligations Secured by Collateral; Survival

  	
   

  
	
   

  	
   

  
	
  ARTICLE IX DEFINITIONS

  	
   

  
	
   

  	
   

  
	
  ARTICLE X MISCELLANEOUS

  	
   

  
	
   

  	
   

  
	
  10.1. Notices

  	
   

  
	
  10.2. Waiver; Amendment

  	
   

  
	
  10.3.
  Obligations Absolute

  	
   

  
	
  10.4.
  Successors and Assigns

  	
   

  
	
  10.5.
  Headings Descriptive

  	
   

  
	
  10.6. Governing Law

  	
   

  
	
  10.7. Assignor’s Duties

  	
   

  

 

ii

 

	
  10.8.
  Termination; Release

  	
   

  
	
  10.9. Counterparts

  	
   

  
	
  10.10. The Second-Lien
  Collateral Agent

  	
   

  
	
  10.11. Severability

  	
   

  
	
  10.12. Fraudulent
  Conveyance; Etc.

  	
   

  
	
  10.13.
  Additional Assignors

  	
   

  

 

	
  ANNEX A

  	
  Schedule of
  Chief Executive Offices/Record Locations

  
	
  ANNEX B

  	
  Schedule of
  Inventory and Equipment Locations

  
	
  ANNEX C

  	
  Schedule of
  Legal Names, Type of Organization (and whether a Registered Organization
  and/or a Transmitted Utility), Jurisdiction of Organization, Location and
  Organizational Identification Numbers

  
	
  ANNEX D

  	
  Schedule of
  Trade and Fictitious Names

  
	
  ANNEX E

  	
  Description
  of certain Significant Transactions occurring within one year prior to the
  date of the Security Agreement

  
	
  ANNEX F

  	
  Schedule of
  Deposit Accounts

  
	
  ANNEX G

  	
  Form of
  Control Agreement Regarding Deposit Accounts

  
	
  ANNEX H

  	
  Description
  of Commercial Tort Claims

  
	
  ANNEX I

  	
  Schedule of
  Marks and Applications; Domain Name Registrations

  
	
  ANNEX J

  	
  Schedule of
  Patents and Applications

  
	
  ANNEX K

  	
  Schedule of
  Copyrights and Applications

  
	
  ANNEX L

  	
  Form of
  Grant of Security Interest in Certain Patents and Trademarks

  
	
  ANNEX M

  	
  Form of
  Grant of Security Interest in Certain Copyrights

  

 

 

SECURITY
AGREEMENT

 

SECURITY
AGREEMENT, dated as of March 17, 2004 (as the same may be amended,
restated, modified and/or supplemented from time to time in accordance with the
terms hereof, this “Agreement”), among each of the undersigned (each, an
“Assignor” and, together with each other entity which becomes a party
hereto pursuant to Section 10.13, collectively, the “Assignors”) and
Bank of America, N.A., as Collateral Agent (the “Second-Lien Collateral
Agent”), for the benefit of the Secured Creditors (as defined below).  Except as otherwise defined herein, terms
used herein and defined in the Second-Lien Credit Agreement (as defined below)
shall be used herein as therein defined.

 

W I T N E S S E T H:

 

WHEREAS, EnerSys
(“Holdings”), EnerSys Capital Inc. (the “Borrower”), various
financial institutions from time to time party thereto (the “Lenders”),
Bank of America, N.A., as Administrative Agent (together with a successor
Administrative Agent, the “Administrative Agent” and, together with the
Lenders, the Second-Lien Collateral Agent, each other Agent and the Pledgee,
collectively, the “Secured Creditors”), Morgan Stanley Senior Funding
Inc., as Syndication Agent, and Lehman Commercial Paper Inc., as Documentation
Agent, have entered into a Second-Lien Credit Agreement, dated as of
March 17, 2004 providing for the making of Second-Lien Loans to the
Borrower (as used herein, the term “Second-Lien Credit Agreement” means
the Second-Lien Credit Agreement described above in this paragraph as amended,
restated, modified, extended, renewed, replaced, supplemented, restructured
and/or refinanced from time to time);

 

WHEREAS, pursuant
to the Holdings Guaranty, Holdings has unconditionally guaranteed to the
Secured Creditors the payment when due of all Guaranteed Obligations as
described therein;

 

WHEREAS, pursuant
to the Subsidiaries Guaranty, each Subsidiary Guarantor has jointly and
severally guaranteed to the Secured Creditors the payment when due of all
Guaranteed Obligations as described therein;

 

WHEREAS, it is a
condition precedent to the making of Second-Lien Loans to the Borrower under
the Second-Lien Credit Agreement that each Assignor shall have executed and
delivered to the Second-Lien Collateral Agent this Agreement; and

 

WHEREAS, Holdings,
the Borrower, various financial institutions from time to time party thereto
and Bank of America, N.A., as administrative agent and collateral agent (in
such capacity, the “First-Lien Collateral Agent”), have entered into a
credit agreement, dated as of the date hereof (as amended, restated, modified,
extended, renewed, replaced, supplemented, restructured and/or refinanced from
time to time, the “First-Lien Credit Agreement”);

 

 

WHEREAS, each
Assignor will obtain benefits from the incurrence of Second-Lien Loans by the
Borrower under the Second-Lien Credit Agreement and, accordingly, each Assignor
desires to execute this Agreement to satisfy the condition precedent described
in the preceding paragraph;

 

WHEREAS, in order
to secure the obligations under the First-Lien Credit Agreement, each Pledgor
is concurrently granting to the First-Lien Collateral Agent, for the benefit of
the holders of obligations under the First-Lien Credit Agreement, a first
priority security interest in the Collateral (it being understood that the
relative rights and priorities of the grantees in respect of the Collateral are
governed by the Intercreditor Agreement, dated as of the date hereof (as
amended, restated, supplemented or otherwise modified from time to time, the “Intercreditor
Agreement”), among Holdings, the Borrower, the First-Lien Collateral Agent,
the Second-Lien Collateral Agent and certain other persons party or that may
become party thereto from time to time); and

 

NOW, THEREFORE, in
consideration of the benefits accruing to each Assignor, the receipt and
sufficiency of which are hereby acknowledged, each Assignor hereby makes the
following representations and warranties to the Second-Lien Collateral Agent
and hereby covenants and agrees with the Second-Lien Collateral Agent as
follows:

 

ARTICLE I

SECURITY INTERESTS

 

1.1.  Grant of Security Interests.  (a) 
Subject to the terms of the Intercreditor Agreement, as security for the
prompt and complete payment and performance when due of all of the Obligations,
each Assignor does hereby assign and transfer unto the Second-Lien Collateral
Agent, and does hereby pledge and grant to the Second-Lien Collateral Agent for
the benefit of the Secured Creditors, a continuing security interest in, all of
the right, title and interest of such Assignor in, to and under all of the
following, whether now existing or hereafter from time to time acquired:

 

(i)            each and every Receivable;

 

(ii)           all cash;

 

(iii)          the
Cash Collateral Account and all monies, securities, Instruments and other
investments deposited or required to be deposited in the Cash Collateral
Account;

 

(iv)          all Chattel Paper (including, without
limitation, all Tangible Chattel Paper and all Electronic Chattel Paper);

 

(v)           all Commercial Tort Claims;

 

 

(vi)          all computer programs of such Assignor
and all intellectual property rights therein and all other proprietary
information of such Assignor, including but not limited to Domain Names and
Trade Secret Rights;

 

(vii)         Contracts,
together with all Contract Rights arising thereunder;

 

(viii)        all
Copyrights;

 

(ix)           all Equipment;

 

(x)            all Deposit Accounts and all other
demand, deposit, time, savings, cash management, passbook and similar accounts
maintained by such Assignor with any Person and all monies, securities,
Instruments and other investments deposited or required to be deposited in any
of the foregoing;

 

(xi)           all Documents;

 

(xii)          all
General Intangibles;

 

(xiii)         all
Goods;

 

(xiv)        all
Instruments;

 

(xv)         all Inventory;

 

(xvi)        all
Investment Property;

 

(xvii)       all
Letter-of-Credit Rights (whether or not the respective letter of credit is
evidenced by a writing);

 

(xviii)      all
Marks, together with the registrations and right to all renewals thereof, and
the goodwill of the business of such Assignor symbolized by the Marks;

 

(xix)         all
Patents;

 

(xx)          all Permits;

 

(xxi)         all
Software and all Software licensing rights, all writings, plans, specifications
and schematics, all engineering drawings, customer lists, goodwill and
licenses, and all recorded data of any kind or nature, regardless of the medium
of recording;

 

(xxii)        all
Supporting Obligations; and

 

(xxiii)       all
Proceeds and products of any and all of the foregoing (all of the above, the “Collateral”).

 

(b)   The security interest of the Second-Lien
Collateral Agent under this Agreement extends to all Collateral of the kind
which is the subject of this Agreement which any

 

 

Assignor may acquire at
any time during the continuation of this Agreement.  Notwithstanding anything to the contrary contained herein, the
Collateral shall at no time include any items which would at such time
constitute Excluded Collateral.

 

(c)           Notwithstanding
anything herein to the contrary, the lien and security interest granted to the
Second-Lien Collateral Agent pursuant to this Agreement and the exercise of any
right or remedy by the Second-Lien Collateral Agent hereunder are subject to
the provisions of the Intercreditor Agreement. 
In the event of any conflict between the terms of the Intercreditor
Agreement and this Agreement, the terms of the Intercreditor Agreement shall
govern and control.

 

1.2.  Power of Attorney.  Subject to the terms of the Intercreditor Agreement, each
Assignor hereby constitutes and appoints the Second-Lien Collateral Agent its
true and lawful attorney, irrevocably, with full power after the occurrence of
and during the continuance of an Event of Default (in the name of such Assignor
or otherwise) to act, require, demand, receive, compound and give acquittance
for any and all monies and claims for monies due or to become due to such
Assignor under or arising out of the Collateral, to endorse any checks or other
instruments or orders in connection therewith and to file any claims or take
any action or institute any proceedings which the Second-Lien Collateral Agent
may deem to be necessary or advisable to accomplish the purposes of this
Agreement, which appointment as attorney is coupled with an interest.

 

ARTICLE II

GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS

 

Each Assignor
represents, warrants and covenants, which representations, warranties and
covenants shall survive execution and delivery of this Agreement, as follows:

 

2.1.  Necessary Filings.  (i)  All filings, registrations
and recordings necessary or appropriate to create, preserve, protect and
perfect the security interest granted by such Assignor to the Second-Lien
Collateral Agent for the benefit of the Secured Creditors hereby in respect of
the Collateral have been accomplished (or, in the case of Collateral for which
it is necessary to file a UCC-1 financing statement or make a filing with the
United States Trademark and Patent Office or United States Copyright Office in
order to perfect a security interest in such Collateral, such filings will be
accomplished within 10 days following the Initial Borrowing Date (or to the
extent such Collateral is acquired after the Initial Borrowing Date, within 10
days following the date of the acquisition of such Collateral)), and (ii) the
security interest granted to the Second-Lien Collateral Agent pursuant to this
Agreement in and to the Collateral constitutes (or, in the case of Collateral
referred to in the parenthetical in clause (i) above, upon compliance with the
requirements of such parenthetical, will constitute) a perfected security
interest therein prior to the rights of all other Persons therein (except as
otherwise permitted by the Credit Documents (including, without limitation, (x)
Section 3.9 of this Agreement with respect to Deposit Accounts and (y) the
terms of the Intercreditor Agreement)) and subject to no other Liens (other
than Permitted Liens) and is entitled to all the rights, priorities and
benefits afforded by the

 

 

Uniform Commercial Code or other relevant law as enacted in any
relevant jurisdiction to perfected security interests.

 

2.2.  No Liens.  Such Assignor is, and as to all Collateral
acquired by it from time to time after the date hereof such Assignor will be,
the owner of all Collateral free from any Lien, security interest, encumbrance
or other right, title or interest of any Person (other than Permitted Liens and
Liens created under this Agreement) and such Assignor shall defend the
Collateral against all claims and demands of all Persons at any time claiming
the same or any interest therein adverse to the Second-Lien Collateral Agent.

 

2.3.  Other Financing Statements.  As of the date hereof, there is no financing
statement evidencing a valid security interest against Holdings or any of its
Subsidiaries (or similar statement or instrument of registration under the law
of any jurisdiction) covering or purporting to cover any interest of any kind
in the Collateral (other than (x) those created under this Agreement, (y) as
may be filed in connection with Permitted Liens and (z) those with respect to
which appropriate termination statements executed by the secured lender
thereunder have been delivered to the Administrative Agent pursuant to the
terms of the Second-Lien Credit Agreement), and so long as the Total Commitment
has not been terminated or any Second Lien Loan Note remains outstanding or any
of the Obligations (other than arising from indemnities for which no request
has been made) remain unpaid or any Obligations are owed with respect thereto,
such Assignor will not execute or authorize to be filed in any public office
any financing statement (or similar statement or instrument of registration
under the law of any jurisdiction) relating to the Collateral, except financing
statements filed or to be filed in respect of and covering the security
interests granted hereby by such Assignor or as permitted by the First-Lien
Credit Agreement, the Second-Lien Credit Agreement or the Intercreditor
Agreement.

 

2.4.  Chief Executive Office; Records.  The chief executive office of such Assignor
is located at the address or addresses indicated on Annex A hereto.  During the period of the four calendar
months preceding the date of this Agreement, the chief executive office of such
Assignor has not been located at any address other than that indicated on Annex
A in accordance with the immediately preceding sentence, in each case unless
each such other address is also indicated on Annex A hereto for such Assignor.

 

2.5.  Location of Inventory and Equipment.  All Inventory and Equipment held on the date
hereof by such Assignor is located at one of the locations shown on Annex B
hereto.

 

2.6.  Recourse.  This
Agreement is made with full recourse to each Assignor and pursuant to and upon
all the warranties, representations, covenants and agreements on the part of
such Assignor contained herein, in the other Credit Documents and otherwise in
writing in connection herewith or therewith.

 

2.7.  Legal Names; Type of Organization (and
Whether a Registered Organization and/or a Transmitting Utility); Jurisdiction
of Organization; Location; Organizational Identification Numbers; Changes
Thereto; etc.  The exact legal name
of each Assignor, the type of organization of such Assignor, whether or not
such Assignor is a Registered Organization, the jurisdiction of organization of
such Assignor, such Assignor’s Location, the organizational identification
number (if any) of such Assignor, and whether or not such Assignor is a

 

 

Transmitting Utility, is listed on Annex C hereto for such
Assignor.  Such Assignor shall not
change its legal name, its type of organization, its status as a Registered
Organization (in the case of a Registered Organization), its status as a Transmitting
Utility or as a Person which is not a Transmitting Utility, as the case may be,
its jurisdiction of organization, its Location, or its organizational
identification number (if any) from that used on Annex C hereto, except that
any such changes shall be permitted (so long as not in violation of the
applicable requirements of the Second-Lien Credit Agreement and so long as same
do not involve (x) a Registered Organization ceasing to constitute same or (y)
such Assignor changing its jurisdiction of organization or Location from the
United States or a State thereof to a jurisdiction of organization or Location,
as the case may be, outside the United States or a State thereof) if (i) it
shall have given to the Second-Lien Collateral Agent not less than 15 days’
prior written notice of each change to the information listed on Annex C (as
adjusted for any subsequent changes thereto previously made in accordance with
this sentence), together with a supplement to Annex C which shall correct all
information contained therein for such Assignor, and (ii) in connection with
the respective such change or changes, it shall have taken all action
reasonably requested by the Second-Lien Collateral Agent to maintain the
security interests of the Second-Lien Collateral Agent in the Collateral
intended to be granted hereby at all times fully perfected and in full force
and effect.  In addition, to the extent
that such Assignor does not have an organizational identification number on the
date hereof and later obtains one, such Assignor shall promptly thereafter notify
the Second-Lien Collateral Agent of such organizational identification number
and shall take all actions reasonably satisfactory to the Second-Lien
Collateral Agent to the extent necessary to maintain the security interest of
the Second-Lien Collateral Agent in the Collateral intended to be granted
hereby fully perfected and in full force and effect.

 

2.8.  Trade Names; Etc.  Such Assignor has or operates in any jurisdiction under, or in
the preceding five years has had or has operated in any jurisdiction under, no
trade names, fictitious names or other names except its legal name as specified
in Annex C and such other trade or fictitious names as are listed on Annex D
hereto for such Assignor.  Such Assignor
shall not assume or operate in any jurisdiction under any new trade, fictitious
or other name until (i) it shall have given to the Second-Lien Collateral Agent
not less than 30 days’ written notice of its intention so to do, clearly
describing such new name and the jurisdictions in which such new name will be
used and providing such other information in connection therewith as the
Second-Lien Collateral Agent may reasonably request and (ii) with respect to
such new name, it shall have taken all action reasonably requested by the
Second-Lien Collateral Agent to maintain the security interest of the
Second-Lien Collateral Agent in the Collateral intended to be granted hereby at
all times fully perfected and in full force and effect.

 

2.9.  Certain Significant Transactions.  During the one year period preceding the
date of this Agreement, no Person shall have merged or consolidated with or
into any Assignor, and no Person shall have liquidated into, or transferred all
or substantially all of its assets to, any Assignor, in each case except as
described in Annex E hereto.  With
respect to any transactions so described in Annex E hereto, the respective
Assignor shall have furnished such information with respect to the Person (and
the assets of the Person and locations thereof) which merged with or into or
consolidated with such Assignor, or was liquidated into or transferred all or
substantially all of its assets to such Assignor, and shall have furnished to
the Second-Lien Collateral Agent such UCC lien searches as may have been
requested with respect to such Person and its assets, to establish that no
security interest (excluding Permitted Liens) continues

 

 

perfected on the date hereof with respect to any Person described above
(or the assets transferred to the respective Assignor by such Person), including
without limitation pursuant to Section 9-316(a)(3) of the UCC.

 

2.10. 
Non-UCC Property.  The aggregate fair market value (as
determined by the Assignors in good faith) of all property of the Assignors of
the type described in clause (1) of Section 9-311(a) of the UCC does not
exceed $5,000,000.  If the aggregate
value of all such property at any time owned by all Assignors exceeds
$5,000,000, the Assignors shall provide prompt written notice thereof to the
Second-Lien Collateral Agent and, upon the request of the Second-Lien
Collateral Agent, the Assignors shall promptly (and in any event within 30
days) take such actions (at their own cost and expense) as may be required
under the respective United States or other laws, regulations or treaties
referenced in Section 9-311(a)(1) of the UCC to perfect the security
interests granted herein in any Collateral where the filing of a financing
statement does not perfect the security interest in such property in accordance
with the provisions of Section 9-311(a)(1) of the UCC.

 

2.11. 
As-Extracted Collateral;
Timber-to-be-Cut.  On the date
hereof, such Assignor does not own, or expect to acquire, any property which
constitutes, or would constitute, As-Extracted Collateral or
Timber-to-be-Cut.  If at any time after the
date of this Agreement such Assignor owns, acquires or obtains rights to any
As-Extracted Collateral or Timber-to-be-Cut, such Assignor shall furnish the
Second-Lien Collateral Agent with prompt written notice thereof (which notice
shall describe in reasonable detail the As-Extracted Collateral and/or
Timber-to-be-Cut and the locations thereof) and shall take all actions as may
be deemed reasonably necessary or desirable by the Second-Lien Collateral Agent
to perfect the security interest of the Second-Lien Collateral Agent therein.

 

2.12. 
Collateral in the
Possession of a Bailee.  If any
Inventory or other Goods are at any time in the possession of a bailee (other
than the First-Lien Collateral Agent), such Assignor shall promptly notify the
Second-Lien Collateral Agent thereof and, if requested by the Second-Lien
Collateral Agent, shall use its commercially reasonable efforts to promptly
obtain an acknowledgment from such bailee, in form and substance reasonably
satisfactory to the Second-Lien Collateral Agent, that the bailee holds such
Collateral for the benefit of the Second-Lien Collateral Agent and shall act
upon the instructions of the Second-Lien Collateral Agent, without the further
consent of such Assignor. The Second-Lien Collateral Agent agrees with such
Assignor that the Second-Lien Collateral Agent shall not give any such
instructions unless an Event of Default has occurred and is continuing or would
occur after taking into account any action by the respective Assignor with
respect to any such bailee.

 

ARTICLE III

SPECIAL PROVISIONS CONCERNING

RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS

 

3.1.  Additional Representations and
Warranties.  As of the time when
each of its material Receivables arises, each Assignor shall be deemed to have
represented and warranted that such Receivable, and all records, papers and
documents relating thereto (if any) are genuine

 

 

and accurate in all material respects, and that all papers and
documents (if any) relating thereto (i) will represent in all material respects
the genuine legal, valid and binding (except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws generally affecting creditors’
rights and by equitable principles, regardless of whether enforcement is sought
in equity or law) obligation of the account debtor evidencing indebtedness
unpaid and owed by the respective account debtor arising out of the performance
of labor or services or the sale or lease and delivery of the inventory,
materials, equipment or merchandise listed therein, or both, (ii) will be
the only original writings evidencing and embodying such obligation of the
account debtor named therein (other than copies created for general accounting purposes),
(iii) will evidence true, legal and valid obligations, enforceable in
accordance with their respective terms (except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws generally affecting creditors’
rights and by equitable principles (regardless of whether enforcement is sought
in equity or law)) and (iv) will be in compliance and will conform in all
material respects with all applicable federal, state and local laws and
applicable laws of any relevant foreign jurisdiction.

 

3.2.  Maintenance of Records.  Each Assignor will keep and maintain at its
own cost and expense satisfactory and complete records of its Receivables and
Contracts, including, but not limited to, originals or copies of all
documentation (including each Contract), if any, with respect thereto, records
of all payments received, all credits granted thereon, all merchandise returned
and all other dealings therewith, and such Assignor will make the same
available on such Assignor’s premises to the Second-Lien Collateral Agent for
inspection, at such Assignor’s own cost and expense, at any and all reasonable
times and intervals as the Second-Lien Collateral Agent may request, but no
more than two times in any calendar year unless an Event of Default has
occurred and is continuing.  Upon the
occurrence and during the continuance of an Event of Default and at the request
of the Second-Lien Collateral Agent, such Assignor shall, at its own cost and
expense, deliver all tangible evidence of its Receivables and Contract Rights
(including, without limitation, all documents, if any,  evidencing the Receivables and all
Contracts) and such books and records to the Second-Lien Collateral Agent or to
its representatives (copies of which evidence and books and records may be
retained by such Assignor).  If the
Second-Lien Collateral Agent so directs (but subject to the provisions of the
Intercreditor Agreement), such Assignor shall legend, in form and manner
satisfactory to the Second-Lien Collateral Agent, the Receivables and the
Contracts, as well as books, records and documents of such Assignor evidencing
or pertaining to such Receivables and Contracts with an appropriate reference
to the fact that such Receivables and Contracts have been assigned to the
Second-Lien Collateral Agent and that the Second-Lien Collateral Agent has a
security interest therein.

 

3.3.  Direction to Account Debtors;
Contracting Parties; etc. 
Subject to the terms of the Intercreditor Agreement, upon the occurrence
and during the continuance of an Event of Default, and if the Second-Lien
Collateral Agent so directs any Assignor, such Assignor agrees (x) to cause all
payments on account of the Receivables and Contracts to be made directly to the
Cash Collateral Account, (y) that the Second-Lien Collateral Agent may, at its
option, directly notify the obligors with respect to any Receivables and/or
under any Contracts to make payments with respect thereto as provided in
preceding clause (x), and (z) that the Second-Lien Collateral Agent may enforce
collection of any such Receivables or Contracts and may adjust, settle or

 

 

compromise the amount of payment thereof, in the same manner and to the
same extent as such Assignor.  Subject
to the terms of the Intercreditor Agreement, upon the occurrence and during the
continuance of an Event of Default, without notice to or assent by any
Assignor, the Second-Lien Collateral Agent may apply any or all amounts then
in, or thereafter deposited in, the Cash Collateral Account in the manner
provided in Section 7.4 of this Agreement.  The costs and expenses (including attorneys’ fees) of collection,
whether incurred by any Assignor or the Second-Lien Collateral Agent, shall be
borne by such Assignor.

 

3.4.  Modification of Terms; etc.  Except in accordance with such Assignor’s
ordinary course of business and consistent with reasonable business judgment
(and, in the case of any Accounts Receivable Facility Assets, except in
accordance with the provisions of the Accounts Receivable Facility Documents),
no Assignor shall rescind or cancel any indebtedness evidenced by any
Receivable or under any Contract, or modify any term thereof or make any
adjustment with respect thereto, or extend or renew the same, or compromise or
settle any material dispute, claim, suit or legal proceeding relating thereto,
or sell any Receivable or Contract, or interest therein, without the prior
written consent of the Second-Lien Collateral Agent.  No Assignor will do anything to impair the rights of the
Second-Lien Collateral Agent in the Receivables or Contracts, it being
understood that nothing herein shall prevent any Assignor from entering into or
performing its obligations under the Accounts Receivable Facility Documents.

 

3.5.  Collection. 
Each Assignor shall use reasonable efforts to endeavor to cause to be
collected from the account debtor named in each of its Receivables or obligor
under any Contract, as and when due (including, without limitation, amounts,
services or products which are delinquent, such amounts, services or products
to be collected in accordance with generally accepted lawful collection
procedures) any and all amounts, services or products owing under or on account
of such Receivable or Contract, and apply forthwith upon receipt thereof
all such amounts, services or products as are so collected to the outstanding
balance of such Receivable or under such Contract, except that, prior to the
occurrence of an Event of Default, any Assignor may allow in the ordinary course
of business as adjustments to amounts, services or products owing under its
Receivables and Contracts (i) an extension or renewal of the time or times
of payment or exchange, or settlement for less than the total unpaid balance,
which such Assignor finds appropriate in accordance with reasonable business
judgment and (ii) a refund or credit due as a result of returned or
damaged merchandise or improperly performed services.  The costs and expenses (including, without limitation, attorneys’
fees) of collection, whether incurred by an Assignor or the Second-Lien
Collateral Agent, shall be borne by the relevant Assignor.

 

3.6.  Instruments. 
If any Assignor owns or acquires any Instrument constituting Collateral,
such Assignor will within 10 days notify the Second-Lien Collateral Agent
thereof, and upon request by the Second-Lien Collateral Agent, will (subject to
the terms of the Intercreditor Agreement) promptly deliver such Instrument (to
the extent such Instrument is not otherwise required to be delivered to the
Second-Lien Collateral Agent pursuant to the Pledge Agreement) to the
Second-Lien Collateral Agent appropriately endorsed to the order of the
Second-Lien Collateral Agent as further security hereunder; provided, however,
that Instruments with a face amount of less than $500,000 shall not be required
to be delivered pursuant to this Section 3.6 unless and until the
aggregate amount of all Instruments and Tangible Chattel Paper

 

 

not delivered to the Second-Lien Collateral Agent pursuant to this Section 3.6
and Section 3.12 hereof exceeds $2,500,000.

 

3.7.  Further Actions. Each Assignor will, to the
extent not inconsistent with the terms of the Intercreditor Agreement, at its
own expense, make, execute, endorse, acknowledge, file and/or deliver to the
Second-Lien Collateral Agent from time to time such vouchers, invoices,
schedules, confirmatory assignments, conveyances, financing statements,
transfer endorsements, certificates, reports and other assurances or
instruments and take such further steps, including any and all actions as may
be necessary or required under the Federal Assignment of Claims Act, relating
to its Receivables, Contracts, Instruments and other property or rights covered
by the security interest hereby granted, as the Second-Lien Collateral Agent
may reasonably require.

 

3.8.  Assignors Remain Liable Under
Contracts.  Anything herein to the
contrary notwithstanding, the Assignors shall remain liable under each of the
Contracts to observe and perform all of the conditions and obligations to be
observed and performed by them thereunder, all in accordance with and pursuant
to the terms and provisions of each Contract. 
Neither the Second-Lien Collateral Agent nor any other Secured Creditor
shall have any obligation or liability under any Contract by reason of or
arising out of this Agreement or the receipt by the Second-Lien Collateral
Agent or any other Secured Creditor of any payment relating to such Contract
pursuant hereto, nor shall the Second-Lien Collateral Agent or any other Secured
Creditor be obligated in any manner to perform any of the obligations of any
Assignor under or pursuant to any Contract, to make any payment, to make any
inquiry as to the nature or the sufficiency of any performance by any party
under any Contract, to present or file any claim, to take any action to enforce
any performance or to collect the payment of any amounts which may have been
assigned to them or to which they may be entitled at any time or times.

 

3.9.  Deposit Accounts; Etc.  (a) 
No Assignor maintains, or at any time after the date of this Agreement
shall establish or maintain, any demand, time, savings, passbook or similar
account, except for such accounts maintained with a bank (as defined in
Section 9-102 of the UCC) whose jurisdiction (determined in accordance
with Section 9-304 of the UCC) is within a State of the United States.
Annex F hereto accurately sets forth, as of the date of this Agreement, for
each Assignor, each Deposit Account maintained by such Assignor (including a description
thereof and the respective account number), the name of the respective bank
with which such Deposit Account is maintained, and the jurisdiction of the
respective bank with respect to such Deposit Account.  For each Subject Deposit Account, the respective Assignor shall
cause the bank with which such Subject Deposit Account is maintained to execute
and deliver to the Second-Lien Collateral Agent, within 60 days after the date
of this Agreement, a “control agreement” in the form of Annex G hereto (appropriately
completed), with such changes thereto as may be reasonably acceptable to the
Second-Lien Collateral Agent.  If any
bank with which a Subject Deposit Account is maintained refuses to, or does
not, enter into such a “control agreement”, then the respective Assignor shall
promptly (and in any event within 60 days after the date of this Agreement)
close the respective Subject Deposit Account and transfer all balances therein
to (x) the Cash Collateral Account, (y) another Subject Deposit Account subject
to a “control agreement” and meeting the requirements of this
Section 3.9(a) or (z) another Deposit Account subject to a “control
agreement” and meeting the requirements of this Section 3.9(a) as if such
Deposit Account were a Subject Deposit Account (each such Deposit

 

 

Account referred to in this clause (z), an “Alternate Perfected
Deposit Account”).  If any bank with
which a Subject Deposit Account is maintained refuses to subordinate all its
claims with respect to such Subject Deposit Account to the Second-Lien
Collateral Agent’s security interest therein on terms reasonably satisfactory
to the Second-Lien Collateral Agent, then the Second-Lien Collateral Agent, at
its option, may (x) require that such Subject Deposit Account be terminated in
accordance with the immediately preceding sentence or (y) agree to a “control
agreement” without such subordination, provided that in such event the
Second-Lien Collateral Agent may at any time, at its option, subsequently
require that such Subject Deposit Account be terminated (within 30 days after
notice from the Second-Lien Collateral Agent) in accordance with the
requirements of the immediately preceding sentence.  If any Assignor intends to close a Subject Deposit Account in
accordance with the terms of the respective “control agreement” for such
Subject Deposit Account, then the respective Assignor shall, immediately prior
to closing such Subject Deposit Account, transfer all balances therein to the
Cash Collateral Account, another Subject Deposit Account or an Alternate
Perfected Deposit Account.

 

(b)           After the date of this Agreement, no Assignor shall
establish any new demand, time, savings, passbook or similar account, except
for Deposit Accounts established and maintained with banks and meeting the
requirements of the first sentence of preceding clause (a).  At the time any such Deposit Account is
established, the respective Assignor shall furnish to the Second-Lien
Collateral Agent a supplement to Annex F hereto containing the relevant
information with respect to the respective Deposit Account and the bank with
which same is established.

 

(c)           Each Assignor covenants and agrees to transfer, by the
close of business on each Business Day (in the city where the respective
Deposit Account is maintained), any and all cash and other funds on deposit in
each Deposit Account of such Assignor to a Subject Deposit Account or an
Alternate Perfected Deposit Account, provided that, in the case of a
Deposit Account that is an Excluded Local Deposit Account, all Cash and other
funds on deposit in such Excluded Local Deposit Account in excess of $50,000
shall be transferred, by the close of business on the Business Day (in the city
where the respective Excluded Local Deposit Account is maintained) following
the date of initial deposit of such cash and other funds in such Excluded Local
Deposit Account, to a Subject Deposit Account or an Alternate Perfected Deposit
Account.

 

3.10. 
Letter-of-Credit Rights.  If any Assignor is at any time a beneficiary
under a letter of credit with a stated amount of $1,000,000 or more, such
Assignor shall promptly notify the Second-Lien Collateral Agent thereof and, at
the request of the Second-Lien Collateral Agent, such Assignor shall, pursuant
to an agreement in form and substance reasonably satisfactory to the
Second-Lien Collateral Agent, use its commercially reasonable efforts to (i)
arrange for the issuer and any confirmer of such letter of credit to consent to
an assignment to the Second-Lien Collateral Agent of the proceeds of any drawing
under such letter of credit or (ii) arrange for the Second-Lien Collateral
Agent to become the transferee beneficiary of such letter of credit, with the
Second-Lien Collateral Agent agreeing, in each case, that the proceeds of any
drawing under the letter of credit are (subject to the Intercreditor Agreement)
to be applied as provided in this Agreement after the occurrence and during the
continuance of an Event of Default.

 

 

3.11. 
Commercial Tort Claims.  All Commercial Tort Claims of each Assignor
in existence on the date of this Agreement are described in Annex H
hereto.  If any Assignor 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 $1,000,000 or more, such Assignor shall
promptly notify the Second-Lien Collateral Agent thereof in a writing signed by
such Assignor and describing the details thereof and shall grant to the
Second-Lien Collateral Agent in such writing a security interest therein and in
the proceeds thereof, all upon the terms of this Agreement, with such writing
to be in form and substance reasonably satisfactory to the Second-Lien
Collateral Agent.

 

3.12. 
Chattel Paper.  Upon the request of the Second-Lien
Collateral Agent made at any time or from time to time, each Assignor shall
promptly furnish to the Second-Lien Collateral Agent a list of all Electronic
Chattel Paper held or owned by such Assignor. 
Furthermore, if requested by the Second-Lien Collateral Agent, each
Assignor shall promptly take all actions which are reasonably practicable so
that the Second-Lien Collateral Agent has “control” of all Electronic Chattel
Paper in accordance with the requirements of Section 9-105 of the
UCC.  Each Assignor will promptly (and
in any event within 10 days) following any request by the Second-Lien
Collateral Agent, deliver (to the extent not inconsistent with the terms of the
Increcreidtor Agreement) all of its Tangible Chattel Paper to the Second-Lien
Collateral Agent; provided, however, that Tangible Chattel Paper
with a value of less than $1,000,000 shall not be required to be delivered
pursuant to this Section 3.12 unless and until the aggregate amount of all
Tangible Chattel Paper and Instruments not delivered to the Second-Lien
Collateral Agent pursuant to this Section 3.12 and Section 3.6 hereof
exceeds $2,500,000.

 

ARTICLE IV

SPECIAL PROVISIONS CONCERNING TRADEMARKS

AND DOMAIN NAMES

 

4.1.  Additional Representations and Warranties.  Each Assignor represents and warrants that
it is the true, lawful, sole and exclusive owner of or otherwise has the right
to use the Marks and Domain Names listed in Annex I hereto and that said listed
Marks and Domain Names (i) constitute all the Marks and Domain Names that such
Assignor presently owns or uses in connection with its business and (ii)
include all Marks and applications for Marks registered in the United States
Patent and Trademark Office (or the equivalent thereof in any foreign country),
all material unregistered Marks that such Assignor now owns, licenses or uses
in connection with its business on the date hereof and all Domain Names that
such Assignor owns or uses in connection with its business on the date hereof.  Each Assignor further warrants that it has
no knowledge, as of the date hereof, of any material third party claim that any
aspect of such Assignor’s present or contemplated business operations infringes
or will infringe any rights in any trademark, service mark or trade name.  Each Assignor represents and warrants that
it is the beneficial and record owner of all trademark registrations and
applications listed in Annex I hereto and designated as “owned” thereon and
that said registrations are valid, subsisting and have not been canceled and
that such Assignor is not aware of any material third party claim that any of
said registrations is invalid or unenforceable, or that there is any reason
that any of said

 

 

applications will not pass to registration.  Each Assignor represents and warrants that upon the recordation
of a Grant of Security Interest in United States Trademarks and Patents in the
form of Annex L hereto in the United States Patent and Trademark Office,
together with filings on Form UCC-1 pursuant to this Agreement, all filings,
registrations and recordings necessary or appropriate to perfect the security
interest granted to the Second-Lien Collateral Agent in the United States Marks
covered by this Agreement under federal law will have been accomplished.  Each Assignor agrees to execute such a Grant
of Security Interest in United States Trademarks and Patents covering all
right, title and interest in each United States Mark, and the associated
goodwill, of such Assignor, and to record the same.  Each Assignor hereby grants to the Second-Lien Collateral Agent
an absolute power of attorney to sign, upon the occurrence and during the
continuance of an Event of Default, any document which may be required by the
U.S. Patent and Trademark Office or secretary of state or equivalent
governmental agency of any State of the United States or any foreign
jurisdiction in order to effect an absolute assignment of all right, title and
interest in each Mark and/or Domain Name, and record the same.

 

4.2.  Licenses and Assignments.  Each Assignor hereby agrees not to divest
itself of any right under any Mark or Domain Name absent prior written approval
of the Second-Lien Collateral Agent (which approval shall not be unreasonably
withheld), except as otherwise permitted by this Agreement or the Second-Lien
Credit Agreement.

 

4.3.  Infringements. 
Each Assignor agrees, promptly upon learning thereof, to notify the
Second-Lien Collateral Agent in writing of the name and address of, and to
furnish such pertinent information that may be available with respect to, (i)
any party who such Assignor believes is infringing or diluting or otherwise
violating in any material respect any of such Assignor’s rights in and to any
Mark or Domain Name, or (ii) with respect to any party claiming that such
Assignor’s use of any Mark or Domain Name violates in any material respect any
property right of that party.  Each
Assignor further agrees, unless otherwise agreed by the Second-Lien Collateral
Agent, to prosecute, in accordance with reasonable business practices, any
Person infringing any Mark or Domain Name owned by such Assignor.

 

4.4.  Preservation of Marks.  Each Assignor agrees to use its Marks and
Domain Names in interstate or foreign commerce, as the case may be, during the
time in which this Agreement is in effect, sufficiently to preserve such Marks
as valid and subsisting trademarks or service marks under the laws of the
United States or the relevant foreign jurisdiction; provided that no
Assignor shall be obligated to preserve any Mark to the extent the Assignor
determines, in its reasonable business judgment, that the preservation of such
Mark is no longer economically desirable in the conduct of its business.

 

4.5.  Maintenance of Registration.  Each Assignor shall, at its own expense and
in accordance with reasonable business practices, process all documents
required to maintain Mark and Domain Name registrations, including but not
limited to affidavits of continued use and applications for renewals of
registration in the United States Patent and Trademark Office for all of its
registered Marks pursuant to 15 U.S.C. §§ 1058, 1059 and 1065 or any
foreign equivalent thereof, as applicable, and shall pay all fees and
disbursements in connection therewith and shall not abandon any such filing of
affidavit of use or any such application of renewal prior to the exhaustion of
all administrative and judicial remedies without prior written consent of the
Second-Lien Collateral Agent; provided that no Assignor shall be
obligated to maintain any

 

 

Mark and/or Domain Name to the extent such Assignor determines, in its
reasonable business judgment, that the maintenance of such Mark and/or Domain
Name is no longer economically desirable in the conduct of its business.

 

4.6.  Future Registered Marks and Domain
Names.  If any registration for
any Mark issued hereafter to any Assignor as a result of any application now or
hereafter pending before the United States Patent and Trademark Office or any
Domain Name is registered by any Assignor, within 30 days of receipt of such
certificate, such Assignor shall deliver to the Second-Lien Collateral Agent a
copy of such certificate, and a grant for security in such Mark and/or Domain
Name, to the Second-Lien Collateral Agent and at the expense of such Assignor,
confirming the grant for security in such Mark and/or Domain Name to the
Second-Lien Collateral Agent hereunder, the form of such grant for security to
be substantially the same as the form hereof or in such other form as may be
reasonably satisfactory to the Second-Lien Collateral Agent.

 

4.7.  Remedies. 
Subject to the terms of the Intercreditor Agreement, if an Event of
Default shall occur and be continuing, the Second-Lien Collateral Agent may, by
written notice to the relevant Assignor, take any or all of the following
actions:  (i) declare the entire right,
title and interest of such Assignor in and to each of the Marks and Domain
Names, together with all trademark rights and rights of protection to the same
and the goodwill of such Assignor’s business symbolized by said Marks or Domain
Names and the right to recover for past infringements thereof, vested in the
Second-Lien Collateral Agent for the benefit of the Secured Creditors, in which
event such rights, title and interest shall immediately vest, in the Second-Lien
Collateral Agent for the benefit of the Secured Creditors, and the Second-Lien
Collateral Agent shall be entitled to exercise the power of attorney referred
to in Section 4.1 to execute, cause to be acknowledged and notarized and
to record an absolute assignment with the applicable agency; (ii) take and use
or sell the Marks or Domain Names and the goodwill of such Assignor’s business
symbolized by the Marks or Domain Names and the right to carry on the business
and use the assets of such Assignor in connection with which the Marks or
Domain Names have been used; and (iii) direct such Assignor to refrain, in
which event such Assignor shall refrain, from using the Marks or Domain Names
in any manner whatsoever, directly or indirectly, and, if requested by the
Second-Lien Collateral Agent, change such Assignor’s corporate name to
eliminate therefrom any use of any Mark or Domain Name and execute such other
and further documents that the Second-Lien Collateral Agent may request to
further confirm this and to transfer ownership of the Marks or Domain Names and
registrations and any pending trademark applications therefor in the United
States Patent and Trademark Office or any equivalent government agency or
office in any foreign jurisdiction to the Second-Lien Collateral Agent.

 

ARTICLE V

SPECIAL PROVISIONS CONCERNING

PATENTS, COPYRIGHTS AND TRADE SECRETS

 

5.1.  Additional
Representations and Warranties.  Each Assignor represents and warrants that
it is the true and lawful exclusive owner of or otherwise has the right to use
all (i)

 

 

Trade Secrets Rights and proprietary information necessary to operate
the business of such Assignor, (ii) rights in the Patents of such Assignor
listed in Annex J hereto and that said Patents constitute all the patents and
applications for patents that such Assignor now owns or that are otherwise
necessary in the conduct of the business of such Assignor, and (iii) rights in
the Copyrights of such Assignor listed in Annex K hereto, and that such
Copyrights constitute all registrations of copyrights and applications for
copyright registrations that such Assignor now owns or that are otherwise
necessary in the conduct of the business of such Assignor.  Each Assignor further represents and
warrants that it has the right to use and practice under all Patents and
Copyrights that it owns, uses or under which it practices and has the right to
exclude others from using or practicing under any Patents it owns.  Each Assignor further warrants that it has
no knowledge of any material third party claim that any aspect of such
Assignor’s present or contemplated business operations infringes or will
infringe any rights in any Patent or Copyright or that such Assignor has
misappropriated any Trade Secret, Trade Secret Rights or proprietary
information.  Each Assignor represents
and warrants that upon the recordation of a Grant of Security Interest in
United States Trademarks and Patents in the form of Annex L hereto in the
United States Patent and Trademark Office and the recordation of a Grant of
Security Interest in United States Copyrights in the form of Annex M hereto in
the United States Copyright Office, together with filings on Form UCC-1
pursuant to this Agreement, all filings, registrations and recordings necessary
or appropriate to perfect the security interest granted to the Second-Lien
Collateral Agent in the United States Patents and United States Copyrights
covered by this Agreement under federal law will have been accomplished.  Upon obtaining any Patent, each Assignor
agrees to execute a Grant of Security Interest in United States Trademarks and
Patents covering all right, title and interest in each United States Patent of
such Assignor and to record the same, and upon obtaining any Copyright, to
execute such Grant of Security Interest in United States Copyrights covering
all right, title and interest in each United States Copyright of such Assignor
and to record the same.  Each Assignor
hereby grants to the Second-Lien Collateral Agent an absolute power of attorney
to sign, upon the occurrence and during the continuance of any Event of
Default, any document which may be required by the U.S. Patent and Trademark
Office or equivalent governmental agency in any foreign jurisdiction or the
U.S. Copyright Office or equivalent governmental agency in any foreign
jurisdiction in order to effect an absolute assignment of all right, title and
interest in each Patent and Copyright of such Assignor, as the case may be, and
to record the same.

 

5.2.  Licenses and Assignments.  Each Assignor hereby agrees not to divest
itself of any right under any Patent or Copyright absent prior written approval
of the Second-Lien Collateral Agent (which approval shall not be unreasonably
withheld), except as otherwise permitted by this Agreement or the Second-Lien
Credit Agreement.

 

5.3.  Infringements. 
Each Assignor agrees, promptly upon learning thereof, to furnish the
Second-Lien Collateral Agent in writing with all pertinent information
available to such Assignor with respect to any infringement, contributing
infringement or active inducement to infringe any of such Assignor’s rights in
any Patent or Copyright of such Assignor or to any claim that the practice of
any Patent or the use of any Copyright violates any property right of a third
party, or with respect to any misappropriation of any Trade Secret Right of
such Assignor or any claim that practice of any Trade Secret Right of such
Assignor violates any property right of a third party.  Each Assignor further agrees, absent
direction of the Second-Lien Collateral Agent to the contrary, to prosecute, in
accordance with reasonable business practices, any Person

 

 

infringing any Patent or Copyright of such Assignor or any Person
misappropriating any Trade Secret Right of such Assignor.

 

5.4.  Maintenance of Patents and Copyrights.  At its own expense, each Assignor shall make
timely payment of all post-issuance fees required pursuant to applicable law to
maintain in force rights under each of its Patents, and to apply as permitted
pursuant to applicable law for any renewal of each of its Copyrights, in any
case absent prior written consent of the Second-Lien Collateral Agent; provided,
that, no Assignor shall be obligated to pay any such fees or apply for any such
renewal to the extent that such Assignor determines, in its reasonable business
judgment, that the maintenance of such Patent or Copyright is no longer
economically desirable in the conduct of its business.

 

5.5.  Prosecution of Patent or Copyright
Applications.  At its own expense,
each Assignor shall prosecute, in accordance with reasonable business
practices, all of its applications for Patents listed in Annex J hereto
and for Copyrights listed in Annex K hereto and shall not abandon any such
application prior to exhaustion of all administrative and judicial remedies,
absent written consent of the Second-Lien Collateral Agent.

 

5.6.  Other Patents and Copyrights.  Within 30 days of the acquisition or
issuance of a United States Patent or of a Copyright registration, or of filing
of an application for a United States Patent or Copyright registration, the
relevant Assignor shall deliver to the Second-Lien Collateral Agent a copy of
said Patent or Copyright registration or certificate or registration of, or
application therefor, as the case may be, with a grant for security as to such
Patent or Copyright, as the case may be, to the Second-Lien Collateral Agent
and at the expense of such Assignor, confirming grant for security, the form of
a grant for security to be substantially the same as the form hereof or in such
other form as may be reasonably satisfactory to the Second-Lien Collateral
Agent.

 

5.7.  Remedies. 
Subject to the terms of the Intercreditor Agreement, if an Event of
Default shall occur and be continuing, the Second-Lien Collateral Agent may by
written notice to the relevant Assignor, take any or all of the following
actions:  (i) declare the entire right,
title, and interest of such Assignor in each of the Patents and Copyrights
vested in the Second-Lien Collateral Agent for the benefit of the Secured
Creditors, in which event such right, title, and interest shall immediately
vest in the Second-Lien Collateral Agent for the benefit of the Secured
Creditors, and the Second-Lien Collateral Agent shall be entitled to exercise
the power of attorney referred to in Section 5.1 to execute, cause to be
acknowledged and notarized and to record an absolute assignment with the
applicable agency; (ii) take and use, practice or sell the Patents, Copyrights
and Trade Secret Rights; and (iii) direct such Assignor to refrain, in which
event such Assignor shall refrain, from practicing the Patents and using the
Copyrights and/or Trade Secret Rights directly or indirectly, and such Assignor
shall execute such other and further documents as the Second-Lien Collateral
Agent may request further to confirm this and to transfer ownership of the
Patents, Copyrights and Trade Secret Rights to the Second-Lien Collateral Agent
for the benefit of the Secured Creditors.

 

 

ARTICLE VI

PROVISIONS CONCERNING ALL COLLATERAL

 

6.1.  Protection of Second-Lien Collateral
Agent’s Security.  Subject to the
terms of the Intercreditor Agreement, each Assignor will do nothing to impair
the rights of the Second-Lien Collateral Agent in the Collateral.  Each Assignor will at all times keep its
Inventory and Equipment insured in favor of the Second-Lien Collateral Agent,
at such Assignor’s own expense to the extent and in the manner provided in the
Second-Lien Credit Agreement and the other Credit Documents.  All policies or certificates with respect to
such material insurance (and any other material insurance maintained by such
Assignor) shall (i) be endorsed to the Second-Lien Collateral Agent’s
satisfaction for the benefit of the Second-Lien Collateral Agent (including,
without limitation, by naming the Second-Lien Collateral Agent as loss payee
and naming each of the Lenders, the Administrative Agent and the Second-Lien
Collateral Agent as additional insureds); (ii) state that such insurance
policies shall not be canceled or materially revised without 30 days’ prior
written notice thereof by the insurer to the Second-Lien Collateral Agent; and
(iii) be deposited (or certified copies of such policies or certificates shall
be deposited) with the Second-Lien Collateral Agent to the extent, at the times
and in the manner specified in the Second-Lien Credit Agreement.  If any Assignor shall fail to insure its
Inventory and Equipment in accordance with the preceding sentence, or if any
Assignor shall fail to so endorse and deposit all policies or certificates with
respect thereto, the Second-Lien Collateral Agent shall have the right (but
shall be under no obligation) to procure such insurance and such Assignor
agrees to promptly reimburse the Second-Lien Collateral Agent for all costs and
expenses of procuring such insurance. 
Except as otherwise permitted to be retained or expended by the relevant
Assignor pursuant to the Second-Lien Credit Agreement (and subject to the
Intercreditor Agreement), the Second-Lien Collateral Agent shall, at the time
such proceeds of such insurance are distributed to the Secured Creditors, apply
such proceeds in accordance with the Second-Lien Credit Agreement, or after the
Obligations have been accelerated or otherwise become due and payable, in
accordance with Section 7.4.  Each
Assignor assumes all liability and responsibility in connection with the
Collateral acquired by it and the liability of such Assignor to pay the
Obligations shall in no way be affected or diminished by reason of the fact
that such Collateral may be lost, destroyed, stolen, damaged or for any reason
whatsoever unavailable to such Assignor.

 

6.2.  Warehouse Receipts Non-Negotiable.  Each Assignor agrees that if any warehouse
receipt or receipt in the nature of a warehouse receipt is issued with respect
to any of its Inventory, such warehouse receipt or receipt in the nature
thereof shall not be “negotiable” (as such term is used in Section 7-104
of the Uniform Commercial Code as in effect in any relevant jurisdiction or
under other relevant law).

 

6.3.  Further Actions.  Each Assignor will, to the extent not inconsistent with the terms
of the Intercreditor Agreement, at its own expense, make, execute, endorse,
acknowledge, file and/or deliver to the Second-Lien Collateral Agent from time
to time such lists, descriptions and designations of its Collateral, warehouse
receipts, receipts in the nature of warehouse receipts, bills of lading,
documents of title, vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments and take such further
steps relating to the

 

 

Collateral and other property or rights covered by the security
interest hereby granted, which the Second-Lien Collateral Agent deems
reasonably appropriate or advisable to perfect, preserve or protect its
security interest in the Collateral.

 

6.4.  Financing Statements.  Each Assignor agrees to execute and deliver
to the Second-Lien Collateral Agent such financing statements, in form
acceptable to the Second-Lien Collateral Agent, as the Second-Lien Collateral
Agent may from time to time reasonably request or as are reasonably necessary
or desirable in the opinion of the Second-Lien Collateral Agent to establish
and maintain a valid, enforceable, second priority perfected security interest
in the Collateral (subject to the prior lien of the First-Lien Collateral Agent
in accordance with the terms of the Intercreditor Agreement) as provided herein
and the other rights and security contemplated hereby all in accordance with
the Uniform Commercial Code as enacted in any and all relevant jurisdictions or
any other relevant law.  Each Assignor
will pay any applicable filing fees, recordation taxes and related expenses
relating to its Collateral.  Each
Assignor hereby authorizes the Second-Lien Collateral Agent to file any such
financing statements without the signature of such Assignor where permitted by
law (and such authorization includes describing the Collateral as “all assets”
of such Assignor).

 

6.5.  Additional Information.  Each Assignor will, at its own expense, from
time to time upon the reasonable request of the Second-Lien Collateral Agent,
promptly (and in any event within 15 days after its receipt of the respective
request) furnish to the Second-Lien Collateral Agent such information with
respect to the Collateral (including the identity of the Collateral or such
components thereof as may have been requested by the Agent, the value and
location of such Collateral, etc.) as may be requested by the Second-Lien
Collateral Agent.  Without limiting the
forgoing, each Assignor agrees that it shall promptly (and in any event within
10 days after its receipt of the respective request) furnish to the Second-Lien
Collateral Agent such updated Annexes hereto as may from time to time be
reasonably requested by the Second-Lien Collateral Agent.

 

ARTICLE VII

REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT

 

7.1.  Remedies; Obtaining the Collateral Upon
Default.  Each Assignor agrees that,
to the extent not inconsistent with the terms of the Intercreditor Agreement,
if any Event of Default shall have occurred and be continuing, then and in
every such case, the Second-Lien Collateral Agent, in addition to any rights now
or hereafter existing under applicable law, shall have all rights as a secured
creditor under the Uniform Commercial Code, and such additional rights and
remedies to which a secured creditor is entitled under the laws in effect, in
all relevant jurisdictions and may also:

 

(i)            personally, or by
agents or attorneys, immediately take possession of the Collateral or any part
thereof, from such Assignor or any other Person who then has possession of any
part thereof with or without notice or process of law, and for that purpose may
enter upon such Assignor’s premises where any of the Collateral is located

 

 

and remove the same and use in
connection with such removal any and all services, supplies, aids and other
facilities of such Assignor;

 

(ii)           instruct the obligor or
obligors on any agreement, instrument or other obligation (including, without
limitation, the Receivables and the Contracts) constituting the Collateral to
make any payment required by the terms of such agreement, instrument or other
obligation directly to the Second-Lien Collateral Agent;

 

(iii)          instruct all banks which
have entered into a control agreement with the Second-Lien Collateral Agent to
transfer all monies, securities and instruments held by such depositary bank to
the Cash Collateral Account and withdraw all monies, securities and instruments
in the Cash Collateral Account for application to the Obligations in accordance
with Section 7.4;

 

(iv)          sell, assign or
otherwise liquidate, or direct such Assignor to sell, assign or otherwise liquidate,
any or all of the Collateral or any part thereof in accordance with
Section 7.2, or direct the relevant Assignor to sell, assign or otherwise
liquidate any or all of the Collateral or any part thereof, and, in each case,
take possession of the proceeds of any such sale or liquidation;

 

(v)           take possession of the
Collateral or any part thereof, by directing the relevant Assignor in writing
to deliver the same to the Second-Lien Collateral Agent at any place or places
designated by the Second-Lien Collateral Agent, in which event such Assignor
shall at its own expense:

 

(x)  forthwith
cause the same to be moved to the place or places so designated by the
Second-Lien Collateral Agent and there delivered to the Second-Lien Collateral
Agent;

 

(y)  store and
keep any Collateral so delivered to the Second-Lien Collateral Agent at such
place or places pending further action by the Second-Lien Collateral Agent as
provided in Section 7.2; and

 

(z)  while the
Collateral shall be so stored and kept, provide such guards, other security and
maintenance services as shall be necessary to protect the same and to preserve
and maintain them in good condition; and

 

(vi)          license or sublicense,
whether on an exclusive or nonexclusive basis, any Marks, Domain Names, Patents
or Copyrights included in the Collateral for such term and on such conditions
and in such manner as the Second-Lien Collateral Agent shall in its sole
judgment determine;

 

(vii)         apply any monies
constituting Collateral or proceeds thereof in accordance with the provisions
of Section 7.4; and

 

(viii)        take any other action as
specified in clauses (1) through (5), inclusive, of Section 9-607 of the
UCC;

 

 

it
being understood that each Assignor’s obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to
a court of equity having jurisdiction, the Second-Lien Collateral Agent shall
be entitled to a decree requiring specific performance by such Assignor of said
obligation.  The Secured Creditors agree
that this Agreement may, subject to the terms of the Intercreditor Agreement,
be enforced only by the action of the Administrative Agent or the Second-Lien
Collateral Agent, in each case acting upon the instructions of the Required
Lenders and that no other Secured Creditor 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, subject to the terms of the Intercreditor Agreement, be exercised by the
Administrative Agent or the Second-Lien Collateral Agent for the benefit of the
Secured Creditors upon the terms of this Agreement and the Second-Lien Credit
Agreement.

 

7.2.  Remedies; Disposition of the Collateral.  Subject to the terms of the Intercreditor
Agreement, any Collateral repossessed by the Second-Lien Collateral Agent under
or pursuant to Section 7.1 and any other Collateral whether or not so
repossessed by the Second-Lien Collateral Agent, may be sold, assigned, leased
or otherwise disposed of under one or more contracts or as an entirety, and
without the necessity of gathering at the place of sale the property to be
sold, and in general in such manner, at such time or times, at such place or
places and on such terms as the Second-Lien Collateral Agent may, in compliance
with any mandatory requirements of applicable law, determine to be commercially
reasonable.  Any of the Collateral may
be sold, leased or otherwise disposed of, in the condition in which the same
existed when taken by the Second-Lien Collateral Agent or after any overhaul or
repair at the expense of the relevant Assignor which the Second-Lien Collateral
Agent shall determine to be commercially reasonable. Any such disposition which
shall be a private sale or other private proceedings permitted by such
requirements shall be made upon not less than 10 days written notice to the
relevant Assignor specifying the time at which such disposition is to be made
and the intended sale price or other consideration therefor, and shall be
subject, for the 10 days after the giving of such notice, to the right of the
relevant Assignor or any nominee of such Assignor to acquire the Collateral
involved at a price or for such other consideration at least equal to the
intended sale price or other consideration so specified.  Any such disposition which shall be a public
sale permitted by such requirements shall be made upon not less than 10 days’
written notice to the relevant Assignor specifying the time and place of such
sale and, in the absence of applicable requirements of law, shall be by public
auction (which may, at the Second-Lien Collateral Agent’s option, be subject to
reserve), after publication of notice of such auction not less than 10 days
prior thereto in two newspapers in general circulation to be selected by the
Second-Lien Collateral Agent.  To the
extent permitted by any such requirement of law, the Second-Lien Collateral
Agent on behalf of the Secured Creditors (or certain of them) may bid for and
become the purchaser of the Collateral or any item thereof, offered for sale in
accordance with this Section without accountability to the relevant
Assignor.  If, under mandatory
requirements of applicable law, the Second-Lien Collateral Agent shall be
required to make a disposition of the Collateral within a period of time which
does not permit the giving of notice to the relevant Assignor as hereinabove
specified, the Second-Lien Collateral Agent need give such Assignor only such
notice of disposition as shall be reasonably practicable in view of such
mandatory requirements of applicable law. 
Each Assignor agrees to do or cause to be done all such other acts and
things as may be reasonably necessary to make such sale or sales of all or any
portion of the Collateral of such Assignor valid and binding and in compliance
with any and all applicable

 

 

laws, regulations, orders, writs, injunctions, decrees or awards of any
and all courts, arbitrations or governmental instrumentalities, domestic or
foreign, having jurisdiction over any such sale or sales, all at such
Assignor’s expense.

 

7.3.  Waiver of Claims.  Except as otherwise provided in this Agreement, EACH ASSIGNOR
HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE AND JUDICIAL
HEARING IN CONNECTION WITH THE COLLATERAL AGENT’S TAKING POSSESSION OR THE
COLLATERAL AGENT’S DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING, WITHOUT
LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT REMEDY OR
REMEDIES AND ANY SUCH RIGHT WHICH SUCH ASSIGNOR WOULD OTHERWISE HAVE UNDER THE
LAW OF THE UNITED STATES OR OF ANY STATE, and such Assignor hereby further
waives, to the extent permitted by law:

 

(i)            all damages occasioned
by such taking of possession except any damages which are the direct result of
the Second-Lien Collateral Agent’s gross negligence or willful misconduct;

 

(ii)           all other requirements
as to the time, place and terms of sale or other requirements with respect to
the enforcement of the Second-Lien Collateral Agent’s rights hereunder; and

 

(iii)          all rights of
redemption, appraisement, valuation, stay, extension or moratorium now or
hereafter in force under any applicable law in order to prevent or delay the
enforcement of this Agreement or the absolute sale of the Collateral or any
portion thereof, and each Assignor, for itself and all who may claim under it,
insofar as it or they now or hereafter lawfully may, hereby waives the benefit
of all such laws.

 

Any sale of, or
the grant of options to purchase, or any other realization upon, any Collateral
shall operate to divest all right, title, interest, claim and demand, either at
law or in equity, of the relevant Assignor therein and thereto, and shall be a
perpetual bar both at law and in equity against such Assignor and against any
and all Persons claiming or attempting to claim the Collateral so sold,
optioned or realized upon, or any part thereof, from, through and under such
Assignor.

 

7.4.  Application of Proceeds.  (a) 
Subject to the terms of (and to the extent not otherwise inconsistent
with) the Intercreditor Agreement, all moneys collected by the Second-Lien
Collateral Agent upon any sale or other disposition of the Collateral (or, to
the extent the Pledge Agreement or any other Security Document requires
proceeds of collateral thereunder to be applied in accordance with the
provisions of this Agreement, the Pledgee under the Pledge Agreement or the
collateral agent under such other Security Document), together with all other
moneys received by the Second-Lien Collateral Agent hereunder, shall be applied
as follows:

 

(i)            first, to the payment
of all Obligations owing to the Pledgee or the Second-Lien Collateral Agent of
the type described in clauses (iii), (iv) and (v) of the definition of
“Obligations”;

 

 

(ii)           second, to the extent
proceeds remain after the application pursuant to the preceding clause (i), to
the payment of all amounts owing to any Agent of the type described in clauses
(v) and (vi) of the definition of “Obligations”;

 

(iii)          third, to the extent
proceeds remain after the application pursuant to the preceding clauses (i) and
(ii), an amount equal to the outstanding Primary Obligations shall be paid to
the Secured Creditors as provided in Section 7.4(e), with each Secured
Creditor receiving an amount equal to its outstanding Primary Obligations or,
if the proceeds are insufficient to pay in full all such Primary Obligations,
its Pro  Rata Share of the amount remaining to be distributed;

 

(iv)          fourth, to the extent
proceeds remain after the application pursuant to the preceding clauses (i) and
(ii) and (iii), an amount equal to the outstanding Secondary Obligations shall
be paid to the Secured Creditors as provided in Section 7.4(e), with each
Secured Creditor receiving an amount equal to its outstanding Secondary
Obligations or, if the proceeds are insufficient to pay in full all such
Secondary Obligations, its Pro  Rata Share of the amount remaining
to be distributed; and

 

(v)           fifth, to the extent
proceeds remain after the application pursuant to the preceding clauses (i)
through (iv), inclusive, and following the termination of this Agreement
pursuant to Section 10.8(a) hereof, to the relevant Assignor or to whoever
may be lawfully entitled to receive such surplus.

 

(b)   For purposes of this Agreement (x) “Pro
Rata Share” shall mean, when calculating a Secured Creditor’s portion of
any distribution or amount, that amount (expressed as a percentage) equal to a
fraction the numerator of which is the then unpaid amount of such Secured
Creditor’s Primary Obligations or Secondary Obligations, as the case may be,
and the denominator of which is the then outstanding amount of all Primary
Obligations or Secondary Obligations, as the case may be, (y) “Primary
Obligations” shall mean, with respect to the Credit Document Obligations, all
principal of, and interest on, all Second-Lien Loans under the Second-Lien
Credit Agreement and all Fees and (z) “Secondary Obligations” shall mean all
Obligations other than Primary Obligations.

 

(c)   When payments to Secured Creditors are
based upon their respective Pro  Rata Shares, the amounts received
by such Secured Creditors hereunder shall be applied (for purposes of making
determinations under this Section 7.4 only) (i) first, to their Primary
Obligations and (ii) second, to their Secondary Obligations.  If any payment to any Secured Creditor of
its Pro  Rata Share of any distribution would result in
overpayment to such Secured Creditor, such excess amount shall instead be
distributed in respect of the unpaid Primary Obligations or Secondary
Obligations, as the case may be, of the other Secured Creditors, with each
Secured Creditor whose Primary Obligations or Secondary Obligations, as the
case may be, have not been paid in full to receive an amount equal to such
excess amount multiplied by a fraction the numerator of which is the unpaid
Primary Obligations or Secondary Obligations, as the case may be, of such
Secured Creditor and the denominator of which is the unpaid Primary Obligations
or Secondary Obligations, as the case may be, of all Secured Creditors entitled
to such distribution.

 

 

(d)   Subject to the terms of the Intercreditor
Agreement, all payments required to be made hereunder shall be made to the
Administrative Agent under the Second-Lien Credit Agreement for the account of
the Secured Creditors.

 

(e)   For purposes of applying payments received
in accordance with this Section 7.4, the Second-Lien Collateral Agent
shall be entitled to rely upon the Administrative Agent under the Second-Lien
Credit Agreement and for a determination (which the Administrative Agent and
the Secured Creditors agree (or shall agree) to provide upon request of the
Second-Lien Collateral Agent) of the outstanding Primary Obligations and
Secondary Obligations owed to the Secured Creditors.  Unless it has actual knowledge (including by way of written
notice from a Secured Creditor) to the contrary, the Administrative Agent, in
furnishing information pursuant to the preceding sentence, and the Second-Lien
Collateral Agent, in acting hereunder, shall be entitled to assume that no
Secondary Obligations are outstanding.

 

(f)   It is understood and agreed that each of
the Assignors shall remain liable to the extent of any deficiency between (x)
the amount of the proceeds of the Collateral hereunder and (y) the aggregate
amount of the sums referred to in clause (a) of this Section with respect
to the relevant Assignor.

 

7.5.  Remedies Cumulative.  Subject to the terms of (and to the extent
not inconsistent with) the Intercreditor Agreement, each and every right, power
and remedy hereby specifically given to the Second-Lien Collateral Agent shall
be in addition to every other right, power and remedy specifically given under
this Agreement or the other Credit Documents or now or hereafter existing at
law, in equity or by statute and each and every right, power and remedy whether
specifically herein given or otherwise existing may be exercised from time to
time or simultaneously and as often and in such order as may be deemed
expedient by the Second-Lien Collateral Agent. 
All such rights, powers and remedies shall be cumulative and the
exercise or the beginning of the exercise of one shall not be deemed a waiver
of the right to exercise any other or others. 
No delay or omission of the Second-Lien Collateral Agent in the exercise
of any such right, power or remedy and no renewal or extension of any of the
Obligations shall impair any such right, power or remedy or shall be construed
to be a waiver of any Default or Event of Default or an acquiescence therein.  No notice to or demand on any Assignor in
any case shall entitle it to any other or further notice or demand in similar
or other circumstances or constitute a waiver of any of the rights of the
Second-Lien Collateral Agent to any other or further action in any
circumstances without notice or demand. 
In the event that the Second-Lien Collateral Agent shall bring any suit
to enforce any of its rights hereunder and shall be entitled to judgment, then
in such suit the Second-Lien Collateral Agent may recover expenses, including
attorneys’ fees, and the amounts thereof shall be included in such judgment.

 

7.6.  Discontinuance of Proceedings.  In case the Second-Lien Collateral Agent
shall have instituted any proceeding to enforce any right, power or remedy
under this Agreement by foreclosure, sale, entry or otherwise, and such
proceeding shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Second-Lien Collateral Agent, then and in
every such case the relevant Assignor, the Second-Lien Collateral Agent and
each holder of any of the Obligations shall be restored to their former
positions and rights hereunder with respect to the Collateral subject to the
security interest created under this

 

 

Agreement, and all rights, remedies and powers of the Second-Lien
Collateral Agent shall continue as if no such proceeding had been instituted.

 

ARTICLE VIII

INDEMNITY

 

8.1.  Indemnity.  (a)  Each Assignor jointly and severally agrees to indemnify,
reimburse and hold the Second-Lien Collateral Agent, each other Secured
Creditor and their respective successors, permitted assigns, employees, agents
and servants (hereinafter in this Section 8.1. referred to individually as
an “Indemnitee,” and, collectively, as “Indemnitees”) harmless
from any and all liabilities, obligations, losses, damages, injuries,
penalties, claims, demands, actions, suits, judgments and any and all costs,
expenses or disbursements (including attorneys’ fees and expenses) (for the
purposes of this Section 8.1, the foregoing are collectively called “expenses”)
of whatsoever kind and nature imposed on, asserted against or incurred by any
of the Indemnitees in any way relating to or arising out of this Agreement, any
other Credit Document or any other document executed in connection herewith or
therewith or in any other way connected with the administration of the
transactions contemplated hereby or thereby or the enforcement of any of the
terms of, or the preservation of any rights under any thereof, or in any way
relating to or arising out of the manufacture, ownership, ordering, purchase,
delivery, control, acceptance, lease, financing, possession, operation,
condition, sale, return or other disposition, or use of the Collateral
(including, without limitation, latent or other defects, whether or not
discoverable), the violation of the laws of any country, state or other
governmental body or unit, any tort (including, without limitation, claims
arising or imposed under the doctrine of strict liability, or for or on account
of injury to or the death of any Person (including any Indemnitee), or property
damage), or contract claim; provided that no Indemnitee shall be
indemnified pursuant to this Section 8.1(a) for losses, damages or
liabilities to the extent caused by the gross negligence or willful misconduct
of such Indemnitee.  Each Assignor
agrees that upon written notice by any Indemnitee of the assertion of such a
liability, obligation, loss, damage, injury, penalty, claim, demand, action,
suit or judgment, the relevant Assignor shall assume full responsibility for
the defense thereof.  Each Indemnitee
agrees to use its best efforts to promptly notify the relevant Assignor of any
such assertion of which such Indemnitee has knowledge.

 

(b)   Without limiting the application of
Section 8.1(a), each Assignor agrees, jointly and severally, to pay, or
reimburse the Second-Lien Collateral Agent for any and all fees, costs and
expenses of whatever kind or nature incurred in connection with the creation,
preservation or protection of the Second-Lien Collateral Agent’s Liens on, and
security interest in, the Collateral, including, without limitation, all fees
and taxes in connection with the recording or filing of instruments and
documents in public offices, payment or discharge of any taxes or Liens upon or
in respect of the Collateral, premiums for insurance with respect to the
Collateral and all other fees, costs and expenses in connection with
protecting, maintaining or preserving the Collateral and the Second-Lien Collateral
Agent’s interest therein, whether through judicial proceedings or otherwise, or
in defending or prosecuting any actions, suits or proceedings arising out of or
relating to the Collateral.

 

 

(c)   Without limiting the application of
Section 8.1(a) or (b), each Assignor agrees, jointly and severally, to
pay, indemnify and hold each Indemnitee harmless from and against any loss,
costs, damages and expenses which such Indemnitee may suffer, expend or incur
in consequence of or growing out of any misrepresentation by any Assignor in
this Agreement, any other Credit Document or in any writing contemplated by or
made or delivered pursuant to or in connection with this Agreement or any other
Credit Document.

 

(d)   If and to the extent that the obligations of
any Assignor under this Section 8.1 are unenforceable for any reason, such
Assignor hereby agrees to make the maximum contribution to the payment and
satisfaction of such obligations which is permissible under applicable law.

 

8.2.  Indemnity Obligations Secured by
Collateral; Survival.  Any amounts
paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral.  The indemnity obligations of each Assignor
contained in this Article VIII shall continue in full force and effect
notwithstanding the full payment of all the Second-Lien Loan Notes issued under
the Second-Lien Credit Agreement, and the payment of all other Obligations and
notwithstanding the discharge thereof.

 

ARTICLE IX

DEFINITIONS

 

The following
terms shall have the meanings herein specified.  Such definitions shall be equally applicable to the singular and
plural forms of the terms defined.

 

“Administrative
Agent” shall have the meaning provided in the recitals to this Agreement.

 

“Agreement”
shall have the meaning provided in the preamble to this Agreement.

 

“Alternate
Perfected Deposit Account” shall have the meaning provided in
Section 3.9(a) of this Agreement.

 

“As-Extracted
Collateral” shall mean “as-extracted collateral” as such term is defined in
the Uniform Commercial Code as in effect on the date hereof in the State of
New York.

 

“Assignor”
shall have the meaning provided in the preamble to this Agreement.

 

“Borrower”
shall have the meaning provided in the recitals to this Agreement.

 

“Cash
Collateral Account” shall mean a non-interest bearing cash collateral
account maintained with, and in the sole dominion and control of, the
Second-Lien Collateral Agent for the benefit of the Secured Creditors.

 

 

“Chattel Paper”
shall have the meaning provided in the Uniform Commercial Code as in effect on
the date hereof in the State of New York. 
Without limiting the foregoing, the term “Chattel Paper” shall in any
event include all Tangible Chattel Paper and all Electronic Chattel Paper.

 

 “Collateral” shall have the meaning
provided in Section 1.1(a) of this Agreement.

 

“Commercial
Tort Claims” shall mean “commercial tort claims” as such term is defined in
the Uniform Commercial Code as in effect on the date hereof in the State of
New York.

 

“Contract
Rights” shall mean all rights of any Assignor under each Contract,
including, without limitation, (i) any and all rights to receive and demand
payments under any or all Contracts, (ii) any and all rights to receive and
compel performance under any or all Contracts and (iii) any and all other
rights, interests and claims now existing or in the future arising in
connection with any or all Contracts.

 

“Contracts”
shall mean all contracts between any Assignor and one or more additional
parties (including, without limitation, licensing agreements and any
partnership agreements, joint venture agreements and limited liability company
agreements).

 

“Copyrights”
shall mean any U.S. or foreign copyright owned by any Assignor, including any
registrations of any Copyright, in the U.S. Copyright Office or the equivalent
thereof in any foreign country, as well as any application for a U.S. or
foreign copyright registration now or hereafter made with the U.S. Copyright
Office or the equivalent thereof in any foreign jurisdiction by any Assignor.

 

 “Credit Document Obligations” shall
have the meaning provided in the definition of “Obligations” in this
Article IX.

 

“Default”
shall mean any event which, with notice or lapse of time, or both, would constitute
an Event of Default.

 

“Deposit
Accounts” shall mean all “deposit accounts” as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.

 

“Documents”
shall have the meaning provided in the Uniform Commercial Code as in effect on
the date hereof in the State of New York.

 

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

 

“Electronic
Chattel Paper” shall mean “electronic chattel paper” as such term is
defined in the Uniform Commercial Code as in effect on the date hereof in the
State of New York.

 

“Equipment”
shall mean any “equipment” as such term is defined in the Uniform Commercial
Code as in effect on the date hereof in the State of New York, and in any
event,

 

 

shall
include, but shall not be limited to, all machinery, equipment, furnishings,
fixtures and vehicles now or hereafter owned by any Assignor and any and all
additions, substitutions and replacements of any of the foregoing and all
accessions thereto, wherever located, together with all attachments,
components, parts, equipment and accessories installed thereon or affixed
thereto.

 

“Event of
Default” shall mean any Event of Default under, and as defined in, the
Second-Lien Credit Agreement and shall in any event, without limitation,
include any payment default on any of the Obligations after the expiration of
any applicable grace period.

 

 “Excluded Local Deposit Account” shall
mean (x) each Deposit Account listed on Annex F hereto and designated as an
“Excluded Local Deposit Account” thereon and (y) certain other Deposit Accounts
from time to time not listed on Annex F hereto (all of such Excluded Local
Deposit Accounts described in preceding clauses (x) and (y) shall, in any such
case, be local deposit accounts (and not top-tier concentration accounts or
mid-tier concentration accounts (as jointly determined, in the case of accounts
designated as “Excluded Local Deposit Accounts” after the date of this
Agreement, by the Second-Lien Collateral Agent and the relevant Assignor))).

 

 “Excluded Collateral” shall mean, on
and after the Accounts Receivable Facility Transaction Date, any Accounts
Receivable Facility Assets for so long as, and to the extent, same have been
sold or transferred pursuant to the Accounts Receivable Facility Documents, provided
that at such time as, and to the extent that, any such Excluded Collateral is
repurchased by or reconveyed to, an Assignor, such Accounts Receivable Facility
Assets shall cease to constitute Excluded Collateral.

 

“First-Lien
Collateral Agent” shall have the meaning provided in the recitals to this
Agreement.

 

“First-Lien
Credit Agreement” shall have the meaning provided in the recitals.

 

“General
Intangibles” shall mean “general intangibles” as such term is defined in
the Uniform Commercial Code as in effect on the date hereof in the State of New
York.

 

“Goods”
shall mean “goods” as such term is defined in the Uniform Commercial Code as in
effect on the date hereof in the State of New York.

 

“Health-Care-Insurance
Receivable” shall mean any “health-care-insurance receivable” as such term
is defined in the Uniform Commercial Code as in effect on the date hereof in
the State of New York.

 

“Holdings”
shall have the meaning provided in the recitals to this Agreement.

 

“Indemnitee”
shall have the meaning provided in Section 8.1 of this Agreement.

 

“Instrument”
shall mean “instruments” as such term is defined in the Uniform Commercial Code
as in effect on the date hereof in the State of New York.

 

 

“Intercreditor
Agreement” shall have the meaning provided in the recitals to this
Agreement.

 

 “Inventory” shall mean merchandise,
inventory and goods, and all additions, substitutions and replacements thereof,
wherever located, together with all goods, supplies, incidentals, packaging
materials, labels, materials and any other items used or usable in
manufacturing, processing, packaging or shipping same; in all stages of
production — from raw materials through work-in-process to finished goods — and
all products and proceeds of whatever sort and wherever located and any portion
thereof which may be returned, rejected, reclaimed or repossessed by the
Second-Lien Collateral Agent from any Assignor’s customers, and shall
specifically include all “inventory” as such term is defined in the Uniform
Commercial Code as in effect on the date hereof in the State of New York, now
or hereafter owned by any Assignor.

 

“Investment
Property” shall mean “investment property” as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.

 

 “Lenders” shall have the meaning
provided in the recitals to this Agreement.

 

“Letter-of-Credit
Rights” shall mean “letter-of-credit rights” as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of
New York.

 

“Liens”
shall mean any security interest, mortgage, pledge, lien, claim, charge,
encumbrance, title retention agreement, lessor’s interest in a financing lease
or analogous instrument, in, of, or on any Assignor’s property.

 

“Location”
of any Assignor, shall mean such Assignor’s “location” as determined pursuant
to Section 9-307 of the UCC.

 

“Marks”
shall mean all right, title and interest in and to any U.S. or foreign
trademarks, service marks and trade names now held or hereafter acquired by any
Assignor, including any registration or application for registration of any
trademarks and service marks in the United States Patent and Trademark Office,
or the equivalent thereof in any State of the United States or in any foreign
country, and any trade dress including logos, designs, trade names, company
names, business names, fictitious business names and other business identifiers
in connection with which any of these registered or unregistered marks are
used.

 

“Obligations”
shall mean (i) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and liabilities (including, without
limitation, indemnities, fees and interest thereon and all interest that
accrues after the commencement of any case, proceeding or other action relating
to the bankruptcy, insolvency, reorganization or similar proceeding of Holdings
or any other Credit Party at the rate provided for in the respective
documentation, whether or not a claim for post-petition interest is allowed in
any such case, proceeding or other action) of each Assignor owing to the
Secured Creditors, now existing or hereafter incurred under, arising out of or
in connection with any Credit Document to which such Assignor is a party
(including all such obligations and indebtedness under any Guaranty to which
such Assignor is a party) and the due performance

 

 

and
compliance by each Assignor with the terms, conditions and agreements of each
such Credit Document (all such obligations and liabilities under this clause
(i) being herein collectively called the “Credit Document Obligations”);
(ii) any and all sums advanced by the Second-Lien Collateral Agent in order to
preserve the Collateral or preserve its security interest in the Collateral;
(iii) in the event of any proceeding for the collection or enforcement of any
indebtedness, obligations, or liabilities of each Assignor referred to in
clauses (i) and (ii) after an Event of Default shall have occurred and be
continuing, the reasonable expenses of re-taking, holding, preparing for sale
or lease, selling or otherwise disposing of or realizing on the Collateral, or
of any exercise by the Second-Lien Collateral Agent of its rights hereunder,
together with reasonable attorneys’ fees and court costs; (iv) all amounts paid
by any Indemnitee as to which such Indemnitee has the right to reimbursement
under Section 8.1 of this Agreement; and (v) all amounts owing to any
Agent pursuant to any of the Credit Documents in its capacity as such.  It is acknowledged and agreed that the “Obligations”
shall include extensions of credit of the types described above, whether
outstanding on the date of this Agreement or extended from time to time after
the date of this Agreement.

 

 “Patents” shall mean any patents in or
to which any Assignor now or hereafter has any right, title or interest
therein, and any divisions, continuations (including, but not limited to,
continuations-in-parts) and improvements thereof, as well as any application
for a patent now or hereafter made by any Assignor.

 

“Permits”
shall mean, to the extent permitted to be assigned by the terms thereof or by
applicable law, all licenses, permits, rights, orders, variances, franchises or
authorizations (including certificates of need) of or from any governmental
authority or agency.

 

“Primary
Obligations” shall have the meaning provided in Section 7.4(b) of this
Agreement.

 

“Pro  Rata
Share” shall have the meaning provided in Section 7.4(b) of this
Agreement.

 

“Proceeds”
shall have the meaning provided in the Uniform Commercial Code as in effect in
the State of New York on the date hereof or under other relevant law and, in
any event, shall include, but not be limited to, (i) any and all proceeds of
any insurance, indemnity, warranty or guaranty payable to the Second-Lien
Collateral Agent or any Assignor from time to time with respect to any of the
Collateral, (ii) any and all payments (in any form whatsoever) made or due and
payable to any Assignor from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any governmental authority (or any person acting under color of
governmental authority) and (iii) any and all other amounts from time to time
paid or payable under or in connection with any of the Collateral.

 

“Receivables”
shall mean any “account” as such term is defined in the Uniform Commercial Code
as in effect on the date hereof in the State of New York, and in any event
shall include but shall not be limited to, all rights to payment of any monetary
obligation, whether or not earned by performance, (i) for property that has
been or is to be sold, leased, licensed, assigned or otherwise disposed of,
(ii) for services rendered or to be rendered, (iii) for a policy of

 

 

insurance
issued or to be issued, (iv) for a secondary obligation incurred or to be
incurred, (v) for energy provided or to be provided, (vi) for the use or hire
of a vessel under a charter or other contract, (vii) arising out of the use of
a credit or charge card or information contained on or for use with the card,
or (viii) as winnings in a lottery or other game of chance operated or
sponsored by a State, governmental unit of a State, or person licensed or
authorized to operate the game by a State or governmental unit of a State.  Without limiting the foregoing, the term
“account” shall include all Health-Care-Insurance Receivables.

 

“Registered
Organization” shall have the meaning provided in the Uniform Commercial
Code in effect in the State of New York.

 

 “Second-Lien Collateral Agent” shall
have the meaning provided in the preamble to this Agreement.

 

“Second-Lien
Credit Agreement” shall have the meaning provided in the recitals to this
Agreement.

 

“Secondary
Obligations” shall have the meaning provided in Section 7.4(b) of this
Agreement.

 

“Secured
Creditors” shall have the meaning provided in the recitals to this
Agreement.

 

“Software”
shall mean “software” as such term is defined in the Uniform Commercial Code as
in effect on the date hereof in the State of New York.

 

“Subject
Deposit Account” shall mean each Deposit Account listed on Annex F hereto
and designated as a “Subject Deposit Account” thereon.

 

“Supporting
Obligations” shall mean any “supporting obligation” as such term is defined
in the Uniform Commercial Code as in effect on the date hereof in the State of
New York, now or hereafter owned by any Assignor, or in which any Assignor
has any rights, and, in any event, shall include, but shall not be limited to
all of such Assignor’s rights in any Letter-of-Credit Right or secondary
obligation that supports the payment or performance of, and all security for,
any Receivables, Chattel Paper, Document, General Intangible, Instrument or
Investment Property.

 

“Tangible
Chattel Paper” shall mean “tangible chattel paper” as such term is defined
in the Uniform Commercial Code as in effect on the date hereof in the State of
New York.

 

“Termination
Date” shall have the meaning provided in Section 10.8 of this
Agreement.

 

“Timber-to-be-Cut”
shall mean “timber-to-be-cut” as such term is defined in the Uniform Commercial
Code as in effect on the date hereof in the State of New York.

 

 

“Trade Secret
Rights” shall mean the rights of any Assignor in any Trade Secret it holds.

 

“Trade Secrets”
means any secretly held existing engineering and other data, information,
production procedures and other know-how relating to the design, manufacture,
assembly, installation, use, operation, marketing, sale and servicing of any
products or business of an Assignor in any location, whether written or not
written.

 

“Transmitting
Utility” shall have the meaning given such term in
Section 9-102(a)(80) of the UCC.

 

“UCC” shall
mean the Uniform Commercial Code as in effect from time to time in the relevant
jurisdiction.

 

ARTICLE X

MISCELLANEOUS

 

10.1. 
Notices. 
Except as otherwise specified herein, all notices, requests, demands or
other communications to or upon the respective parties hereto shall be deemed
to have been duly given or made when delivered to the party to which such
notice, request, demand or other communication is required or permitted to be
given or made under this Agreement, addressed:

 

(a)           if to any Assignor, at its address set
forth opposite its signature below;

 

(b)           if to the Second-Lien Collateral Agent:

 

Bank of America, N.A., 

Mailcode CA5-701-05-19

1455 Market Street, 5th Floor

San Francisco, CA 94103

Telephone: (415) 436-3495

Facsimile:  (415) 503-5006

Attention:  Charles Graber

 

with a copy to:

 

Bank of America, N.A., as Second-Lien Collateral Agent

Mailcode NC1-007-13-06

100 N. Tryon Street, 13th Floor

Charlotte, NC 28255

Telephone: (704) 388-6415

Facsimile:  (704) 409-0564

Attention:  Laura Clark

 

 

(c)           if to any Lender Creditor (other than the
Second-Lien Collateral Agent), at such address as such Lender Creditor shall
have specified pursuant to the Credit Agreement;

 

or at
such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.

 

10.2. 
Waiver; Amendment.  Subject to the terms of the Intercreditor
Agreement (including, without limitation, Section 5.3 thereof), none of
the terms and conditions of this Agreement may be changed, waived, modified or
varied in any manner whatsoever unless in writing duly signed by each Assignor
directly and adversely affected thereby and the Second-Lien Collateral Agent
(with the consent of the Required Lenders (or all the Lenders if required by
Section 13.01 of the Second-Lien Credit Agreement).

 

10.3. 
Obligations Absolute.  Subject to the terms of the Intercreditor Agreement,
the obligations of each Assignor hereunder shall remain in full force and
effect without regard to, and shall not be impaired by, (a) any bankruptcy,
insolvency, reorganization, arrangement, readjustment, composition, liquidation
or the like of such Assignor; (b) any exercise or non-exercise, or any waiver
of, any right, remedy, power or privilege under or in respect of this Agreement
or any other Credit Document; or (c) any renewal, extension, amendment or
modification of or addition or supplement to or deletion from any Credit
Document or any security for any of the Obligations; (d) any waiver, consent,
extension, indulgence or other action or inaction under or in respect of any
such agreement or instrument including, without limitation, this Agreement; (e)
any furnishing of any additional security to the Second-Lien Collateral Agent
or its assignee or any acceptance thereof or any release of any security by the
Second-Lien Collateral Agent or its assignee; or (f) any limitation on any
party’s liability or obligations under any such instrument or agreement or any
invalidity or unenforceability, in whole or in part, of any such instrument or
agreement or any term thereof; whether or not any Assignor shall have notice or
knowledge of any of the foregoing.  The
rights and remedies of the Second-Lien Collateral Agent herein provided are
cumulative and not exclusive of any rights or remedies which the Second-Lien
Collateral Agent would otherwise have.

 

10.4. 
Successors and Assigns.  This Agreement shall be binding upon each
Assignor and its successors and assigns and shall inure to the benefit of the
Second-Lien Collateral Agent and its successors and assigns.  All agreements, statements, representations
and warranties made by each Assignor herein or in any certificate or other
instrument delivered by such Assignor or on its behalf under this Agreement
shall be considered to have been relied upon by the Secured Creditors and shall
survive the execution and delivery of this Agreement and the other Credit Documents
regardless of any investigation made by the Secured Creditors or on their
behalf.

 

10.5. 
Headings Descriptive.  The headings of the several sections of this
Agreement are inserted for convenience only and shall not in any way affect the
meaning or construction of any provision of this Agreement.

 

10.6. 
Governing Law.  (a)   THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
CONSTRUED IN

 

 

ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF
NEW YORK.  ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK, COUNTY OF NEW YORK, OR OF THE
UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH ASSIGNOR HEREBY IRREVOCABLY ACCEPTS FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. EACH ASSIGNOR HEREBY
FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK JURISDICTION
OVER SUCH ASSIGNOR, AND AGREES NOT TO PLEAD OR CLAIM IN ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT
IN ANY OF THE AFORESAID COURTS THAT ANY SUCH COURT LACKS JURISDICTION OVER SUCH
ASSIGNOR.  EACH ASSIGNOR FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ANY SUCH ASSIGNOR AT ITS
ADDRESS FOR NOTICES AS PROVIDED IN SECTION 10.1 ABOVE, SUCH SERVICE TO
BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. 
EACH ASSIGNOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF
PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY
ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT
THAT SUCH SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE
COLLATERAL AGENT UNDER THIS AGREEMENT, OR ANY SECURED CREDITOR, TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS
OR OTHERWISE PROCEED AGAINST ANY ASSIGNOR IN ANY OTHER JURISDICTION.

 

(b)           EACH ASSIGNOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE
AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN
CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD
OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

(c)           EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

10.7.  Assignor’s Duties.  It is expressly agreed, anything herein
contained to the contrary notwithstanding, that each Assignor shall remain
liable to perform all of the obligations,

 

 

if any, assumed by it with respect to the Collateral and the
Second-Lien Collateral Agent shall not have any obligations or liabilities with
respect to any Collateral by reason of or arising out of this Agreement, nor
shall the Second-Lien Collateral Agent be required or obligated in any manner
to perform or fulfill any of the obligations of any Assignor under or with
respect to any Collateral.

 

10.8. 
Termination; Release.  (a) 
After the Termination Date (as defined below), this Agreement shall
terminate (provided that all indemnities set forth herein including,
without limitation, in Section 8.1 hereof shall survive such termination)
and the Second-Lien Collateral Agent, at the request and expense of the
respective Assignor, will promptly execute and deliver to such Assignor a
proper instrument or instruments (including Uniform Commercial Code termination
statements on form UCC-3) acknowledging the satisfaction and termination of
this Agreement, and will duly assign, transfer and deliver to such Assignor
(without recourse and without any representation or warranty) such of the
Collateral as may be in the possession of the Second-Lien Collateral Agent and
as has not theretofore been sold or otherwise applied or released pursuant to
this Agreement.  As used in this
Agreement, “Termination Date” shall mean the date upon which the Total
Commitment has been terminated, no Second-Lien Loan Note is outstanding (and
all Second-Lien Loans have been paid in full) and all other Obligations (other
than those arising from indemnities for which no request has been made) then
owing have been paid in full.

 

(b)   In the event that any part of the
Collateral is sold or otherwise disposed of (to a Person other than Holdings or
a Subsidiary thereof) in connection with a sale or other disposition permitted
by Section 9.02 of the Second-Lien Credit Agreement, is released by the
Required Lenders (or all the Lenders if required by Section 13.01 of the
Second-Lien Credit Agreement), or is otherwise required to be released pursuant
to the terms of the Intercreditor Agreement and the proceeds of any such sale
or disposition (or release) are applied in accordance with the terms of the Second-Lien
Credit Agreement to the extent required to be so applied, the Second-Lien
Collateral Agent, at the request and expense of such Assignor, will (i) duly
assign, transfer and deliver to such Assignor (without recourse and without any
representation or warranty) such of the Collateral as is then being (or has
been) so sold, disposed of or released and as may be in the possession of the
Second-Lien Collateral Agent and has not theretofore been released pursuant to
this Agreement and/or (ii) execute such releases and discharges in respect of
such Collateral as is then being (or has been) so sold, disposed of or released
as such Assignor may reasonably request.

 

(c)   In the event that any part of the
Collateral is pledged (or is to be pledged concurrently with any release or
subordination effected pursuant to this Section 10.8(c)) in support of
permitted secured Indebtedness pursuant to the provisions of
Section 9.03(xviii) and 9.04(xviii) of the Second-Lien Credit Agreement,
the Second-Lien Collateral Agent, at the request and expense of the relevant
Assignor, will (i) duly assign, transfer and deliver to such Assignor (without
recourse and without any representation or warranty) such of the Collateral
then being pledged in support of such other Indebtedness (to the extent such
Collateral is of the type permitted to be pledged in support of such
Indebtedness pursuant to the provisions of Section 9.03(xviii) of the
Second-Lien Credit Agreement), as may be in the possession of the Second-Lien
Collateral Agent and has not theretofore been released pursuant to this
Agreement and/or (ii) execute such releases, discharges or lien subordination
agreements in respect of such

 

 

Collateral as is then
being pledged in support of such other Indebtedness as such Assignor may
reasonably request.

 

(d)   At any time that the respective Assignor
desires that Collateral be released as provided in the foregoing
Section 10.8(a), (b) or (c), it shall deliver to the Second-Lien
Collateral Agent a certificate signed by an Authorized Officer stating that the
release of the respective Collateral is permitted pursuant to
Section 10.8(a), (b) or (c).  If
requested by the Second-Lien Collateral Agent (although the Second-Lien
Collateral Agent shall have no obligation to make any such request), the
relevant Assignor shall furnish appropriate legal opinions (from counsel, which
may be in-house counsel, reasonably acceptable to the Second-Lien Collateral
Agent) to the effect set forth in the immediately preceding sentence.  The Second-Lien Collateral Agent shall have
no liability whatsoever to any Secured Creditor as the result of any release of
Collateral by it as permitted (or which the Second-Lien Collateral Agent in
good faith believes to be permitted) by this Section 10.8.

 

(e)  If at any time all of the
equity interests of any Assignor owned by the Borrower or any of its
Subsidiaries are sold (to a Person other than a Credit Party) in a transaction
permitted pursuant to the Second-Lien Credit Agreement or the security
interests in such equity interests are required to be released in accordance
with the Intercreditor Agreement, then, such Assignor shall be released as an
Assignor pursuant to this Agreement without any further action hereunder (it
being understood that the sale of all of the equity interests in any Person
that owns, directly or indirectly, all of the equity interests in any Assignor
shall be deemed to be a sale of all of the equity interests in such Assignor
for purposes of this Section), and the Second-Lien Collateral Agent is
authorized and directed to execute and deliver such instruments of release as
are reasonably satisfactory to it.  At
any time that the Borrower desires that an Assignor be released from this
Agreement as provided in this Section 10.8(e), the Borrower shall deliver
to the Second-Lien Collateral Agent a certificate signed by a principal
executive officer of the Borrower stating that the release of such Assignor is
permitted pursuant to this Section 10.8(e).  If requested by Second-Lien Collateral Agent (although the
Second-Lien Collateral Agent shall have no obligation to make any such
request), the Borrower shall furnish legal opinions (from counsel acceptable to
the Second-Lien Collateral Agent) to the effect set forth in the immediately
preceding sentence.  The Second-Lien
Collateral Agent shall have no liability whatsoever to any other Secured
Creditor as a result of the release of any Assignor by it in accordance with,
or which it believes to be in accordance with, this Section 10.8(e).

 

10.9. 
Counterparts.  This Agreement
may be executed in any number of counterparts and by the different parties
hereto on separate counterparts, each of which when so executed and delivered
shall be an original, but all of which shall together constitute one and the
same instrument.  A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Second-Lien Collateral Agent.

 

10.10. 
The Second-Lien Collateral Agent.  Subject to the terms of the Intercreditor
Agreement (including, without limitation, Section 5.5 of the Intercreditor
Agreement), the Second-Lien Collateral Agent will hold in accordance with this
Agreement all items of the Collateral at any time received under this
Agreement.  It is expressly understood
and agreed that the obligations of the Second-Lien Collateral Agent as holder
of the Collateral and interests therein and with respect to the disposition
thereof, and otherwise under this Agreement,

 

 

 to the extent not inconsistent
with the terms of the Intercreditor Agreement, are only those expressly set
forth in this Agreement and this Intercreditor Agreement, if applicable.  The Second-Lien Collateral Agent shall act
hereunder on the terms and conditions set forth in Section 12 of the
Second-Lien Credit Agreement.

 

10.11. 
Severability.  Any provision
of this Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.

 

10.12. 
Fraudulent Conveyance; Etc.  It is the desire and intent of each Assignor
and the Secured Creditors that this Agreement shall be enforced against each
Assignor to the fullest extent permissible under the laws and public policies
applied in each jurisdiction in which enforcement is sought.  Notwithstanding anything to the contrary
contained herein, in furtherance of the foregoing, it is noted that the
obligations of each Subsidiary Guarantor constituting an Assignor are limited
as, and to the extent, provided in Section 24 of the Subsidiaries
Guaranty.

 

10.13. 
Additional Assignors.  It is understood and agreed that any
Subsidiary of the Borrower that is required to become a party to this Agreement
after the date hereof pursuant to the requirements of the Second-Lien Credit
Agreement shall become an Assignor hereunder by (x) executing a counterpart
hereof and delivering same to the Second-Lien Collateral Agent, or by executing
and delivering to the Second-Lien Collateral Agent an assumption agreement in
form and substance satisfactory to the Second-Lien Collateral Agent, (y)
delivering supplements to Annexes A through M hereto as are necessary to cause
such annexes to be complete and accurate with respect to such additional
Assignor on such date and (z) taking all actions as specified in this Agreement
as would have been taken by such Assignor had it been an original party to this
Agreement, in each case with all documents required above to be delivered to
the Second-Lien Collateral Agent and with all documents and actions required
above to be taken to the reasonable satisfaction of the Second-Lien Collateral
Agent.

 

*              *              *

 

 

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

 

 

	
  2366 Bernville Road

  	
  ENERSYS,

  	
   

  
	
  Reading, PA, 19605

  	
  as an Assignor

  	
   

  
	
  Telephone:  (610) 208-1991

  	
   

  	
   

  
	
  Facsimile:  (610) 208-1671

  	
   

  	
   

  
	
  Attention: Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  2366 Bernville Road

  	
  ENERSYS CAPITAL INC.,

  	
   

  
	
  Reading, PA, 19605

  	
  as an Assignor

  	
   

  
	
  Telephone:  (610) 208-1991

  	
   

  	
   

  
	
  Facsimile:  (610) 208-1671

  	
   

  	
   

  
	
  Attention: Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  2366 Bernville Road

  	
  ENERSYS DELAWARE INC.,

  	
   

  
	
  Reading, PA, 19605

  	
  as an Assignor

  	
   

  
	
  Telephone:  (610) 208-1991

  	
   

  	
   

  
	
  Facsimile:  (610) 208-1671

  	
   

  	
   

  
	
  Attention: Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  2366 Bernville Road

  	
  ESFINCO, INC.,

  	
   

  
	
  Reading, PA, 19605

  	
  as an Assignor

  	
   

  
	
  Telephone:  (610) 208-1991

  	
   

  	
   

  
	
  Facsimile:  (610) 208-1671

  	
   

  	
   

  
	
  Attention: Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					

 

 

	
  2366 Bernville Road

  	
  ESRMCO, INC.,

  	
   

  
	
  Reading, PA, 19605

  	
  as an Assignor

  	
   

  
	
  Telephone:  (610) 208-1991

  	
   

  	
   

  
	
  Facsimile:  (610) 208-1671

  	
   

  	
   

  
	
  Attention: Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  2366 Bernville Road

  	
  HAWKER ENERGY PRODUCTS INC.,

  	
   

  
	
  Reading, PA, 19605

  	
  as an Assignor

  	
   

  
	
  Telephone:  (610) 208-1991

  	
   

  	
   

  
	
  Facsimile:  (610) 208-1671

  	
   

  	
   

  
	
  Attention: Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  2366 Bernville Road

  	
  HAWKER POWER SYSTEMS, INC.,

  	
   

  
	
  Reading, PA, 19605

  	
  as an Assignor

  	
   

  
	
  Telephone:  (610) 208-1991

  	
   

  	
   

  
	
  Facsimile:  (610) 208-1671

  	
   

  	
   

  
	
  Attention: Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  2366 Bernville Road

  	
  POWERSAFE STANDBY BATTERIES INC.,

  
	
  Reading, PA, 19605

  	
  as an Assignor

  	
   

  
	
  Telephone:  (610) 208-1991

  	
   

  	
   

  
	
  Facsimile:  (610) 208-1671

  	
   

  	
   

  
	
  Attention: Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  2366 Bernville Road

  	
  HAWKER POWERSOURCE, INC.,

  	
   

  
	
  Reading, PA, 19605

  	
  as an Assignor

  	
   

  
	
  Telephone:  (610) 208-1991

  	
   

  	
   

  
	
  Facsimile:  (610) 208-1671

  	
   

  	
   

  
	
  Attention: Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					

 

 

	
  2366 Bernville Road

  	
  NEW PACIFICO REALTY, INC.,

  	
   

  
	
  Reading, PA, 19605

  	
  as an Assignor

  	
   

  
	
  Telephone:  (610) 208-1991

  	
   

  	
   

  
	
  Facsimile:  (610) 208-1671

  	
   

  	
   

  
	
  Attention: Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
						

 

 

	
  Accepted
  and Agreed to

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BANK OF AMERICA, N.A.,

  as Second Lien Collateral Agent, as Assignee

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
					

 

 

 

	
  ANNEX A

  	
   

  
	
  TO

  	
   

  
	
  SECURITY AGREEMENT

  	
   

  

 

 

 

 

SCHEDULE OF CHIEF EXECUTIVE OFFICES/RECORD
LOCATIONS

 

 

 

	
  ANNEX B

  	
   

  
	
  TO

  	
   

  
	
  SECURITY AGREEMENT

  	
   

  

 

 

 

SCHEDULE OF INVENTORY AND EQUIPMENT LOCATIONS

 

 

 

	
  ANNEX C

  	
   

  
	
  TO

  	
   

  
	
  SECURITY AGREEMENT

  	
   

  

 

 

 

SCHEDULE OF LEGAL NAMES, TYPE OF ORGANIZATION

(AND WHETHER A REGISTERED ORGANIZATION AND/OR

A TRANSMITTING UTILITY), JURISDICTION OF ORGANIZATION,

LOCATION AND ORGANIZATIONAL IDENTIFICATION NUMBERS

 

	
  Exact Legal

  Name of Each

  Assignor

  	
   

  	
  Type of

  Organization (or,

  if the Assignor is

  an Individual,

  so indicate)

  	
   

  	
  Registered

  Organization?

  (Yes/No)

  	
   

  	
  Jurisdiction

  of

  Organization

  	
   

  	
  Assignor’s

  Location

  (for purposes

  of NY UCC

  § 9-307)

  	
   

  	
  Assignor’s

  Organization

  Identification

  Number (or,

  if it has none,

  so indicate)

  	
   

  	
  Transmitting

  Utility?

  (Yes/No)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

 

	
  ANNEX D

  	
   

  
	
  TO

  	
   

  
	
  SECURITY AGREEMENT

  	
   

  

 

 

 

 

SCHEDULE OF TRADE AND FICTITIOUS NAMES

 

 

 

	
  ANNEX E

  	
   

  
	
  TO

  	
   

  
	
  SECURITY AGREEMENT

  	
   

  

 

 

 

DESCRIPTION OF CERTAIN SIGNIFICANT

TRANSACTIONS OCCURRING WITHIN ONE YEAR

PRIOR TO THE DATE OF THE SECURITY AGREEMENT

 

	
  Name of Assignor

  	
   

  	
  Description of any Transactions as required

  by Section 2.8 of the Security Agreement

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

 

	
  ANNEX F

  	
   

  
	
  TO

  	
   

  
	
  SECURITY AGREEMENT

  	
   

  

 

 

 

 

SCHEDULE OF DEPOSIT ACCOUNTS

 

	
  Name of Assignor

  	
   

  	
  Description of

  Deposit Account

  	
   

  	
  Account

  Number

  	
   

  	
  Name of Bank,

  Address and

  Contact

  Information

  	
   

  	
  Jurisdiction of

  Bank (determined

  in accordance with

  UCC § 9-304)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

	
  ANNEX G

  	
   

  
	
  TO

  	
   

  
	
  SECURITY AGREEMENT

  	
   

  

 

 

Form
of Control Agreement Regarding Deposit Accounts

 

AGREEMENT (as
amended, modified, restated and/or supplemented from time to time, this “Agreement”),
dated as of [        
  ,       ], among the undersigned
assignor (the “Assignor”), Bank of America, N.A., not in its individual
capacity but solely as Collateral Agent under the First-Lien Security Agreement
referred to below (in such capacity, the “First-Lien Collateral Agent”),
Bank of America, N.A., not in its individual capacity but solely as Collateral
Agent under the Second-Lien Security Agreement referred to below (in such
capacity, the “Second-Lien Collateral Agent”), and
[          ] (the “Deposit
Account Bank”), as the bank (as defined in Section 9-102 of the UCC as
in effect on the date hereof in the State of
[               ]
(the “UCC”)) with which one or more deposit accounts (as defined in
Section 9-102 of the UCC) are maintained by the Assignor (with all such
deposit accounts now or at any time in the future maintained by the Assignor
with the Deposit Account Bank being herein called the “Deposit Accounts”).

 

W I T N E S S E T H :

 

WHEREAS, the
Assignor, various other Assignors and the First-Lien Collateral Agent have
entered into a First-Lien Security Agreement, dated as of March 17, 2004
(as amended, restated, modified and/or supplemented from time to time, the “First-Lien
Security Agreement”), under which, among other things, in order to secure
the payment of the Obligations (as defined in the First-Lien Security
Agreement), the Assignor has granted a security interest to the First-Lien
Collateral Agent for the benefit of the Secured Creditors (as defined in the
First-Lien Security Agreement) in all of the right, title and interest of the
Assignor in and into any and all deposit accounts (as defined in
Section 9-102 of the UCC) and in all monies, securities, instruments and
other investments deposited therein from time to time (collectively, herein
called the “First-Lien Collateral”);

 

WHEREAS, the
Assignor, various other Assignors and the Second-Lien Collateral Agent have
entered into a Second-Lien Security Agreement, dated as of March 17, 2004
(as amended, restated, modified and/or supplemented from time to time, the “Second-Lien
Security Agreement” and, together with the First-Lien Security Agreement,
the “Security Agreements”), under which, among other things, in order to
secure the payment of the Obligations (as defined in the Second-Lien Security
Agreement), the Assignor has granted a security interest to the Second-Lien
Collateral Agent for the benefit of the Secured Creditors (as defined in the
Second-Lien Security Agreement) in all of the right, title and interest of the
Assignor in and into any and all deposit accounts (as defined in
Section 9-102 of the UCC) and in all monies, securities, instruments and
other investments deposited therein from time to time (collectively, herein
called the “Second-Lien Collateral”, and together with the First-Lien
Collateral, the “Collateral”);

 

 

WHEREAS, EnerSys,
[the Assignor] [EnerSys Capital Inc.], the First-Lien Collateral Agent and the
Second-Lien Collateral Agent have entered into an Intercreditor Agreement,
dated as of March 17, 2004 (as amended, restated, modified and/or supplemented
from time to time, the “Intercreditor Agreement”), governing the
relative rights and priorities of the Secured Creditors (as defined in each
Security Agreement) in respect of the Collateral; and

 

WHEREAS, the
Assignor desires that the Deposit Account Bank enter into this Agreement in
order to establish “control” (as defined in Section 9-104 of the UCC) in
each Deposit Account at any time or from time to time maintained with the
Deposit Account Bank, and to provide for the rights of the parties under this
Agreement with respect to such Deposit Accounts;

 

NOW THEREFORE, in
consideration of the premises and the mutual promises and agreements contained
herein, and for other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:

 

1.             Assignor’s Dealings with Deposit Accounts; Notice of
Exclusive Control.
Until the Deposit Account Bank shall have received from the First-Lien
Collateral Agent and/or the Second-Lien Collateral Agent a Notice of Exclusive
Control (as defined below), the Assignor shall be entitled to present items
drawn on and otherwise to withdraw or direct the disposition of funds from the
Deposit Accounts and give instructions in respect of the Deposit Accounts; provided,
however, that the Assignor may not, and the Deposit Account Bank agrees
that it shall not permit the Assignor to, close any Deposit Account, in any
case without the prior written consent of each of the First-Lien Collateral
Agent and the Second-Lien Collateral Agent. 
If the First-Lien Collateral Agent or the Second-Lien Collateral Agent
shall give to the Deposit Account Bank a notice of the First-Lien Collateral
Agent’s or the Second-Lien Collateral Agent’s exclusive control of the Deposit
Accounts, which notice states that it is a “Notice of Exclusive Control” (a “Notice
of Exclusive Control”), only the First-Lien Collateral Agent or the
Second-Lien Collateral Agent, as the case may be, shall be entitled to withdraw
funds from the Deposit Accounts, to give any instructions in respect of the
Deposit Accounts and any funds held therein or credited thereto or otherwise to
deal with the Deposit Accounts.

 

2.             First-Lien Collateral Agent’s and Second-Lien
Collateral Agent’s Rights to Give Instructions as to Deposit Accounts. 
(a)  Notwithstanding the foregoing or any separate agreement
that the Assignor may have with the Deposit Account Bank, each of the
First-Lien Collateral Agent and the Second-Lien Collateral Agent shall be
entitled, for purposes of this Agreement, at any time to give the Deposit
Account Bank instructions as to the withdrawal or disposition of any funds from
time to time credited to any Deposit Account, or as to any other matters
relating to any Deposit Account or any other Collateral, without further
consent from the Assignor.  The Assignor
hereby irrevocably authorizes and instructs the Deposit Account Bank, and the
Deposit Account Bank hereby agrees, to comply with any such instructions from
the First-Lien Collateral Agent and/or the Second-Lien Collateral Agent without
any further consent from the Assignor. 
Such instructions may include the giving of stop payment orders for any
items being presented to any Deposit Account for payment.  The Deposit Account Bank shall be fully
entitled to rely on, and shall comply with, such instructions from the
First-Lien Collateral Agent or the Second-Lien Collateral Agent even if such
instructions are contrary to any

 

2

 

instructions
or demands that the Assignor may give to the Deposit Account Bank.  In case of any conflict between instructions
received by the Deposit Account Bank from the First-Lien Collateral Agent or
the Second-Lien Collateral Agent, on the one hand, and the Assignor, on the
other hand, the instructions from the First-Lien Collateral Agent or the
Second-lien Collateral Agent, as the case may be, shall prevail.  In case of any conflict between instructions
received by the Deposit Account Bank from the First-Lien Collateral Agent and the
Second-Lien Collateral Agent, the instructions from the First-Lien Collateral
Agent shall prevail.

 

(b)           It is understood and agreed that the Deposit Account
Bank’s duty to comply with instructions from the First-Lien Collateral Agent
and the Second-Lien Collateral Agent regarding the Deposit Accounts is
absolute, and the Deposit Account Bank shall be under no duty or obligation,
nor shall it have the authority, to inquire or determine whether or not such
instructions are in accordance with the Security Agreements, the Intercreditor
Agreement or any other Credit Document (as defined in each of the Security
Agreements), nor seek confirmation thereof from the Assignor or any other
Person.

 

3.             Assignor’s Exculpation and Indemnification of
Depository Bank.  The Assignor hereby irrevocably authorizes
and instructs the Deposit Account Bank to follow instructions from each of the
First-Lien Collateral Agent and the Second-Lien Collateral Agent regarding the
Deposit Accounts even if the result of following such instructions from the
First-Lien Collateral Agent or the Second-lien collateral Agent is that the
Deposit Account Bank dishonors items presented for payment from any Deposit
Account.  The Assignor further confirms
that the Deposit Account Bank shall have no liability to the Assignor for
wrongful dishonor of such items in following such instructions from the
First-Lien Collateral Agent or the Second-Lien Collateral Agent.  The Deposit Account Bank shall have no duty
to inquire or determine whether the Assignor’s obligations to the First-Lien
Collateral Agent or the Second-Lien Collateral Agent are in default or whether
the First-Lien Collateral Agent or the Second-Lien Collateral Agent is
entitled, under any separate agreement between the Assignor and the First-Lien
Collateral Agent or the Second-Lien Collateral Agent, to give any such
instructions.  The Assignor further
agrees to be responsible for the Deposit Account Bank’s customary charges and
to indemnify the Deposit Account Bank from and to hold the Deposit Account Bank
harmless against any loss, cost or expense that the Deposit Account Bank may
sustain or incur in acting upon instructions which the Deposit Account Bank
believes in good faith to be instructions from the First-Lien Collateral Agent
or the Second-Lien Collateral Agent.

 

4.             Subordination of Security Interests; Deposit Account
Bank’s Recourse to Deposit Accounts.  The Deposit
Account Bank hereby subordinates any claims and security interests it may have
against, or with respect to, any Deposit Account at any time established or
maintained with it by the Assignor (including any amounts, investments,
instruments or other Collateral from time to time on deposit therein) to the
security interests of the First-Lien Collateral Agent (for the benefit of the
Secured Creditors under, and as defined in, the First-Lien Security Agreement)
and the Second-Lien Collateral Agent (for the benefit of the Secured Creditors
under, and as defined in, the Second-Lien Security Agreement), and agrees that
no amounts shall be charged by it to, or withheld or set-off or otherwise
recouped by it from, any Deposit Account of the Assignor or any amounts,
investments, instruments or other Collateral from time to time on deposit
therein; provided that the Deposit Account Bank may, however,

 

3

 

from
time to time debit the Deposit Accounts for any of its customary charges in
maintaining the Deposit Accounts or for reimbursement for the reversal of any
provisional credits granted by the Deposit Account Bank to any Deposit Account,
to the extent, in each case, that the Assignor has not separately paid or
reimbursed the Deposit Account Bank therefor.

 

5.             Representations, Warranties and Covenants of Deposit
Account Bank.  The Deposit Account Bank represents and
warrants to the First-Lien Collateral Agent and the Second-Lien Collateral
Agent and hereby agrees that:

 

(a)           The Deposit Account Bank constitutes a “bank” (as
defined in Section 9-102 of the UCC), that the jurisdiction (determined in
accordance with Section 9-304 of the UCC) of the Deposit Account Bank for
purposes of each Deposit Account maintained by the Assignor with the Deposit
Account Bank is
                                       .

 

(b)           The Deposit Account Bank shall not permit any Assignor
to establish any demand, time, savings, passbook or other account with it which
does not constitute a “deposit account” (as defined in Section 9-102 of
the UCC).

 

(c)           The Deposit Account Bank will not, without the prior
written consent of each of the First-Lien Collateral Agent and the Second-Lien
Collateral Agent, amend any account agreement between it and the Assignor
governing any Deposit Account so that the Deposit Account Bank’s jurisdiction
for purposes of Section 9-304 of the UCC is other than the jurisdiction
specified in the preceding clause (a). 
All account agreements in respect of each Deposit Account in existence
on the date hereof are listed on Annex F hereto and copies of all such account
agreements have been furnished to the First-Lien Collateral Agent and the
Second-Lien Collateral Agent.  The
Deposit Account Bank will promptly furnish to the First-Lien Collateral Agent
and the Second-Lien Collateral Agent a copy of the account agreement for each
Deposit Account hereafter established by the Deposit Account Bank for the
Assignor.

 

(d)           The Deposit Account Bank has not entered and will not
enter, into any agreement with any other Person by which the Deposit Account
Bank is obligated to comply with instructions from such other Person as to the
disposition of funds from any Deposit Account or other dealings with any
Deposit Account or other of the Collateral.

 

(e)           On the date hereof, the Deposit Account Bank maintains
no Deposit Accounts for the Assignor other than the Deposit Accounts
specifically identified in Annex F hereto.

 

(f)            Any items or funds received by the Deposit Account
Bank for the Assignor’s account will be credited to said Deposit Accounts
specified in paragraph (e) above or to any other Deposit Accounts hereafter
established by the Deposit Account Bank for the Assignor in accordance with
this Agreement.

 

(g)           The Deposit Account Bank will promptly notify the
First-Lien Collateral Agent and the Second-Lien Collateral Agent of each
Deposit Account hereafter established by the Deposit Account Bank for the
Assignor (which notice shall specify the account number of

 

4

 

such
Deposit Account and the location at which the Deposit Account is maintained),
and each such new Deposit Account shall be subject to the terms of this
Agreement in all respects.

 

6.             Deposit Account Statements and Information. 
The Deposit Account Bank agrees, and is hereby authorized and instructed
by the Assignor, to furnish to each of the First-Lien Collateral Agent and the
Second-Lien Collateral Agent, at its address indicated below, copies of all
account statements and other information relating to each Deposit Account that
the Deposit Account Bank sends to the Assignor and to disclose to the
First-Lien Collateral Agent and the Second-Lien Collateral Agent all
information requested by the First-Lien Collateral Agent or the Second-Lien
Collateral Agent, as the case may be, regarding any Deposit Account.

 

7.             Conflicting Agreements.  This
Agreement shall have control over any conflicting agreement between the Deposit
Account Bank and the Assignor.

 

8.             Merger or Consolidation of Deposit Account Bank. 
Without the execution or filing of any paper or any further act on the
part of any of the parties hereto, any bank into which the Deposit Account Bank
may be merged or with which it may be consolidated, or any bank resulting from
any merger to which the Deposit Account Bank shall be a party, shall be the
successor of the Deposit Account Bank hereunder and shall be bound by all
provisions hereof which are binding upon the Deposit Account Bank and shall be
deemed to affirm as to itself all representations and warranties of the Deposit
Account Bank contained herein.

 

9.             Notices.  (a) All
notices and other communications provided for in this Agreement shall be in
writing (including facsimile) and sent to the intended recipient at its address
or telex or facsimile number set forth below:

 

If to the First-Lien Collateral Agent or the
Second-Lien Collateral Agent, at:

 

Bank of America, N.A., 

Mailcode CA5-701-05-19

1455 Market Street, 5th Floor

San Francisco, CA 94103

Telephone: (415) 436-3495

Facsimile:  (415) 503-5006

Attention:  Charles Graber

 

with a copy to:

 

Bank of America, N.A., 

Mailcode NC1-007-13-06

100 N. Tryon Street, 13th Floor

Charlotte, NC 28255

Telephone: (704) 388-6415

Facsimile:  (704) 409-0564

Attention:  Laura Clark

 

5

 

If to the Assignor, at:

 

 

 

 

If to the Deposit Account Bank, at:

 

 

 

 

or, as to any
party, to such other address or telex or facsimile number as such party may
designate from time to time by notice to the other parties.

 

(b)           Except as otherwise provided herein, all notices and
other communications hereunder shall be delivered by hand or by commercial
overnight courier (delivery charges prepaid), or mailed, postage prepaid, or
telexed or faxed, addressed as aforesaid, and shall be effective (i) three
business days after being deposited in the mail (if mailed), (ii) when
delivered (if delivered by hand or courier) and (iii) or when transmitted with
receipt confirmed (if telexed or faxed); provided that notices to the
First-Lien Collateral Agent or the Second-Lien Collateral Agent shall not be
effective until actually received by it.

 

10..          Amendment.  This
Agreement may not be amended, modified or supplemented except in writing
executed and delivered by all the parties hereto.

 

11.           Binding Agreement.  This
Agreement shall bind the parties hereto and their successors and assign and
shall inure to the benefit of the parties hereto and their successors and
assigns.  Without limiting the
provisions of the immediately preceding sentence, the First-Lien Collateral
Agent or the Second-Lien Collateral Agent may at any time or from time to time
designate in writing to the Deposit Account Bank a successor First-Lien
Collateral Agent or Second-Lien Collateral Agent, as the case may be (at such
time, if any, as such entity becomes the “First-Lien Collateral Agent” under
the First-Lien Security Agreement or the “Second-Lien Collateral Agent” under
the Second-Lien Security Agreement, or at any time thereafter), and such
successor shall thereafter succeed to the rights of the existing First-Lien
Collateral Agent or Second-Lien Collateral Agent, as the case may be,  hereunder and shall be entitled to all of
the rights and benefits provided hereunder.

 

12.           Continuing Obligations.  The rights
and powers granted herein to each of the First-Lien Collateral Agent and the
Second-Lien Collateral Agent have been granted in order to protect and further
perfect its security interests in the Deposit Accounts and other relevant
Collateral and are powers coupled with an interest and will be affected neither
by any purported revocation by the Assignor of this Agreement or the rights granted
to the First-Lien Collateral Agent or the Second-Lien Collateral Agent
hereunder or by the bankruptcy, insolvency, conservatorship or receivership of
the Assignor, the Deposit Account Bank, the First-Lien Collateral Agent or the
Second-Lien Collateral Agent or by the lapse of time.  The rights of the

 

6

 

First-Lien
Collateral Agent hereunder and in respect of the Deposit Accounts and the other
First-Lien Collateral, and the obligations of the Assignor and Deposit Account
Bank hereunder, shall continue in effect until the security interests of the
First-Lien Collateral Agent in the Deposit Accounts and such other First-Lien
Collateral have been terminated and the First-Lien Collateral Agent has
notified the Deposit Account Bank of such termination in writing.  The rights of the Second-Lien Collateral
Agent hereunder and in respect of the Deposit Accounts and the other
Second-Lien Collateral, and the obligations of the Assignor and Deposit Account
Bank hereunder, shall continue in effect until the security interests of the
Second-Lien Collateral Agent in the Deposit Accounts and such other Second-Lien
Collateral have been terminated and the Second-Lien Collateral Agent has
notified the Deposit Account Bank of such termination in writing.

 

13.           Compliance with Intercreditor Agreement. 
The First-Lien Collateral Agent and the Second-Lien Collateral Agent
hereby acknowledge and agree as between themselves that, notwithstanding
anything herein to the contrary, the exercise of any right or remedy by the
Second-Lien Collateral Agent hereunder (including, without limitation, its
right to deliver a Notice of Exclusive Control or any other instruction to the
Deposit Account Bank and to withdraw funds from a Deposit Account) is subject
to the provisions of the Intercreditor Agreement.

 

14.           Governing Law.  This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York.

 

15.           Counterparts.  This
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
Agreement by signing and delivering one or more counterparts.

 

[Remainder of this page intentionally
left blank; signature page follows]

 

7

 

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

 

	
   

  	
  Assignor:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [NAME OF ASSIGNOR]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  First-Lien Collateral
  Agent:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Second-Lien
  Collateral Agent:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BANK
  OF AMERICA, N.A.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Deposit Account Bank:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [NAME OF DEPOSIT
  ACCOUNT BANK]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

8

 

	
  ANNEX H

  	
   

  
	
  TO

  	
   

  
	
  SECURITY AGREEMENT

  	
   

  

 

 

 

DESCRIPTION OF COMMERCIAL TORT CLAIMS

 

	
  Name of Assignor

  	
   

  	
  Description of Commercial Tort Claims

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

 

	
  ANNEX I

  	
   

  
	
  TO

  	
   

  
	
  SECURITY AGREEMENT

  	
   

  

 

 

 

SCHEDULE OF MARKS AND APPLICATIONS;

INTERNET DOMAIN NAME REGISTRATIONS

 

[Company to Provide Schedule Updated
from Existing Deal]

 

1.             Marks and Applications:

 

	
  Marks

  	
   

  	
  Country

  	
   

  	
  Registration No.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

2.             Internet Domain Name Registrations:

 

	
  Marks

  	
   

  	
  Country

  	
   

  	
  Registration No. (or other

  applicable identifier)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

	
  ANNEX J

  	
   

  
	
  TO

  	
   

  
	
  SECURITY AGREEMENT

  	
   

  

 

 

 

SCHEDULE OF PATENTS AND APPLICATIONS

 

 

 

	
  ANNEX K

  	
   

  
	
  TO

  	
   

  
	
  SECURITY AGREEMENT

  	
   

  

 

 

 

SCHEDULE OF COPYRIGHTS AND APPLICATIONS

 

 

 

	
  ANNEX L

  	
   

  
	
  TO

  	
   

  
	
  SECURITY AGREEMENT

  	
   

  

 

 

FORM OF GRANT OF SECURITY

INTEREST IN U.S. PATENTS AND TRADEMARKS

 

FOR GOOD AND
VALUABLE CONSIDERATION, receipt and sufficiency of which are hereby
acknowledged,
                                      ,
a
                           
corporation (“the Grantor”) with principal offices at
                                                        ,
hereby grants to Bank of America, N.A., as Second-Lien Collateral Agent (the “Grantee”)
with principal offices at Mailcode NC1-001-15-04, 101 North Tryon Street,
Charlotte, NC 28255, a security interest in (i) all of the Grantor’s right,
title and interest in and to the trademarks, trademark registrations and
trademark applications (the “Marks”) set forth on Schedule A
attached hereto; (ii) all of the Grantor’s right, title and interest in and to
the patents and patent applications (the “Patents”) set forth on
Schedule B attached, in each case together with (iii) all Proceeds (as
such term is defined in the Security Agreement referred to below) of the Marks
and Patents, (iv) the goodwill of the businesses with which the Marks are
associated and, (v) all causes of action arising prior to or after the date
hereof for infringement of any of the Marks and Patents or unfair competition
regarding the same.

 

THIS ASSIGNMENT OF
SECURITY INTEREST (this “Grant”), effective as of
                         ,
is made to secure the satisfactory performance and payment of all the
Obligations of the Grantor, as such term is defined in the Security Agreement,
among Grantor, the other assignors from time to time party thereto and the
Grantee, dated as of March 17, 2004 (as amended, restated, modified and/or
supplemented from time to time, the “Security Agreement”).

 

This Assignment
has been granted in conjunction with the security interest granted to the
Grantee under the Security Agreement. 
The rights and remedies of the Grantee with respect to the security
interest granted herein are without prejudice to, and are in addition to those
set forth in the Security Agreement, all terms and provisions of which are
incorporated herein by reference.  In
the event that any provisions of this Grant are deemed to conflict with the
Security Agreement, the provisions of the Security Agreement shall govern.

 

 

IN WITNESS
WHEREOF, the undersigned have executed this Grant as of the
            day of
                 ,
                          .

 

 

	
   

  	
   

  	
   ,

  
	
   

  	
  Grantor,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A.,

  as Second-Lien Collateral Agent, as

  Grantee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
					

 

2

 

	
  STATE OF NEW
  YORK

  	
  )

  
	
   

  	
  )  ss.:

  
	
  COUNTY
  OF NEW YORK

  	
  )

  

 

On this
             
day of
               ,
        , before me personally came
                                       ,
who, being by me duly sworn, did state as follows:  that [s]he is
                                       
of [Name of Grantor], that [s]he is authorized to execute the foregoing Grant
on behalf of said corporation and that [s]he did so by authority of the Board
of Directors of said corporation.

 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  	
   

  

 

3

 

	
  STATE OF NEW
  YORK

  	
  )

  
	
   

  	
  )  ss.:

  
	
  COUNTY
  OF NEW YORK

  	
  )

  

 

On this
             
day of                ,
        , before me personally came
                                       ,
who, being by me duly sworn, did state as follows:  that [s]he is                                        
of BANK OF AMERICA, N.A., that [s]he is authorized to execute the foregoing
Grant on behalf of said company and that [s]he did so by authority of said
company.

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  	
   

  

 

4

 

SCHEDULE A

to Annex L

 

 

U.S. TRADEMARKS OWNED BY [NAME OF GRANTOR]

 

	
  Mark

  	
   

  	
  Reg. No.

  	
   

  	
  Reg. Date

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

[Each
Grantor to provide]

 

 

SCHEDULE B

to Annex L

 

U.S. PATENTS AND PATENT

APPLICATIONS OWNED BY [NAME OF GRANTOR]

 

	
  Patent

  	
   

  	
  Patent No.

  	
   

  	
  Issue Date

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

[Each
Grantor to provide]

 

 

ANNEX M

 

FORM OF GRANT OF

SECURITY INTEREST IN U.S. COPYRIGHTS

WHEREAS,
                                           ,
a
                                     
corporation (the “Grantor”), having its chief executive office at
                                                           ,
is the owner of all right, title and interest in and to the copyrights and
associated copyright registrations and applications for registration set forth
in Schedule A attached hereto;

 

WHEREAS, BANK OF
AMERICA, N.A., as Second-Lien Collateral Agent, having its principal offices at
Mailcode NC1-001-15-04, 101 North Tryon Street, Charlotte, NC 28255 (the “Grantee”),
desires to acquire a security interest in, and lien upon all of the Grantor’s
right, title and interest to, said copyrights and copyright registrations and
applications therefor; and

 

WHEREAS, the
Grantor is willing to assign and grant to the Grantee a security interest in
and lien upon the copyrights and copyright registrations and applications
therefor described above.

 

NOW, THEREFORE,
for good and valuable consideration, the receipt of which is hereby
acknowledged, and subject to the terms and conditions of the Security
Agreement, dated as of March 17, 2004, made by the Grantor, the other
assignors from time to time party thereto and the Grantee (as amended,
restated, modified and/or supplemented from time to time, the “Security
Agreement”), the Grantor hereby assigns to the Grantee, and grants to the
Grantee a security interest in, and lien upon all of the Grantor’s right, title
and interest to, the copyrights and copyright registrations and applications
therefor set forth in Schedule A attached hereto (the “Copyrights”),
together with (i) all Proceeds (as such term is defined in the Security
Agreement) of the Copyrights and (ii) all causes of action arising prior to or
after the date hereof for infringement of any Copyright.

 

THIS ASSIGNMENT OF
SECURITY INTEREST (this “Grant”) has been granted in conjunction with
the security interest granted to the Grantee under the Security Agreement.  The rights and remedies of the Grantee with
respect to the security interest granted herein are without prejudice to, and
are in addition to those set forth in the Security Agreement, all terms and
provisions of which are incorporated herein by reference.  In the event that any provisions of this
Grant are deemed to conflict with the Security Agreement, the provisions of the
Security Agreement shall govern.

 

 

IN WITNESS
WHEREOF, the undersigned have executed this Grant at New York, New York, as of
the            day of
                 ,
             .

 

	
   

  	
   

  	
  ,

  
	
   

  	
  Grantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A.,

  as Second-Lien Collateral Agent, as Grantee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
					

 

2

 

	
  STATE OF NEW
  YORK

  	
  )

  
	
   

  	
  )  ss.:

  
	
  COUNTY
  OF NEW YORK

  	
  )

  

 

On this
             
day of
               ,
        , before me personally came
                                       ,
who being duly sworn, did depose and say that [s]he is
                                      
of [Name of Grantor], that [s]he is authorized to execute the foregoing Grant
on behalf of said corporation and that [s]he did so by authority of the Board
of Directors of said corporation.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  	
   

  

 

3

 

	
  STATE OF NEW
  YORK

  	
  )

  
	
   

  	
  )  ss.:

  
	
  COUNTY
  OF NEW YORK

  	
  )

  

 

On this
             
day of
               ,
        , before me personally came
                                       ,
who being duly sworn, did depose and say that [s]he is
                                                          
of BANK OF AMERICA, N.A., that [s]he is authorized to execute the foregoing
Grant on behalf of said corporation and that [s]he did so by authority of the
Board of Directors of said corporation.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  	
   

  

 

4

 

U.S. COPYRIGHTS OWNED BY [NAME OF GRANTOR]

 

 

	
  Copyright Title

  	
   

  	
  Copyright
  Reg. No.

  	
   

  	
  Publication
  Date

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

[Each Grantor to provide]

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